Companies Need to Get Serious about Customer Experience
Excellent customer experience is rare, and it’s only going to get harder to come by, according to Forrester’s Customer Experience (CX) Index. The research firm’s most recent data finds that only 17 percent of the 100,000 U.S. companies surveyed posted a “good” CX Index score, and 1 percent ranked as “excellent,” a figure that Forrester predicts will be halved to just 0.5 percent in the next two years.
The good news is that while a great majority of companies are rated as just “OK” (59 percent), many of them will rise to the “good” category.
Forrester’s data has confirmed that better CX drives results across a wide range of industries, including retail, banking, and internet service providers. When customers have better experiences with companies, they’re likely to stay customers for longer, spend more money on their products and services, and recommend them to people they know.
As examples, the report, titled “Improving CX Through Business Discipline Drives Growth,” singles out Delta Air Lines and 1-800 Contacts. 1-800 Contacts drove a 12 percent increase in customer retention through its CX strategy, while Delta reduced its costs to serve customers by $3 million.
According to Forrester Principal Analyst Rick Parrish, who presented on the topic at the Forrester Customer Experience Forum in New York in late June, the current mediocrity is the result of a great number of companies failing to commit to customer experience management (CEM) strategies. He says that improving customer experience requires a clear and actionable vision and the discipline to master six competencies, along with the essential accompanying activities:
1. Research (previously known as “customer understanding”). Use a combination of quantitative (e.g., surveys or web analytics) and qualitative (e.g., interviews or ethnographic) methods to gather information about customer preferences and behaviors and communicate the findings to employees and partners in digestible forms.
2. Prioritization. Acknowledge the idea that companies can’t do everything or serve every customer well, nor should they. Instead, companies should focus on allocating resources to the areas that are most important for their customers’ experience and business success, honing in on the appropriate customer groups and interactions. “You don’t do CX because it’s fun,” Parrish said. “You do it to drive business results.”
3. Design. Use iterative research to plan, test, and refine customer experiences before deciding that a process has been improved to its full potential.
4. Enablement. Provide employees and partners with the resources (training, information, and tools) they need to deliver the right experiences and verify through direct observation that the intended experience is being supported across points of customer contact. “There’s a big difference between creating an experience and making that experience happen consistently, and there’s an entirely different set of activities necessary to do that,” Parrish said.
5. Measurement. Track and analyze what happens when customers interact with your organization, including how they perceive the interactions and what they do as a result, while linking the findings to organizational metrics.
6. Culture. Foster an environment in which managers can hire, train, and retain employees who naturally are empathetic and interested in customers, not just because they are being instructed to do so. Companies that excel at this also reward and celebrate when desired behaviors are carried out. Culture is what separates companies that simply act as though they care about customers and those that actually do. “Customers can tell the difference,” Parrish said.
“We find that there’s a difference between performing these activities, and performing them well, in a disciplined way,” Parrish said. “You have to perform these activities with rigor, cadence, coordination, and accountability.”
Rigor requires an effective, documented process. Cadence requires a plan for how often to do an activity. Coordination requires a process for ensuring that all relevant parts of the company collaborate. And, finally, accountability requires a designated senior professional who holds employees responsible for following the instructions.
According to Parrish, there are three levels of competency in delivering customer experience. Companies can either be in the “establishing,” “optimizing,” or “innovating” areas.
To get on the path to excellence, companies must start first with rigor and make sure they carry out each competency in an effective way, using best practices research and learning from others’ mistakes. Companies can verify their effectiveness when they start to see ROI. But “don’t mistake action for progress,” Parrish warned.
Companies that are performing the competencies and their associated activities with rigor are “optimizing.” When they are at this level, they can dedicate their efforts to improving cadence, coordination, and accountability.
And those that have optimized are innovating. “When we say ‘innovating,’ we don’t mean innovating the customer experience,” Parrish explained. “We mean that you’re ready to start coming up with cutting-edge ways to perform the activities within that competency.
“When you’re innovating in the competencies of CX management maturity, now you’re capable of pushing the envelope on customer experience,” Parrish said.