customerexperiencemanagementbobthompson.pdf

Customer Experience Management: A Winning Business Strategy for a Flat World

By Bob Thompson CEO, CustomerThink Corporation

Founder, CRMGuru.com

July 2006

Copyright © 2006 CustomerThink Corp. All Rights Reserved.


© Copyright 2006 CustomerThink Corporation and CRMGuru.com. All rights reserved.

Except as permitted under the United States Copyright Act of 1976, no part of this report may be reproduced or transmitted in any form by any means, electronic or manual, including photocopying, recording or by any information storage and retrieval system without written permission from the author, except for the inclusion of brief quotations in a review or media article. Mentions of this study in media articles should list www.crmguru.com/cem2005 for additional information. Please email [email protected] to request permission to republish content or graphics.

DISCLAIMER OF WARRANTY AND LIMITATION OF LIABILITY

CustomerThink Corporation does not warrant the accuracy of the materials provided herein, for any particular purpose and expressly disclaims any warranties of merchantability or fitness for a particular purpose. Although the information provided to you in this report is obtained or compiled from sources we believe to be reliable, CustomerThink Corporation cannot and does not guarantee the accuracy, validity, timeliness or completeness of any information or data made available to you for any particular purpose. Neither CustomerThink Corporation, nor any of its affiliates, directors, officers or employees, nor any third party vendor will be liable or have any responsibility of any kind for any loss or damage that you incur resulting from the act or omission of any other party involved in making this report available to you or from any other cause relating to your access to, inability to access or use of the information in this report, whether or not the circumstances giving rise to such cause may have been within the control of CustomerThink Corporation or any vendor providing software or services support. In no event will CustomerThink Corporation, its affiliates or any such parties be liable to you for any direct, special, indirect, consequential, incidental damages or any other damages of any kind even if CustomerThink Corporation or any other party have been advised of the possibility thereof.

All Trademarks are trademarks of their respective companies.

Published July, 2006, by CustomerThink Corporation, founder of CRMGuru.com.

CRMGuru is the world’s largest industry portal for business leaders to learn the art and science of Customer Management. CRMGuru’s mission is to help marketing, sales and service executives improve customer relationships through high-quality articles, discussions and newsletters; interactions with CRMGuru panelists; insightful industry benchmark reports; and online events. The portal serves 300,000 newsletter subscribers and site visitors each month from all regions of the world, with support from a global panel of CRM experts.

Acknowledgements

We are indebted to many people who gave generously of their time to make this report possible. First of all, our sincere thanks to the 1,200 members of the CRMGuru community who collectively spent more than 400 hours completing online surveys on the customer and enterprise perspectives of customer experiences. Also, the survey design was improved with support from industry experts on the CRMGuru Panel (www.crmguru.com/gurus), several of whom were also interviewed and quoted in this report.

Executives from Hilton, Intuit, Publix and Wells Fargo gave invaluable input regarding their customer strategies and results, helping bring our survey data to life with real-world examples. Authors of leading CEM books were also gracious with their thoughts, including Jan Carlzon (author of Moments of Truth), Bernd Schmitt (author of Customer Experience Management and Experiential Marketing) and Shaun Smith (co-author of Managing the Customer Experience). The “memorable experience” research was facilitated with Jim Barnes’ list of 10 common customer emotions and Fred Reichheld’s loyalty scale for “promoters” and “detractors.”

RightNow Technologies is sincerely thanked for its generous sponsorship of CRMGuru research. Last but not least, CRMGuru Managing Editor Gwynne Young made an outstanding contribution throughout the project, as research assistant, writer and editor.

Bob Thompson CEO, CustomerThink Corp. Founder, CRMGuru.com [email protected]


Copyright © 2006 CustomerThink Corporation. All Rights Reserved. i

Table of Contents Executive Summary....................................................................................................................................1 What Is Customer Experience Management?..........................................................................................2

How CEM Relates to CRM........................................................................................................3 Customer Process Improvement...............................................................................................3 Emotions and Experiential Products .........................................................................................4 Step Back and Stop Managing..................................................................................................4 Yin and Yang.............................................................................................................................5

How Important Are Experiences to Your Customer?..............................................................................6 High-Quality Interactions Drive Loyalty .....................................................................................6 Customer Experience Industry Trends......................................................................................7

Emotions Make Experiences Memorable .................................................................................................9 Emotional Glue..........................................................................................................................9 Little Things Matter..................................................................................................................10 Lack of Common Courtesy......................................................................................................10 Promoters and Detractors .......................................................................................................11

Getting It Right at “Moments of Truth”...................................................................................................12 Well-trained and Helpful Employees .......................................................................................12 Excellent Customer Service ....................................................................................................13 High-Quality Goods and Services ...........................................................................................13 Friendly and Caring Employees ..............................................................................................13 Personal Attention, Reward for Loyalty ...................................................................................13

The Business Case for Customer Experience Management ................................................................14 The World Is Flat .....................................................................................................................14 Beyond CRM Systems ............................................................................................................15 Improving Business Performance ...........................................................................................16

The Experiential Chasm ...........................................................................................................................17 What Drives Loyalty? ..............................................................................................................18 Experience and Cost Conundrum ...........................................................................................18

A SMART Guide to CEM Success ...........................................................................................................21 Develop a Customer Experience Strategy ..............................................................................21 Set Goals and Define Measurements .....................................................................................23 Align the Organization .............................................................................................................24 Redesign the Customer Experience........................................................................................25 Optimize Interactions With Technology...................................................................................25

Stop the Insanity .......................................................................................................................................27 It’s Up to You...........................................................................................................................27 Be SMART About CEM ...........................................................................................................27

Appendix....................................................................................................................................................28 What Does “Customer Experience” Mean?.............................................................................28 Loyalty Drivers.........................................................................................................................29 Customer Experience Ratings.................................................................................................30 Impact on Customer Experiences ...........................................................................................33 Loyalty Impact of Customer Processes...................................................................................34 Competitive Environment ........................................................................................................37 Organizational Commitment....................................................................................................38 CEM Effectiveness ..................................................................................................................39 CEM Effectiveness Vs. Business Performance Scores ..........................................................40 Research Methodology ...........................................................................................................41 About the Author .....................................................................................................................41


Copyright © 2006 CustomerThink Corporation. All Rights Reserved. 1

Executive Summary

When he was taping a documentary on outsourcing, New York Times columnist Thomas L. Friedman discovered a funny thing: Indian entrepreneurs wanted to write his software, do his taxes, trace his lost luggage and read his X-rays from Bangalore. He realized that location was no longer a factor in the production of services and merchandise. All it took was knowledge and communication links.

In this way, Friedman says, more than 500 years after Columbus proved the flat-worlders wrong, the world really has become a flat marketplace. Now executives must look for a new competitive edge. The time is ripe for experienced-based differentiation.

In this report, we will define Customer Experience Management (CEM) and compare it to CRM; analyze the gap between the experiences customers are receiving vs. those enterprises think they are delivering; review the business case for CEM; and present the best practices gleaned from our research.

At first glance, CEM appears disarmingly similar to CRM, which should be a business strategy to improve long-term loyalty. Because customer interactions with a company form a critical part of the value customers perceive, theoretically CRM should include experience management. As you’ll learn, however, most people consider CRM in practice to be an information-driven approach to customer analysis and process automation. CEM, on the other hand, concentrates on the customer’s value proposition and includes all interactions, not just those that can be automated.

Although CEM’s roots date back 25 years to when Jan Carlzon applied Richard Normann’s “moments of truth” (high-impact interactions) at Scandinavian Airlines, it’s becoming a force in customer management strategy only now. In this report, we’ll bring CEM leadership practices to life with examples from Hilton Hotels, Intuit, Publix Super Markets and Wells Fargo. With quantitative data from two CRMGuru surveys on CEM, we conclude that managing experiences well can, indeed, boost business performance.

Here are the major findings and conclusions:

A majority of survey respondents confirm what Friedman suggests—competition has been tougher in the last five years, and more of the same is expected in the next five years.

While enterprise managers do understand the importance of customer experiences, most overestimate the quality of experiences they are actually delivering, as customers perceive it.

Enterprises also tend to overestimate the value of marketing communications and should be careful not to take basic product and price issues for granted while improving experiences.

IVR systems and off-shoring have helped cut costs but at the detriment of experiential quality. Internet sales/support and training have been more effective.

Companies that lead in CEM effectiveness, as measured by CRMGuru’s 25-question assessment, generally also achieve double-digit revenue and profit growth.

Highly competitive industries, such as high-tech, telecommunications and travel, achieved the highest CEM scores, with manufacturing lagging behind the ten industries analyzed.

Does your organization have what it takes to compete in a flattened global marketplace? If you want to do more than pay lip service to delivering customer experiences that truly differentiate, read on for the steps you can take to CEM success.



What Is Customer Experience Management?

To manage customer experiences, you must first understand what “customer experience” means. It’s almost as difficult to pin down as “customer relationship.”

Experts interviewed for this report offered many different definitions, but virtually all agreed that customer experiences included interactions with an organization’s people, processes or systems. Some said experiences also included interactions with a product. And others said that experiences included the feelings or emotional responses generated by the interactions.

Customer perception seems to be at the heart of what a customer experience is about, so we asked CRMGuru survey respondents for their perspective. When asked to pick from a list of expert definitions, nearly 50 percent chose: “The sum of all my interactions with a brand’s products, services and people.” But one respondent highlighted the importance of human perception in this write-in definition of customer experience: “The feelings and thoughts resulting from all impressions, tangible and intangible, from anyone or anything representing, directly or indirectly, an organization, brand or product.”

Customer experiences include every point in which the customer interacts with your business, product or service. For the Starbucks customer, for example, it includes the anticipation of going to Starbucks, walking up to a shop, opening the door, ordering and paying for the coffee, getting the coffee and sitting down in the atmosphere of the shop to enjoy the coffee. Each interaction point is what Scandinavian Airlines’ Carlzon would call a “moment of truth.” That’s the point at which your customer is engaging with your brand and at which you can make or break the relationship.

For the purposes of this report, our definition of customer experience is: The customer’s perception of interactions with a brand

Let’s break that down to understand it more clearly:

“Perception” is critical, because, unless the customer thinks or feels that something happened, it hasn’t. And perception can include the emotional aspect of the interaction.

An “interaction” could mean literally anything, from viewing a marketing message to the actual use of a product or service to a post-purchase service/support activity to solve a problem.

Finally, “brand” means far more than a logo or marketing communication. In the customer’s mind, the brand is a symbol for the organization and a promise to be fulfilled.

Customer Experience Management, therefore, is simply managing customer experiences. That was easy! But this begs the question: To accomplish what? A more useful definition of CEM is:

Managing customer interactions to build brand equity and improve long-term profitability

“Managing” anything requires measurement, but it’s tricky to quantify how customers perceive and value experiences. “It is important to note that customers intuitively judge the experiences they receive. That is, they often are not able to consciously point out why an experience resonates with them, but they know when it works or, conversely, when it doesn’t,” says Qaalfa Dibeehi, director of thought leadership and vice president for Beyond Philosophy, the London-based customer experience advisory and consulting firm.

Those “soft” responses are what set Customer Experience Management apart from most other business strategies. They can’t easily be quantified by numbers and technology. It’s also what some would say differentiates CEM from CRM. When it comes to defining CEM, you can view it as an extension of CRM as a strategy, paying particular attention to the customer’s emotion and considering the product itself as an experience.



How CEM Relates to CRM Customer Relationship Management (CRM) is a business strategy to acquire, grow and retain profitable customer relationships. In previous research on CRMGuru.com, we found that more than 80 percent of business managers seem to understand that CRM is a customer-centric way of doing business, not just technology to automate front-office processes.

Managing customer experiences is an integral part of what CRM should be—a win-win value exchange between a company and its customers. Loyal customer relationships are built on what the customer perceives and feels about the product/service purchased and interactions with the organization. At a fair price, of course. Says CRM industry veteran and CSO Insights’ partner Barry Trailer, “CRM and CEM are really synonymous, if you look at CRM as a business strategy, rather than just technology.”

Yet, the reality is that some people do equate CRM with technology used for tactical automation projects, and many of those consider it technology that hasn’t always made a business successful. (CRMGuru’s research has found that about two-thirds of IT-focused CRM projects are successful.) So in some minds, the term Customer Relationship Management has become tainted and must be avoided, while Customer Experience Management is another name for a customer-centric strategy without any stigma attached.

Others see Customer Experience Management as an extension of CRM to provide a true customer focus.

“At its highest level, CRM defines what the company wants from the customer relationship and gathers the information and insight that is analyzed against products and service to find optimum opportunities to sell,” according to David Rance, managing director of Round (U.K.) Limited. “CEM is the mechanism by which the customer is engaged to optimize the potential customer loyalty and long-term value that is defined by CRM. The customer experience is the emotional part of any transaction.”

Lior Arussy, customer strategy expert and president of Strativity Group and author of Passionate & Profitable (Wiley, 2005), agrees that CEM is about “managing the value proposition as the customer perceives it,” while CRM is concerned with “maximizing the revenue and value to the company.”

Of course, loyalty research tells us that there is a linkage between the customer’s perceived value and loyalty and the company’s revenue and profits. But in practice, too many companies focus more attention on the ends (revenue and profit) and ignore the means (the customer’s value proposition). “Organizations think CRM will create the customer experience for them, but it’s just a tool,” Shaun Smith, director of the London-based shaunsmith+co, told us.

Customer Process Improvement Many find CEM to be an organizational strategy for managing customer interactions. HP, for instance has placed customer experience high on its organizational chart, with a department dedicated to Total Customer Experience. Its research director, Katherine Armstrong, calls CEM a “designed and structured approach to planning and managing the customer experience end to end.”

In such cases, the business takes an active role in managing customer interactions, including setting expectations to protect the brand value.

If you define CRM, at least in part, as a method of customer process improvement (technology-based or otherwise), then you’ll see plenty of overlap between CRM and CEM in our recent survey.

The quality of the actual product or service being purchased is still critical, to be sure. However, as you can see in the following chart, the quality of sales, purchasing and service/support activities received a significant percentage (ranging from 58 percent to 66 percent) of high importance ratings. Marketing communications were not rated highly, but keep in mind that marketing messages are one way in which companies make promises that they have to keep.



Emotions and Experiential Products Is there any real difference between CRM and CEM? Yes, in two areas. CRM is usually more clearly focused on customers’ value to the enterprise. There’s nothing wrong with that—businesses exist to make money, and customers are valuable assets that require varying levels of attention and investment. But CEM brings in the new dimensions of customer emotions and “experiential” products (a type of product innovation), both of which are value that customers receive from the enterprise. Conventional CRM projects rarely consider such things.

“At a broad level, [CRM and CEM] are similar,” said Bernd H. Schmitt, professor of international business at Columbia University and author of five books, including Experiential Marketing (Free Press, 1999) and Customer Experience Management (Wiley, 2003). To Schmitt, CRM is supposed to focus on customer loyalty and making sure customers are treated well. To that end, businesses can turn to their CRM systems to find out whether the contact center treated customers well, contacted them when they wanted to be contacted and fixed a problem.

But, Bernd says, CRM falls short of the emotional connection that is at the heart of Customer Experience Management. “I would say CEM is a bit broader. I don’t think people will talk about the aesthetic aspects of the product or design [when talking about CRM], but that’s part of the experience.”

Beyond Philosophy’s Dibeehi agrees. “Where CRM had to be, in large part, inside-out in perspective (i.e., viewing the company from the inside) to begin to set a foundation for customer-centric action within the business, CEM is outside-in (i.e., viewing the company from the point of view of the customer) to make certain that the actions of the business resonates with customers in a positive way.”

Step Back and Stop Managing Some people are so emphatic about the importance of looking at the business from the customer’s point of view that they cringe at the reference to “management.” Paul Greenberg, president of CRM advisory firm The 56 Group and a big proponent of focusing on the customer experience, warns against approaching that experience as something you can “manage.” “What the customer needs is to manage their own experience; they don’t need to have it managed for them,” he says. Instead, you must examine

Factors in Earning LoyaltyHow important is the quality of each of these activities in earning your loyalty?

22%

58%

62%

66%

84%

0% 20% 40% 60% 80% 100%

Marketing communications

Service and support

Purchasing process

Sales interactions

Product or service

Percent High Importance (Top 2 Box)



the customer and his or her experience with your business carefully, mapping out every point at which the customer touches your organization and then tailor your business to accommodate what you’ve found out.

As Rance of customer-experience specialist Round says, “Customer Experience Management attempts to define how all the customer management capabilities within an organization, such as the brand, marketing, business rules, processes, decision-making authority, training, employee engagement, customer data and metrics, etc. combine to influence the customer experience.”

Yin and Yang Previous CRMGuru-sponsored studies have found that customer-centric planning—taking an outside-in approach—is the No. 1 driver of CRM success. The emergence of CEM brings new focus to the oft-neglected task of examining the customer value proposition.

Customer strategy expert Jim Barnes believes that you shouldn’t neglect some basic principles of CRM when you turn to Customer Experience Management. “Maybe we should approach CEM, as we should CRM, from the customer’s viewpoint. What will customers consider a genuine positive experience? I believe it will have to appear genuine, not staged or synthetic.”

Put it all together, and it seems that CEM and CRM have more in common than differences. After all, relationships are developed through a series of experiences over time.

Perhaps we can sum up by saying that CEM and CRM are the Yin and Yang of customer-to-business relationships. The Yin-Yang concept originates in ancient Chinese philosophy and describes two primal opposing, but complementary, forces found in all things in the universe. There’s no record about whether the Chinese found it necessary to turn every concept into a Three Letter Abbreviation (TLA).

Whether you’re a fan of the latest TLA or not, what you should take away from CEM is the imperative to find out how experiences drive the customer to—or, heaven forbid, from—your business, service or product. Then use that knowledge to build an emotional attachment between the customer and your brand. A relationship, even.



How Important Are Experiences to Your Customer?

Customer Experience Management is a method of increasing customer loyalty, a daunting task, as more products and services become commodities in today’s global economy. Loyalty can increase your bottom line, because loyal customers buy more, stick around longer and refer others.

Not surprisingly, CEM proponents claim it will help turn customers into “raving fans” or advocates. Like members of the Harley-Davidson Owners Group (who call themselves, appropriately, HOGs), people who are so passionate about your product or service that they get tattooed with your logos.

High-Quality Interactions Drive Loyalty In CRMGuru’s April 2006 online survey, more than 600 respondents gave 2,021 industry ratings based on their own experiences. We asked respondents to rate the importance of three factors in earning their loyalty, using a seven-point scale. Across 12 industries, 78 percent of respondents give high-importance ratings (top 2 box) to “high-quality interactions” and “superior product or service,” while “lowest price or cost of ownership” received only 31 percent of high importance ratings.

Loyalty Drivers by IndustryTo earn your loyalty in this industry, how important are these factors?

(Customer respondents, n=2,021)

44%

24%

35%

24%

36%

29%

34%

28%

40%

30%

28%

34%

31%

78%

79%

73%

85%

72%

73%

66%

77%

68%

81%

80%

78%

78%

81%

77%

77%

85%

65%

79%

71%

80%

72%

76%

82%

76%

78%

0% 20% 40% 60% 80% 100%

Wireless Telecom (394)

Hotel (699)

Grocery Supermarket (529)

Full-Service Restaurant (487)

Fixed Line Telecom (186)

Fast-Food Restaurant (398)

Electronics (235)

Department Store (440)

Car Rental (144)

Banking (1047)

Automobile (399)

Airline (984)

ALL (2021)


Superior product orserviceHigh-quality interactionsw ith people and systems

Low est price or cost ofow nership



As you might expect, there were differences between industries.

Banking and fixed-line telecom customers rated interactions higher than product or price. In banking, of course, the main product is money—the perfect commodity. As many telephone customers are locked into service and pricing, company interactions rise in importance. It’s not clear how one can be truly “loyal” to a monopoly, however.

Not surprisingly, customers of full-service restaurants rated both the product (food) and interactions highly, and price was tied for those elements with the lowest importance. Automobile customers provided quite similar ratings. Wireless customers rated price the most important of all industries, but product/service and interactions were also average or higher.

One surprise: electronics. All three dimensions were scored lower than average. Possibly, this simply means that it’s harder to earn gizmo shoppers’ loyalty, no matter what the manufacturer does. Barnes surmises that, since the customers’ principal contact is with the product, they are “most likely to define experiences as involving some form of contact with people.”

These findings suggest that companies should not lose focus on providing competitive products or services. But winning the hearts and wallets of customers requires equal attention to the quality of interactions between a company and its customers.

This may be obvious in service-intensive industries like airlines or financial services, but as noted earlier, even customers of product-focused industries like electronics place significant value on interactions.

Customer Experience Industry Trends Globalization and the Internet have created an abundance of goods and services, and it has become increasingly difficult to differentiate based on the core offering (functional capabilities) or price. An IBM study in 2005 revealed that, “to create a new and lasting source of competitive advantage, businesses must manage the customer experience.”

Customer Experience Management is valuable in any industry—and in both business-to-business and business-to-consumer relationships. In their book, Building Great Customer Experiences (Palgrave MacMillan, 2002), Colin Shaw, a founding partner of Beyond Philosphy, and John Ivens, a Beyond Philosophy consultant, cite their own research, which found that “85 percent of senior business leaders agree that differentiating solely on the traditional physical elements such as price, delivery and lead times is no longer a sustainable business strategy.”

That’s why tuning in to the customer experience is so important. Unhappy customers can bolt to a competitor—or simply stop using a service. All it takes is a computer browser set to any of the complaints sites on the World Wide Web to see the true story of how easy it is to irritate and lose a customer.

“Because of one rude person you have put in charge, you no longer get that weekly cut out of my check, but you also have lost a very loyal customer who did ALL of their shopping, fueling and video rentals,” complained one person on www.complaints.com about a grocery store she used to patronize. Now angry, she was willing to pay more money to pump gas from the more expensive station across the street and travel farther from home for her groceries and videos.

Is CEM worth the effort? Author Smith and Joe Wheeler, who co-wrote Managing the Customer Experience (2002, FT Prentice Hall), think so. They cite a 2000 study by Accenture and Montgomery, which found that “if a $1 billion enterprise increased its investment in customer interactions from average to high, it could anticipate a $42 million return on investment. They concluded that ‘superior relationship management is worth half your bottom line.’”



How are companies doing today? In CRMGuru’s survey, only 22 percent of respondents agreed that companies “currently provide an excellent customer experience.” As you can see, more than half of the respondents had no strong opinion one way or the other, and 18 percent had a negative response.

Full-service restaurants got the highest positive ratings and one of the lowest negative ratings. At the other end of the spectrum, fixed-line telephone companies earned the highest negative rating, at 32 percent, perhaps an indication of the lack of competition in this industry.

Electronics companies had the lowest positive rating, and the long-suffering airline industry fared only slightly better.

Currently Provide an Excellent Customer Experience?Customer respondents (n=2,021)

16%

18%

19%

20%

20%

21%

22%

23%

24%

25%

25%

26%

27%

67%

63%

61%

62%

48%

60%

60%

55%

62%

58%

61%

59%

58%

17%

19%

20%

19%

32%

18%

18%

23%

13%

17%

14%

15%

15%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Electronics (235)

Airline (984)

Automobile (399)

Banking (1047)



All Responses (n=2021)


Car Rental (144)

Hotel (699)




Agree (Top 2 Box) Neutral (Middle 3 Box) Disagree (Bottom 2 Box)



Emotions Make Experiences Memorable

Some experts say that CEM is all about creating an exemplary experience, what many call “customer delight” or a “wow” experience.

Carlzon, the former Scandinavian Airlines CEO, in an Inside Scoop interview for CRMGuru tells the story of the tour operating company in which he began his career. The company liked to surprise customers by putting baskets of fruit or a bottle of wine and a hand-written card in guests’ rooms at their travel destinations. “Everybody got extremely happy, because nobody expected it, and they all thought it was a kind of individual service to them,” Carlzon said.

The value of booking for the tour company increased because of the guests’ perception that they were getting something special. Unfortunately, an enterprising advertising manager burst the balloon by amending the company’s brochures to tell people they would be getting a “surprise” of a bottle of wine in the room. Setting this expectation eliminated the surprise and, worse, turned the positive experience into a negative one when the gift was forgotten.

Emotional Glue Without emotion, we wouldn’t remember much of anything. Think about your strongest memories. They probably include either very pleasant or awful experiences.

In CRMGuru’s online survey, we asked respondent for input on a recent “memorable” experience. It might be surprising to learn that it doesn’t take a lot to please or annoy customers. Sure, when your people go the extra mile for customers, they’re very impressed. But often, customers just want to get what they ordered and to be treated decently. Amazon.com’s most popular link is “Where’s My Stuff?” One happy online shopper put it this way: “Amazon is easy. A child could use it. Online ordering is practically two clicks.”

Earlier, we stated that the “quality of service/support processes” was ranked fourth out of five activities in earning a customer’s loyalty. Yet, when we asked respondents for input on a recent “memorable” experience, 35 percent of the responses included service and support activities. Sales activities (15 percent), purchasing process (19 percent) and use of product/service (20 percent) ranked lower. Clearly, how a problem is resolved can create a strong emotion and lasting impression.

For highly loyal customers (“promoters”), approximately 80 percent to 90 percent of respondents said a memorable experience left them feeling positive emotions like “pleased,” “comfortable” and “appreciated.” Customers with little loyalty (“detractors”) felt “frustrated,” “let down” and “angry.”

Emotions After Memorable Experience

0%

20%

40%

60%

80%

100%

Please

d

Comfor

table

Appre

ciated

Impo

rtant

Specia

l

Frus

trated

Let D

own

Angry

Ignore

d

Confus

ed

"Stro

ng" (

Perc

ent T

op 2

Box

)

Promoter Detractor



Little Things Matter Exceeding expectations may not be the right goal for companies that don’t get the basics right. In some cases, the customer experience can improve, not because of a pleasant surprise but for the lack of a negative one. Naras Eechambadi, CEO of marketing performance management company Quaero, says that paying attention to the experience the customer has with your firm is “not about customer delight all the time.” It’s about making promises and sticking to it: “There is a place for wow. But consistency is more important,” he said.

One survey respondent raved that Commerce Bank had a toll-free phone contact that was “nearly instantaneous”; it was answered on the “FIRST ring by a real, live, knowledgeable human being.” And the question was answered in less than two minutes. Not exactly a “wow” experience, you might say, but the fact that the business handled it well nearly floored this customer.

And that’s not all. People who experienced trouble with a product or service were also thrilled by a business handling the problem well. For example, a grocery shopper discovered that a can of chili peppers was less than half full. “I returned it to the market, where they immediately replaced it, and when I left, an employee was shaking cans to see if they were less than full so that others would not have my problem.” You would think the customer would be upset about getting a partial can of chilis. Instead, the market impressed the customer with how its employee was thinking of other people.

Of course, customers also pleased when businesses exceed their expectations. One person wrote in about Alaska Airlines, which gave every passenger a $50 coupon to “a very nice restaurant in my local area.” The customer was pleased not only by the coupon but also by the fact that there were no restrictions or early expiration. “To my delight, they were good for one year, and there were no catches!”

Another person was surprised to be met at the door by Hilton Hotel employees in Fort Wayne, Indiana, and then escorted to a get-acquainted reception at the restaurant, along with dinner on the house that night and breakfast on the house in the morning. It was Hilton’s way of “just doing a little customer appreciation for my frequent stays.” Ebay.com noticed a mistake in an order and notified the customer. “They were right. They sent me a very polite email asking if I meant to order two,” reported the happy person, who had wanted only one item.

Lack of Common Courtesy Alternatively, judging from the complaints people registered in the survey, all it takes to earn a customer’s disapproval is a lack of common courtesy or inattention to details you might expect businesses to take for granted. Some fast-food restaurants, for instance, were dinged for poor quality food and dirty seating areas. When the HBO signal went out the night of the season premiere for the TV series, The Sopranos, a cable company operator wouldn’t offer a credit. “The person just didn’t care,” the survey-taker wrote.

And customers know lip service when they experience it. One person wrote about a transaction that went terribly wrong at an investment firm. The people were friendly, but the customer wound up on the phone for an hour, transferred four times and put off for more than a month without resolution. “They think that pleasant service people that ask if there’s anything else they can do to help you—even though they usually can’t answer your question or solve your problem—means they have good service.”



Promoters and Detractors After a customer has a memorable interaction, what happens next?

As you can see from the chart below, loyal customers (“promoters”) said they recommended the business to a friend or colleague nearly one-third of the time. That’s powerful evidence that the likelihood to recommend (“promoters” give loyalty scores of 9 or 10 on a scale of 0 to 10) does lead to actual recommendations. Other customer activities that increase customer value to the company include purchasing more products and services and continuing the relationship.

Conversely, “detractors” (0 to 6 on the 10-point scale) complained to a friend or colleague 25 percent of the time, complained to the company nearly as often and switched suppliers 20 percent of the time. After one experience! Imagine how customers might defect or complain to others if a company has a pattern of bad experiences.

Note that the company gets direct customer feedback only 22 percent of the time after a positive experience and 24 percent of the time after a negative one. Given the severe repercussions of a bad experience, companies need other proactive ways to identify the 76 percent who may complain to others or reduce their business without any warning.

Actions After Memorable Experience

As a result of this specific experience, what did you do?

9.5%

20.1%

24.0%

25.3%

5.9%

1.6%

2.0%

0.3%

0.4%

1.1%

1.8%

0.9%

15.7%

19.1%

22.2%

31.7%

0% 5% 10% 15% 20% 25% 30% 35%

Purchased lessproducts/services

Sw itched to newsupplier/provider

Complained to acompany

represenative

Complained to afriend or colleague

Continued therelationship about

the same

Purchased moreproducts/services

Praised a companyrepresentative

Recommended to afriend or colleague

Percent of Responses

Detractor Promoter



Getting It Right at “Moments of Truth”

Part of the value in your specific product or service comes in the experience you create. Coffee is coffee is coffee, except when it’s Starbucks coffee. “Whether it was a planned or sort of a random discovery early on in their experience as a business, they figured out that it’s really not about selling coffee to customers,” said HP’s Armstrong. “Starbucks is selling more than beverages; it’s the total experience at a Starbucks outlet: buying, drinking, getting online, etc.”

People who participated in CRMGuru’s survey on customer experience were passionate about companies that served them well or poorly. We received more than 1,400 write-in responses about specific companies that provided “consistently excellent” or “consistently poor” customer experiences.

In this section, we’ll discuss the Big Five attributes that set apart the top-performing companies. Attributes were determined by analyzing frequently-mentioned terms and their synonyms and grouping them into meaningful phrases.

Well-trained and Helpful Employees If you’re interested in delivering an excellent customer experience, start by ensuring your employees are well-trained and genuinely helpful. Training gives the means, but being helpful is, in large part, an attitude—as we learned from our survey-takers.

For example, a Best Buy (electronics retailer) customer said, “When we go in, someone is always there to greet us and direct us to the correct area. Their salespersons seem to be well-trained in their particular field. We have had nothing but good experiences with them.”

Marriott received several positive comments from travelers who noted the hotel chain’s “pleasant and helpful staff,” “selection, training and management of employees” and “friendly and well-trained staff ready and willing to support travelers (whether for business or for leisure).”

One car shopper was impressed that “Saturn employees are well-trained on the various models and are willing to talk with me at length about which model best fits my needs. They are willing to show me aspects of a particular sales model even when they know I am not currently looking for a new car.”

Attributes of Companies Providing "Consistently Excellent" Customer Experiences

0% 2% 4% 6% 8% 10% 12% 14%

Innovative and exciting

Streamlined processes w ith automation

Fast fulf illment of purchase

Easy to use

Clear communications

Wide selection of purchase options

Clean store or restaurant

Good total experience

Consistent and dependable

Good value for money

Responsive and f lexible to customers

Personal attention, rew ard for loyalty

Friendly and caring employees

High-quality goods or services

Excellent customer service

Well-trained and helpful employees

Percent of Mentions



Excellent Customer Service A significant number of responses simply said that customer service was “excellent,” or words to that effect, making it the No. 2 attribute of the top companies. A passenger of U.S. regional airline Midwest Express illustrated how service can offset a “product” limitation: “They offer limited flights, but the service on them is always excellent. They go above the norm by giving out freshly baked cookies!” American Airlines, although “not always perfect” according to one 20-year frequent flyer, “consistently focuses on the core things necessary to provide an excellent service.”

In financial services, you can feel the value of good communications when you note that ING Direct was praised for “great customer service by phone (don’t feel you’re sent offshore), excellent communications—keeps it simple, easy to understand.” In restaurants, however, service is hard to separate from the quality of food, as this comment about Bonefish Grill illustrates: “Personable, attentive people; consistently excellent product with seasonal variations.”

High-Quality Goods and Services Smiling and helpful employees will take you only so far. You’d better be able to deliver the goods—or, as the case may be, services—that customers want. And don’t think you’ll be able to sacrifice quality for price, because the leading companies don’t.

The meaning of “high quality” varies by industry. As you might expect, the quality of food was a key factor in grocery supermarkets and restaurants. In the United States, specialty grocery retailer Trader Joe’s earned kudos from one shopper for “high-quality products at low prices” and from another for “reliable quality produce and nice selection of products.” One Subway (sandwich specialty restaurant) patron liked the “quality and range of products.”

Car drivers have a different view of quality, naturally. Toyota received comments regarding its “great quality products and associated warranties” and because it “delivers on its promise of quality product and service.” Another survey-taker said that Acura offered “superior quality product out of the gate.”

Friendly and Caring Employees It pays to be nice! “Friendly” was one of the most commonly mentioned words in survey responses. Customers liked pleasant interactions with employees who genuinely cared about doing their job well.

In our survey, no other company was rated friendlier than Southwest, a popular low-cost airline in the U.S. “They match expectations with reality—their people are friendlier,” gushed one happy passenger. Another lauded “friendly, personable employees who take time to connect with passengers,” and another observed that the airline “hires friendly and helpful people.”

Starbucks, the company that redefined coffee from a product to a service, was recognized for “friendly and helpful service” by employees who “go out of their way to serve.” A customer of Enterprise Rent-A-Car, another service-obsessed company, appreciated “very friendly, accommodating staff.”

Personal Attention, Reward for Loyalty Our final “Big Five” attribute is about recognizing top customers personally. A First Citizens Bank customer said, for example, “This bank treats me with respect, as an individual. They got to know me personally as soon as I opened the accounts and are always pleasant and helpful when I transact business with them. I can pick up the phone and call the person who opened my accounts any time.”

Marriott was praised by several customers who noted the company’s “personal touch.” One said, “I am a person to this hotel chain. On repeat visits, I am recognized and treated personally.” Others noted that they appreciated Marriott’s rewards program, which recognized their loyalty in a tangible way.



The Business Case for Customer Experience Management

A “customer experience” is the customer’s perception of interactions with a brand, from marketing communications to sales and service processes to the use of the product or service. “Customer Experience Management” means managing customer interactions to build brand equity and long-term profitability.

Why should enterprises care about CEM now?

Remember the Hilton Hotel guest who was met at the door by the manager and whisked to the restaurant for a get-acquainted reception with the new staff and then served dinner on the house?

Why would a hotel do that? To make guests feel so welcome and loyal that they won’t consider the competition—and will enthusiastically recommend the hotel to friends, relatives and coworkers. You can bet the guest who got the royal treatment is telling everyone about it. After all, the guest shared it with us.

As we noted earlier, customers value the quality of their interactions with businesses as much as they do the quality of the goods or services purchased. Enterprise respondents shared that view, as you can see from this chart. The good news is that positive and memorable experiences tend to drive profit-building

behavior: 32 percent of customers say they recommended a supplier to a friend or colleague, and 19 percent say they purchased more products and services. The bad news: Negative experiences lead to customer defections and reduced spending.

The World Is Flat We’re living in a flattened marketplace, where, thanks to globalization and the Internet, products are becoming commoditized at lightening speed. A majority of enterprise respondents (58 percent) in a May 2006 CRMGuru survey say competition has been getting tougher in the last five years. Nearly the same proportion expects it will be harder to make a reasonable profit in the next five years.

“Sometime in the late 1990s, a whole set of technologies and political events converged—including the fall of the Berlin Wall, the rise of the Internet, the diffusion of the Windows operating system, the creation of a global fiber-optic network and the creation of interoperable software applications, which made it very easy for people all over the world to work together—that leveled the playing field,” said New York Times columnist Friedman in an interview with Amazon.com. The convergence “created a global platform that allowed more people to plug and play, collaborate and compete, share knowledge and share work, than anything we have ever seen in the history of the world.” Yet, Friedman found that very

Loyalty DriversTo earn customers' loyalty, how important are these factors?

16%

81%

64%

31%

78%

77%

0% 20% 40% 60% 80% 100%


High-quality interactionsw ith people and systems

Superior product orservice


Customer View

Enterprise View



CEM“Right Brain”

Enterprise’s Value to Customer

People and Interactions

Emotional Value

CRM“Left Brain”

Customer’s Value to Enterprise

Systems and Transactions

Functional Value

Strategic Customer Management

few business leaders were reacting to this change. And, although many executives today are talking about the importance of the customer experience, few businesses are managing them well.

The same convergence is leading to customers being more vocal about what they like and don’t like about businesses, through web logs (blogs), social networking and pure word of mouth. “I do think we’re in a paradigm shift,” said The 56 Group’s Greenberg. Customer loyalty expert Michael Lowenstein, of Harris Interactive, agrees. He cites international quantitative research that has found that “word-of-mouth has emerged as the dominant communication vehicle for impacting customer decision-making and supplier selection.”

Beyond CRM Systems In the CRM revolution of the past decade, businesses embraced information technology as the answer to improving relationships with their customers. But instead of forging better relationships, many just implemented customer databases and automated processes. Unfortunately, most CRM “projects” have been focused on monetizing customer relationships without really addressing the customer’s experience as a loyalty driver.

Those businesses that are working to enhance their customer experiences are onto something powerful, because they know that it’s one of the most important ways of making and keeping a business profitable.

CEM helps the enterprise see the customer with the “right brain”—concerned with perceptions, feelings and interactions that are harder to quantify but oh so valuable nonetheless. Instead of just looking at how valuable the customer is to the enterprise, CEM requires an inspection of the enterprise’s value to the customer. Rather than recording such transactional information as leads, opportunities and average handle times, the way many CRM systems do, CEM maps the experience from the customer point of view.

Technology to support CEM could take you far from conventional CRM software, which tends to focus on internal processes. CEM is also more creative, where well-trained, helpful and friendly people play a critical role. In CRM, people are said to be important, but, somehow, CRM projects are mostly about IT investments that do little to improve the enterprise’s value to the customer.

In the ideal world, CEM should be part of CRM as a business strategy, but that’s rarely the case. That’s why, in the chart above, we use the term Customer Management to encompass both as-practiced CRM and the new-age CEM. Whatever labels you use, rest assured that top-performing companies are adept at left- and right-brained customer management.

In practice, the dividing line between CRM and CEM is blurred. In our research, we found that 80 percent of the “best practices” recommended by CEM experts are the same as those that we’ve proven deliver ROI in CRM projects. For example, the No. 1 driver of CRM success is developing a customer-centric plan. That is also the starting point for CEM.



Improving Business Performance Hilton is a leading example of a company doing customer experiences right. Others are the oft-discussed Starbucks, Amazon.com and Harley Davidson—along with businesses like Wells Fargo and Intuit. These firms know the secret to building loyalty and growing the business out of it. They make a connection with customers that transcends basic functional value.

Executives striving to deliver superior experiences to their customers are doing it for solid business reasons. Consider Wells Fargo & Co., which made a strategic decision in 2003 to invest heavily in its call center infrastructure to build a base of satisfied customers over a vast banking network. Corporate executives “recognized the importance of a service channel,” said Bruce Withers, vice president, Contact Center Technology, based on the belief that satisfied customers would be more loyal and receptive to considering additional products.

Does it really work? Wells Fargo has had double-digit profit and revenue growth. It is ranked first in cross-sell among retail banks (at 4.8 products per customer). And Forbes magazine in 2004 named Wells Fargo the best-managed company in U.S. banking.

CEM leaders don’t focus on the customer just to feel good—they see it as a successful business strategy. CRMGuru research bears that out, showing a strong relationship between CEM effectiveness scores and business performance (revenue and profit growth). Obviously, customer experience isn’t the only factor in business success, but it’s

clearly an important one.

Hilton leaders see managing the customer experience as the only way to compete in what executives deem a two-horse race with rival Marriott—and the only way to control branding in an organization with both corporate and franchise facilities, according to Jim Von Derheide, vice president, CRM Strategies.

Intuit cofounder Scott Cook found that as profits at the financial software company grew, the company direction moved out of focus. Worse, market share in the web-based segment for industry-leading TurboTax software had dropped by more than 30 points from 2001 to 2003. Too many decisions were being made with an eye solely on profits, rather than on customer happiness (Fred Reichheld, The Ultimate Question, Harvard Business School Press, 2006).

What’s preventing companies from delivering excellent experiences? In our survey, enterprise respondents say the top two obstacles are poor processes and information systems. But leadership, employee skills and channel complexity are also factors. Cost was the lowest-ranked issue.

Obstacles to Providing a Consistently Excellent Customer Experience

14%

21%

23%

24%

25%

30%

0% 10% 20% 30% 40%

Customer experienceimprovements are too costly to

be justif ied.

Multiple customer interactionchannels are too complex to

manage.

Employees are not hired,trained and motivated to serve

customers w ell.

Company strategy andleadership does not focus on

customer experience.

Information technologysystems and data bases are

outdated and ineffective.

Business processes are notdesigned to deliver greatcustomer experiences.

Major

CEM Effectiveness Vs. Business Performance

68

75

80

50

55

60

65

70

75

80

85

Low Medium High

CEM Score

Ave

rage

Bus

ines

s P

erfo

rman

ce



The Experiential Chasm In CRMGuru’s online survey of customers, conducted in April 2006, only 22 percent of respondents agreed that companies “currently provide an excellent customer experience.” Enterprises have a more positive view, compared to customer respondents. Nearly double (42 percent) felt their companies were doing an excellent job, and less than half (7 percent) thought they were doing a poor job.

A Bain & Co. study of 362 firms in 2005 painted a bleaker picture. Bain found that 80 percent of respondents believed they delivered a “superior experience” to their customers. Yet, the same study found that only 30 percent organize functions to deliver superior experiences, and 30 percent maintain effective feedback loops.

That may explain why only 8 percent of customers agreed they were receiving a superior experience. Bain concluded that

this “delivery gap” was in part because of growth initiatives that did more damage than good, such as adding fees and chasing new customers instead of taking care of current ones.

In a study on customer experience, published in March 2006, consumers told Harris Interactive that if they received consistently excellent service, they would be more likely to increase their business with an organization. A majority of consumers had stopped doing business with an organization with which they had had a negative experience. Yet, the study found that almost every U.S. customer surveyed had had a negative customer experience in the previous year.

The bottom line: Companies tend to overestimate how happy their customers are with the experiences they are receiving. In CRMGuru’s study, we measured CEM effectiveness with a 25-question survey on strategy development practices, goals and metrics definitions and usage, organizational alignment, experience redesign and technology usage. The composite scores ranged from 47.7 (on a scale of 0 to 100) for manufacturing to 64.0 for high-tech consulting and services.

It’s interesting to note that the intensely competitive high-tech and telecommunications industries achieved the highest scores. Financial services and retail, industries that one might expect to lead due to the critical nature of

Companies Provide an Excellent Customer Experience?

42%

22%

50%

60%

7%

18%

0% 20% 40% 60% 80% 100%

Enterprise View

Customer View

Agree Neutral Disagree

CEM Effectiveness by IndustryEnterprise Respondents (n=619)

47.7

53.9

54.7

55.6

56.1

57.7

58.1

58.4

60.1

64.0

0 10 20 30 40 50 60 70 80

Manufacturing (non-tech) (37)

Advertising / Media / PR (54)

Retail Sales (41)

Financial Services (65)

Education (32)

Business & Legal Services (43)

Transportation, Travel, & Leisure (24)

High Tech Products & Systems (70)

Telecommunications (38)

High Tech Consulting & Services (64)

CEM Score (0 to 100)



customer relationships, lag well behind. Perhaps less of a surprise is that the slower-moving manufacturing (non-tech) industry does not see CEM as a top priority, yet.

With few coming close to the “perfect 100” score, there is considerable room for improvement. Enterprises need to understand their own “delivery gap” and develop plans to close it. Later on, we’ll describe a five-element framework to accomplish just that.

What Drives Loyalty? In CRMGuru’s survey of customers, more than 600 respondents delivered over 2,000 industry ratings based on their own experiences. We asked respondents to rate the importance of three factors in earning their loyalty, using a seven-point scale. Across 12 industries, nearly 80 percent of respondents give “high-quality interactions” and “superior product or service” high importance ratings (Top 2 Box). “Lowest price or cost of ownership” received only 31 percent of high importance ratings.

Enterprises give slightly lower importance ratings to the product and cost dimensions. This suggests that enterprises need to be careful not to overlook the fundamentals while searching for the next differentiator. But one thing is for certain: The respondents in our study do “get” that interactions are critical.

Drilling down into specific processes, we see good alignment between enterprises and customers that the quality of the product/service being purchased is still the first priority. After that, customers rate sales, purchasing and service support processes, then marketing communications.

Enterprises seem to undervalue the purchasing process, possibly taking it for granted. Customers place considerably less importance on marketing communications than enterprise respondents do. Perhaps the message here is this: “Don’t tell me how great you are. Show me!”

Experience and Cost Conundrum Over the past decade, business executives have been cutting costs with automation, off-shoring and, of course, the Internet. In recent years, as the economy has improved, attention has turned back to revenue growth and building loyalty—hence, the current interest in customer experiences.

Factors in Earning LoyaltyHow important is the quality of each of these activities in earning customer loyalty?

43%

74%

48%

71%

75%

22%

58%

62%

66%

84%

0% 20% 40% 60% 80% 100%

Marketing communications

Service and support

Purchasing process

Sales interactions

Product or service


Customer View

Enterprise View



The problem is that some of these strategies may be in conflict—at least, in terms of how they are executed and perceived by customers. We asked CRMGuru survey respondents to rate their agreement on whether, based on their own personal experiences, they believed that employee training, Internet sales/support, off-shoring and Interactive Voice Response (IVR) had improved customer experiences.

Their reactions were dramatically different. As you can see in the chart below, customers believe that “well-trained people” and “Internet sales/support” have had a positive impact a bit more than one-third of the time. Only 15 percent had a negative outlook.

However, a significant number of respondents said off-shore call centers (38 percent) and IVR (35 percent) had adversely affected their experiences. Although some companies attempt to spin these initiatives as attempts “to serve you better,” it’s clear that most customers don’t see it that way.

A backlash against “IVR hell” led to the launch of GetHuman.com, where consumers rate service quality, record their hold times and can find the shortcuts to bypass the phone menu and get directly to a human being at many of the top American companies. One major bank in the United States is running humorous TV ads touting its ability to enable customers to actually talk to a real person. Imagine that!

The off-shoring issue is more complex. To be fair, it’s not clear whether customers would be willing to pay more for experiences that did not include an off-shore call center. In this respect, it’s “damned if you do and damned if you don’t” for companies that attempt to cut costs but can’t do so without some change in quality of service, even if the “quality” is a perception based on a different accent.

Customers want lower-cost goods and services, hence the rise in Wal-Mart and other discounters, but don’t always like the trade-off when it affects local jobs or service quality.

Some companies are taking a more cautious approach to off-shoring, worried that cost savings may be offset by customer experience deterioration. Dell, for example, decided in 2004 to bring back to the United States some of its call-center operations, after concerns surfaced about service quality.

But the real danger is that enterprises tend to under-appreciate the negative backlash of first-generation IVR systems and off-shoring. Efficiencies are important, to be sure, but the risk for many companies chasing cost cuts could be deterioration in the quality of customer experiences.

Have Companies Improved Customer Experiences?

6%

8%

34%

36%

55%

57%

51%

49%

38%

35%

15%

15%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

With off-shore call centers

With voice response (IVR)

With Internet sales/support

With w ell-trained people

Agree Neutral Disagree



In the chart below, a “net agreement” score is calculated as the percentage of respondents who agreed that an initiative improved customer experience (top 2 box) minus the percentage who disagreed (bottom 2 box). Neutral or no opinion scores were excluded from this calculation.

A positive score indicates that the initiative does more good than harm. Conversely, a negative score means that the initiative has had a net negative impact on customer experiences.

As you can see, customer and enterprise respondents are in directional agreement, giving net negative ratings to off-shoring and IVRs and net positive ratings to Internet sales/support and training. However, it appears that enterprise respondents are non in synch with customers as to the magnitude of the ratings for off-shoring, IVR, and training.

CRMGuru’s surveys offered some clues to the gap between customer expectations and enterprise delivery. When we asked both customer and enterprise respondents for input on attributes of companies that delivered “consistently excellent customer experiences,” we found that enterprises tended to:

Underestimate the value of friendly and helpful employees Underestimate the value of personal attention and rewards for loyalty Overestimate the value of innovation and excitement vs. fulfilling basic requirements reliably

In summary, you might say that enterprises are “left-brained” and customers are “right-brained.” Enterprises are focused on the functional aspects of running a business, while their customers are responding to the emotional and personal aspects of their experiences. This is the gap that must be closed for success in CEM.

Improves Customer Experience?

-32%-27%

18% 22%

-12%-5%

16%

46%

-60%

-40%

-20%

0%

20%

40%

60%

Net

Agr

eem

ent (

Posi

tive

- Neg

ativ

e)

Customer View Enterprise View

Off-Shore Call Centers

Voice Response (IVR)

Internet Sales/Support

Well-Trained People



A SMART Guide to CEM Success

Acknowledging that there’s a gap between where you are and where you need to be is the first step toward surmounting that gap. But how?

Our research found that a five-element approach leads to CEM success—as measured by improved business performance (revenue and profit growth). To remember these elements, be SMART: Define a customer-centric Strategy; use appropriate Metrics; ensure your organization is Aligned with your objectives; Redesign experiences as needed; and use appropriate Technology tools as enablers.

To segment our survey data, we asked enterprise respondents how quickly their revenue grew in the most current fiscal year. “Leaders” were those who grew revenue by 20 percent or more. We called those who grew revenue by 10 percent to 19 percent “achievers” and those who grew revenue by 1 percent to 9 percent “plodders.” The others, those who had no growth or who lost revenue, were categorized as “laggards.”

We found that revenue leaders also claimed to grow profits more quickly (generally at double digits) and had higher customer retention rates than the other segments. We found a statistical relationship between CEM scores and business performance. Said another way, revenue growth leaders tend to practice more effective CEM.

Where should you begin a CEM initiative? At the very foremost level, we can’t stress enough the importance of buy-in, from the top all the way through to every part of the organization, with everyone involved with your company—employees, suppliers, dealers and agents—truly believing in what you’re doing.

Then the real work begins: You have to “walk the talk.” You must understand what customers feel and think at every level of their interaction with your organization.

Use these five elements of Customer Experience Management to help you get closer to creating an ideal customer experience, which should help improve your business performance—if customer experiences are a key source of competitive differentiation in your industry.

Develop a Customer Experience Strategy Before you can develop a customer experience strategy, you have to know what your customers want, say customer experience advocates. Start by mapping the customer experience (known as experience mapping or touch-mapping) and one-on-one interviews with customers. Mapping is tracking all the points (those “moments of truth” again) in which customers interact with your company. You can chart this on report, or you can take report or sticky notes and affix them on a wall.

Customer experience expert Shaw has clients map emotional responses to key points, identifying “frustration points” in the customer journey, striving to eliminate negative emotional states.

In this manner, one client, a large healthcare provider, was surprised to discover that negative feelings such as those associated with severe healthcare problems like cancer were tempered by elements within the customer experience. One surprise was the way patients made emotional judgments on the quality of

CustomerExperience

ManagementSMART

Framework

Strategy

Metrics Alignment

TechnologyRedesign



care based on small things not related to the physical care process, itself. For example, at a point where they didn’t understand whether a certain medical procedure was working, patients would base their judgments on something they could understand, like a snack being out of date (Colin Shaw and Steven Walden, Don’t Ignore Your Customers’ Emotions, Feb. 7, 2006, CRMGuru.com).

The map here was designed by Sampson Lee of GCCRM to illustrate his experience, comprising 20 distinct interactions, during a visit to Starbucks in China. As you can see, the map charts positive and negative emotions, starting with viewing the store location and appearance and ending with a warm farewell from an employee.

Experts recommend spending time with customers and with employees who work directly with customers, conducting mystery shopping trips, mapping your processes and service blueprinting, a concept outlined in 1984 in the Harvard Business Review. You diagram customer experience in buying and receiving a service, showing the departmental handoffs to isolate problem areas. Face-to-face interviews, preferably conducted by company executives, rather than outside consultants, can elicit surprises. Greenberg relates how, in this way, company leaders at his client David’s Bridal discovered that their key customer was not the bride—but, rather, the mother of the bride.

Discoveries such as these allow you to see what customers consider to be important and factor that into your strategy. Then you need to decide what you want to focus on—the “moments of truth” that have a high impact on customer loyalty.

Hilton, for example, wants to differentiate—both from its competitors and between customers. In other words, according to Von Derheide, the company wants to tailor the experience for each customer, to create an experience unmatched by competition. The company is evolving from a transactional organization to a relational one, he said. Hilton developed the central content for its strategy through a team of business, technology and marketing representatives. The company tended to find, Von Derheide

Customer Experience Map: One Starbucks Visit



said, that because it’s a differentiated, “sandbox” system, it worked best to pilot strategic changes with the “best guests.” And executives were always making sure they could track everything, asking, “Can we see some change in downstream behavior?”

Further, when Hilton leaders want to make a serious change in the customer’s experience, they will build “pocketbooks” for test customers, asking them how they would allocate their money.

For a company like Publix Super Markets, Inc., which operates retail grocery stores in the U.S. South, strategy is simple; it’s always based on the same philosophy held since the company was founded in 1930, said Maria Brous, director of media and community relations: “to provide stellar customer service, at competitive prices and quality products.” Brous said the company president has four points for the business: Know your customers; know your product; know your business (competitive environment); and train and develop your associates.

Set Goals and Define Measurements How do you know if you’re on the right track? Value is a two-way proposition. If you’re doing things for your customers that aren’t valuable to you, that’s a problem. If you’re doing things that aren’t valuable to your customers, that’s not good, either. Figuring out how to deliver valuable experiences and get a valuable return requires a strategy that includes goals and measurements.

Intuit met with loyalty expert Bain & Co., which developed a Net Promoter Score (NPS)—a scoring system based on the question of whether a customer would recommend a brand to another person. Based on customers’ responses to key questions, a business would divide its customers into clusters of promoters, passives and detractors. The more the promoters, the higher the NPS number. Intuit worked on raising that number. One method? Simply contacting the detractors and asking them why they were unhappy.

More important than mere measurement, however, are reality checks to continue gauging the customer’s experience and viewpoint. Intuit has quarterly customer experience reviews and has random surveys pop up, triggered by incidents, such as page abandonment.

Publix does it the traditional way, soliciting customer feedback at every level (providing toll-free phone numbers on store receipts) and responding personally to every communication customers make, whether in person or by telephone, email or letter.

“We always take into account feedback and have measurements in place, so we can measure if we’re hearing something consistently from customers,” Brous said. “Feedback from customers doesn’t work unless you’ve taken it truly into account.”

Goals and MetricsDoes your company...

…set specific customer experience goals, measurements and objectives?…measure and communicate the quality of customer experiences throughout the organization?…have top management regularly review customer satisfaction and loyalty measurement?…assess customers' emotional reactions to marketing, sales and service interactions?…use performance measures and rewards to encourage employees to treat customers well?

Customer Experience StrategyDoes your company...

…recognize more valuable customers and treat them differently?...develop a customer strategy using research about what drives customer loyalty?…benchmark customers' experiences vs. those provided by your competitors?…understand how the quality of customer experience is valued by customers?…use brand communications to clearly tell customers the experience they can expect?



Align the Organization Too often, employees are the forgotten equation in any corporate strategy. But, just as we’ve been saying all along with Customer Relationship Management, you have to bring employees into the mix or your strategy will go nowhere.

Customer experience expert Smith and Joe Wheeler, recommend public praise in their 2002 book, Managing the Customer Experience (FT Prentice Hall). “Let high-performing employees know you are proud of them,” they say. “Create tangible, short-term milestones for your employees that they can achieve and which contribute to the overall commitment to customers.”

It helps to hire the right person from the start. That’s a key concern for Intuit, where Adrian Fung, group manager for marketing, and Carolyn Grenier, director for customer care, oversee the customer experience in the QuickBooks Online product line. They say they don’t look for people with call center experience but, instead, for people who have had experience helping customers. A potential hire has “got to want to be there for customers,” Grenier said.

When Wells Fargo reorganized its contact centers, it concentrated on a consistent strategy that was aimed at high customer satisfaction, rather than its earlier focus on cost and efficiency. According to Withers, the company changed terminology, calling people “bankers,” rather than “agents.” It treated contact center operations as a partner, aligned with the retail bank. Wells Fargo also focused on training, teaching representatives how to talk to customers in a way that would avoid escalating issues and concentrating on building empathy and making calls more personal.

Empowered employees are critical for CEM success. In Building Great Customer Experiences, Shaw and Ivens list seven philosophies that they say combine to create a great customer experience. One of those is the philosophy that:

Great customer experiences are enabled through inspirational leadership, an empowering culture and empathetic people who are happy and fulfilled (our emphasis).

Not only are empowered employees happier (because they are treated like adults and feel their voice counts), but also their empowerment directly enhances the customer experience, Shaw and Ivens say. That’s because customers can see them following through with their promises. Shaw and Ivens tell the story of the U.K.’s First Direct, which took the then scary action of letting front-line customer service representatives decide when compensation was in order for complaining customers. The move resulted in 75 percent of the complaints being resolved within 24 hours and lowered recovery costs. That was because employees resolved problems before they escalated into serious complaints costing serious money.

Empowering personnel is a way of life at Hilton, where Von Derheide says that the service is the business. At Hilton, which has between 300,000 and 600,000 people, in terms of franchisees, employees and partners, “touching” the guests, executives believe you have to change your incentive base. If you’re incenting staff or franchisees on getting people in and out quickly and not on treating guests like people, then guess what? They won’t treat the guests very well. Hilton offers both general manager incentives and bottom-up awards, rewarding both the front desk and the GM.

“The biggest part of the evolution,” said Von Derheide, “is recognizing that it’s not just the room,

Goals and MetricsDoes your company...

…set specific customer experience goals, measurements and objectives?…measure and communicate the quality of customer experiences throughout the organization?…have top management regularly review customer satisfaction and loyalty measurements?…assess customers' emotional reactions to marketing, sales and service interactions?…use performance measures and rewards to encourage employees to treat customers well?



not just the physical thing. That starts at the top.”

Redesign the Customer Experience Unless you’re launching a brand-new business or service, you already are delivering a customer experience. Redesigning the experience based on customer research should help your business differentiate itself on customers’ loyalty drivers.

Smith and Wheeler recommend gathering key decision-makers from across the organization, including the CEO, marketing, operations, customer services and human relations; reviewing the current customer experience, based on what you find in your research; and then re-branding and developing a new “branded” customer experience to deliver that promise. The new experience must both meet core expectations and differentiate your brand from your competition.

Then you develop “enablers”: technology, processes and training “that will enable employees to deliver the promise and customer experience every day.”

You’ll need to make choices about where to invest your energies. Not all experiences are equally valuable to your customers. Experience improvement projects should start with those that your customers value highly but your organization is performing poorly. These customers are very likely to defect at the first opportunity. If you have a strong position, keep it!

Remember to keep an eye on what your competitors are doing. Where the interaction value is low, make sure you increase or keep CEM effectiveness as cost efficiently as possible.

At Hilton, the company begins with research: How would a customer spend? And then the company has to make a choice. The experience, Von Derheide said, is based around “choice and control.” The research is “only going to be telling us which things they’d like to be choosing, and we have to go off and decide which things we can do.”

For example, customers may say they’d love for Hilton to provide limousine service to and from airports. Ultimately, however, Hilton has to determine whether that’s a valuable service. “We can’t give everything a guest would want or maybe even deserve, but we would find those things and figure out at what investment those things might be capable to be made.”

Optimize Interactions With Technology When Hilton was establishing its frequent traveler program, Hilton HHonors, a decade ago, the program’s service lead would ask people questions regarding their stays. They’d inevitably respond, “Just look in your computer, honey,” said Von Derheide. Guests thought Hilton knew everything about every stay everyone had ever had at a Hilton hotel. “At that point, trust me, we didn’t know,” Von Derheide said.

Experience RedesignDoes your company...

...map customer experiences end to end and identify interactions likely to affect customer loyalty?...use qualitative input from customers, such as individual interviews, shadowing, focus groups, etc.?...proactively plan to surprise customers to create a positive feeling about your company?...design interactions with your products as part of the total customer experience?...create a vision of the customer experience process with a cross-function team?

Customer Experience Improvement Strategy



Hilton has not been standing still. It now uses CRM systems to collect and mine data that can help the company identify valuable guests and personalize their experience, no matter whether they stay at a corporate-owned or franchise facility. And, yes, it helps Hilton take a data-driven snapshot of its patrons. “CRM,” said Von Derheide, “is just another name for what we view as service with a memory, marketing with a memory.”

It enables any Hilton franchisee to tap into the Hilton system and be able to recognize that a guest has, for example, recently traveled to New York three times in the last month and has stayed at a Hilton brand, say, seven times over the course of the month. That franchisee can greet the customer personally, recognizing the guest as a frequent traveler and patron.

You don’t necessarily need technology to establish a good Customer Experience Management program. But good technology supporting a good strategy can be a powerful combination. Wells Fargo’s Withers will tell you that “people are much more important than technology,” but still the company invested heavily to completely revamp its disparate call centers, with an eye to being able to cross-sell to high-value customers and increase customer satisfaction.

Wells Fargo had nine business units using 42 contact centers, with more than 5,000 agent seats. Its project was focused on tying all the business units together. It enabled the company to add metrics in addition to standard average handle time rates, referral, close and cross-sell rates. It smoothed the hand-off from one call center to another, to create a seamless phone experience for customers. Wells Fargo reduced the need to transfer calls between business units and identified specific customer sets quickly and efficiently, routing them to the correct sites and agents.

While technology is not a driver of CEM success, it can be an invaluable tool. Use IT for upfront analysis, for monitoring systems and throughout marketing, sales and service processes to provide high-quality and efficient experiences. For example, you might:

Assess the quality of customer experiences with online and contact center monitoring and measurement systems. Feed that information back to the organization regularly.

Optimize marketing with analysis and campaign management systems to deliver relevant offers. However, make sure that marketing is making promises the organization can keep.

Improve sales/service delivery with a unified customer view. Customers expect to be recognized and treated as individuals—and rewarded for their loyalty.

Use natural-language speech applications to provide efficient sales and service without the bad experience aftertaste.

Provide tools to help employees be helpful and responsive, including sales coaching, support knowledge bases and the like. Of course, it helps to hire the right employees to begin with.

Information TechnologyDoes your company...

...use IT systems that enable a complete view of customers interactions across all channels?...involve both business users and technology experts in IT system planning?...use IT tools to identify and escalate customer satisfaction issues to swift resolution?...consolidate all customer information in databases that are shared across the company?...provide front line employees with easy to use tools and information to serve customers?



Stop the Insanity

Carlzon turned Scandinavian Airlines around in the 1980s by focusing on “moments of truth.” Today, 25 years after he took charge, the importance of customer experiences is catching on everywhere.

Although CRM should be a strategy for a win-win value exchange, most “CRM” projects are not strategies at all—they are merely IT projects designed to extract more value from customers. For long-term success, however, enterprises must deliver more value to get more. CEM puts the spotlight on the customer’s value proposition, where experiences play a vital role in driving true loyalty.

It’s Up to You Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results.” If your customer experiences are less than optimal, do you think they’ll fix themselves?

Ah, but CEM sounds a lot like CRM, doesn’t it? A good job for someone else to do. After all, many customer experiences cross functional areas. So you should just wait for the big boss to form a committee, then get cracking, right?

Wrong. While you’re arguing over who should own that newfangled customer experience map, your world economic map just got a little flatter.

What can you do? If you’re a “CxO” of your company or head a business unit, you can lead the way to make customer experiences a true differentiator. Only you can make it a central theme of your business strategy.

Marketing leaders can see that the right research is done on interactions as loyalty drivers, then figure out where the company stands vs. its competition in terms of quality of experience. Sales executives would be wise to consider that repeat buyers are looking for a consultative approach from genuinely helpful and responsive reps. Rethink your compensation scheme accordingly.

If you’ve got the tough task of running the contact center and doing more with less year after year, take heart! The good news is that improved technologies will make your job easier and keep your customers out of IVR jail. In fact, IT can help deliver experiences that are both effective and efficient.

Be SMART About CEM To improve your chances for CEM success, use the SMART approach. It’s based on fundamentals developed with CRM and adapted for CEM, and proven effective with CRMGuru’s extensive CEM research. Think out of the conventional CRM box and use technology that improves customer experiences directly or provides tools to help employees do so.

If you think the “leaders” analyzed in this report have all the answers, think again. On average, the top-performing companies scored only 60 percent to 70 percent of the maximum possible CEM scores. There’s plenty of room for you to leap ahead and win in the experience economy ahead. Good luck!



Appendix

This appendix contains demographic breakdowns of the data captured in CRMGuru’s customer and enterprise surveys. Segments are presented when sufficient data is available for meaningful comparisons.

What Does “Customer Experience” Mean?

What does "customer experience" mean to you?Customer Respondents (n=640)

10

22

23

26

142

53

22

55

131

27

41

44

92

195

48

111

110

62

157

174

316

1

0

5

8

39

19

3

19

21

12

5

18

23

40

10

32

14

25

38

43

87

3

4

8

5

32

18

5

8

26

10

12

8

25

46

15

26

17

21

34

45

81

2

3

6

4

33

10

7

10

28

2

14

10

24

37

8

20

21

22

26

45

73

6

1

4

9

22

8

4

5

24

8

9

5

15

38

9

15

20

14

23

35

62

1

0

0

1

13

4

2

7

3

3

1

3

8

9

3

5

7

5

10

10

21

0% 20% 40% 60% 80% 100%

Australia (23)

India (30)

UK (46)

Canada (53)

USA (281)

Consultant / Other (112)

Small Business Ow ner (43)

Staff (104)

Middle Management (233)

Vice President (62)

C-Level Executive (82)

High School or Some College (88)

Four Year College Degree (187)

Graduate Study or Degree (365)

Age: Under 30 (93)

Age: 30-39 (209)

Age: 40-49 (189)

Age: 50 or Older (149)

Female (288)

Male (352)

All (640)

The sum of all my interactions w ith a brand's products, services and people

My interactions w ith an organization's people, systems or processes

My emotions that result from my activities w ith an organization

The performance of the organization in meeting my expectations

My perception of interactions w ith an organization

Other



Loyalty Drivers

Loyalty DriversTo earn your loyalty in this industry, how important are these factors?


44%

24%

35%

24%

36%

29%

34%

28%

40%

30%

28%

34%

31%

78%

79%

73%

85%

72%

73%

66%

77%

68%

81%

80%

78%

78%

81%

77%

77%

85%

65%

79%

71%

80%

72%

76%

82%

76%

78%

0% 20% 40% 60% 80% 100%


Hotel (699)





Electronics (235)


Car Rental (144)

Banking (1047)

Automobile (399)

Airline (984)

ALL (2021)






Loyalty DriversTo earn your loyalty in this industry, how important are these factors?


28%

36%

30%

34%

32%

32%

29%

30%

32%

80%

79%

77%

69%

79%

78%

82%

80%

76%

74%

82%

77%

79%

78%

76%

79%

82%

74%

0% 20% 40% 60% 80% 100%




Under 30 (258)

30-39 (600)

40-49 (536)

50 or Older (436)

Female (832)

Male (998)






Loyalty Drivers

To earn your loyalty in this industry, how important are these factors?(Customer respondents, n=2,021)

35%

35%

27%

37%

31%

26%

31%

35%

34%

33%

26%

74%

77%

79%

75%

79%

75%

74%

78%

79%

75%

84%

58%

91%

62%

74%

83%

74%

73%

78%

82%

73%

77%

0% 20% 40% 60% 80% 100%

Australia (66)

India (88)

UK (135)

Canada (156)

United States (807)


Small Business Owner (124)

Staff (291)


Vice President (170)







Customer Experience Ratings

Companies currently provide an excellent customer experience?Customer Respondents (n=2021)

10

4

6

16

58

26

17

12

38

16

21

16

36

78

8

41

43

38

58

72

42

42

36

27

26

22

15

30

5

77

30

75

146

7

3

26

12

97

25

11

38

73

21

28

40

37

121

14

49

71

64

82

116

44

70

57

43

28

35

28

42

20

123

45

113

221

11

9

22

26

141

43

30

40

108

26

40

36

84

167

36

88

96

67

141

146

64

97

90

70

30

63

41

69

18

178

67

174

327

12

15

27

27

154

57

21

66

118

35

41

55

101

184

40

115

105

80

152

188

73

129

91

84

36

76

52

80

26

203

84

186

382

15

20

31

43

196

82

26

68

184

41

60

49

149

265

83

160

118

102

206

257

84

188

130

139

31

103

53

114

44

253

92

256

505

11

15

14

22

55

17

44

100

22

23

35

80

147

38

104

60

60

130

132

53

113

86

82

21

60

21

60

25

138

54

126

283

0

22

9

10

48

31

2

23

54

9

26

20

45

85

39

43

43

25

63

87

34

60

39

42

14

39

25

45

6

75

27

54

157

113

0% 20% 40% 60% 80% 100%

Australia (66)

India (88)

UK (135)

Canada (156)

United States (807)


Small Business Ow ner (124)

Staff (291)







Under 30 (258)

30-39 (600)

40-49 (536)

50 or Older (436)

Female (832)

Male (998)


Hotel (699)


Full-Service Restarant (487)



Electronics (235)


Car Rental (144)

Banking (1047)

Automobile (399)

Airline (984)

ALL (2021)

1 = Strongly Disagree 2 3 4 = Neutral 5 6 7 = Strongly Agree

Mean4.17

4.05 4.09 4.09 4.27 4.29 4.12 4.35 3.74 4.39 4.20 4.33 4.04

4.19 4.21

3.97 4.00 4.31 4.73

4.16 4.33 4.06

4.10 3.98 4.26 4.25 3.70 4.36

4.07 4.12 3.96 5.01 3.73



Impact on Customer Experiences

Have companies improved the customer experience…Customer Respondents (n=2,021)

(1 = Strongly Disagree, 7 = Strongly Agree)

3.3

3.1

3.0

2.9

2.7

3.2

3.2

3.2

3.1

3.1

3.1

3.0

3.1

3.5

3.3

3.2

3.0

3.2

3.3

3.6

3.3

3.0

3.3

3.3

3.2

3.3

4.5

4.8

4.4

4.4

4.4

4.3

4.6

4.5

4.9

4.6

4.6

4.8

4.6

4.5

4.9

4.6

4.9

4.4

4.7

4.6

4.8

4.7

4.6

4.7

4.5

4.7

- 1 2 3 4 5 6


Hotel (699)

Grocery Supermarket(529)

Full-Service Restarant(487)

Fixed Line Telecom(186)

Fast-Food Restaurant(398)

Electronics (235)


Car Rental (144)

Banking (1047)

Automobile (399)

Airline (984)

ALL (2021)

Mean

...with well-trained people?

...with Internet sales/support?

...with voice response (IVR)?

...with off-shore call centers?



Loyalty Impact of Customer Processes

In earning loyalty, what is the importance of…(Customer Respondents (n=2,021)

23%

19%

23%

21%

17%

25%

25%

27%

17%

23%

28%

18%

22%

69%

54%

48%

48%

62%

49%

69%

56%

50%

65%

69%

58%

58%

64%

58%

67%

60%

56%

67%

55%

66%

56%

65%

65%

61%

62%

63%

65%

66%

70%

61%

67%

60%

72%

65%

67%

72%

65%

66%

83%

87%

86%

90%

74%

84%

77%

85%

84%

82%

85%

86%

84%

0% 20% 40% 60% 80% 100%

Wireless Telecom(394)

Hotel (699)

Grocery Supermarket(529)

Full-ServiceRestaurant (487)

Fixed Line Telecom(186)

Fast-Food Restaurant(398)

Electronics (235)

Department Store(440)

Car Rental (144)

Banking (1047)

Automobile (399)

Airline (984)

ALL (2021)

Top 2 Box on Importance Scale 1 to 7

…product or service acquired?

…sales interactions?

…purchasing process?

…post-purchase service and support?

…marketing communications?



In earning loyalty, what is the importance of…

(Customer Respondents (n=2,021)

36%

22%

20%

15%

23%

20%

22%

55%

60%

57%

58%

57%

59%

58%

55%

68%

61%

60%

69%

57%

62%

63%

67%

68%

69%

73%

62%

66%

81%

85%

82%

87%

88%

82%

84%

0% 20% 40% 60% 80% 100%

Under 30 (258)

30-39 (600)

40-49 (536)

50 or Older (436)

Female (832)

Male (998)

ALL (2021)









In earning loyalty, what is the importance of…

(Customer Respondents (n=2,021)

11%

45%

11%

18%

18%

25%

8%

23%

23%

22%

19%

22%

52%

80%

59%

50%

54%

61%

54%

59%

56%

65%

53%

58%

62%

63%

59%

60%

64%

58%

58%

65%

67%

61%

56%

62%

61%

74%

63%

71%

70%

63%

69%

67%

68%

67%

67%

66%

74%

91%

83%

82%

87%

81%

81%

84%

88%

86%

80%

84%

0% 20% 40% 60% 80% 100%

Australia (66)

India (88)

UK (135)

Canada (156)

USA (807)

Consultant / Other(319)

Small BusinessOw ner (124)

Staff (291)

Middle Management(675)


C-Level Executive(239)

ALL (2021)









Competitive Environment

Difficulty making a reasonable profit today…

Enterprise respondents (n=777) Mean scores on scale of 1 to 7 (1=Much Easier, 4 = About the Same, 7 = Much Harder)

3.3

3.6

3.6

3.4

3.9

3.5

3.5

3.6

3.3

3.2

3.3

3.4

3.7

3.9

3.8

3.0

3.9

3.3

3.6

3.4

3.3

3.8

3.4

3.4

3.7

3.5

3.7

3.6

3.3

3.0

3.7

3.5

3.1

3.5

3.3

3.2

3.3

3.6

3.4

3.7

3.7

3.3

3.8

3.6

3.9

3.3

3.3

3.5

3.6

3.3

3.2

3.4

- 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

Laggard (163)

Plodder (186)

Achiever (164)

Leader (143)

Australia (27)

Canada (35)

India (44)

UK (47)

USA (228)

<10 Employees (98)

10-99 Employees (169)



1,000-4,999 Employees (75)

5,000+ Employees (90)



Retail Sales (41)





Education (32)



ALL (777)

Mean

...vs. 5 years ago?

…vs. 5 years from now?



Organizational Commitment

How committed is your organization to delivering excellent customer experiences?Enterprise respondents (n=700)

Top Box ("Completely")

31%

34%

36%

38%

33%

46%

39%

30%

38%

57%

31%

36%

27%

32%

37%

25%

24%

32%

38%

41%

41%

25%

44%

58%

41%

37%

38%

34%

49%

47%

41%

54%

45%

47%

47%

60%

47%

43%

32%

35%

38%

29%

34%

37%

43%

50%

58%

34%

41%

58%

44%

43%

49%

54%

60%

58%

44%

57%

45%

47%

65%

71%

60%

54%

59%

49%

46%

58%

50%

66%

49%

54%

72%

58%

47%

67%

54%

56%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Laggard (157)

Plodder (179)

Achiever (159)

Leader (139)

Australia (27)

Canada (35)

India (44)

UK (47)

USA (228)

<10 Employees (98)




1,000-4,999 Employees (75)




Retail Sales (41)





Education (32)



ALL (700)

Percent Top Box

Top Management

Middle Management

Frontline Employees



CEM Effectiveness

Customer Experience Management EffectivenessEnterprise Respondents (n=619)

11.1

12.0

12.3

12.6

11.4

11.7

12.7

12.2

12.0

11.4

11.8

9.9

8.9

11.4

13.0

10.6

10.7

10.9

9.1

11.3

10.7

10.2

10.8

11.0

11.6

10.9

9.4

11.5

11.3

12.2

9.5

10.5

12.5

10.9

11.6

10.4

11.0

9.5

7.9

10.2

11.1

9.2

10.4

9.9

10.0

11.6

9.3

9.3

9.8

10.1

11.0

10.1

11.3

13.3

13.6

13.7

12.7

13.0

13.2

13.2

13.7

12.8

12.7

13.3

11.3

13.2

14.6

12.7

12.5

13.5

12.5

15.2

12.6

12.4

13.0

12.7

13.2

13.0

8.7

10.3

10.0

11.3

8.5

9.6

11.8

10.3

9.9

10.9

12.3

10.3

9.1

11.6

12.2

11.1

11.3

11.3

10.3

12.4

10.1

10.3

11.9

11.4

12.5

11.2

9.5

11.1

11.1

11.6

10.0

10.0

11.8

12.0

10.7

12.5

12.2

11.7

10.4

12.0

13.0

12.0

11.4

12.2

12.0

13.1

11.4

11.4

11.7

12.2

13.0

12.1

0 10 20 30 40 50 60 70

Laggard (138)

Plodder (160)

Achiever (139)

Leader (124)

Australia (27)

Canada (35)

India (44)

UK (47)

USA (228)



Retail Sales (41)





Education (32)



<10 Employees (98)




1,000-4,999 Employees (75)


ALL (619)

Score (20 points maximum per category)

Strategy Metrics Alignment Redesign Technology



CEM Effectiveness Vs. Business Performance Scores Business Performance scores were calculated based on total of annual revenue and profit growth rates reported by enterprise respondent, where 1 = Declined 20% or more, 2 = Declined 10-19%, 3 = Declined 1-9%, 4 = No Growth, 5 = Grew 1-9%, 6 = Grew 10-19%, and 7 = Grew 20% or more. Score expressed as a percent of maximum score of 14.

Customer Experience Management scores were calculated based on responses to 25 equally weighted assessment questions using a scale of 1 to 7, where 1 = Not At All, 4 = Partially, 7 = Fully. Score expressed as a percent of maximum score of 35.

BP and CEM pairs were excluded for incomplete responses (Don’t Know), resulting in 320 observations used in regression analysis. Regression statistics are given below.

Regression Statistics

Multiple R 0.945305288R Square 0.893602088Adjusted R Square 0.890467292Standard Error 25.22777661Observations 320

ANOVAdf SS MS F Significance F

Regression 1 1705138.678 1705138.678 2679.179135 5.7966E-157Residual 319 203024.5874 636.4407127Total 320 1908163.265

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 99.0% Upper 99.0%Intercept 0 #N/A #N/A #N/A #N/A #N/A #N/A #N/ACEM Score 1.231288577 0.023788057 51.76078762 2.9499E-157 1.184487279 1.278089874 1.169645898 1.292931256

Customer Experience ManagementRegression Line Fit Plot

Enterprise Respondents (n=320)

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0 10 20 30 40 50 60 70 80 90 100

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Predicted BP Score



Research Methodology Customer Survey The customer-focused statistical information in this report was collected via a CRMGuru online survey conducted in April 2006. More than 600 respondents gave over 2,000 ratings on companies in 12 industries. “Memorable experience” input on specific companies was collected from 440 individuals. About 75 percent of CRMGuru members are in customer-oriented jobs in marketing, sales or customer service functions.

Respondents were generally well-educated and ranged from 20 to 60 years old, slightly skewed toward male (55 percent), with 52 percent from the United States and Canada, about 30 percent from EMEA and the balance from Asia Pacific countries.

Enterprise Survey The enterprise-focused statistical information in this report was collected via a CRMGuru online survey in May 2006. More than 600 respondents gave input on their CEM practices and business performance in 10 industries. The 25-question assessment and SMART framework was developed based on CEM expert interviews, CEM literature research and CRM best practices research published in Blueprint for CRM Success (2002), by David Mangen, Dick Lee and Bob Thompson.

Respondents were generally in mid- to upper management positions (59 percent) with most (75 percent) in customer-oriented jobs in marketing, sales or customer service functions. Respondents were generally very well-educated (57 percent with graduate degrees). Most respondents (83 percent) ranged from 30 to 59 years old and were skewed toward male (67 percent). Geographically, 39 percent were from the United States and Canada, 35 percent from EMEA and the balance from Asia Pacific countries.

Research Bias From prior experience, we know the CRMGuru audience is biased toward customer-centric thinking and quality. Therefore, it’s likely that customer input is more critical, and enterprise management thinking is more advanced, than the general population. Conclusions may not be valid outside the regions and industries analyzed or in developing markets where basic products and services are being introduced or affordability is the primary concern.

About the Author Bob Thompson is CEO of CustomerThink Corp., an independent Customer Management research and publishing firm. He is also founder of CRMGuru.com, the world’s largest industry portal dedicated to helping business leaders improve customer management success.

Since 1998, Thompson has researched the leading industry trends, including partner relationship management, customer value networks and customer experience management. In January 2000, he launched CRMGuru.com, which now serves 300,000 business leaders monthly through its web site and email newsletters. Thompson is co-author of Blueprint to CRM Success; has written numerous articles for leading business and IT publications; and is a popular keynote speaker at conferences worldwide.

Throughout his career, Thompson has advised companies on the strategic use of information technology to solve business problems and to gain a competitive advantage. Before starting his firm, Thompson had 15 years of experience in the IT industry, including positions as business unit executive and IT strategy consultant at IBM. For more information, please visit www.crmguru.com or contact Thompson at [email protected].

customerexperiencemanagementbobthompson.pdf

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