Definition 1:
Customer Relationship Management (CRM) can be widely defined as company activities related to developing and retaining customers. It is a blend of internal business processes: sales, marketing and customer support with technology and data capturing techniques. Customer Relationship Management is all about building long-term business relationships with customers.
D 2:
As the name implies, CRM means Customer Relationship Management. Different organizations define CRM differently. In today’s economy, there is no single undisputed definition of CRM. Here is what we believe CRM is:
CRM is an alignment of strategy, processes and technology to manage customers and all customer-facing departments & partners.
Having defined CRM, here are some generalizations
Any CRM initiative is and has the potential of providing strategic advantages to the organization, if handled right.
Most CRM initiatives begin with a strategic need to manage the process of handling customer related information more effectively. For beginners it could simply mean better lead management capabilities or sales pipeline visibility. However, as organizations mature in their CRM initiatives, they begin to look at CRM as tool to acquire strategic differentiators.
Despite the immense benefits that the CRM solutions can deliver, they are not entirely without their share of problems. Many organizations have burned their fingers trying to implement the technology and manage costs. To successfully undertake CRM initiatives it is essential to
• Clearly define the management objective & strategy
• Evolve the right process around it
• Identify the right software solution for implementation
• Understand the hidden costs and hurdles
• Back it up with good training and support
While selecting the software solution for your implementation, ensure that
• It can manage both your data and process
• It is easy to implement and roll out
• It is simple to use
• You understand the total cost of ownership
• You evaluate the risk exposure
Many companies are turning to customer-relationship management systems to better understand customer wants and needs. Customer Relationship Management applications, used in conjunction with data warehousing, E-commerce applications, and call centres, allow companies to gather and access information about customers' buying histories, preferences, complaints, and other data so they can better anticipate what customers will want and how to best retain them. The adoption of Customer Relationship Management is being fuelled by a recognition that long-term relationships with customers are one of the most important assets of an organization, providing competitive advantage and improved profitability.
Customer Relationship Management is a strategy, not a specific software or hardware; but it encompasses the technology and strategy needed to completely integrate a business in order to get a holistic view of customers and their relationship to the entire enterprise. The software that links the back office to the front office, the technology needed to make the call centre customer-friendly, and integrating each component seamlessly with the customers' point of contact, web-based or other means, are all part of Customer Relationship Management.
CRM stands for Customer Relationship Management. It is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends.
CRM helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers.
1. Advantages Of CRM
Using CRM, a business can:
• Provide better customer service
• Increase customer revenues
• Discover new customers
• Cross sell/Up Sell products more effectively
• Help sales staff close deals faster
• Make call centers more efficient
• Simplify marketing and sales processes
2.
What are the advantages of CRM?
CRM solutions help companies boost their business efficiency, thereby increasing profit and revenue generation capabilities. Let us take a quick look at some of the measurable benefits that your organization can gain by implementing a CRM solution.
• Increase Customer Lifecycle Value
In most businesses, the cost of acquisition of customers is high. To make profits, it is important to keep the customer longer and sell him more products (cross sell, up sell, etc) to him, during his lifecycle. Customer stay, if they are provided with value, quality service and continuity. CRM solutions enable you to do that.
• Execution Control
Once the business strategy is put into motion, the management needs feedback and reports to judge how the business is performing. CRM solutions provide management with control and a scientific way to identify and resolve issues. The benefits include a clearer visibility of the sales pipeline, accurate forecasts and more.
• Customer Lifecycle Management
To keep the customers happy, you need to know them better. At the minimum, you need a centralize customer database, that captures most of the information from your entire customer facing departments and partners. Integrated CRM solutions, like CRMnext enable you to manage customer information, throughout all stages of their life cycle, from contact to contract to customer service.
• Strategic Consistency
Because CRM offers business and technological alignment, it enables companies to achieve strategic company goals more effectively, like enhanced sales realization, higher customer satisfaction, better brand management and more. Additionally, the alignment results in a more consistent customer communication creating a feeling of continuity.
• Business Intelligence
Due to the valuable business insights that CRM provides, it becomes easier to identify the bottlenecks, their causes and the remedial measures that need to be taken. For example, CRMnext provides real-time business focus dashboards with extensive drill down capabilities that provide the decision makers with the depth of information required to identify the causes and spot trends.
Who Needs CRM ?
Putting it simply, CRM is ideally embraced by that organization which besides making and retaining clients also makes serious effort to optimize their revenue potential. This organization is one that aims at organizational growth through sharp focus on customer relationship management, which it achieves through an intelligent tracking system.
In here, the customer relationship executive stays terrifically organized, since he can view his pipeline even while on the move and stay informed of the latest customer status which helps him plan his short time strategy and long time goals. The management, on the other hand doesnt have to rely on the week end/month end/year end etc cumbersome reports (authored/tailored by the designated personnel) to know how the organization is faring. Instead, it is empowered with real time access (anywhere, anytime and totally web based) to the progress, performance and profits of the entire organization ( broken right down to the individual level ) through comprehensive, smart and informative analytics. All this and more at a cost that is affordable, software that is easy to deploy and an adoption time that is unbelievably low!
Can CRM Drive Revenue ?
The important considerations of any organization looking forward to incorporating a CRM are understandably, more business related than technical. Thankfully, all the different objectives that are fulfilled through CRM, by default; revolve around increasing the top line revenue.
CRM is not just a guarantee for quicker growth and bigger revenues but also a means to keep up with competition. Through CRM, you can determine the Customer Lifetime Value or in other words, the present and projected business worth of a customer to your organization. This once known, acts as the basis on which you can formulate marketing strategies targeting customers individually.
Customer intelligence and CRMs predictive analysis capabilities help you generate a highly accurate demand forecast which leads to better and more informed inventory management, thus, curtailing significantly, the internal costs through new and efficient processes. Further, the simplification and streamlining of the sales process, significantly reduces the time spent by sales reps on their paperwork and administrative engagements, and lets them focus on selling instead.
The ROI gained out of implementing a CRM is what makes the experience worthwhile. It is best measured by comparing the past and the present customer acquisitions, enhancements in customer value/worth, long-term customer retention, etc, all of which contribute to the organizations revenues.
Key Challenges in implementing CRM solutions
Companies around the world have leveraged CRM strategies to gain competitive advantage. As more and more companies rush to implement CRM, precautions must be taken to do it right. It is approximated that 50-70% CRM implementations fail, depending on the Industry vertical. Hence, it is essential to identify the key challenges, address risks and build a strategy that can make your CRM successful. CRM is full of talk about strategy, but at the end of the day, someone has to lead the way and implement
Even if operations report that the network is operating perfectly and services are running normally, your customers may not be happy, leading to revenue shortfall and increasing levels of churn. You need to view your network and services from your customers' perspective to gain a true understanding of availability, performance, quality and usage.
That understanding has to be built from an analysis of each individual's experience. Individual users have different handsets, use different services, connect from different locations, and connect over different paths through the network. They each have individual experiences that you cannot interpret by looking at aggregate metrics and reports.
Agilent OSS provides Customer Experience Management, based on the analysis and correlation of individual customer transactions captured by monitoring the signaling traffic buried in your network. Signaling is the central nervous system of your network. It manages every customer activity, from switching on a handset, to downloading ringtones and the most complex inter-operator roaming services. Tapping into this data source gives you the detailed intelligence to optimize your customers' experience of your network and services.
CRM Software
Sales Force Automation
• Contact management
Contact management software stores, tracks and manages contacts, leads of an enterprise.
• Lead management
Enterprise Lead management software enables an organization to manage, track and forecast sales leads. Also helps understand and improve conversion rates.
eCRM or Web based CRM
• Self Service CRM
Self service CRM (eCRM) software Enables web based customer interaction, automation of email, call logs, web site analytics, campaign management.
• Survey Management Software
Survey Software automates an enterprise's Electronic Surveys, Polls, Questionnaires and enables understand customer preferences.
Customer Service
• Call Center Software
• Help Desk Software
Partner Relationship Management
• Contract Management Software
Contract Management Software enables an enterprise to create, track and manage partnerships, contracts, agreements.
Example: Upside Software, Accruent Software, diCarta, I-Many.
• Distribution management Software
CRM-
Fast and consistent will always beat the slow and steady
First find out your core competency and then change your playing field to suit your core competency
Team work and harness each other’s competency
Consistency and changing your strategy
Stop competing against a rival and start competing against a situation
Start competing against a situation
One needs to take care of an internal situation
Compete against a situation and not with your rival
Pooling resources and working as a team will always beat individual performers
Work to your competence
Never give up when faced with failure
Gap model
There is a gap because of which a market goes up or come down. What the company perceives and what the customers perceives is different. It is this gap which identifies a product of the company as product centric. The customer has a different point of view. He may focus on the price.
Gap for the community
Failure of CRM systems to deliver the promised benefits. For e.g. it is assumed that the food at Taj is good. What is the back up system that you are going to offer a customer is what the customer is more bothered about. To back the entire purchase and to satisfy the customer
Treating CRM as a tool implementation exercise rather than a strategic effort. You need to know who your customer is.
Gap for the general consumer group
Customers were asking for methodologies to address these things
CGI had development methodologies and technical know how We need to target our customer’s specific CRM needs
CRM- it is a long term customer centric business strategy whose goal is to maximize profitability through customer loyalty.
To realize CRM benefits
Foster behavior- for e.g. a guy using a laptop makes him use a USB port. You make a customer move in a different direction
Implement processes- your cost and middlemen
Implement technologies- this is possible only if you have money. You first show an operating profit, and then convince others. Once you make profits you have to write off the costs incurred in the previous stages of implementing technology
Support coordinated interactions through all customer channels
CRM-
Underlying principles
CRM may be understood as looking at the ideas of product and customer centricity
Organization’s tendency to concentrate it’s activities of the product or the customer
Aspects of product or customer centricity
these two are mutually exclusive-
an organization may be somewhere between the two
there are discreet activities between the two- moving from a need, want to a demand
natural evolution- from product to customer centricity Product may be our skills and customer centric may be the result of our skills
Product and customer strategies
Mission- guides an organization.
Organization
Competition- this is a deterrent to an organization
Environment- the sustainability report talks about how much you are contributing to the society. Sustainability costs and revenues should be taken into account
Product extensions are bringing new products into the market
Line extensions are adding new attributes to the product
Cross selling- It is where you sell something in addition to the product. For eg If you are selling a car
you also sell a car loan. It refers to the income that a Business unit gets from another business unit
Up Selling- When you make a customer move on from a product to a line extension. In this case the income comes from the same business unit
Product offering
Reducing cost and cycle time- it also involves reengineering your middle level. Your output depends on how you manage your cycle
Improve quality
Customer centric
You increase your product offering to acquire new customers and we are not only talking about acquiring new customers but also maintaining existing customers
Increase profitability - offering a new product which is volume based and maintaining existing products which is value based
Retention of customers
Customization- The example is designer wear
Differentiation- Gastronomy and Formula strategy
Wow syndrome- when you make a mistake correct it with an extra product offering
The strategies of CRM
Acquiring new customers
Differentiation
Innovation
Retain customers
Listening
Adaptability
New product
Customer service
Loyalty program
Increase customer profitability
Bundling
Cross selling and upwelling
Maximizing high value or low cost customer
Determining CRM maturity levels
Product
Mass market or niche market
Competitive advantage derived from cost, quality and cycle time
Customer
Competitive focus on building
Testing customer relationships
Management of customer knowledge, data mining
Competitive advantage is something that cannot be copied over a period of time and something that has not to be copied over a period of time
CREATING CUSTOMER LOYALTY
Correlation to delivering world class service and reaching beyond customer satisfaction and creating customer loyalty
Various measurement methodologies and rating scales:
In the days of the booming economy IT companies based their success on continuous product innovation
Services were originally body shopping in those days. Body shopping is basically out sourcing that is doing what companies have to do..
During an economic slowdown customers need more than product features to ear loyalty
Research results:
44 percent only plan to business with the current IT sector.
30 percent feel trapped and are unhappy
23 percent are high risk and are unlikely to continue relationship in terms of innovative features
3 percent are vulnerable to competitive product. The speed at which the service is given
Satisfaction is meeting minimum expectation. It is need based approach
Loyalty is exceeding customer expectation and securing future commitment.
Retention is satisfaction plus loyalty
CRM GOALS
Revenue growth model
Existing customers and existing products- retain
Existing customers and new products- cross and up selling
New customer and an existing product- win the new customer
Loyalty factors
Product capability and quality
Customer service and experience
Ease of doing business
Price versus value
Company reputation- Brand
Most service vendors have a survey process to measure customer satisfaction
Periodic surveys
Event/ transactional surveys- one time that is something that has gone wrong and what are the quantifiable damages
Establish required sample size, target response, rates and confidence level
Quantitative results and verbatim feedback gathered
Results are analyzed and communicated
SCP support center practices
Seven point scale
Top box measurement is a term used to describe the 80 percentile of the service scale
Highest rated measurement to better understand customer loyalty and retention
Four point seven point and a ten point rating scale
The blue boxes are the 80 percentile
Companies need to hang on to their customer acquiring new business is difficult and costly
CLM is a method to predict future customer behavior
It is forward thinking
Understand how customers feel about you
It’s strategic and tactical.
Ring questionnaire
H0 Null hypothesis- something that you assume, something that is there
It is raining- H0
When the rain will stop is what is H1
The entire analysis is to find out if H1>H0
Suppose you have 10 questionnaires you will have to base your questionnaire
A link questionnaire is prepared when two factors affect a single factor
A hidden questionnaire is to test the validity of the questionnaire.
For e.g. - Asking if a person’s income is > 100000 to check if what he has given is right
One can also group the questionnaires. You also need to code the questionnaires as in giving codes for
each of the options
Strategic is based on a certain mathematical parameter or a scientific method
Owner’s relationships means the strategic business units
When a customer is more accessible the feedback from the customer is much better. A truly loyal
customer is one whose behavior and attitude is very high.
The attitude is basically when you change to a different product because you want to try something new
and your behavior is that of churn.
Psychographic pattern exercise- You don’t sometimes buy a product because they need it but because of
one’s behavior. Your attitude will determine which brand you buy
At the end of the day every manager looks for business and looks for money.
In the beginning the customer is new and he might not know about the product. But over time a point comes when the customer is fully satisfied and your revenues grow considerably. If you keep your product in the market even further there is saturation and the customer gets bored. Instead of the customer moving to another company’s products you make the customer move to another product of your own company in the form of Brand extensions and line extensions. For e.g. H.P which was introducing soon realized it was stable and it had stable revenues. But there was nothing new for the customers and retaining the customers was very important in terms of staying in the Fortune 500 list.
When you do a loyalty analysis it is not only customers but also about your markets and it varies from industry to industry
LTV is lifetime value.
================================================== =====================
Customer Service Organizations in Dire Need of Management
Company Announces Results of Online Survey Focused on the Ways Organizations Address Customer Service and Leverage Information from Their Customer Interactions
Friday, 06 October 2006
Witness Systems, provider of workforce optimization software and services, announced the results to its online survey in celebration of this year's National Customer Service Week, October 2-6.
It's no surprise that many industry-leading organizations monitor and review customer interactions on a regular basis. However, what happens to the information from there - is it shared across departments, does it change the way service is delivered, or it is used to create revenue generating opportunities?
Top-line results from the company's recent customer service survey revealed the number one challenge facing customer service organizations is first call resolution, which led with a nearly 40 percent response rate. This aligns with the 35 percent that were surprised to hear inconsistencies among their agent responses, along with poor service delivery. In addition, when asked if senior management listens to calls to hear customer feedback first-hand, nearly half of survey respondents said their managers listen occasionally, and more than a quarter dial-in on a regular basis. Further, when asked if their organizations share interactions with other groups outside the call center, respondents said training departments topped the list at 38 percent, followed by sales and marketing at 17 percent.
Following is a full break-down of survey results:
When it comes to improving customer service, what do you feel your number one challenge is?
37% - First call resolution
11% - Root cause analysis
6% - Improving up- and cross-selling rates
9% - Creating effective training initiatives
8% - Agent satisfaction
23% - Customer satisfaction and retention
6% - Other (insufficient staffing, retaining good employees)
Do members of your senior management team listen to/review customer interactions?
28% - Regularly
49% - Occasionally
17% - Do not listen
6% - Don't know
Do you share customer interactions with other departments in your organization? If so, which ones?
17% - Sales and marketing
5% - Engineering and product management 9% - IT 6% - Human resources 38% - Training 9% - Executive 9% - No 7% - Other
After listening to customer interactions, what were you surprised to hear?
35% - Inconsistencies in responses, voice tone, attitudes/poor service from agents
25% - Customers express gratitude for great experience/agents go above and beyond the call of duty
10% - Agents need more training on company products/services and communication skills
2% - Customers not familiar with products they purchased/call in multiple times asking repeat questions
3% - Customers are rude and/or they have unrealistic expectations as to the level of service they should receiv
e 3% - Problems weren't solved the first time and caused the customer to call back multiple times
22% - Other (language conflicts, easier to up sell after problem was solved, better agents are low performers, online initiatives are a challenge for some customers)
In what ways do you recognize your contact center during "National Customer Service Week" - or at other times during the year?
42% - Have a party in the office
24% - Conduct an awards ceremony recognizing high achievers 14% - Provide gift certificates to a select group or all service representatives
6% - Provide special scheduling arrangements for a certain amount of time
14% - Other (provide daily gifts, invite other staff to listen to calls, combination of the above, themed events and activities)
Customer Experience Management:
The Value of "Moments of Truth"
Part 1 of 2
By Bob Thompson
CEO, CustomerThink Corporation
Founder, CRMGuru.com
• Executive Summary
• What Is Customer Experience Management?
• How Important Are Experiences to Your Customer?
• Emotions Make Experiences Memorable
• Getting It Right at "Moments of Truth"
• Living Your Brand
• About the Author
• About the Sponsor
Executive Summary
Nearly 25 years ago, Jan Carlzon engineered a turnaround at Scandinavian Airlines by improving "moments of truth" in passenger interactions with the airline. Since then, relationship marketing and Customer Relationship Management (CRM) have been mostly concerned with how to market to customers and get value from them, often with IT-based strategies. But largely forgotten was the insight that Carlzon understood intuitively: Customers perceive value based on the experiences they receive.
These days, it seems the phrase "customer experience" is on the lips of every marketer and business consultant. And really, it's not a moment too soon. All too often, we've seen executives pay lip service to the customer while gearing their business to short-term payoffs. But in this age of customers empowered with global shopping carts, that won't cut it. Colin Shaw, founding partner of Beyond Philosophy, and John Ivens argue that customer experiences are critically important. "We are witnessing the first ripples of a fast approaching new wave of change, breaking upon the shore of a new business differentiator," they write in their 2002 book Building Great Customer Experiences (Palgrave MacMillan).
Think about your own behavior. While using Starbucks as your remote office, you sip on a tall latte and catch up on email. When you travel, you rent your car from Enterprise Rent-A-Car and stay at Marriott hotels—brands that fulfill their promise to you. When you get a free weekend, you head for the open road on your Harley. You listen to music on your iPod. You buy DVDs, kids' toys, clothes, electronics and, oh yes, books at Amazon.com.
These firms know the secret to building loyalty and growing your business. Why? Because they make a connection with customers that transcends the basic functional value they offer. Unfortunately, such stellar experiences are not the norm. In CRMGuru's survey, only 22 percent of customers agreed that companies "currently provide an excellent customer experience" in major industries like banking, air travel and electronics. The silver lining, though, is that companies that excel can build a more sustainable competitive edge based on an emotional bond.
But what is the "customer experience" and how can you tap into it? What is Customer Experience Management and how does it relate to Customer Relationship Management? And why are so few businesses focusing on the customer experience, let alone managing it well?
In this paper, we'll discuss the customer experience from the point of view of the customer, based on CRMGuru research conducted in April 2006. In a second paper, we'll analyze CEM from the enterprise perspective, and highlight performance gaps and methodologies to improve customer experiences while driving loyal and profitable relationships.
Consider what customers had to say in our recent survey. Some key findings include the following:
• In earning their loyalty, customers rate their quality of interactions with an organization as equally important to the quality of the goods or services purchased.
• Off-shoring and IVR initiatives, popular methods to cut the cost of customer interactions, have not improved customer experiences for more than 90 percent of survey respondents.
• In contrast, investing in employee training and Internet-based sales and support has generally had a more positive effect, improving customer experiences more than a third of the time.
• Post-sales service/support activities are the most likely to generate a "memorable" experience, either positive or negative, because of the strong emotions that often result in problem situations.
• Memorable experiences build loyalty—31 percent of customers in the survey recommended the company to a friend or colleague, and 19 percent increased their purchases.
• "Well-trained and helpful employees" is the top attribute of companies that provide "consistently excellent" customer experiences.
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."
"Customer Experience" and "Management" Defined
Experts interviewed for this paper 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 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." Well said.
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, sitting down in the atmosphere of the shop to enjoy the coffee. Each interaction point is what SAS' 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.
(Note: This paper was written with the help of a few venti lattes and apple fritters served up at the local Starbucks!)
For the purposes of this white paper, 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 (CEM) 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, Customer Relationship Management. 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," author 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. Classic 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, author of CRM at the Speed of Light: Essential Customer Strategies for the 21st Century, (3rd Edition McGraw-Hill, 2004), 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 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 the 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 Acronym (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.
In CRMGuru's April 2006 online survey, more than 600 respondents gave 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.
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 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 says 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."
High-Quality Interactions Drive Loyalty
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. Shaw and Ivens of Beyond Philosophy 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
Complaints.com - Consumers in Control 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.
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 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.
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.
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.
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. The same goes with customer 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 creates 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."
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 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 in how its employee was thinking of other people.
Of course, they're 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.
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.
1. 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."
2. 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 a 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 (interact with their customers on a more personal level); consistently excellent product with seasonal variations."
3. 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."
4. 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 that "go out of their way to serve." A customer of Enterprise Rent-A-Car, another service-obsessed company, appreciated "very friendly, accommodating staff."
5. 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.
Living Your Brand
Imagine if your company were the Starbucks in its field, with all your customers devoted advocates, recommending your business to others. It's not so far-fetched. The steps to managing the customer experience are at every business's disposal.
But before you start the CEM journey, take note of the findings of the CRMGuru study. Start by truly understanding how customers perceive the value your brand provides and what will earn their loyalty. That's why this paper was devoted to the customer's perspective.
Walk a mile in the shoes of your customers, along every step of their interactions with your organization, products and services. How do customers first hear about your company? How do they respond emotionally to sales and service interactions? Are you offering the right touch-points and methods of interactions or forcing customers to the lowest cost?
Keep in mind that problems are opportunities to build relationships and true loyalty. Are your employees perceived to be "well trained and helpful," like those of customer experience industry leaders? Can they provide the human touch when it's needed? Are they empowered to take action immediately? Technology can be part of the answer, but you can't rely on systems to make the human connection.
In an upcoming paper, we'll discuss Customer Experience Management from the enterprise point of view. We'll look at methods for identifying the customer's current experience, setting goals for the ideal experience and getting from here to there. We'll look at how you can tailor that experience to your business—and your customers—in a way that will help you stand out in a global market and reap the rewards of customer loyalty.
Until then, take the CEM litmus test: Would you like your current customer experiences turned into a tagline and plastered all over your firm's marketing material? It's happening already in your customer's mind. Experiences increasingly define what your brand really is, not what you tell your customers it is through marketing or sales communications.
Above all, let great experiences bring your brand to life in the hearts, not just the minds, of your customers. That human and emotional customer connection is a key part of the journey toward truly loyal relationships. Enjoy the trip!
About the Research and Author
Acknowledgments
We are indebted to many people who gave generously of their time to make this paper possible. First of all, our sincere thanks to members of the CRMGuru community who collectively spent more than 200 hours completing an online survey. Also, the research design and survey process was improved tremendously with input from industry experts on the CRMGuru Panel (
www.crmguru.com/gurus), several of whom were also interviewed and quoted in this paper.
Authors of leading CEM books were also gracious with their time and input, 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" section was facilitated with Jim Barnes' list of 10 common customer emotions and Fred Reichheld's loyalty scale for "promoters" and "detractors."
Methodology
The statistical information in this paper was collected via a CRMGuru online survey in April 2006. More than 600 respondents gave 2,000 ratings on companies in 12 industries. "Memorable experience" input on specific companies was collected from 440 individuals.
The CRMGuru community is diverse, with approximately 75 percent 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 about half from the United States and Canada, 30 percent from EMEA and the balance from Asia Pacific countries.
From prior experience, we know this audience has a bias toward customer-centric thinking and high quality. Therefore, we have found that customer input is by and large more critical than the general population. Conclusions may not be valid outside the 12 industries analyzed or in developing markets.
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
http://wwww.crmguru.com/ or contact Thompson at
bob@crmguru.com.
About the Sponsor
RightNow (RNOW) is leading the industry beyond CRM to high-impact Customer Experience Management solutions. More than 1,500 companies around the world turn to RightNow to drive a superior customer experience across the frontlines of their business. As a win-on-service strategy becomes a business imperative, Customer Experience Management solutions have become essential for business success. Founded in 1997, RightNow is headquartered in Bozeman, Montana, with additional offices in North America, Europe and Asia. For more information, visit
On Demand CRM Software and Solutions by RightNow Technologies | RightNow Technologies.
Unlocking The Value of Your Customer Satisfaction Surveys
In today's business environment companies cannot afford to lose a single profitable customer. By effectively leveraging results from a customer satisfaction survey an organization can respond to their customer's needs in ways that increase revenue as well as improve customer and employee, satisfaction and loyalty.
Many companies perform customer satisfaction surveys, but don't receive full value from their investments to administer the program. Too often survey results are used simply for monthly reporting on "how we did last month".
A few years ago, I had the pleasure of being placed in charge of a fast-paced and dynamic customer care organization. After several weeks in my new role, I was in my office enjoying the challenges of my new position when one of my team-members dropped off a stack of "thank you" letters for me to sign.
These letters would be sent to customers that had taken our most recent survey. The letters stressed to the customer how much we appreciated the time they invested in taking the survey, and our commitment to using the information to improve the service we deliver to them.
We had been doing monthly reviews of the survey data, but something was missing. The reality was that the organization was investing resources in a process to perform customer satisfaction surveys and not getting the maximum value possible. And, worse, we were wasting our customers' time.
At a juncture like this, you have 2 choices: stop the survey process (save your money and your customer's time) and throw the thank you letters in the trash, or leverage the customer satisfaction survey results as a catalyst for continuous improvement. We selected option 2. Reaping the full benefits of our survey program didn't happen overnight. We ultimately implemented a very effective program that truly leveraged our customer satisfaction survey information. I could again feel comfortable with our investment in the program, and in the fact that we were no longer wasting the time of our customers. Most important of all was the fact that our overall customer satisfaction ratings consistently improved.
In my experience the key elements to unlocking the value of customer satisfaction surveys, include:
- Adherence to measurement principles
- Responding to immediate customer needs identified during the survey process
- Implementing customer-focused changes
- Implementing account strategies
- Management review and assessment
Adherence to Measurement Principles
Your adherence to the following principles, within your customer satisfaction survey program, will place you where you want to be in the eyes of your customer.
1. You can't manage what you don't measure. Performing a customer satisfaction survey program is step 1. If you are not presently performing customer satisfaction surveys, there are many reputable firms that can help you with this. Assuming that you are measuring customer satisfaction, we will now discuss the remaining principles for managing to this critical metric.
2. Any measurement that does not hold an individual responsible is not an effective metric. While many companies adhere to one element of the first measurement principle (that of "measuring" customer satisfaction), managing to it requires that an individual be held responsible for the customer satisfaction metrics. For example; a customer satisfaction survey program may be designed to produce feedback on customer service, account management, billing, provisioning, etc. At the end of the day, the managers of these organizations are responsible for the customer satisfaction levels of their respective areas. As such, they should be fully engaged in your customer satisfaction survey program.
3. No one should ever be held responsible for a measurement that they cannot influence. Too often, customer-facing personnel know that their firm is performing customer satisfaction surveys, but they don't know what the customers are saying in the survey results. This causes tremendous frustration for the front-line personnel, because they want to know what they can do to improve customer satisfaction. Your program should be designed to include communications to your customer-facing personnel so they know what they can do to improve customer satisfaction.
4. The importance of a measurement is determined by how high in an organization it is consistently reviewed. Make no mistake, business is about numbers. In my opinion, there are 2 sets of numbers that every company would do well to track and manage to: 1) the financials, 2) customer satisfaction levels. If executives of a corporation only care about the financial indicators, that company has lost sight of their source of revenue; the customer. To be truly successful companies must include customer satisfaction results on their list of key performance indicators that are reviewed by executive leadership on a monthly basis.
5. Every measurement must have clear unambiguous and rational goals. After establishing a baseline, for its customer satisfaction levels, a company must set measurable and achievable goals in terms of where it wants to be. Firms initially find that customers are totally satisfied in some areas of performance, while not satisfied in others. Companies typically focus their efforts only on areas of dissatisfaction, which is an appropriate step upon initially establishing a baseline. However, the customer satisfaction survey program needs to pay attention to all areas. That is, customer expectations are continuously changing. As such, areas in which customers are satisfied today may turn into areas of dissatisfaction, if a company doesn't remain progressive.
6. If a carrot and stick is not clear, for a measurement, it will fall into disuse. Building upon each of the above principles, it is not good enough to simply measure, manage to, influence, promote visibility and set goals for customer satisfaction results. Those personnel that can influence customer satisfaction, directly or indirectly, must benefit from reaching, and be impacted by missing, customer satisfaction goals. To accomplish this management must ensure their organization's compensation model is tied to customer satisfaction levels. This could be in the form of annual performance reviews in which merit increases would reflect achievement of goals, or lack thereof. Alternatively, this could occur through a bonus program that is administered on a monthly, quarterly or annual basis.
Responding To Immediate Customer Needs Identified During The Survey Process
All too frequently, companies only use customer satisfaction survey results as a report of "how we did last month". Truly proactive, customer-focused organizations respond to customer survey information to increase revenue and improve customer and employee satisfaction and loyalty.
During the process of administering a customer satisfaction survey program your customer will often express items requiring immediate attention. We will refer to these occurrences as a "HOTLINE". A HOTLINE could include leads for new business, up-sell and cross-sell opportunities, or areas of significant dissatisfaction from an irate customer. This is the moment of truth in the eyes of your customer.
If you respond to these items promptly, you demonstrate to the customer how much you care about their business. If you don't, the customer will perceive that your firm is wasting their time in asking them to participate in the survey. That is, you aren't taking the time to respond to their feedback. A customer that has a need for additional services will now have time to shop your competitor. And, a customer that is dissatisfied with the product or service will only be further convinced of the lack of performance of your organization. The goal is to take this opportunity to show the customer how much you truly care about their needs.
There are 4 steps we will discuss in setting up a process to effectively respond to your customer's needs:
- Becoming "connected at the hip" with your survey partner
- Establishing your HOTLINE criteria
- Implementing a HOTLINE team
- Management Reporting
1. Becoming "connected at the hip" with your survey partner: To ensure objectivity in their customer satisfaction survey process, many companies engage a third party survey firm. If this is your approach to performing surveys, then the first step to setting up a HOTLINE process is ensuring you are "connected at the hip" with your survey partner.
2. Establishing your HOTLINE criteria: The next step to setting up a HOTLINE process is establishing specific criteria for which a real-time response is warranted. This could include: identifying keywords that a customer may use when responding to the survey, or indicating that a customer providing at least one response of "totally dissatisfied" to any survey question is a qualified HOTLINE.
Additionally, the survey partner must be prepared to capture the complete context of the customer's comment. There is nothing worse for a dissatisfied customer than to go through a dissertation during the survey, on their areas of concern, only to have you call them and ask "so, why are you dissatisfied with our service?".
3. Implementing a HOTLINE team: You now need to define, within your organization, a team of people empowered to effectively respond to your customer HOTLINES. This includes ensuring the team has the ability to immediately [if necessary] engage support personnel to resolve the customer's service issues. The HOTLINE team must also be prepared to initiate the process to fulfill a customer's requirement for new/additional services.
A customer's dissatisfaction is in direct proportion to the gap between what they "believe" they were to receive and what they "perceive" they are receiving. This can be a contractual gap or it could be based on a misunderstanding of what they acquired. The HOTLINE team may need to explain that a particular item or service was not included in their purchase or lease.
They should also be prepared to discuss how they may be able to obtain this added level of service, if it is an available option and they so desire it. This team, therefore, must be very knowledgeable about your products and services as the appropriate response may simply be to reset the customer's expectations.
For many companies it makes sense to establish the HOTLINE process such that service issues go to the Customer Care department, and up-sell and cross-sell opportunities go to Sales.
4. Management Reporting: The final step of the HOTLINE process is to produce management reporting on a frequent basis; this insures that appropriate attention is paid to your HOTLINES. Reporting should occur on at least a monthly basis. Information on the HOTLINE report should include the customer's company name, contact name, brief description of the HOTLINE, when it was detected, when it was initially acted upon by your HOTLINE team, when it was closed-out and what the final resolution was.
Now you are ready to administer the customer satisfaction survey. And, upon your survey partner sensing that a customer's situation warrants immediate response they can initiate the HOTLINE process. They will know what criteria initiates this process, what information they should capture and how to engage the appropriate personnel in your organization to follow-up with the customer.
Effectively responding to HOTLINES uncovered in the survey process simply requires a closed-loop process between your survey partner and your firm. By so doing you have taken the necessary steps to fulfill a customer's unmet needs and respond to their concerns that may have been previously unknown to your firm. In all cases this is a win-win situation. Your customer's level of satisfaction will increase and you will have increased the measure of loyalty they have with your firm.
The benefits of implementing and following a process such as this include:
- Turning customer problems into new business opportunities
- Demonstrating to the customer that you truly care about their experience and are committed to taking immediate action to respond
- Increasing customer satisfaction
- Increasing revenue
Implementing Customer-Focused Changes - A Customer Survey Remediation Program
This step in the process of unlocking the value of your customer satisfaction surveys is where the rubber truly meets the road. You are now measuring customer satisfaction, adhering to measurement principles and responding to the immediate needs of your customer uncovered in the process of executing your survey. There are 4 steps that we will review to implement customer focused changes through a Customer Survey Remediation program.
1. Management attention and commitment - Management (Director and VP-level) of each customer-facing organization must be engaged and participate in the program. This includes, at a minimum, the areas of sales, marketing and service/operations. This commitment requires their personal review of customer satisfaction survey results as well as ensuring their area is fully represented in all elements of the Customer Survey Remediation program.
2. Cross-functional review - Each customer-facing organization needs to receive the monthly customer satisfaction survey results report and perform a detailed review. The goal is to identify trends that are impacting customer satisfaction. Additionally, proactive actions must be identified to improve customer satisfaction levels. You may need to follow-up with the customer to apologize for the lack of performance by your firm, reset expectations or obtain additional details regarding their comment. For chronic trends that are impacting many customers you will want to define initiatives to improve the level of performance being experienced by your customers.
Finally, each team must come prepared to a cross-functional review meeting, to discuss the survey results reflective of their area and comment on actions that have been, or will be, taken. The cross-functional review meeting should happen 7-10 days after the customer satisfaction results have been compiled by or provided to your firm, from your survey partner. This meeting should be facilitated by a member of your firm that is not part of a customer-facing organization.
This role could be referenced as the the customer survey coordinator. The customer survey coordinator should be assertive, diplomatic and empowered to "ask the tough questions". Because this person has no vested interest in the customer-facing organizational camps, they can tease-out key areas that need to be addressed to get at the root of issues causing customer dissatisfaction.
3. Survey remediation tracking and reporting - During the cross-functional reviews that take place, trends will be observed and continuous improvement programs will be defined. The result of this exercise will be a customer satisfaction dashboard that includes high-level reporting on the customer satisfaction trends by month, and a list of initiatives that have been defined to respond to these trends. This reporting is produced by the customer survey coordinator, and distributed to senior management and all levels of management of the customer-facing organizations.
Establishing satisfaction goals and tracking performance against these goals - Here there are 3 things to focus on. First, each area of your customer satisfaction survey should have an established goal that is owned by the functional area whose performance is being measured. Also, each program that is defined to improve customer satisfaction needs to have a quantifiable impact established that can be tracked on a timeline. For example, let's assume that the Customer Care organization will be performing a customer service skills training program in the month of October.
It is expected that this will have a measurable impact on customer satisfaction. The first step is to determine when the impact of this training will initially be felt by the customer. Let's assume that the impact of this training will begin to be felt by the customer in November. The second focus is determining when this impact will be observed in the customer satisfaction survey results. In this case, if the training will begin to provide positive impact in November, the full impact on the survey results may not show up until the December surveys are administered.
Therefore, it will not be until the January timeframe, when you review your December survey results, that your organization will be able to see the full impact of this training. The final focus is establishing customer satisfaction goals to identify the level of impact. For example, let's say that customers are 78% totally satisfied with Customer Care, at the present time. The question to ask is "how many percentage points will our customer satisfaction ratings increase as a result of providing skills training to the Customer Care organization? How much improvement should we experience in November, and how much in December?"
You may decide that the customer satisfaction rating will improve by 2% in the November survey, and an additional 6% in December. This exercise is repeated for each functional area as they identify the impact that their customer-focused initiatives will have on the satisfaction results for which they are responsible.
4. Communication to the organization, and the customer - Now that you are performing all of the above elements of the Customer Survey Remediation program, you have the opportunity to share the positive results with your entire organization and more importantly the customer. This can be in the form of all-hands meetings and internal newsletters for your employees. For customers, this can be in the form of monthly reporting to your highest priority accounts and newsletters sent to all customers. By taking this final step you will increase employee morale and ensure that your organization is focused on your single source of revenue: the customer.
Additionally, you will demonstrate to the customer that you truly value their feedback by responding in ways to improve the experience they have with your firm.
There is no silver-bullet in the quest to increase customer satisfaction. As such, your team should try various programs designed to improve customer satisfaction, check against survey results and adjust the program(s) based on customer feedback. By aligning your customer-facing teams towards a common goal and promoting awareness through-out your organization you will find that you are well on your way to continuously increasing customer
