The Customer Experience Risk – It’s What You Don’t Know That Should Keep You Up at Night

The Verde Group - Customer Experience Risk

You may be like many executives who’ve had more than a few sleepless nights worrying about your customers. Particularly the customers with problems (and on average that’s 3 out of 4 of your customers – source: The Verde Group white paper) — the ones who light up the phones and fill your inbox with concerns, complaints, and helpful suggestions. Surely if you don’t act and fix their issues, they’ll take their business elsewhere, right?

It’s a common hypothesis that you should prioritize your initiatives around those known problems or the ‘squeaky wheel’ issues. The ‘known issues’ are causing friction in your customers’ experience and should be addressed, however, they may not deserve the resources or priority that you think.

In fact, it’s often the best, most loyal customers who bother to take the time to contact you and complain. And by and large, they’re not a flight risk. There’s a good chance there is no direct correlation between the frequency of customer complaints, the likelihood of retaining that customer, and the revenue impact to your business. This group of customers are passionate about your product or service, and they want to make it work.

How do you determine what the real customer issues are that may be financially impacting your business? With limited resources to address them, you can’t afford to get it wrong.

Majority of unhappy customers don’t complain. Over 67% of customers who experience a problem never tell the company about it. Customers cite “it’s not worth my time” and “they don’t believe that complaining will do any good because no one cares”. These are the customers who spread negative word of mouth and then vote with their wallet by taking their future purchases elsewhere. (source: The Verde Group white paper)

Where to start? Build a data-driven hypothesis
In a prior role, I was charged with building business strategies for a start-up SaaS company to reduce customer defect and maintain the very costly customers we worked so hard to acquire. It was early days in the subscription business model, and while we had a hypothesis as to why customers would defect, we didn’t know with certainty what was driving the churn.

We had spent a lot of time analyzing the customer complaints and surveys that came in through our support desk. We could tell you with confidence, the issues that our customers were experiencing.

But as we started to dig into the customer data points associated with that segment of customers (those that contacted us) we were surprised to see that they were some of our most engaged users. They were contacting us multiple times a year and using the product more frequently and recently compared to those customers who never contacted us.

The profile of these customers was contradictory of our institutional belief, so we had to learn more. Following a big subscription renewal period, we began to analyze the data points available on customers who defected. Did they purchase through a certain channel? Did they use specific feature sets?

Examining the data of our lost customers provided us with working theories as to why they left. But the data alone was far from providing us with the necessary insight to be able to put plans in place to reduce future customer churn. We needed to understand the context of the internal data points we were seeing. We needed to understand the “why” behind these behaviors.

Ask ‘what really happened?’
What you’re looking for here is the opportunity to have a genuine dialogue with your ex-customer — an open-ended conversation where you let them talk and share their experiences. It’s important to listen without pre-conceived notions of what the customer will say. Go in with an open mind and the only goal being to listen and learn.

Using the data you already analyzed, target specific segments of users when recruiting for the listening sessions. For example, one group may be users who showed great engagement with the product, yet still defected. This focus enables great efficiency in learning the root cause because you already have some insight into their behaviors.

Each user has a unique experience, but through qualitative research such as IDI’s or focus groups, themes will emerge that will provide the insight that you’re looking for. Often, they will introduce an issue that you didn’t uncover when reviewing the data and provide critical insight in doing so.

Socialize your learnings
At this point, you have detailed customer feedback in one hand, and objective, measurable data in the other. The customers’ experience with your product or service is end-to-end and holistic. What you learn through this process will not fit nicely into just one area of the business or function.

In order to put plans in place to address the top drivers of churn, you will need cross-functional support and leadership buy-in. This is a critical and often overlooked step in the process. Don’t forget that the insights you uncover may be completely new to this audience. It may take some time to help colleagues understand these “silent killers” and why they haven’t heard about them before.

Build your action plan
Now that you have organizational alignment, you’re ready to prioritize the issues you’ve uncovered and start building a plan to address those specific issues.

Start with what you consider to be the easiest fixes that have the most substantial revenue impact. Don’t overcomplicate the solution but rather stay laser focused and have clear metrics in place to measure the impact. It’s easy to start to have scope creep and before you know it you’re attempting to build a plan that is unattainable.

Clarity of ownership is critical in getting plans off the ground. Make sure everyone involved knows their role and expectation in solving the issue at hand.

After achieving some early momentum, move on to evaluate the business case the more complex, resource-intensive solutions.

No resting on your laurels
Once you’ve moved from a reactive mode to proactively addressing customer issues, don’t make the mistake of stopping, or even slowing down. You’ll need to repeat the data review/customer conversation cycle on an ongoing basis to stay in tune with your customer’s experience and keep raising the bar on your performance.

In the end, it’s not the customers who complain the loudest or most frequently that should keep you up at night. It’s worrying whether you really understand your customer’s experience and whether you’re truly addressing the issues that are financially impacting your business.

Of course, if you leverage your data, have genuine conversations with your customers (and ex-customers), build organizational support and create a measurable action plan, you might just sleep like a baby.

Sarah Pierce is Senior Vice President at The Verde Group.

Collecting Consumer Data: Is More Really Better?

The Verde Group - Customer Experience ResearchIt wasn’t too long ago that industry leaders would have scoffed at the idea of collecting too much customer data. In a rush toward realizing the value of big data and analytics, customer information was the key to higher revenue and increased market share, and more was better. Too much customer data? There was simply no such thing.

Times have changed
Today companies are experiencing firsthand the challenges associated with collecting, analyzing and actioning mountains of customer data. Big companies, especially when delivering an omni-channel experience in retail, collect data in many different ways — through various touchpoints, transactional data, marketing automation and primary research initiatives.

The challenge for these companies is how to bring all of this customer experience research and data together in a way that provides value and insights to the business.

Multiple stakeholders, multiple agendas
Consider call center teams, who collect and validate basic customer information, but can also confirm customer interest and readiness to purchase. Or social media engagement tracking, which tells companies how customers interact with their content and also provides a means to monitor brand image. Sales also collects client data (installed base, key customer contact, competitive information), especially in business to business (B2B) companies. Marketing has their own data points including website traffic, email open rates and communication preferences to name a few.

Often these and other groups within an organization will drive separate research initiatives to gather, analyze and action customer data, in many cases for their specific purposes and in isolation.

A significant expense
Collecting, housing, analyzing and actioning all that customer data is very expensive. With no centralized plan, companies can incur a considerable cost for overlapping initiatives. Even if separate groups share data, there’s bound to be overlap in the data collected, and each group will mine the data based on their unique requirements. The costs in dollars, time and resources add up quickly. Additionally, your company may be investing these resources into something that may or may not have a substantial impact on the customer experience and your business.

Lack of planning can drive lacklustre results
While it’s okay and often necessary to have individual customer initiatives, the absence of a centralized and coordinated plan often creates missed opportunities and confusion for companies. Inconsistent approach to research can yield conflicting insights and drive different action plans, and rather than improving the customer experience, they can confuse or even frustrate customers.

Organizations need to start with a company-wide understanding of their goals for increasing profitability and improving the customer experience and establish a consensus on how to target and measure progress against those goals. Without these two in place, they risk investing in initiatives that may have little to no impact on the customer and not meet revenue or market share targets.

Three ways to improve your customer data initiatives
How can businesses manage all this data and build a company-wide strategy that promotes collaboration, data-sharing, and the creation of common action plans? Here are four ways that organizations can get started:

  1. Establish common goals
    While each team will have unique requirements and metrics, it’s critical to establish common goals when it comes to customer engagement and the customer experience. These goals should align with the strategic vision for the company set out by the executive team.This helps to streamline the number of goals, creates clarity and also ensures executive support for the overall initiative. An effective way to determine those goals is by conducting strategic customer experience research — this helps clarify the current relationship between company and customer, and ultimately to refine and prioritize goals.
  2. Share data and minimize overlap
    Teams collecting data should work together to consolidate their efforts. Where possible, ‘no repeat data’ should be their mantra. Customer data must be centralized and fully accessible to the appropriate stakeholders.This includes defined business requirements – how to collect the data, when it should be collected and where it will be stored and how to access the data. Consistent screening questions across initiatives will enable cross-collaboration between studies.
  3. Collect the right data points
    Companies need to carefully examine the questions they’re asking their customers. Too often, in an effort to gauge customer satisfaction, they’ll ask customers about what they like, or what makes them happy. Many organizations invest a great deal of money and effort in measuring customer satisfaction and even pay bonuses based on the results.The problem is that customer happiness and satisfaction are very poor predictors of customer loyalty or future behavior. In fact, negative experiences are much more predictive of what a customer will do in the future. In fact, 60-80% of defecting customers categorize themselves as ‘satisfied’ on surveys conducted immediately before their departure. (source: Verde white paper).

    Another point to note is that attitudinal feedback (‘I’m angry’, or ‘I’m frustrated’) is much less valuable than experiential feedback (‘this is what happened’). It’s hard to do anything with the former, while the latter provides a precise readout of that particular customer experience.

Create common, actionable insights
With shared data and goals, companies can consolidate their findings and create actionable insights that are consistent across the organization. These can serve as a platform for individual functions to align behind broad initiatives based on the desired customer experience.

Michael Tropp is Vice President, Business Development at The Verde Group.

 

Start Small To Create a Company-wide View of the Customer

The Verde Group - Customer Insight

I’m sure you’ve heard the ancient parable about the blind men and the elephant.

It’s the story of a group of blind men who encounter an elephant for the first time. They all touch a different part of the animal, then draw different conclusions as to what they’ve experienced. In some versions of the story, the men violently disagree and almost come to blows. The moral of the story, of course, is that people often form different conclusions based on a partial view of the same information.

This is precisely the challenge many companies have when collecting, analyzing and actioning their customer data for customer insight. How best to link multiple sources of data to capture a complete, holistic picture of the customer experience?

Islands in The (Data) Stream
For many companies, views of the customer experience are functionally focused. For example, the team in charge of packaging design understands everything about the customer’s perception of their packaging. Sales knows about product features and benefits and is competition-savvy. Customer service is full of experts about everything that can go wrong with the product.

Often, especially in large organizations, each of these teams captures, prioritizes and actions different (and incomplete) data about the customer experience. However, customers don’t view each of these areas separately — their perception of their purchase experience and the company as a whole is much more holistic.

From a company-wide perspective, this functional approach is wildly inefficient. It’s hard to know what to prioritize and take action on if you’re only focused on your small area and can’t see the big picture. It can lead to competing (and sometimes conflicting) action plans, duplication of efforts, and resources spread too thin to be effective. 

More Than a Systems Issue
A common theme, again in large companies, is to put the problem down to deficiencies in systems. With the mountains of data collected and stored, the refrain goes, it must be a systems limitation that prevents customer data from being pulled together into a centralized view.

It’s true that it’s difficult to consolidate disparate data sources like customer service data, transactional data or product usage. Systems issues are real enough. However, even more than systems, this is a leadership issue. Leaders must embrace the need for a complete, ‘single source of truth’ for the customer, and acknowledge that it’s worth the time, money, and organizational disruption to do it. It’s a long-term initiative and not an easy call for leaders to make, given other more pressing, short-term issues.

It may be easier for startups to implement the ‘single customer view’ as a priority than for established businesses. It’s simpler for smaller companies to build from the ground up — to agree on what data should be collected and how it will be shared and actioned. Startup mode gives these companies the luxury of building systems around the process, rather than the other way around.

Look at how Netflix has leveraged their data gathering and their understanding of the customer experience. By collecting and analyzing user preference information, the company can recommend shows they ‘know’ you’ll like based on your previous viewing habits. Moreover, armed with a holistic view of their customers, they are creating bespoke programming that’s almost certain to be a hit with their target audience.

Starting Small The Best Approach
Ironically, the optimal solution to tackling a customer view that’s too narrow is one that involves starting small and staying focused. Remember the elephant? Not that you would, but if you had to eat him, ‘a bite at a time’ is the right approach. The same goes here.

The idea is straightforward — pull together cross-functional teams and build agreement on a small number of ‘must-have’ customer data fields that you think are the most important and impactful to your business. Next, brainstorm about the best way to collect that data if you aren’t already, determine how it can be easily shared and interpreted even if it is a manual process while gaining traction with leadership/ Once the organization begins to see that there is consistency in how teams are looking at the customer experience, it is time to leverage that data and build coordinated action plans from your findings.

Once the cross-functional team has had success with limited data streams, you may see a snowball effect. Perhaps you started with a Top 5 list of must-have customer data fields, but the team can now see gaps and opportunities that lead you to expand the initiative.

While the cost benefits of this approach can be substantial — less duplicated effort means a lower cost of data collection — the real benefits to the organization are far greater.

This focused, cross-functional approach yields a single ‘true picture’ of the customer,  supported across the enterprise. Stakeholders share data and analytics and execute universal programs and get-well plans. The company develops a greater understanding of the customer experience, and that understanding is the key to building deeper, more meaningful relationships with its customers.

Sarah Pierce is Senior Vice President at The Verde Group.

Tomorrow is Fine. Free is Fine. What Else Can You Do?

The Verde Group Customer InsightCustomer Insight: How Logistics Raises the Bar on Customer Expectations

Ask any customer shopping online when they want their order delivered, and it’s a good bet they’ll answer ‘tomorrow’.

Thanks to masters of logistics like Amazon and Zappos, customers have come to expect 2-day or even 1-day shipping, sometimes at no cost. They want things NOW and will choose companies based on that expectation. If you can’t deliver, you risk losing customers — even if you have a great product and competitive pricing.

A case in point. Prior to a recent business trip, I needed a new laptop bag. It was Saturday, and I was flying on Wednesday. I found a nice leather case I liked and identified several online retailers who carried it. Whom did I choose? The one who could get it to me by Tuesday and didn’t charge a premium for fast shipping.

Evolving logistics capabilities have impacted the customer experience in other ways. Consumers now want to know ‘where’ their order is every step of the way. And these expectations have spread across industries. If Uber and Dominos can tell you the exact location of their driver, exactly where the driver is, consumers expect that their package delivery company should be able to do the same?

Companies who can meet these constantly rising expectations are being rewarded with increased sales and customer loyalty. Those who can’t may suffer the consequences. Faced with the customer challenge of ‘why drive to the store when I can double-click and two days later it’s at my door?’, Toys ‘R Us had no answers.


Fast and Free Delivery Is Not Enough
With delivery speed and accuracy quickly becoming the norm, how can companies further differentiate the delivery experience? For that, they’ll need to get creative. Going back to my recent laptop bag purchase — supposing the retailer had included a small sample of leather protector in the box? Unfortunately, they didn’t, but adding a small gift or discount coupon can further endear customers to a brand while also providing an opportunity to cross-sell.

Post-delivery follow-up provides another opportunity to differentiate from the competition and add value. This generally takes the form of a post-purchase survey or a request for a product review. Most customers appreciate the touchpoint, and the post-sale interaction typically promotes brand loyalty.

However, when companies master logistics, they can take the Customer Experience to even higher levels. They know exactly when you received the product, how long you’ve had it, and when that product is due for replacement. This mastery of logistics and “big data” gives these companies an edge on their competition – it enables them to be more than a “one and done” with the initial transaction.

 

Where Do We Go From Here?
Customers now expect to get anything and everything to their front door FAST. This has created industries that didn’t exist just a few years ago — think of meal preparation companies such as Hello Fresh and Blue Apron.

The continued growth of online sales and the globalization of supply chains will keep driving logistics innovation. We’re already seeing trials of drones and driverless long-haul trucks. The automatic re-ordering and shipment of products based on a pre-set delivery cycle is certain to disrupt some industries — just ask Gillette, who late last year introduced cheaper razor blades to fend off competitors Dollar Shave Club and Harry’s.

And of course, there’s Amazon, ever the leader in logistics innovation. Amazon continues to surprise consumers with their innovations. In April 2018, they partnered with GM and Volvo to offer product delivery to the trunk of your vehicle rather than your front steps by remotely unlocking your vehicle through the car’s internet connection.   Granted, not all Amazon customers may want to take advantage of this offering, at least initially.  But for those who do (perhaps those with “front porch security concerns”), this is a potentially high value-add service.

Most companies now understand that there is a direct correlation between their logistics ability and their customer loyalty (NPS score). The challenge for these companies will be to develop and deliver innovations to their customers that represent relevant, timely and meaningful improvements.  Understanding which delivery innovations will materially shift customer spend and brand affinity will become a competitive advantage, particularly in those categories where product quality and price are weakly differentiated.

Want to learn more about the link between logistics, innovation and the customer experience? Check out a few of my favorite customer insight articles on the topic:

How Innovations in Logistics Fulfill the Experience Demand

The Amazon Supply Chain: The Most Innovative in the World?

Lori Childers is Vice President, Client Solutions at The Verde Group

The Four Biggest Mistakes Companies Make When Implementing a Customer Measurement Program

Transform your customer insights by avoiding these common errors 
Technology and analytics have provided companies the means to understand their customers in ways they couldn’t have imagined even a few years ago. Almost every large organization invests heavily in customer measurement programs, yet many don’t achieve the customer insight they’re looking for.

Why?

It turns out that a handful of common missteps are responsible for the unsatisfactory results:

#1. Unclear Measurement Goals
What are the reasons for undertaking the measurement program? Is it a desire to improve your customer’s experience? Are you trying to gauge the success of a recently launched product or service, or understand how you stack up against a competitor?

Companies need to establish clear objectives for measurement programs and ensure there is alignment across the entire organization. Extensive planning and engagement with key stakeholders are critical, as is a clear strategy for the use of the data captured. What decisions will be driven by that data, and who is accountable to take action?

 

#2. Not Enough Time Spent Establishing Ownership
Building alignment within the organization is fundamental to the success of any measurement program. But it’s not enough to just inform stakeholders, collecting their input into the objectives of the program, how it will be structured, and how findings can positively impact their specific business metrics — these are all are critical to the success of the program. And all require a lot of work upfront to get it right.

The most important step is to establish a link between the findings of the measurement program and business issues those findings promise to address. Stakeholders need to know how the program findings may help improve or transform their business.

 

#3. Measuring Customer Loyalty or Satisfaction in a Vacuum
Customer surveys only provide a single data set in any customer measurement program. A single data source provides an incomplete picture, and sometimes a very misleading one.

To truly gain customer insight, you need to establish multiple listening posts across the entire organization. This means gathering information from your sales team, the call center, your service teams, and your complaint management system.

All of this information should be reviewed and packaged holistically. The different data sources may corroborate some findings and create different perspectives for others. This provides a much broader understanding of your customer’s experience.

 

#4 Thinking You Know What Customers Want
Preconceptions can ruin a customer measurement program. Often programs are built in isolation and structured based on what is perceived as important to stakeholders.

Good programs need to be constructed outside-in. Speak to customers before building a survey. These upfront discussions provide customers with the opportunity to tell you their full stories, and many times it’s the qualitative insight you gather that proves most valuable.

This feedback also helps you understand and adopt the language your customers use to discuss your business, which may not align with your internal company vocabulary. For example, if your survey poses questions about the effectiveness of your claims department, but your customer refers to it as your customer service department, your findings will almost certainly be skewed or incomplete.

 

My Challenge to You
Customer measurement programs can provide you with critical customer insight that helps improve your business metrics and shape your company strategy. For these programs to be effective, however, you need to establish clear goals, cultivate alignment and ownership across your organization, and most critically, ask for your customers’ input as you’re building the program.

Paula Courtney is Chief Executive Officer of The Verde Group and a lecturer at The Wharton School

Making Your Customer Experience Research Matter

customer experience research The Verde Group

Find the difference between interesting and actionable insights

By now, the notion that customer experience matters to market success is nearly universal.

A 2016 Gartner survey found that 89% of companies expect to compete primarily on the basis of customer experience — up from 36% in 2012.

Most companies make significant investments in customer research to shape their customer strategies, seeking to understand gaps in customer satisfaction and to develop remedial actions based on research findings.

Yet many companies still struggle to establish a clear link between research findings and meaningful, sustained improvements in business fundamentals.

For some, after many quarters of customer analysis, Net Promoter Score (NPS) – the metric that most companies use to gauge the loyalty of their customer relationships – remains stubbornly static.  For others, changes in customer satisfaction show little relationship to customer revenue growth.

Why would this be the case?  The Verde Group has been analyzing customer experiences for over 20 years, and we’ve arrived at this conclusion: for nearly all categories, customer experience is a rich, complex and dynamic phenomenon that is easy to describe generally using traditional satisfaction research analysis, but is quite difficult to diagnose actionably using those same techniques.

This is why we focus our clients on a different analytic filter for understanding customer experience: the filter of dissatisfaction analysis.

As my colleague Michael Tropp discusses, customer dissatisfaction can be very powerful for interpreting customer experiences.  Rooted in human evolutionary psychology, the concepts are simple:

  • Events that cause us pain are far more influential on what we do than events that cause us pleasure.
  • When a customer says “No, I won’t” (as in “you made my interaction so hard that I won’t buy from you again”) they are far more likely to follow through on that statement than when they say “Yes, I will.” This makes dissatisfaction analysis highly predictive of future customer behaviors.
  • Because problem experiences so strongly correlate to market action, they can be financially prioritized in terms of damage to customer loyalty, revenue or brand equity.

That last point is particularly important.  The objective of dissatisfaction analysis is not to tell companies their customers have problems; they already know that.

And they probably have an overall sense of what those problems are because if they didn’t they’d be out of business.  But what most companies don’t know is which problems are most damaging to customer value and relationship equity.

Now, executives in the C-suite will have their opinions.  But that’s the issue: generally, a company’s problem prioritization is based on partial data, limited analysis and a priori biases.  What’s worse, those opinions vary greatly depending on which executive holds them.

The sales department thinks customers suffer most from one set of problems, but Operations targets a different set.  Marketing focuses on the pain points they think are most crucial, but the Service function has a wholly different point of view.

What happens?  Executive team CX debates don’t resolve, strategies don’t align, and tactics step on each other and undermine overall improvement efforts.

This is why a statistically rigorous, financially based prioritization of the customer experience is so valuable.  It moves the debate from bias to objective facts: which problems are costing us the most in terms of customer revenue and loyalty?  Such a ranking aligns a company’s functions with respect to experience strategy and provides a powerful way to link C-suite strategy to front-line execution.

Maybe dissatisfaction analysis validates what the company already suspected.  That’s a win; validation means the team can move from debate to action.  Or maybe the analysis slays a few “sacred cows”: customer issues that the team firmly believed were highly damaging to customer equity, but turned out to be relatively inconsequential compared to other customer issues.  That’s an even bigger win since now the team can redirect resources to solving what really matters.

And the biggest win of all: identifying problems that the company didn’t even realize they had.  These “silent killers” are the most powerful output of dissatisfaction analysis.

Quietly eating away at customer retention and revenue growth, undiagnosed they represent a serious drag on loyalty and earnings.  But brought into the light, they can be addressed and controlled.

Most companies want the same thing: to serve their customers well, to innovate for the future, and to grow their customer relationships profitably and for the long term.

But few companies truly succeed at analyzing the customer experiences on which those objectives depend.  Those that are willing to go beyond traditional satisfaction analysis to look hard at the dissatisfaction of their customers will find great returns in customer loyalty, customer value and competitive stance.

Jon Skinner is Executive Vice President of The Verde Group

 

To Change or Not to Change? That is the Question

iStock_000018873957_Full

Consumers are creatures of habit, often seeking out their favorite restaurant, hotel or store, because they know they’ll have a positive experience. These positive experiences make them loyal — whether it’s a perfectly grilled steak, a service associate who helps you find that perfect gift, or the ease of pre-selecting your hotel room in advance of check-in.

However, if a consumer’s go-to business never changes, the experience might seem stale. Once-loyal customers might consider switching.

This point was driven home when I watched the movie Chef, about a chef who wants to transform the time-tested menu to impress a food critic. The owner disagrees, saying, “Look, if you bought Stones tickets and Jagger didn’t play Satisfaction, how would you feel? Would you be happy?”

The chef sticks with his 1990s-style menu and gets scorched by a terrible review from the food critic.

The Business Dilemma

So the question is: when is it time to change and when should you keep things the same? Can you do a little of both?

The same dilemma is faced by many businesses. To change or not to change? When is the right time? When sales decline? When complaints increase? When stock prices fall?

If you act too quickly, customers may be upset. If you wait too long, customers—and their money—could walk out the door. But how do you know when the timing is right to introduce change? And, should it be a completely new product/servicing offering or just a modification?

Many companies come to mind when thinking about waiting too long to change. Consider Motorola which, according to Forbes, once had nearly 50% of the cell-phone handset market. In 1995, they passed up chances to enter the digital market early, sticking with more primitive analog designs, because it felt sure that analog’s 43 million customers couldn’t be wrong. Within four years, Motorola’s market share had slumped to 17%.

In deciding whether it’s time for change, companies need to understand a multitude of factors but key inputs to this decision are:

  • Knowing where they are in the product life cycle curve
  • Understanding the current state (baseline)

Product Life Cycle

Lori BlogTheodore Levitts classic Product Life Cycle has been around since 1965. Understanding which stage a product is in provides information about expected future sales growth, and the kinds of strategies that should be implemented to protect sales. The product life cycle of many modern products is shrinking, as Tom Spencer found, while the operating life for many of these products is lengthening.

As explained in Using Market Research in Product Development, many companies recognize the importance of offering something new. For this reason, they allocate substantial sums to research and development to help them determine when it’s time for a change. Most companies spend between 2% and 5% of sales on R&D.

However, as stated by Paul Hague in the third edition of Market Research, not all products/services necessarily completely die and need to be replaced with something new. There are often opportunities for modifications and improvements which can result in a rejuvenation of the product life cycle. In fact, per B2B International, 90% of new product research is focused on product additions and modifications rather than on new concepts.

Product improvements by their nature are less drastic and are much more easily accepted than conceptually new products. As with our restaurant example, an entirely new menu was perhaps unnecessary but rather, some innovations and changes to existing items while keeping some old favorites breathing new life into the restaurant while still keeping the brand intact.

Baseline Measurement

In parallel with a product life cycle assessment, organizations should have a baseline measurement of areas of satisfaction and dissatisfaction. As my colleague Jon Skinner wrote , by knowing what issues upset customers the most (causing dissatisfaction and disloyalty) and by understanding what makes loyal customers return and recommend a business, organizations have better insight into whether it is time to pursue the introduction of something new (where “new” is adding/changing/or removing a product/servicing offering). It is important to remember that the issues that upset customers the most aren’t necessarily the most prevalent problems but rather, the ones that have the biggest impact on customer loyalty.

However, a baseline is not enough. Businesses need to take regular temperature checks and compare their results to the baseline. More formal, data-driven Voice of the Customer (VOC) research will reveal even more about customer experiences and expectations. This could include short surveys after every interaction, more detailed monthly, quarterly or annual surveys and staying on top of ongoing social media chatter.

By using an experienced research partner for product life cycle assessments, baseline studies, and temperatures checks against the baseline, businesses can make informed decisions about when it’s time to change, what should change, and what must stay the same.

Being true to your brand or what sets you apart from the competition is great. But when you risk driving your customer to choose another business, it’s time to change.

Don’t lose your customers because they’re tired of the same old menu. Know when it’s time for change and get ahead of the curve!

Lori Childers
Vice President, Client Solutions

To learn more about Lori Childers

 

 

Customer Experience Is Not Our Responsibility

Responsibility Reliability Trust Liability Trustworthy Concept

Recently a client asked me how to engage Human Resources, Legal/Risk and Finance in their customer experience journey.

When my client had approached these groups about their contributions to the customer experience, the response was essentially: “We are very in favor of focusing on the customer experience and are glad that our sales and customer service departments are doing so much in this area. However, this is not something we have any control over, so it is not on our priority list.”

This response is very common in organizations that are in the early stages of true customer experience transformation. Ironically, these departments may have more to contribute to the customer experience journey than most others.

Here are some ways these departments can put the customer at the center of everything they do, to build a more customer-centric organization.

Human Resources rewards the right people

By hiring, rewarding and setting clear expectations, Human Resources can engage people who contribute through their attitudes, strategies and day-to-day actions.

This goes beyond the “employee of the month” awards. This is about national awards on center stage that recognizes individuals from every department who have made a true difference to the customer experience.

What’s more, it means ensuring that every individual clearly understands their contribution to the customer experience and setting customer experience goals to achieve each year

Human Resources can

  • hire people who will make customer needs a priority
  • set personal goals and assess employees on their ability to develop and execute customer-focused business strategies
  • recognize and reward employees for succeeding in these objectives, through bonuses, high-profile awards and promotions (and make the difficult decisions with employees who do not perform well in this area)
  • add a customer experience element to your employee surveys

Legal/Risk balances customer ease

Legal and Risk departments have a long-lasting effect on how customer-centric an organization will be. As the watchdogs of an organization, they ensure that the company is not exposed to lawsuits and financial risk in the course of doing business. To achieve this, they create policies that sales, customer service and operations groups must adhere to when bringing on new customers and managing existing customer relationships.

Sometimes these policies unintentionally create problems and unnecessary effort for customers when doing business with your organization, as I stated in a previous blog. For example, policies such as requiring a receipt, original packaging and returns in 30 days may prevent a few from taking advantage, but also make it more difficult for many customers to do business with you.

Legal/Risk can

  • create policies for bringing on new customers and managing existing customer relationships that don’t create problems or require unnecessary effort by customers
  • shadow front- line sales, customer service and operations stakeholders to understand how these policies affect their workflow and the customer experience
  • enhance the customer experience by investigating the effect of their policies on the customer experience journey
  • incorporate feedback from sales and customer service in their review of policies
  • regularly update policies to make them more customer-centric

Finance empowers relationship owners

Because they tend to own the purse strings across all lines of business, the Finance team has a great deal of influence over the customer experience in every organization.

However, they need to balance the critical requirements for cash flow and cost control with the need to deliver a great customer experience. For example, the need to ensure reliable payments must be balanced against particularly arduous onboarding requirements for new customers.

They also need to provide flexibility with customer relationship owners to “make things right” when problems arise, as I wrote in a recent blog on how this can reduce churn and build long-term loyalty.

In addition, the Finance team must also work with HR to recognize and reward those in the organization that make an impact on the customer experience.

In short, they should

  • work closely with sales and customer service teams, to ensure policies don’t have negative effects, for example arduous onboarding requirements for new customers
  • financially empower customer relationship owners to effectively solve customer problems
  • work with HR to recognize and financially reward those in the organization who make an impact to the customer experience.

While almost every department plays a role in the customer experience, Human Resources, Legal/Risk and Finance have more influence over the customer experience than they might think.

One department, one improvement

If each of these departments made one significant improvement to the customer experience each quarter, there would be measurable improvements in customer loyalty, employee engagement and shareholder value.

What’s more, by communicating their progress to the entire organization, they can inspire others to focus on what they can do to deliver the ultimate customer experience.

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2 Steps to Create Customer Service Heroes

Customer service. Customer experience. Focus on the customer. The customer is at the centre of everything we do.

Why do we hear this so much? Because time and again we see that selling something of value at a fair price is not enough. The customer must find the seller easy to do business with at every touch point.

Most organizations are relatively good at easily allowing you to buy goods and services from them. But only some understand that being easy to do business with must include service and support as well.

Examples abound:

  • Apple is extremely good at making sure you are looked after with very little effort involved.
  • Best Buy’s Geek Squad makes sales and after-sales support easier.
  • Zappos lets customers return purchases, no questions asked, for up to a year.
  • The Ritz-Carlton gives every staff member a no-strings budget to resolve any customer experience issue.

Personal experience confirms how this ease builds customer loyalty. Recently I purchased a suitcase that had a problem with the handle. When I notified customer service, I was asked to take a photo of the affected part and fill out a few pieces of information like my address and email it to them. Within 20 minutes, I was advised that a new bag was on the way. As a result, I am a customer for life.

Like me, you probably have a great customer experience story that solidified your loyalty to a brand. Most often the story stars someone who seemingly went out of their way to make you feel special and resolve the issue to your satisfaction. This person at the bag company was the key to being easy to do business with.

Where companies miss the mark

So why isn’t every company easy to do business with at every customer touch point?
Some of it has to do with policies and risk aversion.

Policies were created to reduce the risk of economic loss to an organization. The famous 30-day money-back guarantee that many of us grew up with was put in place to stop you from returning every single thing that you have ever purchased from a company. The policy was created to stop a very small percentage of customers from taking advantage of the organization.

But if you want to become a truly customer-centric organization, you can’t let risk aversion hold you back. You can accomplish your goals by employing only the most customer-centric people in this role and empowering them to make issue resolution enjoyable for the customer.

Customer services process

For example, let the customer tell you, online or by mobile, why they need help. Then have an expert who can quickly resolve the issue contact them, using a well-defined, step-by-step process that will resolve the issue on the first call.

This involves only two steps:

1. Hire, train and promote your most customer-centric people and remove those who are not able to deliver on the customer experience promise.

2. Allow and provide the budget and other tools for these people to make decision and resolve the individual customer issue.

If you ask most executives to cancel all customer-facing policies and leave everything up to the people in customer-supporting roles, they will shiver with fear, worrying that employees will give away the farm to avoid confrontation and dissatisfaction.

Fortunately, in my experience, this is not the case. I once started with an organization that had so many restrictive policies that employees were powerless to resolve customer problems. as an example, they were authorized to give a maximum 10 per cent credit to resolve an issue. This meant high-value customers would end up returning the item (at a significant cost to us) instead of taking the credit, which severely undermined their loyalty.

How we empowered heroes

After I got involved, we hired, supported and trained our customer support staff to be engaging customer advocates. We removed the small few who were damaging the customer experience. Then we did the unthinkable. We allowed anyone to give any credit they wished as long as they felt it was appropriate for the customer and the issue at hand. We provided quite a few examples of what “good” might look like and what a reasonable budget limit might be, but it was up to the individual to decide.

We collaborated with them to determine the best and most efficient resolution on the first call. Customer support staff discussed scenarios with each other in meetings and at breaks.

The result? Customer kudos poured in.

Our staff was elated that they were free from the restrictive policies that added stress to their jobs and prevented them from helping customers.

Because our supervisors received almost no escalations, they were freed up to coach individuals on what might be appropriate under what circumstances.

On our intranet, staff shared examples of where they gave credits and examples where they did not feel it was appropriate. There were so very few examples of customer support staff giving away too much for the issue and customer at hand.

The most difficult part? Convincing a small percentage of customer advocates that they actually needed to take advantage of the budget they had. They were so protective of the company that they were worried about making the commitment. Over time they came around.

Happy endings

So how did the new credit levels compare to the old ones? They went up about 15%, mainly because customers and customer support staff had other reasonable options to consider. Overall we were ahead in profits, returns were reduced and our customers liked our new easy-to-do- business-with philosophy.

The customer support team was now in charge of customer service. Our revenues increased, our lapsed customers decreased and employee morale had never been higher.

Graham Kingma
Executive Vice President, Verde Group

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You may not know your customers as well as you think

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I’ve been married for a long time, certainly long enough to know my wife Alicia pretty well.  Or so I thought.

But last week while dining out, I learned something new.  At the end of our meal, the server ran my credit card and returned it to me, saying  “Here you go, Jon. Have a great evening.”

This made no impression on me whatsoever.  But Alicia commented “Boy, I hate it when a waitress uses my name like that.  It’s just so phony!”  To which I replied “No kidding?  I didn’t know you hated that!”

My point is not that after many years of marriage my wife still surprises me.  (Although she does.)  My point is a business point:  we all interpret experiences differently.  I don’t care one way or another whether a server calls me by name.  Others find it aggravating.  Still others are charmed by it.

We all interpret experiences differently.  This principle underlies all of Verde’s Customer Experience work, and is embodied in our “EAB” Model: Experience drives Attitude, which in turn drives Behavior.  What makes an experience good, neutral or bad is how we interpret the experience.  Two different customers may experience the same problem, but have wildly different reactions, depending on their temperament, personal history and circumstances.

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Companies seeking to redesign the customer experience to drive more lucrative customer behaviors should keep this principle in mind: strategies and service interaction tactics need to be tailored to address the specific issues most damaging to specific customer segments.

Consider some of the segment-specific differences in problem experience Verde has discovered in our client work:

  • Gender. Verde’s retail experience work with the Wharton School of Business (Executive Summary) has identified some unexpected differences between the shopping experiences of men and women.  For example: the top problem suppressing share-of-shop for female shoppers (by 6%) is “I can’t get sales associates help when needed.”  But for men the top risk issue (5% share-of-shop loss) was “The item I was looking for was out of stock.”
  • Health Condition. Last year Verde conducted a major “Adherence@Risk” study, where we prioritized the specific patient problem experiences that decreased their likelihood of adhering to their medication regimen. We ran the study for a leading injectable product indicated across multiple conditions.  We found that for patients with one disease, more than 50% of all adherence risk was based on injection issues.  Yet for patients with a different disease, injection issues were completely immaterial. Instead, these patients pulled back their drug regimen due to problems understanding their condition and what to expect from the drug.
  • Line of Business. In a recent customer experience assessment for a Health Insurance client, Verde determined that 7% of policyholder loyalty in the “Small Group” segment was at risk due to “plan materials that were too detailed and insufficiently relevant” to the policyholder.  Yet this issue was isolated to the Small Group segment; the loyalty of policyholders in all other group segments was unaffected by this problem, even though the materials were fundamentally the same.

In each of the examples above our clients were surprised by these differences.  Of course they knew that different customers hold different attitudes concerning their service models and go-to-market approaches.  But they did not expect to see such pronounced differences in the specific experiences underlying those attitudes.

This client surprise is not uncommon when Verde presents its findings, and it is one of the most gratifying aspects of our work.  But it also reflects my surprise at my wife’s restaurant reaction. We think we understand those we spend a lot of time with: our families, our co-workers, our customers.  But we often understand far less than we think we do.

Don’t take for granted that you know what is happening with your customers.  Taking the time to really understand what matters to them is the first step to creating great customer experiences that deliver long-term, successful customer relationships.

Jon Skinner
Executive Vice President, The Verde Group

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