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.

Click to learn more about Graham Kingma 

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

Click to learn more about Graham Kingma 

You may not know your customers as well as you think

iStock_000058890152_Large Web

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.

Jon blog 3.1

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

To Learn more about Jon Skinner

3 Steps to Firing Your Worst Customers

iStock_000005178644_Medium

As I wrote recently, customers who are loyal to your business and contribute to your bottom line should be rewarded with an outstanding experience.

But what about unprofitable customers, the ones who cost you money? Most businesses have customers who call in 10 times a month asking for credits, return items more often than not or perhaps demand too much of your organization’s time.

These bad apples not only require a disproportionate share of resources, but they also result in longer phone waits and return lines and restrictions such as limited return times for your profitable customers.

  1. Use Data to Identify Unprofitable Customers

To identify unprofitable customers, businesses must have enough data to track and evaluate returns and other drains on resources. Here’s a very brief example of how this analysis could work using only 4 data points:

Customer Purchases Returns Resources (@ $35/contact) Credits Contribution
Customer A $2,000 $1,200 $700 $250 -$150
Customer B $2,000 $100 $70 $50 $1,780

Each business will have a different formula for calculating the actual profit of each individual customer and should reflect the value of returned goods, for example jewelry retains more value than clothing and online self service costs less than human support.

Customer B is contributing significantly to the bottom line, but will face longer wait times and potentially more restrictions because of Customer A’s buying behaviour. It’s a lose/lose for your business. So what do you do?

In my experience of firing customers at a retail organization, I found the easiest part of the process was determining which customers were actually profitable. The formula was 14 fields long and provided a very holistic view to the customer contribution. The worst 100 customers, combined, pulled $180,000 off the bottom line. The formula was scrutinized by Finance, Merchandising and Marketing, who all agreed that these customers were bad for business.

The hardest part was convincing the organization that we must fire these customers. The idea was completely against the concept of “customer experience” and the “customer is always right.” It was even more ludicrous that I, the head of customer experience, should suggest such a thing. What if the newspapers caught wind? What if these customers told their friends?

  1. Give them a second chance. 

I was relentless in my pursuit, mainly because the extra investment in serving these unprofitable customers was standing in the way of us really showing our appreciation for our profitable customers. More than a year later we had the green light on two conditions: (1) that we tested the approach on the first 100 customers and (2) that we gave these customers every chance to change their behaviour.

We sent a very gentle and considerate letter, hand signed, to each of the 100 customers. We talked about their general purchase behaviour and suggested that perhaps we were not the retailer for them. We gave them the option of being more selective with their purchases in the future to maintain their account status. If the past purchase behaviour continued, we would be forced to close their accounts.

We waited for a response, but 100 customers were silent. Fast forward six months and we took a look at these customers one more time using our profitability formula. Eighty-nine had completely changed their behaviour and were now profitable.

  1. Fire the customers who won’t improve

We were stunned at the turnaround. The program had worked and we could now expand the program further. The remaining 11 had continued their spending behaviour and we called them to let them know their accounts were now closed.

These customers were upset — not at us, but at themselves. Was there anything we could do to give them another chance? We let them know we would call them in three months to discuss the matter, but for now their accounts were closed.

The 100 customers who had contributed negative $180,000 to the bottom line were now contributing more than $50,000 in annual profit, a swing of almost a quarter million dollars annually. More importantly, our service levels and return efficiencies increased and contributed to the loyalty of our existing, profitable customers.

Sometimes the best thing you can do is lose some customers to please the ones you want to keep. But before you start firing, give them a second chance. That way, you’ll turn many unprofitable customers into profitable ones and have fewer to fire.

Click to learn more about Graham Kingma 

The profitable customer is always right

The Profitable Customer - Website Large

“The customer is always right.” Although this saying has been around for more than 100 years, pretty much everyone who works in customer service knows that while most customers are always right, certain customers are often wrong.

Consider the customers who return tools, jewellery or clothing after they’ve been used. The resulting costs will either drive up the price of goods or require the retailer to cut costs for continued profitability. Nobody wins.

In the days of mom-and-pop stores when this saying was invented, customers and employees got to know and trust each other. Back then probably more customers were right. In addition, retailers could easily identify the problems.

Loss of intimacy
But with chain, big-box and online stores, the retailer-customer relationship has lost its intimacy. As a result, restrictive policies have blanketed all shoppers, rather than targeting the problem few.

Take the example of the requirement to have the original receipt and packaging and return the item within 30 days. On top of that, customers may have to stand in a long line and complete a tedious form and show ID for an in-store credit. As a customer, it is difficult not to go through this experience feeling like you have done something wrong.

This can also demoralize employees who must apply the strict policies to both right and wrong customers.

Reward profitable customers
The solution? Implement a “Profitable customer is always right” policy.

By monitoring your customers’ buying behaviours, retailers can determine who is an unprofitable customer and take steps to discourage bad behaviour. Moreover, they can identify and reward profitable customers, allowing them to shop free of restrictive policies.

Online retailers have an advantage here because they can easily track shoppers’ behaviours. Brick-and-mortar retailers can monitor customer profitability through the use of a loyalty rewards program.

The obvious rewards are the points and other perks their customers expect. In addition, they can reward profitable customers with longer money-back guarantee times with no line-ups, no forms and no hassles.

Imagine the experience of returning an item to a store, only to have someone else handle the returns process for you (a perk of your loyalty rewards card), while you are free to browse the store for your next purchase.

Imagine if your preference was to return the item through a self-serve kiosk. This could be added as an additional perk of your loyalty rewards program.

What worked for Zappos
The end result is an opportunity to remove all restrictive customer-facing policies and make life easier for your customers and your employees. Zappos made quite a name for themselves with their no questions asked 365 day return policy. They differentiated themselves from the rest by assuming the customer had good intentions when shopping and returning items, especially important when buying shoes online.

They made the return process a positive experience for customers and an integral part of their brand experience. It worked well enough that even Amazon took notice. Zappos became part of the Amazon family of companies after a $1 billion purchase back in 2009.

Fire the few bad customers
Who is going to pay for the additional cost of providing exemplary service to your loyal, profitable customers? Your unprofitable customers will. By placing restrictions on unprofitable customers, you risk losing some. But essentially “firing” customers who are costing you time and money may be good business in the long run.

If you spend less time enforcing restrictive policies and more energy on removing customer experience roadblocks to strengthening relationships with profitable customers, you can improve your bottom line. Good customers will spend money with retailers that honour and respect them at every stage of the purchase experience. That includes the experience of returning that item that just didn’t meet their needs.

Graham Kingma
Executive Vice President, Verde Group

Click to learn more about Graham Kingma

Which “Silent Experiences” Are Killing Your Customer Loyalty?

Which Experiences Are Your “Silent Killers”?

In my last post, ‘The Complexity of Customer Simplicity‘, I pointed out that one of the chief obstacles for companies that seek to “simplify” the customer experience is the difficulty in knowing what customers want.

Customer simplification efforts need to address the issues that aggrieve customers the most. These are the problem experiences that drive customers away – the issues that make them defect, spend less or adopt fewer products or services.

Most companies are confident that they have a sound grasp on these issues. They have millions of dollars invested in call centers that listen to customers complain every day. They monitor social media for negative brand sentiment. They have thousands of front line sales representatives interacting with customers. How could they not know what matters most to their customers?

Here’s how: The issues customers complain about most are often not the issues that have the largest impact on their loyalty and economic value.

Lethal issues are often silent

Verde analysis of customer problem experience consistently reveals a critical difference between the problems that occur most frequently and those that inflict the biggest damage on spend and retention. Call centers and social media monitoring pick up the frequent issues, but miss the “silent killer” experiences: the problems that customers don’t complain about but that drive down their economic value.

This is a huge challenge for companies seeking to simplify customer experience. Based on 15 years of research in retail, financial services, pharma, manufacturing, telecom and insurance, Verde finds that the intersection of “most frequent” problems and “most damaging” problems is generally under 50%.

Look at the chart below, which illustrates the overlap between a company’s “most frequent” problems and their “most damaging” problems. The data is from Verde research conducted in the last 18 months.

graph blog

The data shows that if these clients relied solely on “transactional” sources of customer dissatisfaction such as customer service complaint logs, negative tweets and sales call sheets, they would be ignoring 75% of the dissatisfaction drivers costing them revenue and market share. That’s a big miss.

Be proactive about understanding your “Silent Killer” experiences

A company can’t passively rely on customer complaint volume to identify their “silent killers.” These problems can only be discovered analytically by assessing the complex interactions of specific customer problem experiences with customers’ intended or actual economic behaviors.

This is not a trivial undertaking. It requires a disciplined research approach and a strategically rigorous assessment of the issues potentially hurting customer equity. But when a company unearths these silent killers the benefits are immense.

How immense? As an example: one year after making mostly tactical adjustments to customer experience processes, one of the Verde clients in the chart above realized a 9% revenue improvement in a key strategic customer segment worth over $20 million annually.

That’s a pretty high ROI on research. Clearly, knowing what really matters to your customers is worth the effort of discovery. If you want to simplify your customer experience and enjoy economic gain from doing so, don’t just ask customer service or the twittersphere what to do.

Take the time to find those silent killers. You and your customers will both be very glad you did.

Jon Skinner
Executive Vice President, The Verde Group

To Learn more about Jon Skinner

The Complexity of Customer Simplicity

iStock_000062387494Large

Last week I had to call my cable company to accomplish what I thought would be a simple task: getting a replacement modem.

I was quickly reminded why most consumers hate their cable companies. I’ll save you the gory details of the experience and just provide the bullet points:

• three days
• seven calls
• three transfers, including two disconnects
• at least two hours on hold
• four chat sessions
• a couple of hours on the website
• five emails and
• one trip to the closest retail service outlet for my cable provider.

And as of this morning, still no modem.

All this complexity, and frustration, got me thinking: why are so many customer experiences so unnecessarily complicated? Of course, customers clearly want simplicity in their interactions. But so do most Fortune 500 companies. This is what Verde sees in our work with clients, which are a pretty good representation of the Fortune 500:

Marketing wants customer experience simplicity.
Choice is good. But the exponential growth of options when consumers consume – brands, models, channels, retailers – raises the stakes for clarity and ease of consideration/purchase. Experience simplicity reduces cognitive overload and moves barriers to purchase out of the way.

Service Operations wants customer experience simplicity.
The more complexity in customer experience, the higher the service costs. And not just because complexity requires customer service staff to handle more calls; experience complexity also drives service cycle times, rep turnover and capital investment. Experience simplicity means fewer calls, easier calls, less rep burnout and more straightforward service technology investments. Oh, and service reps could spend more time on interactions with customers that grow their value instead of defending against customer defection.

The C-Suite wants customer experience simplicity.
The less energy customers have to spend managing their relationship with a brand, the more energy they have to invest in enjoying the brand promise. The outcomes: greater loyalty, advocacy, spend and commitment. Which means more revenue, more market share and superior competitive position.

So all of us – customers and companies, executives and front-line sales service reps – want pretty much the same thing: simplicity. So isn’t it surprising that more companies haven’t cracked the code on making their customer experiences simple?

Not really. Paradoxically, simplicity is actually pretty complicated. For any specific company there will be numerous reasons – cultural, financial, technical, operational – why customer simplicity is difficult to achieve. But at Verde we see three common reasons why companies struggle so hard to simplify customer experiences:

1. High quality simplicity depends on flawless integration of a complex set of business processes. 
From the outside looking in, I’d guess my less-than-simple cable experience resulted from the intersection of at least: poor hiring/training practices, inadequate technology infrastructure, sloppy marketing communications, unreasonable corporate goal-setting and short-sighted financial policies. If I was on the inside, my list would probably expand. Syncing all these processes up to deliver simple-yet-high quality experiences without sacrificing long term customer profitability is a very complex task.

2. Change is hard.
Even when companies have a good grasp of what is required to deliver a high quality customer simplicity, making the changes necessary to meet those requirements requires fortitude, focus and discipline. Very few meaningful changes in the customer experiences can rely on quick hit “silver bullet” solutions at a single point of the value chain. Staying on plan over time – and knowing how well you are progressing – is critical to simplifying customer experience.

3. Knowing what matters to the customer is really hard.
This is the big one. You may have noted our use of the adjective “meaningful” in my bullet above. Companies purposefully invest in a multitude of customer experience improvements every year, but many of these are not “meaningful”: they don’t matter to the customer and they don’t improve profitability or share. Consider for a moment the hundreds of experiences that comprise your customers’ relationship with your company. Which ones matter the most to loyalty and advocacy? Just as important: which ones don’t? Are you investing your energies and resources where you’ll get the highest return in customer equity?

Customer experience simplicity is complex. But all is not lost. There are specific proven ways to cut through all the complexity and align the organization against the experiences that really matter to loyalty and customer value.

Subscribe to this blog and go to Part II of this post, Which “Silent Experiences” Are Killing Your Customer Loyalty?, where we’ll share our thoughts on those tactics and provide some examples of companies who “cracked the simplicity code” and reaped significant gains.

Jon Skinner
Executive Vice President, The Verde Group

To Learn more about Jon Skinner

An Obsession with Success Metrics Won’t Create More Success – Find Out What Will

iStock_000028580136XLarge

I understand why companies like to focus on positive measurements — be they sales, profits or stock price. We all want to feel good.

But if you want to improve, you also have to identify what you need to do differently or stop doing.

In my last post, NPS: the danger of its singularity, I examined the Net Promote Score (NPS), a phenomenon in the world of customer experience measurement. But, as I explained, a sole focus on NPS can force you to overlook the complexity of company-customer relationships and the cause of your problems. What’s more, it measures an outcome, not the actions required to achieve it.

Stop, replace or adjust

Just as the mechanic must understand what’s wrong with your car in order to fix it, marketers cannot focus only on their successes. You want your car, and your company, to perform as well as it can. That means looking under the hood, with the help of computer diagnostics of course, to see what needs to be stopped, replaced or adjusted.

Diagnostics and measurements need to inform action. They need to look beyond the success yard stick of NPS. They need to identify problems, such as employee churn, customer churn, customer complaints, and customer problem experience.

Ultimately, the role of a good marketer is to figure out the measures that inform action. In the ideal world, those actions should drive more of those success outcomes – like improved sales, profits and market share.

Or they’ll stop buying

Customer problem experience is one of the best predictors of market impact. When customers experience problems, they are far more likely to take action than those who do not.

That action may be manifested as inaction or disloyalty. That is, the customer will stop buying from the company. They will buy less frequently and, depending on the problem severity, they will tell others about it – spawning more potential disloyalty to the company in question.

Based on over 250,000 customer responses from research conducted by Verde Group over the past four years, about 70% of consumers who choose to stop doing business with a company do so because they experienced a problem. Imagine being in control of that much risk.

Attitudes and behaviours tend to be consistent. Positive attitudes lead to approach behaviors; negative attitudes are associated with withdrawal behaviors. Negative attitudes, particularly when emotionally charged, can cause very negative withdrawal or disloyal behavior.

Ask about specifics

The measure of problem experience is not straightforward. You can’t simply ask a customer if they’ve had a problem. Most will say “no”. That doesn’t mean they didn’t experience something negative.

The best way to measure the extent to which your customers are experiencing problems is to ask them specifically about potential known problems. Have them answer “yes” or “no” to your list. Then use the output from that line of questioning to analyze the attitude-behavior link. Customers will answer differently. In the end, you will get a clear picture of the key experiences that are most likely suppressing market behavior and therefore, market value.

It takes guts to scrutinize problems. But that’s what leadership is all about.

Paula Courtney
Chief Executive Officer, The Verde Group

Learn more about Paula Courtney

NPS: The Danger of its Singularity

Metrics Ruler iStock small

After Fred Reichheld published The One Number You Need to Grow in the Harvard Business Review, many customer experience professionals thought they had to ask only a single question: “How likely is it that you would recommend company [x] to your friends and colleagues?”

Gone were the “overall” questions that had dominated customer surveys, as in “Overall, how satisfied are you with…” or “Overall, how would you rate the value of …” and the inevitable follow-up “Why?”

Soon this one question would become the de facto way to measure customer sentiment. Everyone seemed drawn to the simplicity of Net Promoter Score (NPS). And, it became a forcing function for many organizations. Finally, everyone was talking about wanting to improve the customer “metric”.

While we all want the simplicity of a single metric, whether it’s for business growth, weight loss or a happy marriage, we know it’s rarely that easy.

Believing that NPS is sufficient can be dangerous as it:

  1. overlooks the complexity of company-customer relationships
  2. is a description, not a cause and
  3. measures an outcome, not the actions required to achieve it.

Customer relationships are complex

Most experienced executives appreciate the complexity of the customer-supplier relationship. They:

  • Think about the hundreds of touch points customers have when they do business with a company.
  • Factor in the variety of products they can choose from and the various people with whom they interact
  • Lead complex marketing programs, campaigns and pricing strategies designed specifically for certain customer segments.

So why do many think a single metric, NPS, can sum it all up? Wishful thinking, I’d say.

Imagine this

A broker presents you with an investment opportunity, based on only one number, the company’s sales. Do you invest? No.

Or your doctor wants to assess your health. Can she do that with only one number? BMI, cholesterol, blood pressure or blood sugar? Humans are too complex to be assessed with one number.

So is the relationship between company and customer. While NPS is an important indicator, it’s not the only important number.

NPS is not a cause

Although Reichheld claimed that “willingness to recommend” was, by far, the best predictor of business growth, he never made a causal connection. Companies with high NPS scores had high performance, he observed. To many people, this implied causality.

But, that would be like watching videos of musicians with lots of tattoos and insisting their success was caused by the tattoos. You wouldn’t make that leap. You’d know that the tattoos were a common feature of the musicians, but not the cause of their talent or popularity. Similarly, high NPS scores are a common feature of growing companies, but not the cause of their success.

An outcome is not an action

NPS is a significant outcome of a good company-customer relationship. But NPS does not tell you what you need to change or do to encourage customers to recommend your company.

Experiences cannot be measured by a single number, any more than your BMI can give the full picture of your health. Descriptions and outcomes don’t tell you what you need to do to influence customer attitudes and behaviours.

What does? While there’s no simple “metric”, there are answers, too long for one post.
Subscribe to this blog or check back soon to find out how to measure experiences for ultimate market behavior.

See the follow up to this post: An Obsession with Success Metrics Won’t Create More Success – Find Out What Will

Paula Courtney
Chief Executive Officer, The Verde Group

Learn more about Paula Courtney