Customer Experience Is Not Our Responsibility

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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 

3 Steps to Firing Your Worst Customers

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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 

Verde Update: New Product Partnership Launched with LoyaltyOne Consulting

Verde Group and LoyaltyOne Consulting partner to deliver innovative Customer Experience solution

I am pleased to share exciting news. Verde Group has partnered with LoyaltyOne Consulting, a global customer loyalty consultancy specializing in the design and development of customer engagement strategies for Fortune 1000 brands, to develop an innovative new customer experience (CX) offering to add to Verde Group’s suite of services. The new offering will link the specific customer experiences most damaging to a company’s financial performance to specific shopping behaviors to gain maximum return on revenue and market share.

We recognize that in today’s hyper-competitive retail environment customer experience excellence is critical to market leadership. The offering will integrate LoyaltyOne’s behavioral analytics expertise and strategy consulting practice along with Verde Group’s 20 years of customer experience measurement and our Revenue@Risk™ methodology. The output will be a highly actionable segment-specific roadmap to create authentic customer loyalty, based on the CX improvements statistically linked to customer spend and brand equity. The data insights will have enterprise wide applicability, from corporate CX strategy development to location-specific implementation of CX delivery tactics.

We have partnered with LoyaltyOne because they are well aligned with Verde Group’s goal to provide you with experiential insights, strategies and treatments to take your business to the next level of customer engagement. Our partnership will deliver a unique blend of experiential and behavioral data insights to allow you to make business decisions differently and more powerfully than you do today.

Thank you for your interest in Verde’s work. As our offering with LoyaltyOne develops, I look forward to sharing more details on how it may be of value to you and how we can work together to achieve and sustain authentic customer loyalty.

Sincerely,

Paula Courtney, President & CEO
Verde Group
71 Ontario Street
Toronto, ON M5A 2V1

www.verdegroup.com

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About LoyaltyOne

LoyaltyOne is a global leader in the design and implementation of coalition loyalty programs, customer analytics and loyalty services for Fortune 1000 clients around the world. LoyaltyOne’s unparalleled track record of delivering sustained business performance improvement for clients stems from its unique combination of hands-on practitioner experience and continuous thought leadership. LoyaltyOne has over 20 years history leveraging data-driven insights to develop and operate some of the world’s most effective loyalty programs and customer-centric solutions.

www.loyalty.com

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