To a Customer Centric Business
An Infosys consultant returning to LHR from a business trip to SIN arrived at the airport and made her way to the gate for an 11:30 p.m. departure. As she neared the gate, she noticed the aircraft wasn’t there. Great, delayed. She grabbed a seat, hoping it wouldn’t be long. Soon, an agent got on the loudspeaker and explained the delay was due to weather in London. OK, not much they can do about that. An hour later, the agent made another announcement, apologizing profusely, but admitting the delay would last at least until 2 a.m.
Along with the announcement, the crew rolled out a spread of food and drinks to tide customers over, and handed out blankets and pillows so people could rest.
The flight wasn’t called until 4 a.m. But as the weary passengers prepared to board, friendly crew members stood at the jet way and handed out a gift, along with a survey asking for opinions on how they’d handled the disruption. On the plane, the captain personally apologized for the delay. And flight attendants provided one-on-one help with each passenger’s connecting flight.
What’s missing from this picture? Lost customers. Angry tweets. Passenger frustration.
Singapore Airlines did things right. They explained the delay, apologized, tried to diminish the inconvenience, and solicited feedback. They knew this was a moment customers would remember, so they used it as an opportunity to create a positive experience.
But great customer experiences don’t happen by accident. They are planned, designed and actively managed. Companies that consistently deliver, and improve upon, positive experiences have three things in common: customer insight, a customer culture, and a “designed” customer experience.
THE CUSTOMER EXPERIENCE MATURITY MODEL (CXMM)
How good is your organization at planning and delivering outstanding customer experiences? Our Customer Experience Maturity Model has five stages of maturity, based on how advanced an organization is in three capabilities: insight, culture, and experience design.
1 Customer Insight: Does your business have an accurate, data-driven picture of customers, their needs, and their behaviors?
Carmaker Nissan had customer satisfaction challenges in 2011. The problem was inconsistencies in the dealership experience (comfort, rest room quality, etc.), and Corporate had no means of tracking or responding to these problems.
Once the company developed a means to measure and collect feedback on the dealership experience, the effect was significant; customer satisfaction results were boosted in less than a year.
Of course, it’s not just having good data that creates insight; it’s the delivery of that data in bite-size chunks that can drive action.
This means serving up alerts, exceptions, and thresholds – highlighting the So what for busy executives. It also means delivering the data in new ways, via mobile, tablet or other portable devices. How insights are filtered, interpreted, and delivered can exponentially increase their value.
2 Customer-Focused Culture: Does the whole business revolve around providing value and service to customers?
Rackspace is an IT infrastructure firm that understands hosting has become a commodity, and the only way to differentiate is through outstanding service. The company refers to itself as a service business rather than a technology provider. One employee even holds the title “Customer Fanatic & Vice President of Fanatic Support.”
Once when service went down for a few hours, Rackspace refunded customers for the entire day at a cost of $3.5 million. The move generated tremendous word of- mouth and customer loyalty. And as a result, Rackspace has had 40 consecutive profitable quarters, grown at least 50% every year since 1999, and in 2011 grew net revenue 31%. They charge a premium for their service, but customers are happy to pay it.
3 Customer Experience Design: Has the business actively designed a differentiated experience at all touch points?
Apple is an oft-cited example of exemplary design, but for good reason. Apple’s genius in products such as the iPad and the iPhone comes from a deep understanding of how a product is made: its materials, its tooling and ergonomics, the unboxing experience – the total design.
But the “Apple experience” transcends product design: go into a retail store, and you can check yourself out when purchasing small items by using an app on your phone. The store is designed to inspire, and everyone is invited to use the product. Small details are all well designed, from the roving employees who come to you to complete a sale, to the receipt printers hidden under every desk in the store. Beyond the stores, every single customer touch point, down to emails, support, forms, contracts, and problem resolution processes, are actively designed at Apple. Often ignored as inconsequential by Apple’s competitors, these small encounters create an incredibly positive impression.
CXMM: THE STAGES OF MATURITY
Becoming so customer-centric that you develop devoted evangelists doesn’t happen overnight. It’s a journey with several stages, and these are the stages of our Customer Experience Maturity Model.
Great customer experiences don’t happen by accident. They are planned, designed, and actively managed.
THE CUSTOMER IS IGNORED
Insight: In Stage 1, businesses are capable of receiving and processing customer complaints, but they do not act on the root cause. They may track competitive positioning of customer satisfaction through 3rd party research, but they only understand customer interactions in terms of their own organizations.
Culture: Companies like this focus on streamlining processes internally rather than on improving customer interactions.
Experience Design: A Stage 1 business tolerates bad experiences. The most critical experience failures are addressed reactively, but not in a systematic way. For example Ryanair, who makes customers pay to use the aircraft toilets, is a clear example of a company that has made the decision to compete on price rather than customer experience.
THE CUSTOMER IS HEARD
Insight: A Stage 2 business uses customer research to segment its customer base. Customer satisfaction and its drivers are understood, but only in the context of the industry.
Culture: Businesses at this stage will acquire and manage data on satisfaction through warehousing and regular market research including benchmarking, mystery shopping and satisfaction surveys. But management doesn’t share data throughout the business.
Experience Design: At Stage 2, the customer experience is formed through systematic, on-going improvements like usability testing and channel metrics.
Initiatives are sporadic, siloed, and give rise to uneven customer experience across channels. Imagine the bank whose advertisements promise no hassle, but opening an account is a long and arduous process with endless forms full of complicated legalese. The customer service might be good at your local branch, but if you go to the one in the next town, it’s inconsistent. Your business and personal accounts may not be connected, and the web site takes a few minutes to sync up with any transfers you’ve made on the mobile app. Each channel is trying to be its best, but the customer experience is hardly consistent across touch points.
THE CUSTOMER IS UNDERSTOOD
Insight: Businesses in Stage 3 understand the met and unmet needs of their customers, and use those needs to help identify new business opportunities. Customer needs are discovered in sustained qualitative customer research focused on drivers of behavior.
Culture: A prevailing “internal customer” service culture typifies Stage 3 businesses. Employees treat each other as customers, striving to provide superior service internally, and business performance is measured on customer satisfaction and behavior.
UK sandwich chain Pret-a-Manger famously sends all candidates (regardless of the post applied for) to a store to work a six-hour day; the store’s employees decide whether to keep them or not. In fact, a candidate for chief financial officer exited the recruitment process based on feedback from an in-store team. This ensures that Pret-a–Manger hires and keeps motivated, customer focused staff.
Experience Design: At Stage 3, the key drivers of positive experiences are actively managed. The most important moments in the customer experience, those things that are critical to quality for customers, have specific performance objectives and are tracked.
The vast majority of companies do not make it beyond Stage 3. Of course not every business can have passionate customers, but every business can make a strategic decision to improve their existing customer focus.
THE CUSTOMER IS ENGAGED
Insight: At Stage 4, customers provide immediate feedback about their experiences. The objective is to then feed real-time, actionable customer intelligence to all decision makers in the organization. Businesses in this stage quantify and measure the customer experience, and priorities are set accordingly.
Culture: Employees understand their role in the customer context and are empowered to act accordingly. If they see a problem, they know how to solve it and don’t have to ask for permission to do so. In fact, they are measured on customer experience as part of their performance rating. Consider the Ritz Carlton, which empowers associates to spend up to $1,000 per day per guest to improve someone’s stay. While not every company can afford to spend this much on each customer, the spirit behind the idea is instructive. At every Ritz, the staff also reviews guest situations at the beginning of each day, in a meeting they call the “Line Up.” Most businesses could afford to implement a practice like this.
Experience Design: Customer experiences are structured, identified by segments and aligned with sales and customer service. The quality of customer experience delivery is fully under control, with consistent, positive experiences delivered each and every time, and your most profitable customers receiving superior service.
THE CUSTOMER IS PASSIONATE
Insight: A Stage 5 business tracks and reports on all interactions with customers and predicts the effect of future interactions. Businesses at this level have invested in systems that augment raw customer data with real time feedback. At popular Spanish retailer Zara, store associates act as “eyes and ears” for Headquarters, noting what colors and styles are hot. Executives actively monitor and respond to this feedback, rotating lines and products mid-season.
These companies have a systematic, holistic and dynamic view of the customer and track individual customer preferences, like the Nordstrom personal shopper who calls because she’s found an item you might like based on previous purchases.
Culture: A business with passionate customers routinely involves them in setting the direction of the company and in the development of new products and services. A Stage 5 business will operate a customer-centric organizational model, like Harley Davidson, where senior executives are required to spend at least 15 days a year riding with customers in order to really understand their needs, lifestyle, and experience with the product.
Experience Design: Stage 5 Experience Design uses customer behavioral data to tailor products to individuals, rather than just segments. Think about the recommendation engine on Netflix or the personalized recommendations on Amazon; these are Stage 5 companies who tailor their products and experiences to a customer’s specific buying patterns rather than a general demographic like Soccer Moms. The personalized customer experience keeps engagement and customer retention rates very high.
CXMM: THE BOTTOM LINE
With this 5-stage model, businesses can work their way up the ladder of collecting insight, building a customer-focused culture, and embedding experience design in every decision every employee makes.
The journey to a truly customer-centric business is a long and arduous haul, but if you succeed in passing through enough stages, your marketing hurdle will decrease in inverse proportion to your rising customer loyalty.
Stage 5 companies tailor their products and experiences to a customer’s specific buying patterns rather than a general demographic like Soccer Moms.
About the authors
Rob Ballantine is a Principal in the Retail, Consumer and Life Sciences practice of Infosys.
Richard Hamerton-Stove is a Principal in the Financial Services practice of Infosys.