Chapter 2

Connecting with your customer to create a customer intelligent company

To understand the future you need to understand the past and this chapter looks at some of the reasons why companies still find engaging in meaningful customer-based activity very hard to accommodate. We will explore:

• Why you should move your thinking from being a customer-centric company to being a more customer intelligent company?
• What is the impact of the inequity of investment in infrastructure and the actual delivery of a customer experience? In the theatrical world this is like investing in
• a set but not in the script, story or actors.
• What is the legacy of the 1980s/90s investments in CRM systems and the relative lack of understanding about how to embrace the customer from an organisational design perspective?

Let’s explore the notion of the ‘customer intelligent’ company and consider how to give practical guidance to those serious about wanting to turn their intuitive belief into real programmes and then to make being customer intelligent an integral part of their business DNA not because it is fashionable or because it feels good to be ‘nice’ to customers, but because it makes sense from a company, an employee and their customers’ point of view. Happy employees stay longer, work harder and attract people like them to join your company, while customers spend more, stay longer and advocate your company more. Many executives see this as a ‘new journey’ and one that will require them to become customer centric and incur significant investments both in terms of cash and other resources – it is this fear that dilutes the enthusiasm and the eventual level of deployment of customer-based strategies.

Put simply companies and executives are wrong.

The customer intelligent company uses all of its knowledge and connects the customer into the very heart of its operation and decision making – the customer intelligent company has a very high level of self-awareness of its position in its customers’ lives and is in tune with the rhythm of their lives.

We have all heard companies claim that they either are or intend to become customer centric but what does that really mean and how realistic is that?

According to Investopedia, customer centricity is a ‘specific approach to doing business that focuses on the customer. Customer/client centric businesses ensure that the customer is at the centre of a business philosophy, operations or ideas. These businesses believe that their customers/clients are the only reason they exist and use every means at their disposal to keep the customer/client happy and satisfied.’

If we accept those words it means that the customer agenda will be at the centre of company thinking and dominant in the company, driving both strategic choices and day-to-day actions.

How many examples can you think of where that goal has been achieved when applied to an already-established business?

I struggle to name any because it is an unrealistic goal and involves such a cultural and strategic shift that it is easily suppressed through the passive aggressive actions of individuals across the organisation. So why not avoid this unachievable ambition and instead seek to be more customer intelligent instead?

A customer intelligent company will be both more efficient in terms of its operation and more effective at translating the often huge spend on marketing and product development into bottom line profitability.

Think about your own life and instances where you have seen a great advert and then when you tried the product or service it failed to live up to the expectation that had been created in your mind. You end up more disappointed than if you had never even tried it. Or think about a product that has clearly had a lot of development money spent on it – but the wrapper of the human experience does not reach the standard set by the product. We can all do this and it means that the investments made in advertising our product are not fully crystallised for the end customer.

Compare that with the Apple iPad that has managed to bridge the gap between technology and experience to the extent that my children credited it with emotions. What do I mean? When about to go on holiday a few years ago the children asked the question ‘Is iPad coming with us?’ An innocent phrase, but consider the phrasing of the question and you see that it meant they saw the iPad in the same terms as perhaps a dog, something to be considered, so we ended up taking another ‘family member’ along with us to Spain!

What are the characteristics of a customer intelligent company?

Ask yourself the following questions and see where you can honestly say, ‘yes we do that’:

• A customer intelligent company understands the cost of failure in terms of its customer promise, for example how much time and budget you spend resolving what are often self-inflicted customer problems.
• A customer intelligent company’s staff all know what experience they are required to deliver.
• A customer intelligent company understands the precise points in the customer journey where value is either created or destroyed.
• A customer intelligent company uses customer needs to actively design the critical interactions with customers.
• A customer intelligent company monitors a range of key customer-outcome-driven measures and makes changes based on those results.
• A customer intelligent company ensures all employees understand how their actions impact on the customer, including both frontline and back office teams.
• A customer intelligent company spends enough time and resources to train staff to deliver on the customer/brand promise.
• A customer intelligent company is making small course adjustments every day to improve the experience.

In short, a customer intelligent company understands the value of connecting with a customer’s mind as well as their wallet and that to do the former you will improve your results in terms of the latter.

The concept of customer intelligence is nothing to be scared of, it is not a rebadging of CRM (customer relationship management), it is not about an IT solution (and all the financial pain that brought)–it is about using the wide range of information already available and using that information more intelligently to better inform how to deliver and what to deliver through the customer experience. I will argue later that, in fact, customer experience is not about ‘big data’, it is about ‘little data’, it is not about big spend it is about small spend – it is about using what already exists to become more customer intelligent. That will mean centralising information that relates to your customer experience and connecting different teams and departments that own parts of the experience today. It will also mean thinking differently about the business and how you design experiences. To be intelligent you need to be able to view customer experiences from the outside in, and identify and understand the critical stages in a life cycle of experience so that you actually invest where you can make a difference. Successful customer experiences are part science and part art: it is all about mindset and culture, and it is this blend that creates success.

Remember 95 per cent of what you need to improve your customer experience will already exist in the company. The role of the customer experience team is to act as the catalyst, the connector and facilitator inside the company

The continuing debate over the value of investing in the customer experience has acted as a brake on its development as a discipline. It has taken several years to build sufficient evidence to convince boardroom sceptics, but the evidence to support the link between commercial and stock market success and the delivery of a superior customer experience continues to grow every year. The latest round of studies has reinforced this view showing that where the customer experience is rated high the stock performance is similarly high, and vice versa.

Studies in both the United Kingdom and USA bring this correlation into stark context – what is significant is that both studies now have trends over many years that are consistent.

The UK customer experience top 100 achieved double the five-year revenue growth of the FTSE 100.

Customer experience excellence top 100 growth by sector compared to FTSE 100 from 2012–2015

Source: KPMG-Nunwood CEEC 2015 UK Analysis

What we see across the globe is that it is increasingly the case that product offerings are closer to parity and more easily imitated, which means that creating and managing a positive and memorable customer experience is often your single greatest source of sustainable differentiation and therefore competitive advantage. The good news is that customers are prepared to pay for a better service experience. As far back as 2012, Oracle’s research report ‘Why Customer ”Satisfaction” is No Longer Good Enough’ revealed that, 81 per cent of customers surveyed are willing to pay more for superior customer experience. With nearly half (44 per cent) willing to pay a premium of more than 5 per cent.’ In the UK Institute of Customer Service survey February 2014, 25 per cent confirmed they would prefer a higher level of service and ‘were prepared to pay a premium for it’.

Remember the evidence is that your customers will pay more for a better experience and delivering a poor experience will cost you more. By improving the delivery of your experience you will be impacting positively on both sides of the balance sheet

Post the financial crisis of 2008 many companies implemented wholesale cuts to their business operations, often with little knowledge of the impact on their customer’s experience. We now know that it is important to understand your customers and what they really value about their interactions with you and as a result boardrooms have started to take the value of experience seriously. This has opened the door to us as customer experience practitioners to really push the agenda.

Remember we can thank the financial crisis that has caused business leaders to go back to the business basics, without customers you have no business! Today’s connected world is allowing start-ups to disrupt the established companies by focusing on experience

We know that understanding how to gain and keep customers over time is increasingly critical at a time when customers have more and more choice, not only in terms of product but also channel and the experience they are prepared to pay for. Understanding what a customer values in terms of the experience and what are the critical interactions that drive their behaviours and then actions is at the heart of customer experience. The rise of the small business designed to exploit the best market opportunities is another key market factor – they feed off the mistrust of the incumbent who is seen to have underdelivered or exploited their market position in experiential terms.

If you think about your business, how easy it is to match product changes quite quickly, but if you think about copying a brand reputation around best-in-class experience that is much harder and intangible. That translates into a much more sustainable advantage and as has been evidenced has significant extra benefits.

When you are recognised for your customer experience:

• you are often seen as innovators;
• your stock performance is likely to be better than your competitors;
• you will enjoy lower staff churn rates, which means you get to keep your best performers longer and avoid the cost in cash and quality of replacing key leaders;
• the cost of handling complaints falls;
• the company benefits from the free positive customer word of mouth and the associated ‘halo effect’;
• your customers are more willing to share ideas and improvements;
• your customers will bank a higher level of ‘forgiveness’ when you make a mistake.

Put simply, your customers would rather you existed than not – can you claim that about your company?

Preparing to connect with your customers

If you ask yourself which companies you admire, most people will end up thinking about brands that have great products but they are complemented by great and differentiated experiences. In many cases they will not even have experienced the product or service themselves but they have heard positive messages, the ‘halo effect’ –today’s customers talk about their great experiences and their terrible experiences with equal passion.

Remember brands that we admire are typically those that deliver consistently and occasionally exceed our expectations

If the case both intuitively and empirically is so strong the question has to be why are more companies not fully engaged with delivering on this key part of a business strategy?

It has become clear over a number of years that the easiest way to lose traction inside a business is to always tag the word customer to a subject. Why is this? By tagging the word customer it is possible to switch off a significant portion of an organisation’s management and staff who immediately assume that the ownership must lie with either marketing or customer service – after all, they are the only people who really have customers, right? Even sales teams often only have customers when they need them to complete a sale or affect a renewal; there was an old retail adage that said, ‘life would be just great if it wasn’t for customers’. Of course the reality is that everyone in a company has an impact on the end customer, they just don’t see it and nobody helps them to make the connections that are required in order to do so.

Back in 2004 in their book Building Great Customer Experiences Colin Shaw and John Ivens talked about their view that ‘the customer experience will be the next business tsunami’. The problem is that few companies actually had approaches in place to deal with that ‘business tsunami’ effectively, and the same remains true today as leaders struggle to come to terms with what they actually can do in practical terms to drive business benefit from this knowledge.

Your question is how well prepared and capable are you today in terms of the day-to-day practicality of what can be done today, tomorrow and the next day to address it? As ever in these situations your company will probably see itself as unique and your industry or sector as unique too, requiring bespoke solutions when the reality from many engagements is that the Pareto principle is not far out in terms of the 80 per cent of issues and solutions that are cross sector, geography and industry. It is usually just a matter of degrees of influence of specific factors that weigh more heavily in one area or another.

For example, bringing new customers on board is a very common issue for companies whether they are business-to-business or business-to-consumer – for a bank it may be more important than an online retailer, but it is important to both nonetheless. The 20 per cent may require some specific work, but if the companies could get to the 80 per cent first then the 20 per cent would follow later. What I have found over time is that the focus tends to be on the difficulties while the basics – less ‘sexy’ but absolutely fundamental and often where the early wins are to be found – are not addressed.

Remember all companies have one thing in common – people are customers who want a product, a service or probably both

What else can we say has held back the progress of customer experience? Well not least the fact that it is not considered a discipline in the same field as perhaps areas such as finance, marketing, sales and business process re-engineering. The whole area has tended to be classified as ‘soft’. In some senses those of us engaged in the world of customer experience did it a disservice by not more strongly developing the financial links between the customer experience and business performance, this gap is now being filled quickly as more and more tracking-based evidence is emerging from respected sources including Forrester Research.

The make-up of the top executives across sectors has had an impact with a significant proportion drawn from the world of finance – these individuals while interested in the concept have almost to act against their likely personal profiles to enable them to embrace and really evangelise on the subject. It has become clear that without top-down engagement and belief then the customer experience will only ever be a small part of a balanced scorecard if it appears at all –

at worst it will be a project given to someone in the organisation who has little or no chance of success, but at least they provide senior managers with a fig leaf to say that they are taking it seriously!

Remember to be successful any customer experience activity needs top-down support and bottom-up action and NEVER refer to it as a project or programme which shouts short term and someone else’s issue

Education has also been a black hole with few training programmes making the leap from simple service training to the more encompassing customer experience agenda. Senior executive programmes rarely include the customer experience as part of the learning programme. The effect is felt both at the board level where executives are unsure ‘how’ they should engage with a customer experience agenda and lower down where the newly appointed Director of Customer Experience has no source to use as a guide for their role and often find themselves in a team of one as the organisational design does not have a convenient customer experience model.

Remember just appointing someone to a role with the word ‘customer’ in the title does not mean they are fully equipped to deliver in a customer experience role

Thankfully the business world is ready to embrace a new future where companies become more ‘customer intelligent’, which essentially means that they structure and manage their businesses in a way that optimises all of the information available to them about their customers and effectively balance the commercial needs with their customer expectations, creating a true ‘win–win’ position.

If you make the decision to focus on the customer in your strategy it’s the start of a journey and the first question needs to be: ‘can we identify who our customers really are?’ So one of the start points is to ask: ‘Who are your customers and what do they look like?’

This leads to endless hours of debate and discussion as different functions have their own names for customers – public relations have ‘opinion formers’, the group board have ‘stakeholders’, the sales team have ‘clients’ and ‘prospects’, and the retail team have ‘customers’.

What needs to emerge is a picture of those customers that make up the bulk of your paying business, at the highest level – you have years to develop a whole segmentation so don’t overthink this.

When you do develop segments of customers make sure that they are done with a strong human and visual element rather than statistics and trend analysis.

In an attempt to sort out this confusion one international business decided that customers were simply ‘the people who actually pay the bills’, and even that was then dissected and argued over.

The customer value proposition

Having established what your customer looks like you need to begin to understand their relative importance in your company and your customer engagement model? In traditional marketing terms you need to look at the customer value proposition (CVP) where your company is considering the three components of price, product and service – you can substitute customer experience for service. A CVP is ‘the promise that value will be delivered and the belief from customers that value will be experienced’. It is not an advertising strapline or slogan and it must not make ‘benefit assertions’ that are not subsequently delivered or are so difficult for customers to access or experience that they are in effect meaningless.

Few, if any, businesses derive their CVP from an equal and high weighting along each of these three dimensions, as this is unrealistic. The CVP is determined by the relative focus on the three dimensions and while each of the three dimensions will be included one will always be dominant.

Remember a CVP should show the relative balance of importance of the key strategic drivers

Even those companies that have traditionally been seen as product businesses from high-tech lab equipment to major logistics companies are recognising that differentiation on the product level is no longer sustainable in the longer term and are dialling up the service/customer experience component of their emerging CVPs to a position of strategic dominance. Stepping up or evolving the customer component is the key.

Remember to turn the company on its head – which is the way too many companies have lurched – is not sustainable or deliverable

Having agreed on an enhanced role for the customer as part of the CVP your challenge is to find a means for delivering a differentiated experience in areas that the customer values, track performance and identify areas for improvement to effectively drive business performance.

Remember customer experience activities and success should be directly connected to the bottom line of your business, otherwise why do it at all. Customer experience is not about an altruistic customer utopia, it is about combining customer experience with commercial sense

Building up knowledge about your customers

In order to do that we need to understand how a customer experiences the company and where the key points of interaction are that will influence and then drive the behaviour of that customer.

The backdrop for this is a customer journey map (CJM) that is an ‘outside-in’ customer view of how they experience the sector, product or service. When you ask companies if they have this view of the world many will say ‘yes we do’. What emerges on closer inspection is that they have business process maps – these are not a CJM, they are an internal map of ‘what you do to customers’. Making this leap of understanding can be difficult given the, often huge, scale of investment made in mapping internal processes. It is critical to understand the difference between an ‘outside-in’ and an ‘inside-out’ view.

Remember that process maps are NOT customer journey maps

Your company has the capability to take an ‘outside-in’ customer view and to create a customer journey map – it is there just waiting in the wings to be activated . The information needed to create your CJM is locked up inside your company and we will unlock that when we explore how to create a CJM in Chapter 6.

The problem is that we tend to play a game of pass the parcel with customers – teams engage only during specific stages and then the customer moves on to another department to be managed – in this way we create disjointed, compartmentalised experiences which feel disjointed to the customer. Anyone who has experienced the cold handoff when we phone a call centre and have to repeat the same story to multiple people brings this into sharp relief.

Remember that every customer handoff during an interaction is an opportunity for dissatisfaction and negative emotions to develop

The development of CJM approaches over the last 10 years has now provided ready-made structures both in the process of creating and then refining the output of a CJM to allow your company to connect the parts of the company involved in the various stages into one end-to-end journey. The visual CJM provides you with a common view of the journey for the first time, a critical step to gaining alignment across the silos of your internal teams and to begin to understand interdependencies across teams in terms of the experience that customers have of your company.

Your CJM becomes the pivot around which experiences can be both visualised and designed. It allows you to centralise into a single point information that will be held in different parts of the businesss – connecting data, information, people and processes.

Remember the map itself is not the end deliverable, it is just a tool to build actions off and a reference point for future activity. Too many businesses produce a map and then stop – if you are going to do that you are better off not even starting

Of course there remains a significant role for the underlying process mapping and engineering, but this should now be led by the customer journey map activity.

The impact of not being customer intelligent?

Let’s consider an example of a business that is not displaying a customer intelligent approach. In a world where Disney continues to set the benchmark, this hotel has invested very significant sums in creating a potentially world-beating waterpark, both in terms of the physical rides and the advertising and marketing budget to promote it. Yet in terms of the end product, I would argue having experienced it that it is today a triumph of style over substance in experiential terms.

The expectations are set high by the slick and expensive advertising campaigns. Having purchased tickets I arrived with my family and having navigated the crowds found myself at the entry to the park. First problem was that I actually did not have actual tickets, I had tickets to get a ticket that meant a queue of around 20–30 minutes that no one had prepared me for, to arrive at one of the handful of counter points. The tension levels and frustration were rising. Having got to the front of the queue it appeared the only reason for this secondary ticketing was to provide an opportunity to sell me more. Having finally got into the park it was then unclear how it worked, people were wandering around with large inflatable rings – where did they come from, why do they have them, we wondered? Looking around there was no one to ask, not quite Disney where we would be falling over staff trying to predict that we needed something. Next the signage: once you got to the top of the rides there were different queues and different entrances – again creating unwanted confusion about which one was the right one. Finally there was little obvious shelter from the blazing sun or measures taken to ensure that visitors remained cool. The irony of the lack of staff was that when you looked into the water channel that flows around the park there were plenty of staff on hand – one can guess that drowning is a bit of a risk in this location and would result in some rather bad publicity, staff are deployed to ensure this does not happen.

A customer intelligent company would recognise these visitor issues and act on them as they are damaging the brand. The points to note here are that expectations were created both by the company advertising and the personal comparison to other high-end attractions that are not delivered in reality at this resort. The investment was in the infrastructure and not the experience and these shortcomings were very obvious and resolvable. In the short term just communicating with visitors to better manage their expectations around ticketing and scripting the ticket office conversation to provide better basic information about how the park functions would be a quick win.