Sixty percent of brands want to differentiate based on superior customer experience, according to a recent Forrester survey. Of those, 13% have even higher hopes. They are looking to create experiences that differentiate them from any firm in any industry, not just their own.
It’s no surprise given the potential benefits: lower service costs plus increased revenue from better customer retention, greater wallet share, and superior customer acquisition. But sadly, the same survey revealed that fewer than half of those companies are doing the things it takes to achieve their lofty goals.
In fact, 85% of companies have no systematic approach for determining what a differentiated customer experience even looks like—let alone creating one.
How can organizations turn their aspirations into reality? To find out, my colleagues and I interviewed and observed dozens of firms that have tried to develop customer experience discipline over time. We found that companies that have successfully improved customer experience maturity all took the same four-step path: repair, elevate, optimize, and differentiate.
Step 1: Repair
Before they set out to delight customers, organizations must have a way to identify and eliminate experiences that cause customers pain and frustration. While some companies treat this effort as a one-time research project, most realize that it’s the first step of a continuous improvement process. For example, Barclaycard’s US division started a process for analyzing every single customer complaint, which it defined as “any customer expression of dissatisfaction regardless of channel, business line, or contact center.” The firm began holding a monthly meeting called the “Customer Accountability Forum,” where business leaders prioritize the customer agenda, work through any roadblocks that may impede existing projects, and measure results. Those metrics show that the Customer Accountability Forum has, to date, produced at 50% drop in complaint volume and a 28% decrease in customer attrition.
Step 2: Elevate
Once they’ve established a safety net for bad experiences, brands must leverage customer insights and other practices to make the kind of behavior that leads to good customer experiences the norm. For example, Rosetta Stone began gathering up every piece of customer feedback—positive or negative—about the program’s new online teaching experience and started sending employees monthly reports of the top customer rants and raves across webinars, calls, chats, surveys, online reviews, Facebook, and Twitter.
Step 3: Optimize
If implemented successfully, the first two steps will reduce negative experiences and make it far less likely that new problems will emerge. They can take customer experience from poor to OK, and keep it there. But to go from good to great, companies need to build a more sophisticated tool kit for making customer experience decisions. AT&T Mobility, for example, had been tracking and fixing customer experience issues since 2008. But in 2012 the firm moved up the maturity ladder by adopting a more rigorous process for analyzing the value of great customer experiences. Customer experience and finance experts combined customer interaction data, Net Promoter Scores, and financial metrics to create a model that shows which aspects of customer experience contribute most to things like revenue per-user, cost of service, and churn rates. Business leaders now use this information to guide business decisions based on a more complete understanding of the costs and benefits of each proposed action.
In addition to models, firms at this phase adopt employee training programs that make sure employees have the skills to deliver the optimal customer experience. Progressive Insurance uses behavioral analytics to personalize the coaching that managers give call center reps. The Cleveland Clinic put all 42,000 of its employees through empathy training, even those who don’t work directly with patients. And Virgin Media now builds empathy among its top 120 directors by requiring them to spend a week in a frontline job so that they know what to do to make things easier for those serving customers every day.
Step 4: Differentiate
By the end of step three, organizations have acquired the ability to consistently deliver a good experience, detect when things go awry, and adjust accordingly. But if they want to have a shot at creating significant competitive advantage, firms must go further, adopting practices that help them consistently reveal unmet customer needs. For many firms that’s a big shift, but a truly differentiating customer experience may require a company to operate in dramatically new ways. For example, when interactive agency Organic was working to redesign the online experience for a chain of high-end fitness clubs, agency members became members of those clubs, participated in classes, and observed how others used the club. They even made a documentary-style film to capture the movement, expressions, and body language of customers. One key insight that arose from the study: people who take spin classes always like to use the same bike. If they can’t get the bike, they don’t show up. That’s why the fitness club site now allows users to not only reserve a spot for the spin class, but also reserve the actual bike that they want. According to the agency, “We wouldn’t have discovered this need if we hadn’t gotten away from our desks.”
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