Customer Experience Improvement Momentum: Whitepaper

Customer Experience Improvement
Momentum
Engaging Employees for Sustained Profitability

Customer Experience Improvement Momentum
2009


“What everyone in a company does can be reduced to one of two functions:  to serve the customer or serve
someone who does.”       –  W. Edwards Deming

Momentum is essential for any long-term
Summary:
initiative – particularly when a number of recent
Momentum of customer experience improvement
initiatives is in jeopardy. Lack of cross-functional distractions have occurred. No firm is exempt
alignment and organization-wide employee from the global economic shocks that are
engagement impede value to customers and changing the competitive landscape, customer
companies alike. Internal branding sustains 89% of firms view
realities, organization structure and morale. customer experience
momentum by overcoming inward focus through
systems thinking, change management, As dramatic changes in customer perceptions, management as very
organizational learning, and well- balanced metrics expectations and needs are underway,
important or critical to
and rewards. the firm’s strategy in
heightened attention to customer experience 2009
monitoring and improvement is imperative.
Contents: Unique opportunities for customer experience
- Momentum for Initiatives differentiation exist in downturns while
- Business Case for CEM competitors are preoccupied with survival and

- Customer-Centricity Challenges internal politics.

- Internal Branding is a Way of Life
- Culture In Forrester Research’s February 2009 Obstacles

to Customer Experience Success report, 89% of
- Motives & Shared Vision
firms view customer experience management
- Systems Thinking
(CEM) as either very important or critical to the
- Change Management
firm’s strategy in 2009. While 12% of firms
- Organizational Learning
expect higher cuts in CEM spending this year,
- Accountability
48% of firms expect lower cuts in CEM spending

- Holistic Processes relative to other programs. 80% of firms aim to

- Actionable Metrics differentiate customer experience, although more

- Motivation than half cite lack of cooperation across

- Balanced Incentives organizations as a momentum inhibitor.
- Self-Reporting Recognition

Business Case for CEM Momentum
Aberdeen Group’s August 2008 Customer
Experience Management study demonstrated
significant advantages for best-in-class CEM
practitioners. The best firms enjoyed year-over-
year improvement compared to industry average
performers and laggards.

Lynn Hunsaker is head of ClearAction
and author of these e-handbooks:
- Customer Experience Improvement Momentum
www.ClearAction.biz/cem-momentum
- Metrics You Can Manage For Success
www.ClearAction.biz/cem-metrics

© 2009 ClearAction LLC.  All Rights Reserved.
2

2009

Customer-Centricity Challenges Gallup’s February 2009 article, Building
Customer-centricity weakness is a key reason Engagement in This Economic Crisis, reports that
why momentum is inhibited by lack of firms with high employee engagement levels
cooperation across organizations, as seen in the have 12% higher customer advocacy, 18%
CMO Council’s July 2007 Customer Affinity study. higher productivity, and 12% higher profitability
While 12% of customers judge their vendors as than bottom-quartile business units. 46% of senior
marketers admit high-
extremely customer-centric, 56% of the vendors
profile negative
think they are extremely customer-centric. Yet, high levels of employee engagement alone customer experience
When asked what qualities best characterize a will not guarantee customer experience has compromised
customer-centric company, customers reply: improvement. In the book Loyalty Myths by their brands
- organizational, operational and cultural Keiningham et al, cause-and-effect is proven
alignment around customers inconclusive between employee satisfaction or
- empowerment of employees to address and loyalty and customer loyalty or business results.
remedy customer problems “The role of employees in building customer
The biggest source of relationship issues from loyalty is far more complex than the myths
customers’ viewpoint is overpromising and imply. … Employee satisfaction and employee
under-delivering, causing substantial distrust. loyalty are only two of a myriad of factors that
ultimately affect the loyalty of customers, and Employee satisfaction
The costs of such disconnects are evident in loyalty can still be had in the absence of either of and employee loyalty
are only two of a
Harris Interactive’s October 2008 Customer them.”
myriad of factors that
Experience Impact Report: 84% of customers ultimately affect the
will register a complaint or tell others of a bad Corporate service intelligence (CSI), described in loyalty of customers
experience. This tendency is rising from 74% in the July 2007 AMA Marketing Management
2007 and 67% in 2006. article, Service Smarts, broadens the paradigm of
employee engagement and customer experience
In CMO Council’s January 2009 Turning improvement. “The essence of CSI is in an
Customer Pain Into Competitive Gain study, 46% organization’s design, communications, policies,
of senior marketers admit that high-profile and practices that clearly put service first. CSI
negative customer experiences have looks at service quality as a corporate Frontline employees
compromised their brands. responsibility, not a service deliverer problem. are the last link to the
CSI has frontline employees as the last link to customer in a very
long chain
Hence, sustained profitability is at risk from lack the customer in a very long chain. CSI is high in
of cross-organizational cooperation and companies that make service excellence a fact –
alignment with customers, to empower a way of life – all along the chain. So, CSI is
employees for adequate resolution of customer how companies are organized and what they
problems and to maintain brand promise actually do – not what they say they believe in.”

integrity.
Internal Branding is a Way of Life
Even among the best-in-class firms in the Internal branding is more than an ad campaign
Internal branding
Aberdeen Group study, top challenges are: focused on customer-facing employees. It’s a engages all
- cross-channel CEM multi-faceted cultural initiative to guide executives and
- organization-wide focus on customer service employees company-wide in managng their employees effectively
in outside-in thinking
differentiation personal impact on customer experience.
and behaviors
- commonly agreed-to metrics
- 360-degree view of customers Internal branding engages all executives and
employees effectively in outside-in thinking and
Effective employee engagement is at the heart of behaviors. It differentiates primary motives and
these issues – including effective executive secondary motives as a basis for doing the right
engagement. thing for the company’s long-term well-being.

3

2009

Internal branding gets back to basics. If When the primary motive is pure, it’s more
execution is broken, examine the foundation natural to overcome – and ultimately prevent –
rather than fill potholes. Tendencies to focus on the stumbling blocks of execution, adaptability,
IT solutions, statistics, simplified metrics, cooperation, organization-wide focus, common
customer acquisition, or isolated opportunities definitions, 360-degree perspectives, brand
have over-shadowed the realities of people and integrity and engagement.
processes and culture as the most important
determinants of customer experience. Shared vision tools to establish a customer-
centric primary motive include customer Systems thinking is a
holistic view of
After all, hassles and disappointments are the personae, customer bill of rights, stories, games
components of an
primary reasons customers leave a brand. The or a super-ordinate goal. Ideally, the shared entity in context of
CMO Council’s Customer Affinity study reports vision links external and internal goals company- relationships with
that distrust leads to 7% of customers no longer wide. To make the vision actionable, translate it each other and with
other entities, rather
considering a brand for future purchases, 62% into function-specific and role-specific behaviors
than in isolation
scaling back existing engagements, and 30% and standards. Be creative and thorough.
terminating the relationship. Distrust indicates Consistent emphasis in simple ways is a defining
misalignment of what is said and what is done, a factor in nurturing a customer-centric culture.
symptom of an unhealthy culture that spills into
the customer experience. Systems Thinking:
To revitalize people and processes and culture, a
Motives & Shared Vision: systems thinking approach offers sustainable
To truly be customer-centric, a hierarchy of solutions. Every handoff may have a ripple
motives should be explicit. All parties within a effect on the customer or at least on the
firm must continually reinforce an outside-in customer-facing employee. In other words,
primary motive such as making it easier and frontline employees are only as effective as the
nicer for customers to get and use solutions. rest of the organization enables them to be.
With a customer-centric primary motive firmly
guiding thinking and behaviors, Systems thinking is a holistic view of the
acknowledgement of largely self-serving components of an entity in the context of
secondary motives is appropriate: up-sell, cross- relationships with each other and with other
sell, acquire customers, launch products, manage entities, rather than in isolation. Indeed, all of
costs, and so forth. the studies cited earlier indicated that linkages
are broken between:
- functions’ and business units’ goals
- survey results and business results
- multiple voice of customer sources

- data and actions
- incentives and desired behaviors
- views of what customers want
- brand promise and what’s delivered

In the first four reports from The Conference
Board’s CEO Challenge survey, customer loyalty
and retention was priority number one. Recently
that topic is superseded by execution,
adaptability, economic performance and
sustained growth. Lack of systems thinking may
account for execution and adaptability hot
buttons, as means to customer loyalty/retention.

4

2009

Change Management: Organizational Learning:
Broken CEM linkages, weak execution and Employee engagement is a natural outcome of
employee engagement can be addressed organizational learning principles:
through systems thinking, embodied in the seven 1) Language – clearly spell out what’s meant
change management phases: by CEM objectives and approaches to create
1) Address the need for change common language and frames of reference
2) Describe future state and timeline 2) Post-mortem – at setbacks, study what
3) Assess gap: vision versus current state went wrong, as well as the assumptions Never underestimate
the value of returning
4) Map transition: current to desired state that caused those actions
to basic universal
5) Deploy the change 3) Politics – when sharing best practices, shift tools; broken CEM
6) Assess to stop, sustain or redirect focus on the lesson rather than specific linkages will be much
7) Assure knowledge sharing organization achievement less likely if Quality
tools are second
4) Knowledge – capture knowledge of key
nature to everyone
Note that four major steps are necessary before personnel in online portals, training, service
deploying a change. Stakeholder management is standards, and so forth
the central principle for each phase. Conflicts 5) Proliferate – facilitate adoption of know-how
are anticipated and tools enable rapid resolution. across the organization; create games or
Stakeholder diagrams, matrices, continuums, other means to engage employees
questionnaires and other mechanisms are 6) Refine – scrutinize measures and models
essential for planning and managing employee regularly to prevent misleading information
engagement, as well as customer engagement.
Quality Tools. Never underestimate the value of
returning to basic universal tools. Root cause
analysis, fishbone diagrams, Pareto charts,
critical path diagrams, force field analysis, matrix
diagrams, and Gantt charts should be used in
every functional area on an ongoing basis.
Broken CEM linkages will be much less likely if
Quality tools are second nature to everyone.

Holistic Processes:
Generally, a business process is deployed by
several departments, creating a value chain of
internal customers. Timeliness and quality of
handoffs throughout this internal value chain
snowball exponentially toward revenue-

generating customers. To be customer-centric
rather than ethnocentric, employees throughout
the organization need to be plugged into
customer sentiment data streams. Through
meaningful dispositioning of customer feedback,
Change management is exceptionally valuable in each department can receive data that is
dynamic environments, aiding speedy adaptation pertinent to their stewardship. This sharpens
to ever-changing competitive scenarios and understanding of their impact on customer
customer expectations. experience, and ownership of customer
experience improvement throughout the firm.

5

2009

Embrace Warning Signals. Adoption of a mantra 3) Predictive – emphasize actionable,
– such as Good news is no news, no news is bad connected metrics with strong cause-and-
news, bad news is good news – can make it effect to objectives
easier for employees to accept customers’ 4) Sustained – setup the right environment for
constructive feedback. Treat customers’ predictive measures to keep producing
complaints and negative ratings in a concerted strong results
manner similar to an RMA (returned materials
authorization) process. Help departments take Connected. One of the biggest metrics mistakes
ownership for their specific impact on the is random selection. The best metrics start with
customer experience by providing worksheets the big picture: We will know this is successful Adopt a mantra like
and reporting forms they can use to create and when we see X happen. Like a waterfall, the Good news is no news,
no news is bad news,
monitor action plans. Motivate follow-through overall goal is cascaded to each level of the
bad news is good news
and ongoing momentum through management program or organization, to identify successive to make it easier for
visibility, recognition programs, and incentives contributions to the big-picture goal. In the book employees to accept
criteria. What Customers Want, author Anthony Ulwick constructive feedback
explains that customers automatically use 50 or
Internal Handoffs. After characterizing each more metrics for any customer experience. With
department’s ultimate objectives by their impact a focus on outcomes from the customer
on the external customer experience perspective, one is reminded that products and
spectrum, customer-centricity can be further services are simply means to helping customers
improved by emphasizing internal customer fulfill their needs – and needs are simply
satisfaction and internal supplier quality. For customers’ desired outcomes. The firm’s
internal supplier quality, a process owner can objective is to understand what jobs the target
communicate proactively with those who provide customer segments are trying to get done and
inputs to their process. It’s surprising how often what outcomes indicate the job is well done
this seemingly simple step is not enacted. (i.e. customers’ measures of value or success).
Effective handoffs typically result in smoother
processes and fewer customer hassles. Actionable. Metrics at the lowest layer of an
initiative or organization have the highest
actionability. A focus on the most actionable
metrics is essential for moving the needle of big-
picture metrics. To identify actionable metrics,
conduct root cause analysis by using the Five
Why’s technique or a Fishbone (Ishikawa)
Diagram. Validate selected root causes to make
sure they are the malfunctioning issues that

clearly tie to the symptom or big-picture goal.

Predictive. Not all actionable metrics are
Actionable Metrics: predictive of big-picture goals. Among the root
To build momentum toward a shared vision, best causes identified, some may be inputs to a
intentions need to be bolstered with four basic process and others may be critical junctures
principles that apply to any initiative, dashboard, within the process itself. Metrics relating to
metric or incentive: process inputs and in-process control points tend
1) Connected – make sure the focus is on to be predictive. The ability of a process to meet
things with strong connections to overall its objectives is often determined by resources,
objectives skills, stakeholder buy-in and cultural factors.
2) Actionable – select strongly connected These are levers one might employ to improve
success measures that allow one to control the process inputs and process control points.
outcomes

6

2009

Sustained. With connected, actionable,
predictive metrics, sustained momentum hinges
on visibility, transparency, and the frequency and
quality of management nurturing and
intervention, guided by the principles of systems
thinking, change management, and
organizational learning.

Dashboards and balanced scorecards are more
effective when they include not only the big-
picture metrics as process outcomes and
consequences, but also the layers of in-process
control points, inputs, and levers.

Balanced Incentives: It's quite common for metrics to be mis-used,
In tying compensation – as well as non-monetary mis-trusted and mis-managed. What gets
rewards – to customer experience improvement, measured gets done, so improper use of metrics Dashboards,
common pitfalls stem from disconnects with the can lead to unintended behaviors that may scorecards and
negate the expected value of having metrics in incentives are more
four basic principles of actionable metrics:
effective when they
connected, actionable, predictive and sustained. the first place. For example, compensation tied
include not only the
heavily to survey ratings often leads to big-picture metrics as
Scrutinize employees’ perceived weightings of salespersons coaching customers on how to process outcomes
reply to the survey – this not only skews the and consequences,
performance metrics. It may be that the
but also the layers of
behaviors elicited by these perceptions are not validity of survey results, making it a waste of
in-process control
the behaviors that management intended to time and money, but it may also alienate points, inputs, and
motivate. The key to successful incentives is to customers. Avoid sub-optimization by balancing levers
track things for which an employee can make metrics and incentives, and by double-checking
adjustments before stakeholders (i.e. customers, alignment with intended outcomes.
investors, supervisors) see the results. When it’s
possible make adjustments that will affect the
outcome of stakeholders' care-abouts, then the
focus is on something that's manageable,
predictive, and connected to the big picture.


Some firms start by tying closed loop
communication rates (not ratings) to rewards.
Next, leading indicators may be included in
incentives. If lagging indicators are included,
Self-Reporting
they should always be weighted less than the
Recognition:
more actionable leading indicators.
Successful
employee

7

2009

Self-Reporting Team Recognition: Summary
Successful employee engagement trends mirror Customer experience improvement momentum is
the Web 2.0 phenomenon of two-way vital to sustained market success. While strides
conversations enabled by technology, with have been made, customer-centricity tends to be
anyone, anywhere, anytime. Typical recognition an elusive aspiration. Universal challenges When two-way
conversation
programs are one-way communication from revolve around cross-functional and organization-
elements are
management. A two-way communication wide cooperation and alignment. Principles of integrated within a
process taps into employee perspectives about systems thinking, change management and recognition strategy,
noteworthy achievements in addition to organizational learning present valid solutions to employees can be
energized to reach
management viewpoints. Self-reporting address these challenges. Internal branding
stretch goals and
recognition strategies enable real-time encompasses these principles to modify culture, make initiatives
documentation of initiative progress, allowing processes and behaviors in accordance with successful
various management levels to have visibility and desired outcomes of customer experience
opportunities to provide constructive feedback to improvement initiatives.
make the achievements even more significant
and far-reaching. Management can nurture internal branding as a
way of life through holistic processes, actionable
When two-way conversation elements are metrics, balanced incentives, and self-reporting
integrated within a recognition strategy, recognition. These methodologies can pay
employees can be energized to reach stretch excellent dividends in customer experience
goals and make initiatives successful. Guidelines improvement momentum through superior
for self-reporting can reinforce the customer employee engagement levels that heighten
experience shared vision and primary motives, customer-centricity and prevent customer
and raise standards accordingly for the way hassles. As effective employee engagement
employees approach a challenge. Upward and increases, ownership of customer experience is
horizontal visibility foster organizational learning, adopted by employees organization-wide, leading
change management and desirable cultural to lower employee costs and higher customer
changes. Self-reporting team recognition is an profitability as sustainable differentiators.
excellent tool for employee engagement and
customer experience improvement momentum. About ClearAction
ClearAction LLC is a customer experience
optimization consultancy. Through ClearAction
mentoring you can improve your customer
program ROI by ensuring you're setup for
success to listen to the right customers in the
right ways, engage all your employees in doing

their part to deliver your brand promises,
establish criteria for customer-value focused
strategic and tactical decisions, assess voice of
the customer relative to the full customer
experience, innovate for a differentiated end-to-
end customer experience, reinforce customer
behavior that builds profitability, create a
seamless experience across points that touch a
customer, and design or improve processes for
hassle prevention & superior experiences.
www.clearaction.biz
tel 1-877-CEM-ROI4

8

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