Customer Experience Synonymous with Operating Strategy

When you hear the term “customer experience”, what is the first thing you think of? Many think of marketing or sales, but how many think of operating strategy? Others immediately think of the expense of running a customer service department. What is often missed is the growth potential and stability of adopting the customer experience into every operational function and decision.

This story on CRM.com discusses the subtle, but very important differences achieved in giving the customer experience a high profile in your day-to-day operations. Here are a few of the major points:

It is true that the customer experience has a lot to do with sales and marketing, but to limit it to these silos is to miss the larger point. Everyone in your organization is a touch point to the consumer.

It’s also true that the customer experience reflects the emotions or feelings of your consumers. However, there are also tangible elements like contract clarity, financial options, web support, or even something as simple as the ease of transporting your product.

There are those who believe customer experience is a “tradeoff to profitability.” This “necessary evil” attitude is misleading. A healthier viewpoint is to see your operations as a mean to solving your customers’ problems. The better you can do this, the more profitable you will be.

The truth is that there is a grain of truth in every attitude toward the customer experience. The only trouble is that many of these approaches are incomplete. Try thinking of the customers’ need in all phases of your operation.

Making the Promises Real in 2010

Many are seeing 2009 as a breakthrough year for efforts designed to raise the profile of the customer experience. There is growing evidence that the everlasting pledge to put the customer first actually got beyond lip service and into real and actionable tactics. With the progress made last year, even in very tough economic circumstances, 2010 should see the movement gain even more momentum.

An article on retailcustomerexperience.com offers the following advice as brand marketers and retailers continue to travel down this road:

“Drop the executive commitment facade.” Executives need to “put their money where their mouth is” with time, treasure and talent. If it’s a real priority, they will manage customer experience like they do financial results.

“Acknowledge that you don’t know your customers.” The means to truly knowing the customer does not lie in a long and drawn out marketing research project. Establish a “voice of the customer program” for a quick, ongoing and continuous dialogue with your customers.

“Keep from getting too distracted by social media.” Social media should be an important “listening post” in your efforts, not the end all and be all. Other listening posts include surveys and call center calls and other customer touch points.

“Stop squeezing the life out of customer service.” By measuring how well your customer service organization serves the consumer instead of using efficiency metrics, you can turn this necessary evil into a strategic asset.

“Restore the purpose in your brand.” A true brand is more than just your logo. It’s a promise that you make and keep with your customers at every transaction. Your raison d’être should be apparent in everything you do.

“Don’t assume employees will get on board.” When you announce your new customer experience initiatives, expect a good amount of eye rolling from your employees. It’s critical to sell them on why this is so important and engage them to participate in how to make improvements.

“Translate customer experience into business terms.” Develop a model that measures the direct impact of customer experience on brand loyalty. That number can help bridge the understanding gap among employees and engage the accounting department as to a tangible financial impact.

One Size Does Not Fit All

Opinions are being weighed from all over the globe as brand marketers and retailers look forward to the economic upturn in 2010 and beyond. The big question seems to revolve around the customer experience. Is price the driving factor or is there value in truly great service? The answer is that “it depends.”

In his opinion column in the Times of London, Accenture executive Neil Miller say there is no one model that will fit all and that approaches must be targeted to fit individual channels and markets. His company reports that nearly all UK businesses have invested in improving the customer relationship, but either they are missing the mark or the target is moving faster than the aim. Miller says, “Almost two thirds of British respondents in the study reported switching between businesses in the past year as a result of experiencing poor service. Only about a third believed that customer service experiences had improved.”

Less loyal and more demanding customers are setting the pace. It becomes more important to understand differences in customer service needs and channel preferences as they align with your brand proposition and the balance between price and value. Miller explains, “Different sectors have different agendas and demand different services and models, which must be tailored using appropriate digital platforms, processes, data, analytics and skills.”

In the end it comes down to differentiate and deliver. The upturn offers an opportunity to reach out and engage your customers. But one blanket approach will not work for all markets as it has in the past.

Social Marketing, The Perfect Storm

Social networking has enabled consumers to move faster than the brands that they shop for. Mark down 2009 as the year when brand marketers experienced a full frontal realization that social networks are, in fact, a mass communications medium. With this realization comes another wake up call, Social Marketing must play a big role in the overall marketing mix. As Jeremiah Owayang writes in a recent Forbes article, “Brands need to develop a strategy and a plan to respond–not simply react–to the latest technology.”

Like many others in recent days, Owyang takes a look at the trends of 2009 that drive the decisions of the future. He identifies four key trends that senior marketing execs should give some thought to.

“The Recession Spurred Consumers to Adopt Social Technologies.” It’s not just the enabling technology that caused the movement. Hard financial times also drive people to connect to one another. High unemployment levels also contribute by giving people more time to connect. Motive, means and opportunity equals the perfect storm.

“Some Brands Followed Suit with Social Marketing.” The story says that print budgets have been cut by 37% and television by 21%. Brands are hurting too, so it makes sense that they also look for lower cost means and innovation. More money is being directed at Social Marketing due to its low cost and high return.

“Social Networks Share Data, Spreading Social Influence.” Social networks are connecting with other systems. This means the consumer experience can spread like wildfire because opinions and experiences won’t be limited by software or service provider.

“Consumers Move Faster By Sharing Real-Time Data.” A bad customer experience can now travel to the masses at the speed of thought. Real time updates allow instant feedback so brands have to learn to move faster. Even good service recovery practices may now be too late to turn the tide.

Customer Experience Stories of the Year

In our last entry we warned you about the coming onslaught in this, the season of lists. Today, we look at another one on retailcustomerexperience.com called the, “The 5 biggest retail customer experience stories of 2009.” This list is predicated on the observation that consumers’ relationships with brands has changed significantly in 2009. Only in the New Year will we find out if these changes are permanent. Here are the stories offered up in the list.

“An emphasis on value.” Walmart was the big winner in 2009. Their approach defined the term “value” as being synonymous with “saving money.”

“Private label brands take center stage.” It’s no surprise that consumers turn to store brands during tough economic times. However, this time around appears to have staying power as half of the consumers polled said that they found the product better than expected and 41 percent said that brand names are not worth the money.

“The shadow of Apple.” Apple stores continued to be the talk of the customer experience movement just as Microsoft opened its first store. Additionally, Steve Jobs was brought in to help improve Disney Stores.

“Online price war creates the need for better experiences.” The Amazon/Walmart price war showed that other retailers can’t just compete on price. They will have to, “differentiate on the experience, and give customers a reason to pay you more than your competitors for the same goods.”

“Retailers grapple with social media, mobile.” It has been pretty well documented that retailers are scurrying to catch up with this medium. The same can be said for mobile devices as an advertising and communications medium.

Customer Service is the New Marketing

The end of the current year and the beginning of the new always bring many different kinds of lists: wish lists, shopping lists, resolutions, top stories of the year lists, etc. This story in Small Business Trends offers up a list of things to look forward to in 2010. It calls the customer experience the, “new marketing,” and the, “only truly sustainable competitive advantage.” Here are a few items from the story:

The coming year will be a good one for marketers to imprint upon their employees who interact with customers. Why? High unemployment levels will encourage employees to hold onto their jobs by being good at them. They will try harder.

Service will become your identity, not the product you are selling. Companies will learn from the online model of Amazon and Zappos who show that you can build a business based on service.
Along the same line, successful internet companies have trained consumers to look for highly personalized service. Internet sites greet us by knowing our names, habits, likes and dislikes. This expectation will transfer to face-to-face transactions and thus the bar will be raised.

Facebook, Twitter, and YouTube will force higher service levels due to the consumers’ ability to transmit satisfaction or dissatisfaction to a large audience. Brand marketers will have to react quickly and completely to avoid reputation damage. Brands are working quickly to increase their capability in the social networking medium.

This is only part of the list, but you get the picture. Almost every single factor for going to market is changing. Companies are finding out through experience and analysis that the common denominator is providing a great customer experience at every turn.

The Loyal Shopper Principle

Pareto’s Principle states that roughly 80% of effects come from 20% of the causes. In modern times, that’s been altered by many to mean 20% of the people do 80% of the work. A recent study by Concept Shopping, Inc. has found that the thoughts of old Vilfreto Pareto and his observations may extend to shopper loyalty.

A story in Progressive Grocer reports on an analysis of over 2 million grocery shoppers. The results are that 10% of the store customers visit the store over twice a week and are responsible for almost 40% of the store’s total sales. These customers spend over $39 on each visit.

Ninety-five percent of these loyal or “best” customers will continue to shop at the same store all year-round. Only 34 percent of a store’s “worst” shoppers, who visit less than once a week and spend only $9 per visit, will remain as customers. Only 11 percent of the dollars spent by the loyal group were on marked down items, meaning these customers not only provide volume, but also profit.

The message is simple. Loyal customers are hard to replace and new customers are hard to get. Promotion, pricing and advertising can bring new people to the store, but only a great customer experience can create the type of “best shopper” that, from these results, seem to be the life blood of retailers and brand marketers.

How Fresh and Easy Listened to the Customer

Tesco’s Fresh and Easy concept in the U.S. provides a vivid example of a company listening to the customer and making almost immediate adjustments based on that feedback. It has been almost two years since the stores started to appear on the West Coast. In that time, the company has, “done a lot of listening to customers.” This interview with Steve Ryder, Store Design & Planning Director at Fresh & Easy Tesco’s US operation, outlines some of the activity.

Based on customer feedback, 60 stores engaged in a re-fresh program in which stores were made more inviting and informative. Additional banners, more messages and more color was used to address what the customers were calling a “sterile” environment that made the stores appear to be “too discount” for the U.S. shopper.

After 18 month in operation, 120 stores were remodeled this year to take advantage of the learning accumulated over that time. Frozen food space was increased and 600 skus were added by increasing aisle height by 10 inches. Store décor was changed yet again.

Change is never easy, but it appears that Fresh and Easy has broken through the anxiety by creating a culture that listens, and more importantly, responds to the customer. Look for this chain to continue to enhance its presence in the U.S.

Grocery Grasping at Social Media

A frequent topic on this blog has been the acceptance and use of social media as part of the marketing mix of CPG companies. Last week, the Grocery Manufacturers Association (GMA) issued a report that says marketers are still in the very early stages of the process and are wrestling with just what exactly they should be doing on this new frontier of the customer experience.

According to Supermarket News, the GMA CPG Social Media Forum revealed 52.6 percent of consumer packaged goods companies still have low presence or engagement via social media. Half of the companies used Facebook and 41% had a presence on Twitter. Twenty-nine percent said they have an active blog presence.

The hold-up could be the ability to realize and identify ROI. Half of the brand marketers surveyed said they are working toward social media revenue, while a small percentage said they are currently generating funds. Further education, a clever approach and success metrics seem to be at a premium.

Raised Stakes for Customer Service

A survey conducted in the UK found that the younger the consumer, the more likely they are to leave a brand or company due to poor customer service. Research by Genesys Telecommunications Laboratories along with Datamonitor and Ovum found that each generation of consumers has a different and heightened idea about what good customer service is and should be. In business, it’s said that if you aren’t growing, you’re dying. Based on this research, the same can be said for how you interact with your consumers, both now and in the future..

An article found on callcentrehelper.com discusses research that found consumers from age 27 to 43 are 60 percent more likely than those over 44 to abandon your brand, store or offering due to poor customer service. Clearly businesses need to not only continuously raise their service levels to meet the heightened standards, but they must also increase and augment their understanding of what the consumer identifies as a poor, reasonable and excellent customer experience. When customers are walking away from sales, failure to understand and manage the expectations can cost millions in lost revenue, repeat sales and diminished brand equity.

The research cites several current expectations. Among them were proactive engagement when using contact channels and better integration of those channels to allow for flexibility and personalization. Whether it’s in the UK , the USA or the rest of the world, the bar is rising on customer service expectations. Do you know what your customers are thinking?