Three Pillars of Customer Experience: Insight, Culture, and Design
February 23, 2011
In last year’s post on the Customer Experience Maturity Model, we introduced the stages of maturity in delivering customer experience. Now, in 2011 the need for customer focussed change has never been more apparent than in banking. Recently one of the UK’s biggest banks, RBS, was fined for failing to deal with customer’s routine complaints.
How does a huge organisation fail to deliver on a basic customer need like handling a complaint?
We believe there are three common organisational barriers to positive customer experiences in business: no customer experience strategy, lack of employee empowerment and insufficient mechanism to transform customer feedback into action.
Or put another way, businesses must develop capabilities across three “pillars”: Insight, Customer Culture and Experience Design. We call these the three pillars of customer experience.
Pillar 1. Insight
Does a business have an accurate, data driven, picture about its customers, their needs and behaviour?
Pillar 2. Culture
Does the whole business care about giving value and service to their customers and colleagues?
Pillar 3. Experience Design
Does the business actively design a differentiated experience at all touchpoints?
If we combine the pillars of customer experience with the stages of maturity, a picture emerges that helps to pinpoint specific capabilities that businesses must demonstrate in order to claim a certain level of maturity in the CXMM.
ExB has identified a set of capabilities and activities, that can guide a business from an inward looking organisation to one that joins business strategy and customer experience.
What does a company need to do at each level and in each pillar to deliver that stage customer experience maturity? Let’s break down each stage and pillar in detail.
CXMM Stage 5 – Passionate
At stage 5 a business is an undisputed leader in customer experience. Customers are passionate evangelists. They feel privileged and share their positive experiences with others. Examples include Singapore Airlines, Mandarin Oriental, Harley Davidson, Ritz Carlton.
Stage 5 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 CRM data with real-time feedback and track individual customer’s activities when not interacting with the business e.g. on social networking sites.
The line between “CRM” and “business intelligence” is blurred, all customer insight like satisfaction scores and demographics is shared with all employees and will alert decision makers when interactions are outside of established metrics. Businesses use this rich customer picture not only to offer the right products to customers but use this intelligence to drive new product design.
Stage 5 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 great example is Richard Teerlink, the former CEO of Harley Davidson, who regularly went riding with bike owners on weekends and subsequently insisted that his senior executives spend at least 15 days per year riding with customers, a process he dubbed “super-engagement”.
A stage 5 business will operate a customer-centric organisational model. This means that the business has structured itself around key customer segments (rather than products or processes) in order to deliver optimum value propositions. Read Booz Allen Hamilton’s paper on customer-centric operating models for a thorough treatise on placing customers at the heart of operating models.
Stage 5 Experience Design
Business have unprecedented behavioural data about individual customers that lets services and products to be tailored to individuals not just segments. The value of tailored offering is measured not only on sales benefits but also on the long-term value of the customer experience.
And a stage 5 businesses knows that passionate customers can be developed when things go wrong. These businesses have identified potential failings in a customer process and put in place pro-active actions for predicted experience problems. Ideally these measures are triggered before customers are even aware of the problem or complain. Techniques include engineering methods such as Failure mode and effects analysis (FMEA) and rapid response plans to deal with critical experience failures.
CXMM Stage 4 – Engaged
Stage 4 businesses have a comprehensive, actionable picture of customers, and a culture of accountability. Customers are willing to pay more for increased value and feel rewarded for loyalty. Examples include Apple and Virgin.
Stage 4 Insight
A stage 4 business quantifies and measures the value of customer experience. Business priorities are driven by what the business understands about customers. All major change initiatives follow a customer-focused design process and include customer insight reporting as a major indicator of success. Change prioritisation includes weighted customer metrics related to value (a point that management consultancies methodologies mostly fail to realise).
Stage 4 CXMM means that customers can provide immediate feedback about their experiences through any touchpoint. And feedback is immediately available to executives and responsible managers through a dashboard. The goal is to provide real-time actionable customer intelligence to all decision makers.
Stage 4 Culture
At stage 4, all employees fully understand how their role impacts customers and are empowered to deliver a positive customer experience. Employees are measured on customer metrics as part of performance rating. A successful example comes from Barclay’s Commercial Bank, winner of UK employer of the year in 2007. Barclays introduced “credo cards”. These single-sided cards outline Barclay’s services in action orientated sentences like “take ownership, avoid handoffs, and escort the customer”.
Stage 4 Experience Design
The stage 4 business has a clear strategy on the kind of customer experience they must deliver to identified segments in order to successfully compete in the market. The quality of customer experience delivery is fully under control, with consistent, positive experiences delivered each time. Owners are established and held accountable for customer touch-points and customer processes.
Using communication tools like customer promises or “bill-of-rights” the business has communicated to customers what they should expect to receive – and customers believe it. An example comes from RBS, who’s customer charter defines what customer should expect in terms of service quality. But a charter is not enough if the business is not geared to deliver and measure on it.
CXMM Stage 3 – Understood
Stage 3 businesses understand their customers’ needs and behaviours. Deep insight programmes are in place that track and drive customer service and ensure a consistent experience. Customers feel that their needs are mostly addressed by the products and services offered. Examples include Marks and Spencer and Egg Bank.
Stage 3 – Insight
At stage 3, core, met and unmet customer needs are understood in a way that helps identify new business opportunities. Customer needs are uncovered by sustained qualitative customer research programmes that focus on drivers of behaviours not only retrospective satisfaction measures.
Business at this stage use data about customer behaviour to trigger a business response. For example a private bank may consider a customer’s reduced contact with relation managers as a signal that a customer may reduce assets under management so triggering proactive contact.
Stage 3 Culture
A prevailing “internal customer” service culture typifies stage 3 businesses. Employees treat each other as customers, striving to provide superior service internally.
Business performance is measured on customer satisfaction and behaviour. One or more customer metrics, such as NPS or satisfaction, are on the management scorecard. Information about the customer base, including satisfaction, needs and trends, is shared among all employees and easy to understand. Techniques include distribution of customer profiles or personas.
Stage 3 Experience Design
At stage 3 the key drivers of positive experiences 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 actively tracked.
For example, in retail banking a common abandonment point during account opening is when customers need to post back a form to complete the process. Having identified a vulnerable point in the customer process, business can actively manage that part of the experience using the mobile, web and telephone contact to encourage fulfilment.
CXMM Stage 2 – Heard
Stage 2 business have broad understanding of who customers are and how they feel about the business. Customers feel that the business is interested in learning from them, but they don’t have much attachment. Examples include Credit Suisse, RBS and HSBC – in fact, many banks are at this stage.
Stage 2 Insight
A stage 2 business uses customer research to segment their customer base. Customer satisfaction and its drivers are understood, but only in the context of the industry. Businesses at this stage will acquire and manages data on satisfaction through warehousing and regular market research including benchmarking, mystery shopping and satisfaction surveys.
Stage 2 Culture
Management understands available customer insights although at stage 2 it is rarely shared throughout the business. Bosses may communicate both externally and internally on the importance of customers experience to the success of the business.
Stage 2 Experience Design
The stage 2 customer experience is formed through systematic, ongoing improvements such as usability testing and use of channel metrics. At this stage a business will likely conduct competitive benchmarking and may have multiple channel improvement programmes, but these are unlikely to be joined up under a cohesive customer experience strategy.
CXMM Stage 1 – Ignored
Stage 1 business are inward looking. Customers often feel that the business does not understand or care about them. Customer experience is inconsistent and often unpleasant, indeed the business strategy may deliberately trade off customer service to reduce prices. Examples include RBS, Cablecom and Ryanair.
Stage 1 Insight
At stage 1 customer insight is employed at the most basic level and does not drive change. Businesses at this stage are capable of receiving and processing customer complaints but do not act on the root causes of complaints. Stage 1 businesses may track competitive positioning of customer satisfaction through 3rd party research
Stage 1 Culture
Some executives have gone through the customer experience and have a clear, accurate picture of processes and interfaces that customers use. But the organisational culture does not facilitate a top down influence on customer experience.
Stage 1 Experience Design
A stage 1 business tolerates bad experiences. The most critical experience failures are addressed reactively, but not in a systematic way.
CXMM – A framework for change
Creating customer focussed change is a long term goal for a business. Establishing activities that create positive customer experiences and achieve the necessary accountability among employees is a multi-year initiative that requires ongoing management to maintain, the value generated by improved loyalty and new customers makes it a sound investment.
In future articles we will describe how Experience Banker’s CXMM can be leveraged to audit the customer experience maturity of a business, drive strategy realise value.
If you want to know more about how CXMM can be used within your business send us an email on robert.ballantine@gmail.com.
Customer Experience Maturity Model
August 8, 2010
A select few companies achieve more than just loyalty from their customers; they have passionate, evangelistic customers. Think about Singapore Airlines, Harley Davidson, or Mandarin Oriental. These companies go beyond delivering positive experiences and offer experiences that turn customers into fans.
Great customer experiences don’t happen by accident. They planned, designed and actively managed. Companies that consistently deliver, and improve upon, positive experiences have certain capabilities in common that keep their organisation focussed on customers.
5 Stages of Customer Experience Maturity
At ExB we believe that companies demonstrate different stages of maturity in their focus on customers.
Each stage of maturity consists of tangible capabilities and activities that companies employ to realise customer and business value. This is why we created the Customer Experience Maturity Model (CXMM), to show how a company becomes customer focused and how much focus is right for a firm.
Based on a cross-industry analysis, we found that there are five stages of Customer Experience, ranging from companies that ignore customer to those who create passionate customers. Companies at each stage of the model generate increasing business and customer value.
Stage 5, Passionate: Unprecedented relationships with customers mean the company is the undisputed leader in the industry in key metrics such as customer loyalty. Customers are evangelists, they feel privileged and share their positive experiences with others.
Examples: Singapore Airlines, Mandarin Oriental, Harley Davidson, Ritz Carlton.
Stage 4, Engaged: A comprehensive, actionable picture of customers, and a culture of accountability, ensure a business which is differentiated in the market and generates loyalty. Customers feel that the business cares about them and they trust the business. Customers willing to pay more for increased value and feel rewarded for loyalty.
Examples: Apple, Virgin
Stage 3, Understood: Insight programmes are in place that track and drive customer-focus in the business and ensure a more consistent experience. Customers feel that their needs are mostly addressed by the products and services offered.
Examples: Marks and Spencer (UK retailer), Egg (UK bank), First Direct (UK bank)
Stage 2, Heard: An effective understanding of who customers are and how they feel about the business can be employed to make some improvements in the customer experience. Customers feel that the business is interested in learning from them. But in the end they don’t have much attachment yet.
Examples: Credit Suisse, HSBC, Bank of Scotland (as you can see banks tend to fall into this category).
Stage 1, Ignored: Business is inward looking. Only most basic understanding, or interest in, who customers are or how they feel. Customers often feel that the business does not understand or care about them. Customer experience is inconsistent and often unpleasant.
Examples: Cablecom, Ryanair
Not all companies want passionate customers and run their business based purely on price not service. Ryanair (where they make customers pay to use the aircraft toilet) is a clear example a company that will ignore customer needs and compete only on price.
But the ambitions of banks tends to be higher. Banks can rarely differentiate on price or performance. To do be different, banks need to deliver positive experience and certain business lines like wealth management rely on a premium service.
Where does your company fit in the maturity model?
We’ll be writing more about the CXMM over the next few weeks. But if you want to know more about the model and specific measures please send us an email or leave a comment, we’d love to hear from you.
Bank-in-a-Box
July 31, 2010
Bank accounts are traditionally difficult to explain to customers, you can’t see or touch them, yet they require pages of brochures, and forms to fill out. Jyske Bank in Denmark has a different approach to merchandising its bank accounts. Use a box.
The outside of the box shows the marketing and information like interest rates and key terms and conditions. There is enough space to include the most important information, that’s readable at arms length, but not so much space that it becomes filled with boring waffle and jargon.
A boxed product offers the design principle of affordance, basically, it looks familiar and you know what to do with: pick it up, read it, buy it. Such tactile engagement is important to the buying process. It allows consumers to consider the product on their own terms, and gives them a chance to understand before having to talk to anyone. In this video from Jyske Bank you can see the box concept (at 53 seconds).
But the “box” concept can be taken a step further. As we mentioned in our last post, Tesco (UK’s biggest supermarket) plans to provide full retail banking services in their stores. Joining bank-in-a box merchandising with a supermarket environment where people are already in “buying mode” (and add ATM cards and cheque books inside the box) may create a fresh banking experience that is:
- Easy to understand. Only the most important information is shown on the box
- Immediate. Customers can “buy” and activate an account on the spot
- Convenient. No need to wait for forms to be posted or go back into a branch to validate ID.
With immediate business benefits including:
- Zero abandonment. Most customers who abandon account opening do so after they have completed the form, but perhaps don’t post it or go to the branch to validate ID.
- No mistakes on the form, everything is checked in store.
- Immediate usage. Customer’s can start using the account in the store
We’ll be following these trends in merchandising closely over the next few months. We hope that this simple concept will offer easier, useful and enjoyable banking experiences plus a powerful challenge to traditional high street banking. Tell us what you think.
Metro Bank positioned on customer experience
July 30, 2010
New UK bank, Metro Bank opened its doors this week in London with a promise to “surprise and delight every customer”. Without a differentiator on price or products, Metro Bank has adopted a market position around customer experience that promises “unparalleled service and convenience”.
Convenience factors include: branches that open 7 days a week, an account opening process that takes no more than 15 minutes, and ATM/credit cards which are printed in the branch – although customers still need to go into a branch to open an account (or “relationship” as Metro call it).
It’s refreshing to see a bank taking a position on service and experience. Taken together, experience factors drive customer satisfaction and loyalty more than product and price alone.
But will it prove a short term advantage? The UKs biggest supermarket, Tesco, plan to provide full retail banking services in their stores. Tesco (and other supermarkets) also open 7 days a week, have a huge customer base and expertise in design for consumer behaviour.
As new, savvy, players enter the retail banking market and compete on service and experience, traditional banks will be under severe pressure to get off their laurels focus on customers.
But to truly differentiate on experience, promises of great service must be genuine, accountable, attempts to build relationships with customers and make employees proud to work there.
What does vanilla taste like?
July 22, 2010
Enterprise Resource Planning (ERP) systems massively impact the customer experience of a business. From order management and invoicing through to recruitment, such business critical systems should open opportunities to create positive customer experiences. But when companies install a “plain vanilla” version of an ERP system the opposite is true: a poor customer experience leading to manual workarounds and customer dissatisfaction. Higher costs. Lost revenue.
Under-do the Competition
June 9, 2010
Banks are a competitive bunch. We have sportsmen on our adverts, we want to be bigger, most innovative, most admired, have more skills, more capabilities, more products. We want to beat the competition. We want to win.
Often this is how we approach our projects. We equate advantage to more features on a system or product. We believe business benefits come from more flexibility and infinite customization. “More” wins.
But is this culture of “winning” a mistake?
In their recent book “ReWork” , Jason Fried and David Heinemeir Hansson challenge wisdom of winning. The authors compare the one-upmanship of business to a cold war; a never-ending battle that costs money and time, and forces companies on the defensive who consequently can’t think ahead.
The authors advocate another approach, to “under-do” competition through simplicity. At Experience Banker we agree that the most popular products have the least features and best products are the simplest.
Take the camcorder The Flip.
The Flip has taken significant market share in a short time. But it has:
No big screen
No photo taking ability
No discs
No menus
No settings
No video light
No viewfinder
No headphone jack
No special effects
No zoom
No memory card
No headphone jack
The Flip is popular because it does a few things ands it does them well. It doesn’t compete on features and consequently is easy, useful and fun.
According to Accenture, 95% of all electronics which are returned by consumers have nothing wrong with them – consumers simply can’t figure them out. And compare the Apple TV controller (6 buttons) to a regular TV remote (35 buttons) Which is easier to use? which has less buttons?
