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Challenges for delivering compelling customer experiences

Christophe Vergult

Director Customer Experience Management

2Customer Experience Management

why experiences matter

Customer experience is the impact across all moments of contact between a company and its customers that shapes relationships.

As such it is about your company’s physical performance and emotions evoked, intuitively measured against customer expectations across all touch points.

Customer experiences matter

3Customer Experience Management

10% Increase of customer satisfaction index in a bank that segmented customers and targeted self service

5% Revenue increase of a retailer that piloted customer focused treatments in-store

79% 79% of consumers will commit to a deeper relationship with a brand after a satisfying experience

Price premium

Word-of-mouth

Cost reduction

The value of loyalty ?

4Customer Experience Management

0 1 2 3 4 5 6 7

Turnover growth

Base profit

Acquisition

Source: Reichheld & Sasser, Zero Defections: Quality Comes to Service,Harvard Business Review, Sept./Oct. 1990

The value of loyalty - context specific

Relative market share is key driver of profitability in the following industries

Beer, soft drinks, steel, electricity generation/oil and gas production, tyres, cars (mass), audit, hotel chains, …

The premium nature of the category is key driver of profitability in the following industries

5Customer Experience Management

following industriesFMCGs, fashion and luxury goods, star restaurants, strategy consulting, Bordeaux wines, …

Loyalty is key driver of profitability in the following industriesInsurance, banking, credit cars, airlines, luxury cars, hotels (not chains) and restaurants, petrol stations, car leasing, ...

Source: Bain & Company

Retention leads to higher profits...

... for profitable customers

350%

300%

250%

Cum

ulat

ive

Pro

fits

(per

cent

of t

otal

pro

fits)

DesiredCustomers

CostlyCustomers

Break-evenCustomers

6Customer Experience Management

0% 20% 40% 60% 80% 100%

200%

150%

100%

50%

0%

MostProfitable

LeastProfitable

Cum

ulat

ive

Pro

fits

(per

cent

of t

otal

pro

fits)

Percent of Customers

Source: Keiningham e.a.(2006), Loyalty Myths

Loyalty anno 2008

Risk reduction NoveltyRisk

reduction

20th century 21th century

7Customer Experience Management

• Performance risk• Psychological risk

• Financial risk• Safety risk• Social risk• Time risk

• Loyal to one

• Behavioral loyalty

• Safety

•Pleasure of experiencing new products and establishing new

relationships

Loyal to many

Attitudinal loyalty

(Brand) experiences

What is true loyalty?

8Customer Experience Management

“Retention is for wimps. We measure the percent of customers who have our name tattoed on one of their body parts.” (Harley Davidson Annual report)

What is true loyalty?

loya

lty

high NMBS

HospitalsPC’s

Spuriousloyal

Trueloyal

9Customer Experience Management

������������� �������������������������������

Attitudinal loyaltylow high

Beh

avio

rall

oyal

ty

low

Airlines

Cars

Noloyal

Latentloyal

10Customer Experience Management

creating meaningful experiences

Differentiating experiences as competitive advantage

Five ways for developing differentiating experiences

1. Economic experience

2. Functional experience

Biological and psychological needs

Safety needs

Maslow hierarchy of needs

11Customer Experience Management

2. Functional experience

3. Emotional experience

4. Status experience

5. Meaningful experience Personal growth and fulfilment

Safety needs

Belongingness and love needs

Esteem needs ( reputation, achievement)

Sources of expectations that are (hard) to manage

Managing experiences is managing expectations

Word of mouth Competitive

Previous experience

12Customer Experience Management

Expectations

Word of mouth Competitive experience

Communication Personal needs

Brand

Expectations keep on increasing

Tecnological experiences enable new and better

experiences

Customers have different touch points with one company

Customer s are interconnected

13Customer Experience Management

Expectations

Word of mouth Competitive experience

Previous experience

Experiences are even shaped across industries

Customers are better informed than before

Defining a great customer experience across all touch points

14Customer Experience Management

Stay ahead of competition

Identify important customers

Understand their expectationsSet priorities Experience-

based

15Customer Experience Management

Assess your performance

Define moments of truth

based differentiation

It’s about differentiation AND resource management

Remove dissatisfiers

Create differentiators

16Customer Experience Management

Create differentiators

Right-size when an interaction doesn’t matter

17Customer Experience Management

how mature are you to deliver the experience ?

76% performs in line with or above customer expectations

You believe...

18Customer Experience Management

You believe...

It is not easy to deliver the experience

Companies that believe they provide a superior

experience

Companies whose customers agree

80%

19Customer Experience Management

Source : Bain & Company

Delivery gap

8%

How mature are you to deliver the experience?

Understand your customers

Organization alignment

20Customer Experience Management

Moments of truth Brand consistency

Understand your customersUnderstand your

customers

Formal

Desk research 2.0

Qualitative research

In-depth quantitative research

Tracking research after the moments of truth

Talk with all your customers

Current

21Customer Experience Management

Current

Potential

Lost

Informal

Focused executive program: executives in charge of some accounts

Customer officer of the day: service center interim

C-level travel program: in any continent they visit a Xerox user

For whom do you create experiences?

My customer’s customer is my customer

Understand your customers

22Customer Experience Management

Understand the influencers and the end customer

Shift from functional to emotional differentiation

Branding to end customers pays off

For whom do you create experiences?

Having a cool office to work in builds loyalty with pilots

Understand your customers

23Customer Experience Management

Boeing 777 flight deck Boeing 787 flight deck

For whom do you create experiences?

Two contrary visions for Boeing to deal with

Airline companies : faster and higher

Understand your customers

24Customer Experience Management

Airline companies : faster and higher

Passengers : space and silence

Which one build customer loyalty?

How mature are you to deliver the experience?

Novice Basic Practicing Mature Best in class• Scale

Mature + Best in class - Novice - BasicMaturity index = -----------------------------------------------------

All respondents

25Customer Experience Management

• Maturity index - 100 0 + 100

Do you really understand your customers?Understand your

customers

• Customer knowledge

Maturity indexMaturity index

26Customer Experience Management

• Customer knowledgeDoes the company register non-self-reported customer data (e.g. client profile data, interaction data, transaction data …)? The challenge lies in extended data collection (across customer touch points & over time). Practical applicability of the data in an integrated manner (across touch points) is strived for.

- 22- 22

• Customer feedback loopsDoes the company collect self-reported customer insights (e.g. questions, satisfaction, complaints …)?Closing the feedback loop is about openness for customer feedback, processing of the insights gathered and using the feedback to positively alter customer relations.

+18+18

Do you create meaningful experiences on the moments of truth?

Moments of truth

• Moments of truthDoes the company identify moments of truth and deliver on those moments?Moments of truth are critical customer interactions, on specific moments, via specific touch points that drive superior customer experience.

- 11- 11

Maturity indexMaturity index

27Customer Experience Management

customer experience.

• Customer centric design of....Does the company understand customer needs and expectations related to specific touch points? Does the company adapt the moments of contact according to these customer insights?

+7+7• ...sales contact touch points+ 39+ 39• ...product touch points+21+21• ...delivery touch points+12+12• ...customer service touch points- 12- 12• ...communication touch points

Is your organization aligned?Organization

alignment

Is customer experience part of the company’s DNA?

Organization Processes Communication People

28Customer Experience Management

“Customer experience is our top priority, for the management and for any of our 59.000 employees”

“I will make any experience outstanding” - purple promise

Is your organization aligned?Organization

alignment

• Management alignmentIs customer centricity inherent in the company culture? Are customer focused initiatives adopted? +25+25

Maturity indexMaturity index

29Customer Experience Management

• Consistent and shared infoIs customer information consistent and shared across the entire organization? - 12- 12

• Integrated experience via partnersIs customer information consistent and shared across the entire organization? - 19- 19

Brand fit as a condition to build loyaltyBrand consistency

The brandMy inner self

Far apart

Near

30Customer Experience Management

Small overlap

One

Brand consistency

1 billion customer interactions a year= 1 billion opportunities to build a relationship

= 1 billion opportunities to screw it up

Brand consistency

31Customer Experience Management

= 1 billion opportunities to screw it up

Is Amex delivering a consistent experience and always expressing the Amex brand essence?

Customer interaction in line with brand values?Brand consistency

• Brand consistencyIs there a common vision across the company about customer experience? And are customer interactions developed in line +2+2

Maturity indexMaturity index

32Customer Experience Management

Is there a common vision across the company about customer experience? And are customer interactions developed in line with the corporate brand values?

+2+2

How mature are you to deliver the experience?

Understand your customers

Organization alignment

-2-2 -2-2

33Customer Experience Management

Moments of truth Brand consistency

+2+2+13+13-11-11

Customer centric design

Identification moments of truth

Fill out the online questionnaire

www.insites.eu/maturitymodel

34Customer Experience Management

And benchmark your performance with other companies

Evergemsesteenweg 1959032 GentBelgiumTel. +32 9 269.15.00www.insites.eu

35Customer Experience Management

Christophe VergultDirector Customer Experience ResearchTel. +32 9 269.15.06Mobile +32 496 232.932E-mail: Chistophe.Vergult@insites.eu