About two weeks ago, I had a very bad day. Among other measures of misfortune, my car was backed into by a tow truck. The damage was "cosmetic" in the same way the stock market gyrations have been "gently undulating". The insurance/repair process on fast forward looked like this: call insurance company, wait only 30 seconds, tell story, reassured I won't be held at fault, deductible waived, drop car at repair shop, rental car waiting for me, my car repaired and ready on time within five days, returned to me not only good as new but cleaned better than new. Wow. That story didn't go the direction you were thinking, did it?
The experience was so good I have been proactively telling people about it. Which brings us to the topic of today's show: customer experience. Customer experience is a bit of a buzz term these days, and there are many misconceptions about what it really means and why it matters. Whether you running a multinational or an SMB, it matters a great deal. More on why later, but first...
Let's start with an explanation of customer experience. According to Lewis Carbone in Clued In (an excellent read) customer experience is a three part, cyclical process. It starts with perception, transitions into interaction, and finishes/re-starts with recollection.
Perception: the reason this is part of the equation in the first place is customers have some kind of pre-determined view of your company, brand or products/services.
Interaction: this is the obvious bit where customers touch and feel and have conversations with your brand and your people. What may not be so obvious is all of the points of interaction customers have with your organization - and each offers an opportunity to impress or disappoint.
Recollection: great customer experiences are remembered later. So are very poor ones. The interactions have to hit some kind of emotional chord in order to resonate after the fact.
In English, customer experience relates to how people feel about themselves as they interact with your company.
There are some myths about customer experience we should get out of the way before we talk more about its importance and how to manage it.
Customer experience is the same as customer service
Customer service is only a small portion of customer experience. Just look at the cycle described above - customer service really only plays into the Interaction phase. If you're focusing all of your effort on your service, and neglecting other experience factors, you're doing your organization a disservice.
Customer experience is the same as brand experience
Brand and customer experience can be thought of as two sides of the same coin. Whereas brand experience tends to deal with customers perceptions of your company as whole, customer experience speaks much more to how customers perceive themselves and their emotions as part of the process of engaging with your company.
We don't have an expensive customer experience program planned, so it's not applicable to us
All customers - all of your customers - have experiences. Customer experience is an orientation, not a program. It's about understanding all the points of interaction between your customers and your company, and taking advantage of those interactions. Solutions don't have to be expensive, they just have to be smart.
Okay, that's great. But why is customer experience so important and can it be managed?
Well, it's important because it is a direct driver of repeat purchase behaviour and loyalty, referrals, and PR (good and bad).
- Repeat purchase/loyalty is pretty straightforward - you are far more likely to generate repeat business with positive overall customer experience than you are without it. And it's not always linear. Some research shows that if a customer has a very positive experience during the first interaction with a company, that company has in effect bought itself time and goodwill with that client; the company can deliver a neutral customer experience the 2nd, 3rd and even 4th time and still keep the customer coming back. Repeat business is normally about five times easier to get than net new business, so there is a big incentive to provide customers, especially new ones, a tremendous overall customer experience.
- Many SMBs count on referrals to generate net new business. The effects of customer experience here tend to be polar, and skew more heavily toward action on the negative end of the spectrum. In other words, very positive customer experience generates positive referrals, but the experience has to really exceed expectations (like in my car example above). However, even mildly negative customer experience leads to negative referrals (people actively encouraging others not to do business with you). Neutral customer experiences don't generate referrals or word-of-mouth at all (because there was no emotional connection). If referrals are key for you, then so is customer experience.
- The PR equation is much the same as referrals so I won't belabour the point.
Let's mop up here with how customer experience can be managed. At a base level, there are three important steps to follow:
1. Map all the points of interaction
On a giant wall chart. Or in a spreadsheet. The idea is to catalogue every point at which a customer comes into contact with, directly or indirectly, your company. There are obvious points - when a customer talks to a sales rep, when a customer sees your print ad, etc. But there are less obvious points as well - blogs which talk about your service or pricing, and the upkeep (visible to the public) of your warehouses are examples. It normally helps to break things down into four categories: pre-purchase, purchase, use of product/service, and post-purchase. Pre-purchase factors, such as talking to friends or researching your company's website, line up with Perception and Recollection in the customer experience process. Purchase factors, like negotiating with your dealer, are aligned with Interaction. And use of product/service plus post-purchase factors - e.g. durability of good, after-sales telephone support - most heavily influence Interaction and Recollection. This exercise alone can be eye-opening in terms of painting a picture of how much larger customer experience is vs. customer service for your firm.
2. Grade the points of interaction
Now that you have all the interaction points between your customers and your company mapped, an evaluation phase can take place. Each point should be graded A, B, C or F. A = high pass, don't even think about it again. B = pass, should be re-visited in the future. C = marginal pass, requires some work. F = fail, needs to be addressed immediately. And the criteria for evaluation can be very simple: on your scale from A to F, how much does the point of interaction in question contribute to a positive customer experience emotionally. For example, if your website is difficult to navigate, it may frustrate customers and get a C. It's far better to do this exercise with live customer feedback (via conversations or a survey or whatever), but even your senior team's perspective on grades is better than ignoring this outright.
3. Separate the negatives from the positives, then optimize
A complicated way of saying look at your grades and understand which points of interaction build a positive customer experience and which ones are negative experiences. From there it's a matter of understanding WHY the positive ones are strong (what is it about each one that strengthens the emotional connection between your customer and your company) and WHY the negative ones hurt your brand. Now a continuous improvement plan be built for the positive experiences, and a separate plan to eliminate, reverse or minimize the negative experiences can be put together. For example, if conversations with your sales reps are graded out as an A because your reps are well informed, then introducing more opportunities for conversations earlier in the purchase process - or even pre-purchase - makes sense. By the same token, if your online order system grades out as a C because the fields are cumbersome, a hard look should be taken at whether going back to a manual process makes sense, or whether more money and programmers can clean it up.
The biggest take-away's when it comes to customer experience are: there are many points of interaction between your customers and your company, and it is the cumulative experience across all these points which will have customers raving or ranting about you. Improving on your customer experience is not hard, but it does require a rigorous evaluation and a commitment to continuous improvement.
Mark Healy, P.Eng, MBA is a Partner at Torque Customer Strategy, a boutique marketing consultancy focusing on brining organizations closer to their customers via insight development and a no-assumptions model. Mark has completed over fifty studies in this new space over the last four years. He is regularly quoted in the national media on topics ranging from customer loyalty to managing professional service firms. Mark teaches" Customer Intimacy for Marketers" at the Canadian Marketing Association, and a "Demystifying Consulting" module at top Canadian business schools. His full bio can be found at www.torquecustomerstrategy.com .
Mark Healy