The Customer Experience: What Makes the Best the Best – Part 1
Good day. My name is Colin Taylor, and in this discussion, we’re going to be discussing the customer experience and what makes the best organizations the best.
First, a little bit about myself and the organization. As I said, my name is Colin Taylor, and I’m the Chairman and Chief Chaos Officer for The Taylor Reach Group. We are an award winning call, contact center and customer experience consulting firm. The company was established in 2003. What we do is we help our clients improve the operational effectiveness and efficiency of their customer facing organizations.
Most commonly, our work involves call or contact centers, but can involve technical support groups or even social media outreach. All of our consultants have a minimum of 20 years, hands on operational experience. We are vendor agnostic, which is to say that we do not take money from anyone but our clients. So we’re not in the pockets of any technology or outsource vendors. The company is based in the Toronto area which happens to be where I live. But we also have offices in New York, Atlanta, Phoenix, Ottawa, Cork, Sydney, and Beijing. For more information on Taylor Reach, please visit our website.
So, what is the customer experience, or as we will often refer to it during the session as CX.
86% of Consumers Are Willing To Pay More for an Upgraded or Superior Service
The formal industry definition for the customer experience is how customers perceive their interactions with your company. IBM defined it as the designed interaction between an organization and an individual. CX includes all channels of communications, and interactions, and all touch points. CX is critical to the success of any organization, consider that 86% of consumers are willing to pay more for an upgraded or superior service, this should speak loudly to all marketers out there. If organizations can differentiate, based on customer experience, then there’s an opportunity to recoup a premium in terms of price and revenues.
85% of Customer Churn Due to Poor Service is Preventable
More startling facts; Eighty-five percent of all customer churn is due to poor service that was preventable. Eleven percent of customer churn could be prevented simply by the company extending outreach and contacting those disaffected or unhappy customers. 67% of customer churn is preventable if a customer issue could have been resolved on the very first contact or first engagement, this really underscores the importance of first contact resolution, or as it’s termed, FCR.
Only 1 Out 26 Will Ever Complain
Seventy-eight percent of consumers actually expect to get an answer from some form of self-service be that on the web or through an IVR, (interactive voice response) unit. And just 1 out of 26 customers will actually ever complain. Most customer will simply vote with their feet. Eighty-four percent of all social media interactions have to be escalated to other channels for a resolution. It’s just not possible to resolve a refund publicly on Twitter, for example. While we may believe that there’s a bias in terms of various contact channels, in fact, more than two thirds or 67% of customers really don’t care what channel is being used.
Of 34% of Organizations Who Have Completed Customer Journey Mapping, Only 2% Report Success
Thirty-four percent of companies at this point have undertaken a customer journey mapping exercise, 2% have reported success in that process. And 72% have said that customer journey mapping really has missed their needs. That, I think, speaks to a broader understanding about how inclusive the customer experience must be. It has to be all touch points and all interactions. Further, it has to be from the customer’s perspective. It can’t just be what we want them to be thinking about us.
Less Than 1% of Organization Can Actually Measure Their Customer Engagement
We in part influence our customers perceptions and their expectations, but their perceptions and expectations are also going to be influenced by online reviews, the experiences of their friends, and their own experiences with other, perhaps unrelated, firms and organizations, and possibly even different verticals. Fifty-eight percent of companies have customer engagement programs in place, but less than 1% of companies can actually measure their level of customer engagement. So certainly there’s some very positive and strong opportunities for an organization that can execute customer experience very well.
But there are also huge risks, and there’s a lot of wreckage on the path to success. As we look at customer experience, we try and keep it fairly simple. It’s really about three elements. Do customers get value without difficulty? That’s ease. Can customers get value from the experience? Is it effective? And do customers feel good about the experience, that’s emotion. So ease, emotion, and effectiveness are the ‘Three Es’ and these are really core tenets to any customer experience initiative. Each of these elements can be exploded down to a far more minute level and can be rolled back up to those three.
The customer experience is the perception of the customer is based on emotion, ease, and effectiveness. These elements can be expanded to suggest that under emotion, for example, was the agent they spoke with empathetic? Did they understand where the customer was coming from? Is the website visually appealing? Or was the ambiance in the store and the environment pleasant? From the ease perspective, was the order processed quickly? Was the product information clear and readily available? Was help available in an accessible context, either from an associate in the store, from the FAQs on-line, or from a helpful chat option which presented itself?
Was the process effective? What was the effectiveness? Was the right item offered? Was essential product information available? Was required help available or provided?
From a contact center perspective, we might equate effectiveness to, was the agent knowledgeable about the product or services that we were discussing?
The Taylor Reach, has developed a slight variation on Ease, Emotion and Effectiveness, when we look at call and contact centers. Each customer interaction can be viewed across three different dimensions that have the greatest impact on the customers’ perceptions, opinions, and experience of dealing with that agent in that contact center environment.
Customer Effort, Emotional Connection, Rational Connection
We look at Customer Effort and the ability to make a connection, both Emotional and Rational. Was the agent able to make an emotional connection with the customer? Did they ‘get it’? Were they empathetic? Were they able to make a rational connection? From that perspective, what we are really talking about is, was the agent knowledgeable, did they know the products, did they know the policies? And regarding customer effort, how difficult was it to actually get to that right agent who was able to help the customer?
If we have to force customers to go through 14 levels on an IVR or have to transfer the call five times, we certainly have created barriers and restrictions, and increased the amount of effort the customer needs to invest. Now, we know intuitively that better service and better experiences improve the customer relationship. The following graphics below are from HBR. The graphic blow shows that customer experience drives sales and it actually reflects a 140% increase in sales versus the poorest experience.
This chart looks at the customer experience score and the annual revenue of those same customers. The second chart addresses the ability of superior customer experience to drive membership. If we look at things from a subscription perspective, we see that the customer experience score is increasingly predictive of future membership or subscription in future years.
The chart show over 400% tenure increase versus the poorest experience scores. So we can see that there is dollar value available to organizations that are able to deliver that better experience, as judged by their customers.
Why improve the customer experience? Well we want to improve retention and recover potentially lost customers. We want to engage existing customers in improving their satisfaction. We want to increase cross sell and up sell opportunities and the customers’ success.
All organizations want to reduce the cost of new customer acquisition. We know that engaged customers and increased employee satisfaction leads to increased customer engagement and customer satisfaction. This strongly correlates with a significant improvement in customer experience. We want to reduce the cost of the feedback infrastructure.
All organizations want to make it easier for customers to tell us how we’re doing. In the graphic below, courtesy of Genesis, we see the top three reasons why businesses proactively manage and invest in the customer experience.
Number one, is to improve customer retention. The second reason was to improve overall customer satisfaction. Number three on the list was to increase cross selling and up selling. Reasons, one and three directly correlate to increased revenues, and number two represents a secondary relationship to increase loyalty, stickiness, and retention. This is not the only voice speaking to the value and importance of investing in Customer Experience. Gartner reports that in 2016, 89% of marketing leaders surveyed expected to compete mostly on the basis of customer experience.
79% of Customer Experience Leaders Have Better Financial Results
Firms that are recognized as tops in delivering CX, reap huge rewards. Seventy-nine percent of customer experience leaders report better financial results than their competitors. While only 55% of customer experience laggards can report the same. That was a finding from the Temkin Group study in 2015. If we look at the Forrester Customer Experience Index online survey from the same year, we see the brands that ranked tops in customer experience, and there’s a lot of familiar names that are well regarded as having excellent customer experience.
USAA has four mentions on this top CX list!
The distribution of CX index scores, again from Forrester, shows an interesting curve. The smallest number reported on this slide, shows that almost nobody is doing an excellent job. There are a number who are doing a good job, even though that number has actually declined in the third quarter versus the first. We also see that about half or just over half of the firms participating are doing an ‘okay’ job. Yet that leaves 20-25% that are doing a poor or very poor job based on those almost 300 firms that were surveyed.
Perhaps predictably, marketers look at the customer experience from more of a marketing perspective, and the call or contact center is often not a focal point in their designs and their developments. Frankly, I believe that this can be a fatal flaw. Why is that, you ask? Well more than 50% of all consumer interactions take place through a contact center. If we look at the first channel that individuals employ to communicate with an organization, the graphic on the left, we’re seeing that the call center is the first channel 35% of the times. Followed by website, branch, or retail.
IVR, which is directly connected and usually a part of the call or contact center is 12%. So if we add that to our 35%, we’re up to 47%. We can then add email and chat, also channels that terminate and are processed through our contact centers and we are at 53%. Channel preference for communications with the organization varies by vertical, and it also varies based on the level of complexity of the issue. This is the complexity as perceived by the customer. The two charts below illustrate these facts. If the issue is deemed to be not very complex or non-complex shown on the lower chart, only in the case of satellite and cable, or ISP is call center the first choice.
Complex Issues Equal Human Interaction
That preference may have more to do with the options available to the customer. If you have a cable modem or your Internet service provider is down, it’s difficult to get support through the web. But for other verticals where we presume internet service is available, wireless, credit card, health care, technology, etc., the first channel choice. This preference changes dramatically when we have, or believe we have a complex issue. I think this really reflects human nature. For tasks that we believe are easy, or simple, or straightforward, we’re quite happy to interact with technology to achieve our objectives. But as soon as we think that something is broken or messed up, we really want to talk to a human being. So in every one of those sectors we talked about a moment ago, with the exception of technology, call center becomes the first channel choice for complex issues. And that’s over 50% to more than 60% of the cases.
In most organizations, the customer experience teams are quite small. Temkin found that the number of full time employees is generally at least six.
But you can see that the biggest single percentage there is between 3-5 staff and then 6-10 would be the next largest segment. Some very large organizations do have large teams with 15% of reporting organizations have teams in excess of 50 individuals dedicated to the company’s customer experience.
Executive priorities for CX leaders versus laggards can also shed a great deal of light in terms of what they’re focusing on. If you’re a leader, then one of the key priorities you’re going to be working on, is to make the company’s culture more customer-centric and you’ll be looking at fixing customer experience problems. With over 85% and almost 90% respectively focusing on these issues, while only half the CX laggard organizations are focusing on these issues. There is strong alignment in a number of areas where the laggards and leaders respond similarly. Increasing customer retention, acquiring new customers, selling more to existing customers, and improving profitability, are all areas where both groups aligned. Of course what organization isn’t focused on these issues? From a CX perspective however I think that we can probably glean more from the variances than we can from the similarities.
While it seems to those of us in the industry the CX has been with us for a number of years, yet most organizations are still early on in this customer experience journey. In terms of how many companies really view themselves as industry leaders, that’s a very small number, 7%. But how do these same firms expect their CX to be described in three years? 55% believe that they will be industry leaders. In sales this would be called the ‘hockey stick’ as a dramatic increase is anticipated, even though present evidence may belie that prediction. So there’s still lots of gains to be had in the entire milieu for customer experience. Now we’ve focused on the term customer experience thus far in this discussion and in our next installment we will to introduce the relationship between CX and customer centricity.