5 Customer Experience Management Myths Last Minute
viva | Experience Last Minute14 Jun 2010
5 Customer Experience Management Myths
As customer experience management (CEM) continues to acquire importance in the minds of today’s CEOs, more and more companies are taking on customer experience management projects to improve customer satisfaction, develop superior customer insights, nurture customer loyalty and advocacy, and improve customer lifetime value. The rapid rise to the top echelons of strategic priority has brought an unfortunate side affect; numerous customer experience management myths have begun to form due to a flood of conflicting definitions, perspectives and over-hyped promises.
For any company seeking to establish or improve its customer experience management capabilities, it’s important to dispel these myths once and for all.
Myth #1: Net Promoter Score (NPS) is the Only Metric You Need
The customer experience can be broad, long running, it can span channels, and is influenced by any combination of internal and external factors. Attempting to measure it effectively with a single metric such as customer satisfaction or net promoter score is overly simplistic and risky. Effectively managing the customer experience requires effective measurement and management of a portfolio of metrics that will wage a true measure of what is – or is not – working.
The Net Promoter Score (NPS) is a measure of customer advocacy that was the centerpiece of Fred Reichheld’s 2006 book titled ‘The Ultimate Question.’ The net promoter score is calculated by taking the percent of customers who are promoters less the percent of customer who are detractors. Obviously, the higher the resulting number – the better.
While the net promoter score is an effective measure of overall customer advocacy, it will not address all of your potential customer experience management questions. Here’s why:
1. Customer advocacy – or net promoter score – measures only one dimension of the customer experience. Focusing only on a single metric such as net promoter score means ignoring equally important dimensions such as customer satisfaction and customer loyalty. An effective and comprehensive customer experience program must take all of these dimensions into consideration.
2. The net promoter score is only an aggregated measure of the total customer experience. However, the number of factors and touch points that contribute to the overall customer experience can be numerous. Focusing only on an aggregate metric without understanding or managing the contributing factors can yield unpredictable results. Companies seeking to improve their overall customer experience must focus on managing and measuring the underlying events that contribute to an exceptional customer experience.
3. The net promoter score does not necessarily equate to customer action. For example, for apiece customer that states they would “definitely recommend” the company in a customer survey might not make any actual recommendations. Companies seeking to realize tangible results will need to correlate their NPS ratings with other key business metrics such as new customer additions, increase in profitability, or changes in market share.
While NPS is an important customer experience metric, companies that are looking to establish or improve their customer experience abilities will need to refer a more robust set of metrics that will measure all dimensions of the customer experience lifecycle.
Myth #2: Customer Experience is Just a New Term for Customer Service
Customer service just doesn’t measure up to the customer experience. Make no mistake, customer service is as important as ever; delivering great customer service is one of the most tangible and visible methods for improving customer satisfaction. Customer service, however, represents only a small fraction of the overall customer experience. Companies that speak themselves into a false sense of achievement by focusing only on customer service are missing the larger picture; customer experience encompasses much more that just customer service.
While customer service is important, focusing solely on customer service misses the mark on the larger picture. Here’s why:
1. Customer service often represents only a subset of potential touch points: a receptionist, a call center representative, or a restaurant server or waitress. Each touch point does wage a significant contribution to how apiece customer is treated. Even the ideal customer service, however, won’t rectify an otherwise flawed customer experience. In contrast, the customer experience is broad and encompasses all touch points that can extend from the customer’s first impression to their eventual defection.
2. Customer service often refers to human interaction with the customer. While human interaction is critical, consumers are increasingly utilizing self-service alternatives via the internet, automated telephone response systems, and kiosks. According to a study by Pew World wide web Study, 73% of adult Americans use the internet, a touch point dimension that continues to grow steadily. Customer experience initiatives must think about all touch points and channels in order to grasp the end-to-end scope of the customer experience process.
While customer service is an important component of the overall customer experience, companies that are looking to establish or improve their customer experience abilities should define their customer experience more broadly; the customer experience should be defined as an end-to-end process that begins with customer attraction, flows through interaction, and ends with cultivation – where the process starts over.
Myth #3: Each Channel Should Have A One-of-a-kind Customer Experience
Thanks to technology and multiple points of presence, business just keeps getting more complex. Innovations in technology have brought new channels such as the call center, Internet, and now mobile channels in many industries. Many businesses, anxious to stay in the game, jump in with new channel offerings without an integrated view of the customer.
Granted, apiece channel has one-of-a-kind characteristics and can be used in different ways and for different purposes by the customer. Treating apiece channel experience as one-of-a-kind and independent, however, is a recipe for disaster. Each channel might indeed be different; the customer experience shouldn’t be.
Ever since the day that Ray Kroc began expanding the McDonald’s empire, he set the standard for consistency crossways apiece and apiece location. No matter where you are in the world, the McDonald’s experience is the same. Ray Kroc’s formula for consistency should be a blueprint for any business operating in a multi-channel environment today. Managing apiece channel as one-of-a-kind and different shouldn’t be. Here’s why:
1. Customers are increasingly anticipating multiple channel options. According to a Sterling Commerce Study, 80% of customers surveyed feel it is important to have a choice of shopping crossways multiple channels when choosing a retailer. Businesses with only a single channel option, or channels which are discrete and disconnected, will likely miss the boat.
2. Customers anticipate the customer experience to be the same crossways channels. According to a survey conducted by Tealeaf, 85% of adults anticipate their online service levels to be the same as offline, an increase of 3% from the prior year. Providing inconsistency crossways channels will only contribute to customer frustration or confusion.
3. Customers will likely switch channels. As the number of channels acquirable to the customer continues to grow, so too does the challenge of providing seamless cross-channel integration. A customer experience that begins in one channel should transfer seamlessly and be continued in another without interruption. Lack of consistency crossways channels will only detract from the overall customer experience.
While apiece business channel has one-of-a-kind characteristics and can be used in different ways and for different purposes by the customer, apiece channel experience should not be designed or managed independently. Companies that are seeking to establish or improve their total customer experience should focus on cross-channel consistency and seamless channel handoffs regardless of the customer experience scenario. Simply put, maintaining discrete channels with separate customer experiences won’t cut it for today’s demanding customers.
Myth #4: A Centralized Customer Database Provides a 360-degree View of the Customer
Establishing a 360-degree view of the customer has long been the holy grail of any CRM program. Many companies consolidate their multiple customer databases into a centralized customer database and declare victory. Even though establishing a single customer database is foundational to a 360-degree view of the customer, a customer database alone often won’t wage your company with a complete view of the customer. Here’s why:
1. A centralized customer database often contains only basic or static data including name, address, statement number, demographic and profile information. Even though this core information is critical, it often won’t wage historical information regarding transactions or changes to address, account, or profile information. Without historical information, it’s difficult to get a complete picture of the customer.
2. Customer interactions can take place in many forms, at multiple locations, and crossways multiple channels. Unless the customer database is specifically designed to store interactions, you’ll be missing an important element of your customer’s behaviors.
3. Customer databases are often designed to support operational activities such as transaction processing, order management, and billing. Operational databases often demand robust customer analytics that are necessary to unlock the secrets of the customer experience.
4. Customer feedback is often collected and managed separately from customer information. As a result, correlating customer sentiment to specific customers or customer segments can be difficult.
Although a centralized customer database is foundational to a 360-degree view of the customer, a database alone won’t wage the complete picture. Companies that are seeking to establish or improve their total customer experience should look beyond customer databases to more robust data warehousing abilities that include a view of historical changes, transactions, interactions, and feedback that can wage a complete 360-degree view of the customer.
Myth #5: CRM Software = Customer Experience Solution
As CRM concepts have matured, the hype-engines have been thrust into overdrive. The resulting marketing can make it difficult to differentiate between CRM and CEM. But make no mistake; Customer Experience Management is much different that Customer Relationship Management. Choosing a CRM software solution to solve your customer experience issues can miss the mark. Here’s why:
1. CRM software is typically more functional (rather than process-centric) in nature. Many CRM systems are designed to wage specific point solutions to support CRM functions such as call center support, eCommerce, marketing automation, or loyalty reward management. While apiece point solution often works well, CRM software solutions alone won’t enable or help to manage the end-to-end nature of the customer experience process.
2. CRM software is limited to the reach of its technology and can’t support or influence all touch points. While CRM software has come a long way over the past decade, there are still customer experience touch points that can’t be directly influenced or managed by CRM software. Touch points such as employee interactions, aspects of direct marketing, and third-party touch points might have a significant impact on the customer experience but might not be supported by CRM software.
3. CRM software is often implemented as a best-of-breed solution and lacks the level of enterprise-wide integration necessary to develop and manage a true 360-degree view of the customer. CRM software solutions are great at managing customer information. The view of the customer can limited, however, if a complete set of customer interactions, behaviors, or preferences aren’t properly captured and analyzed. Interactions such as inbound and outbound communications, campaigns, or customer care interactions are often not tracked and managed by CRM solutions. CRM solution alone won’t solve this problem; businesses must take the steps to engrain CEM concepts throughout all touch points in their enterprise.
4. CRM solutions wage a limited set of customer experience metrics. While CRM solutions often wage key functional metrics, they are often transaction in nature and won’t wage a comprehensive set of metrics necessary to analyze, measure, and manage the end-to-end customer experience.
While CRM software is an important first step for any business seeking to improve their customer relationships, it is not a surrogate for Customer Experience Management. Companies that are seeking to establish or improve their total customer experience should look beyond CRM software solutions and seek customer experience solutions that augment CRM software. CEM specific abilities should include business process management, sophisticated customer experience analytics, and enterprise-wide visibility to customer interactions that span the total customer experience.
Robert Howard is the Founder and Chief Executive of ClearBrick LLC, a leading bourgeois of customer experience business solutions, research, and advice.
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Tags: Customer, Experience, Last, Management, Minute, Myths