17-09-01 LOYALTY WP CEM...ownership of the customer experience management agenda, an identified CEM team including a leader, and a stated goal to improve the customer experience. Without

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Customer Experience ManagementA Step by Step Approach from Ipsos Loyalty

Easier said than doneBusiness success is no longer based solely on product or service traits but now requires the creation and delivery of holistic branded experiences. Customer Experience Management (CEM) is the name of the practice which places new demands on enterprises as they coordinate the delivery of experiences across functional silos. Yet, while many managers recognize the importance and potential impact of customer experience management, few are prepared to handle the demands CEM creates for their organizations.

For the most managers the vision for CEM is clear. First, understand what drives customers experiences, attitudes, behaviors and financial returns. Then, design holistic experiences for targeted customers and implement the experiences by changing internal processes, structures, and systems. Finally, track performance, take remedial action where necessary, respond to market and competitive dynamics, and create engaging new experiences to keep CEM invigorated. Despite being clear, the vision is realized in few organizations. Initial efforts at CEM emphasized huge database systems. Billions of dollars have been spent on Customer Relationship Management (CRM) systems as organizations have struggled to understand and connect with their customers. Many CEOs, CMOs and CIOs alike will tell you that they have not seen the return on these investments. More alarmingly, customers have not reported great improvements in their own experiences despite all of the resources deployed to their intended benefit.

Companies clearly need to do better in converting their CEM visions into reality. In fact, many of our clients ask us about best practices that we find as we help organizations bring their customers to the center of their business strategy. During our more than twenty years in this field working with dozens of organizations implementing CEM, we have identified four critical steps to implementing customer experience management.

• Engagement: Align the senior executive team

• Insight: Understand the drivers of customer behavior

• Action: integrate the customer experience with business processes

• Embedment: Connect the entire organization into delivering the experience

These steps were empirically derived by looking at what successful clients do; the steps are at once powerful, practical, and possible.

Customer Experience Management (CEM) is the practice that

requires the creation and delivery of holistic branded experiences

to customers

Copyright ©2017 Ipsos Loyalty. All rights reserved.

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CEM : A STEP BY STEP APPROACH

1. Engagement: Align the senior executive teamAssess ReadinessBusinesses tend to organize vertically around functional expertise. Often this is overlaid by geography and the idiosyncrasies of matrix management. Unfortunately for organizational designers, customers interact with organizations horizontally. Customers want innovative ideas that meet their needs, products and services that work, and solutions to their problems. To enable customers to achieve their goals, the entire enterprise from the CEO down must be engaged in customer experience management. The first trick then is to get the senior team aligned with the CEM journey.

We find that a “readiness assessment” is a quick way to get an organization moving. When organizations know their strengths and weaknesses they can see where to begin and the effort it will take. This helps take the risk out of beginning. It also starts the process of getting executives involved.

We investigate several areas to test how ready the organization is to accept evidence-based change founded on customer input. In a typical situation, we know there must be CEO level ownership of the customer experience management agenda, an identified CEM team including a leader, and a stated goal to improve the customer experience. Without these basic ingredients, commencement of a CEM program should most likely be delayed.

Diagnose Business StrategyHealthy organizations emphasize one of three sources of competitive advantage: product leadership, customer intimacy, or operational excellence while maintaining industry par levels of performance in the two areas they do not stress.

Understanding your own organization’s emphasis will help communicate the CEM program in the context of the DNA of the organization, thereby increasing the potential for success.

Southwest Airlines is a classic example of an operational excellence based company that can “turn” their planes faster than any airline in the country. Southwest’s customer experience must leverage this operational capability to create a powerful and differentiated customer experience rather than attempting to compete by pulling resources away from this competency.

Apple is known for its ability to innovate for its target market – often without getting much input from its customers. Apple’s customer experience must be based on this product leadership dimension.

When the core strategy is customer intimacy, such as in the case of Starbucks, customers will accept inefficiencies and premium prices in return for an exceptional experience. Total customer focus in these organizations is so ingrained that employees could not conceive of trading off the customer experience for better operational efficiencies or product qualities alone.

The point is that you have to know who you are.

Recognizing and sharpening your core DNA strategy the doing everything possible to bring the customer to the center of that strategy is imperative.

We find that a “readiness assessment” is a quick way to get an

organization moving


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Implement a Broad Governance Structure: Participation = Buy-InNothing facilitates success faster than a commitment to the right governance structure. Executives and managers nod politely at the need to treat customers as a corporate asset. However, bringing agreement into action is quite another matter. A governance structure will get key players in the game – their participation is an indicator of their commitment.

Everyone is the governance structure must have a clearly defined role and responsibility that contributes to the success of the customer initiative. People come and go; however, the truest indicator of the success and potential for the customer strategy will be who is the governance structure and how seriously they take their participation.

Document the CEM Vision, Roadmap and Business CaseAt this point, our best practice clients document their CEM vision, program deployment roadmap, and business case. Creating a vision and high level roadmap does not have to be a complicated process, but it does have to be cross-functional. All that is required is a simple statement – the simpler and more memorable the better – of the vision for the customer. This vision is supported by a roadmap of basic strategies that can be used as guideposts to define more specific goals and tactics as the CEM program is executed.

To gain executive attention the CEM program needs to have a clear business case. Managers want to know specifically how customer experience improvements contribute to financial performance. There are many studies that show this relationship, and even most executives accept the logic behind the “employee-customer-profit” value chain. However, our clients still demand that we make the CEM ROI real to them.

We use financial linkage analysis and simulations to prove the case for the customer. We create these models for clients where “best practice” references and anecdotal evidence is not sufficient for executive commitment.

Nothing facilitates success faster than a

commitment to the right governance structure


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2. Insights: Understand the drivers of customer behaviorModel the Relationship with Your CustomersWe advise our clients to understand the causal linkages between customer experience, attitudes, behaviors, and results as a key first step to understanding customer relationship dynamics.

This holistic understanding is the core to evidence based change.

From our research and experience we understand the cause and effect relationship among:

Experiences: Events at each touchpoint that connect customers to a business, many of which may be directly influenced through actions taken by managers.

Attitudes: Customer images, feelings and mind-sets in three key areas:

• Rational motivations – the “value for money” proposition

• Emotional motivations – underlying emotional need states activated by experience

• Brand Essence – attitudes that relate to the specific brand’s intended positioning

Behavior: Customer actions defined by the organization as those that have the greatest impact on business results, for example:

• Repurchasing the brand

• Advocating or recommending the brand to others

• Expanding purchases to other offerings of the business

• Complying with requests such as price increases or move to self-service

Results: Business returns coming as a result of customer behavior in terms of increased revenue, reduced cost, and overall return on investment.


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Create a Voice of the Customer ArchitectureAt this stage, we endeavor to create a line of sight from the broad operations of an enterprise to the customer strategy. Customer understanding should happen at several levels. Typically, an organization has multiple disconnected customer “listening posts” at each of these levels causing unnecessary cost due to redundancy and an overload of information that restricts coordinated action by the organization.

In addition to reducing redundancy and confusion, creating an integrated Voice of the Customer architecture comprising these levels allows the organization to use internal operating metrics and transactional measures as leading indicators of relationship health and business results. Because operating metrics and transactional measures are regularly collected and reported daily or even more frequently, an organization is able to test and correct customers experiences far more rapidly than by waiting for end business results – a lagging indicator of customer relationship health.

Typically, an organization has multiple disconnected customer

“listening posts”…causing unnecessary

cost…and an overload of information

Many executives respond favorably to the challenges of customer

experience improvement once the impetus of

competition is introduced

Understanding the Competitive EnvironmentCEM must be seen in the context of the competitive environment. Learning how your customers and your competitors’ customers perceive the performance of all key market players across experiences, attitudes, and intended behaviors provides a perspective in which

customer experience strategy and tactics may be most effectively developed and deployed. Furthermore, many executives respond favorably to the challenges of customer experience improvement once the impetus of competition is introduced.


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Map the Customer ExperienceWe help our customers map the experience flow that their customers have as they cut across the organization’s business silos. Generally, functions operate fairly well within themselves to handle the slice of the customer experience that is owned by them. However, experiences are seldom neatly contained within a silo.

Indeed, the customer experience is the reason the organization exists. It is why all functions have to work together and do so by putting the customer first and then

functional expertise second. Organizations have to get together to talk about this. We help them look at their basic business value chain then we work with them to map the key cross-functional processes in the value chain. Then, by drawing on interviews and existing research we identify expectations, moments of truth, and pain points to understand how the experience can be differentiated and improved


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3. Action: Integrate the customer experience with business processesLaunch and Manage Customer Experience Improvement InitiativesKnowing about the customer and acting on this knowledge are two separate issues. At this stage, organizations should build a pipeline of distinctive brand building customer experience improvement projects that support the CEM vision, roadmap and business case. Once launched, the organization may manage the initial and subsequent projects as a portfolio, regularly scaling up successes and divesting projects that are not positively impacting customers and business returns.

Connect the Voice of the Customer into Strategic PlanningWhile managing a portfolio of customer experience projects is key to CEM, connecting insights from customers into the regular strategic planning processes across the organization facilitates broad engagement with customer experience improvement. Leading organizations create a multi-year “Customer Plan” as part of the overall strategic planning process. Planning templates issued from the corporate center to various business units should include explicit sections driving each area to define its customer strategy and key tactics to be deployed.

Customer information has to be injected into the decision making

process if it is to have an impact


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Tie CEM into BudgetingCustomer information has to be injected into the decision making process if it is to have an impact. Customer data may not always win the day, but it should be given the chance to compete on a level playing field. Sometimes the squeaky wheel gets the grease, but at other times evidence-based decision-making wins the day. In either scenario, the customer has to find a way to be heard in the resource allocation decision making discussion. Customer data must get linked into this process – if budget allocations are the same year-over-year; the customer experience will be too!

Our clients typically follow a simple process that is supported by disciplined tools:

• First, they analyze customer relationship and operational data to discover insights that will improve the customer experience.

• Next, cross-functional teams discuss the data and insights to develop ideas for taking action.

• Then, the ideas are converted to initiative plans that are evaluated against criteria such as: customer impact, ease of implementation, and customer exposure.

• Finally, the results are plotted. Initiatives having the greatest potential are funded and launched.

Provide Regular Operational Information to Promote Corrective ActionStrategic initiatives take time to change the customer experience, even though customers interact with the business everyday. It is not enough to wait. Taking action on improving daily transactions can be extremely valuable to the overall customer experience when aggregated across customers and over time.

Making the right operational decisions means that the customer is actively represented in the local management processes. Data has to be delivered efficiently to managers, ideally in real time to their desktop. This should also result in regular reporting to local management committees to get at the root cause of recurring issues so they can be solved cross-functionally.

Taking action on improving daily transactions can be extremely valuable

to the overall customer experience when aggregated

across customers and over time


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4. Embedment: Connect the entire organization into delivering the experienceCommunicate (in All Directions)The first key in communications is to brand the customer strategy internally. Let people know it is important and give them a vision to guide them each day. Overall, this is a marketing effort just like any other. Branding the CEM program and using the same effective approaches applied to consumer marketing will help capture the minds and hearts of employees.

A customer strategy is intuitive to employees; they know that customers are important and they like to serve them. However, management has to be visibly engaged before employees will change behavior significantly in terms of CEM. There are many set events on the management schedule, such as: board meetings, annual planning events, offsite management retreats, weekly operational meetings and progress reports. The customer strategy has to find a priority place on the agenda. The time that gets secured in these events is an indicator of management’s commitment to the CEM vision and roadmap.

Once communication between managers is in place, broad communications with employees must follow. Introduction and regular updates on the progress of the CEM program and the business results coming from customer experience improvements are standard practices. Ensuring that employees can provide feedback up to managers about the CEM program creates stronger internal engagement with the efforts.

Communication about the CEM program should not remain internally focused. Leading companies talk to all constituents including shareholders, government, and partners about the importance and direction of the customer experience. Lastly, letting consumers and prospects know about specific improvements to the customer experience is critical to setting new expectations that will yield enhanced attitudes and customer behavior.

Enable with training toolsHappy employees make for happy customers. Employees respond well to be given the training and tools necessary to deliver extraordinary customer experiences. However, the “sheep dip” approach to training usually doesn’t work. Determining segments of employees and diagnosing specific training needs is more cumbersome but far more effective. Ascertaining the levels of skill and will of each segment will guide the types of training and tools best deployed. Customer experience leaders typically emphasize tools that empower employees to “do the right thing” for customers.

Align with Performance Management and CompensationAll of our clients ask about connecting customer measures to performance management and compensation to build buy-in and commitment. This is a good principle, but it requires time to implement and a short line of sight. Often in the early stages it is best to measure individual performance and pay for “activity” while transitioning to pay for performance using the customer measures as a guide.

Strengthening corporate cultural attributes relating to customer experience management requires aligning the hiring, promotion and career management processes of the organization. This realignment must take place from the senior executive level all the way through the organization to front line employees.

Employees respond well to being given

the training and tools necessary to deliver

extraordinary customer experiences


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In SummaryThe global competitive economy is driving organizations towards delivering on higher and higher customer expectations for holistic branded experiences in both consumer and business markets. Knowing why customers relate to you is a good thing. Tapping into it is essential. There may not be a cookie cutter answer for doing this, but successful organizations realize they need evidence about their customers if they are going to create the right experience. With this evidence they can execute on four critical steps in implementing customer experience management:

• Align the senior executive team

• Understand the drivers of customer behavior

• Integrate the customer experience with business processes

• Connect the entire organization into delivering the experience

With these words of guidance, we wish you well as you implement your own customer experience management program!


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Ipsos Loyalty Ipsos Loyalty is the global leader in customer experience, satisfaction and loyalty research with over 1,000 dedicated professionals located in over 40 countries around the world. Our creative solutions build strong relationships which lead to better results for our clients. This has made us the trusted advisor to the world’s leading businesses on all matters relating to measuring, modeling, and managing customer and employee relationships.

For further information contact your local Ipsos office, details at: www.ipsos.com/loyalty

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17-09-01 LOYALTY WP CEM...ownership of the customer experience management agenda, an identified CEM team including a leader, and a stated goal to improve the customer experience. Without