Detecon Study Customer Experience Management in the Telecommunications Industry. Market survey and action recommendations for the optimal design of customer experiences

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Customer Experience Management in theTelecommunications IndustryMarket survey and action recommendations for the optimal design of customer experiences

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Customer Experience Management in theTelecommunications Industry

Market survey and action recommendations for the optimal design of customer experiences

March 2010

In cooperation with

> Study Customer Experience Management in the Telecommunications Industry

© Detecon International GmbH2

This publication or parts there of may only be reproduced or copied with the prior written permission from Detecon International GmbH/forum! GmbH.

Published by Detecon International GmbHOberkasseler Straße 2, D-53227 Bonn

www.detecon.com



Table of Contents

1. Preface 5

2. Executive summary 6

3. Trends on highly competitive telecommunications markets 9

3.1 Overview of current challenges 9

3.2 Focus: The new customer experience orientation 14

4. Survey of experts 15

4.1 CEM from the viewpoint of experts 15

4.2 Overview of current CEM measures 21

4.3 Objectives, success factors, and effectiveness 24

5. The customer perspective: results from basic research 28

5.1 Customer championship 28

5.2 Success factors of customer champions 29

5.3 Emotional Customer Loyalty 31

6. The Detecon CEM Framework 35

7. Recommendations for action 38

7.1 Knowing what customers really want 38

7.2 Fix the basics ... 39

7.3 ... and jump in for your customers when you fail! 40

7.4 Ice the cake 41

7.5 Walk the talk of your brand 44

7.6 Employees – your keys to success 45

7.7 Communicate your success successfully 46

7.8 Put the customer on your payroll 47

7.9 Experience by participation 49

7.10 Develop your CEM currency 50

8. Appendix 52

8.1 Recommended reading 52

8.2 Glossary 53

8.3 The Authors 54

8.4 Detecon International GmbH 56

8.5 forum! GmbH 56



Table of FiguresFigure 1: The TOP 5 CEM Measures 6

Figure 2: The Detecon CEM Framework 7

Figure 3: Average Revenue per Subscriber in Mobile Networks, 10

Germany 2004 – 2013 (estimated) in US$

Figure 4: Average Revenue per Subscriber in Fixed Networks, 10

Germany 2004 – 2013 (estimated) in US$

Figure 5: New Categories for Telecommunication Devices 12

Figure 6: Overview of Participants in the Detecon Study 15

Figure 7: CEM from the Participants‘ Point of View (categorized) 16

Figure 8: Relevance of Customer Experience according to phase 16

Customer Life Cycle (Mentions in % of Respondents)

Figure 9: Intended Emotions triggered by Experience Measures 18

Figure 10: Ways to Capture Customer Experience 20

(% of Respondents; Multiple Answers)

Figure 11: Relevance and Frequency of named CEM Measures 21

Figure 12: The TOP 10 CEM Measures 21

Figure 13: Intended Differentiation of Customer Experiences 23

(Mentions in %; Multiple Responses)

Figure 14: Objectives of CEM from the Participants‘ Point of View 24

Figure 15: Customer Experience Performance Measurement 26

(% of Mentions; % of Subset)

Figure 16: CEM Oriented Target Systems for Employees 27

(% of Mentions; Multiple Answers possible)

Figure 17: Cohesion of Complaint Satisfaction and Emotional Customer Loyalty 30

Figure 18: The forum! Index for the Measurement of Emotional Customer Loyalty 31

Figure 19: Customer Typology based on Satisfaction and Emotional Customer Loyalty 32

Figure 20: Customer Orientation Expands the Fan Community 33

Figure 21: Correlation of Emotional Customer Loyalty and Return on Sales 34

Figure 21: Emotional Customer Loyalty through Customer Orientation 34

and Customer Experience Management

Figure 23: The Detecon CEM Framework 35

Figure 24: Effects of Customer Experience Management 37

Figure 25: Derivation of Customer Experiences 38

Figure 26: Examples of Measures for Process Improvement 39

Figure 27: Examples of Moments of Truth, Triggers, and Countermeasures 40

Figure 28: Customer Experience Management, Sales and Service 42

Figure 29: Horizontal vs. Vertical Consistency of Customer Experiences 44

Figure 30: 10 Rules for Communication of Success 47

Figure 31: Professional Feedback Management 48



1. PrefaceEven in today’s world, at a time when the lip service paid to the company objective of “customer satisfaction” is deafening, customers repeatedly find themselves in situations which they never deemed imaginable. Sometimes the customers must almost force their provider to allow them to register so that they can obtain the desired service. Or they find themselves apologizing for daring to ask the company to actually deliver the promised services. They may even notice enthusiastic feelings of gratitude bubbling up when they receive fast and friendly service, some-thing they should normally expect to be part of the standard and not a positive exception. So companies, especially those operating on mass markets such as the telecommunications industry, cannot avoid the key question of what they should do to ensure that customers enjoy an optimal experience.

The current study on “Customer Experience Management in the Telecommunications Industry” performed by Detecon International GmbH and forum! GmbH offers important answers to this question. Readers will be initially impressed by the broad scope of the study design: not only do managers from outstanding telecommunications companies have their say, but experts from other industries as well as academicians have contributed the latest findings from research to the study. Building on this well-laid foundation, the study describes the key contents and trends in the field of customer experience management. This in turn – as an extract, so to speak – serves as the basis for the development of the Detecon Customer Experience Management Framework as a holistic management approach. Starting from here, the paper addresses ten concrete recommendations for action which are capable of blazing new paths. This inspires readers with important ideas for creating customer experience management which functions perfectly, putting in their hands the key to more satisfied, enthusiastic, and consequently loyal customers.

In preparing this study, Detecon and forum! GmbH have succeeded in creating a compendium which helps all interested managers in general, and those at telecommunications companies in particular, to evolve and ultimately professionalize their customer experience management.

Prof. Dr. Matthias Gouthier Chair of Services Marketing European Business School (EBS)



2. Executive SummaryThe saturation on the telecommunications market has caused a steady rise in the intensity of the competition. Customers often perceive the products to be interchangeable. So telecommunications providers find themselves confronted with the growing challenge of setting themselves apart from competitors and securing the sustained loyalty of their customers. They have to find ways to stay profitable while facing the dilemma of declining revenues and inflationary customer expectations. But companies can utilize customer experience management as a tool to profitably design unique customer experience and to secure emotionally the loyalty of their customers. The goal of CEM is to positively influence rational and irrational factors of consumer behavior and to generate delight in customers. Acknowledging that “good is not good when better is expected,” it explicitly takes into account customers’ needs and paves the way to a holistic customer experience with the company. This is the background to Detecon’s decision to conduct a market study which would provide the basis for recommendations for action aimed at the optimal design of customer experience.

CEM from the expert’s viewpointWhen asked about their understanding of customer experience management, 53% of the respondents described it as the generation of positive experience for customers. Many of them noted that the consistency of the customer experience across all customer touch points and business transactions was essential. The most important goal of CEM, as mentioned by 45%, is the surprise or delight of the customers, followed by measures to create loyalty and building up trust with the customers. The five most frequent concepts and approaches of CEM and their impor-tance for the customer relationships were named by the study participants as shown below (cf. Figure 1).

Success factors and measurement of CEMIn the opinion of the respondents, the success of customer experience management is determined by three key factors: integration of the employees (59%), holistic company thinking and action (48%), and the exploitation and provision of customer data (44% of the respondents). 62% of the respondents measure the effect of measures initiated to design the experience (customer satisfaction being the most frequently mentioned target value). In the view of our study participants, the relevant KPIs include customer loyalty indices, net promoter score, and various customer satisfaction indices. 87.5% use these KPIs for steering of their employees, whereby customer satisfaction is the management KPI frequently mentioned.

Figure 1: The TOP 5 CEM Measures

TOP 5Customer

Experience Management Measures

Exploiting the "Moments of Truth"

Generation of Customer Insights

Employee Empowerment

Customer Experience Design

Proactive Complaint Management

1

2

3

4

5

Customer orientation raises the level of customer loyalty and the fan quota The following causality chain can be crystallized from the findings derived from the contest Deutschlands Kunden-champions® and the many years of scientific base research conducted by forum! within the framework of the Excel-lence Barometer®1: Companies with a high level of customer orientation generate a strong “emotional bond” with their customers, and this in turn verifiably and clearly contributes to the company’s economic success.2

1 The Excellence Barometer® (ExBa®) is the benchmark study on the performance capability of the German economy. The initiators of the study are the Deutsche Gesellschaft für Qualität e.V. (German Society for Quality), Frankfurt, and forum! Marktforschung GmbH (forum! Market Research), Mainz. For additional information, go to www.exba.de. 2 This can be clearly demonstrated on the basis of business data which can be evaluated (cf. Chapter 5.3).



The key conclusion here: whether customers intend to buy again in the future and are willing to recommend the company to others is dependent on their emotional ties to the company.

Customer champions are characterized by the following:

They create especially strong emotional customer loyalty; •

They “live and breathe” customer orientation throughout the company. Customer champions take advantage •of every customer contact to strengthen the customer relationship;

Thanks to the high level of customer orientation of their staffs, they enhance the emotional customer loyalty and •turn customers into fans of their company.

Emotional customer loyalty correlates verifiably with customers’ purchase behavior: emotionally loyal customers buy more often and higher quantities. They are less likely to be enticed by offers from competitors, forgive mistakes and mishaps more readily, and actively recommend the company to others. That is why the emotional customer loyalty has a measurable effect on business success: the degree of the emotional customer loyalty correlates with the return on sales and other business indicators (e.g., “EBIT”, “growth in turnover in percent”, “productivity”, “gross profit in percent”, and “development of the market share of the most successful product”).

The Detecon CEM FrameworkThe Detecon CEM Framework embodies the results from the survey of experts and the findings from the customer’s viewpoint, merging them into a holistic presentation of the elements of a practice-oriented customer experience management.3 These elements display many and varied interdependencies in a complex self-regulatory cycle. This is why the long-term success of CEM measures can be secured only by means of a systematic and orchestrated design of all factors. The goal of the CEM Framework is the creation of profitable customer experiences through the fulfillment or over-fulfillment of expectations and avoiding falling short in their fulfillment.

3 The elements relevant for the CEM Framework and their interdependencies will be discussed in Chapter 6.

Customer Experience

Product and Brand Communication

HR-Excellenceand Channel

Synchronization

Quality and PerformanceManagement

CEM Measures

Interactions

Brand

Product/Service

Customer Insight

Customer Insight Brand Halo-

Design

Design

Source: Detecon

FulfillmentExpectation

Figure 2: The Detecon CEM Framework



Recommended actions for your CEMBased on the findings drawn from the scope of the survey, ten recommendations for action aimed at the optimal design of customer experience management have been developed:

Excellent customer experience management presumes that you “know what customers really want” so that you •can systematically recognize the starting points for the optimization;

The second step is to ensure that your core services are in line with customer requirements: consider “fix the •basics” as an absolute necessity;

Identify at an early stage the factors for possible customer dissatisfaction, and “jump in for your customers when •you fail!”, i.e., correct mistakes affecting the customer by coming up with fast, uncomplicated solutions;

Then act purposefully to “ice the cake.” Delight your customers and create an emotional bond to your company •through individual experiences;

“Walk the talk of your brand” by making sure that the customers receive a consistent image of you and your •company. Brand values and corporate identity must be conveyed during every single experience;

Be aware that your “employees are your key to success” and enable them to influence the customer experience •directly and to delight customers personally within the framework of a consistent corporate identity;

Take advantage of the opportunities your achievements provide for your brand by “successfully communicating •your success.” Employees frequently think more poorly of their own company than the customers do;

In addition: “put your customers on your payroll” because they know your strengths and weaknesses best. •Systematically utilize this knowledge for continuous improvement by involving your customers in changes;

Create positive “experiences by participation” and compensate the frequently low level of involvement of • customers for telecommunications products by integrating the customers into the continuous improvement process. They will thank you in the form of word-of-mouth advertising;

“Develop your CEM currency,” making measures that are drafted within the framework of the CEM measurable •so that you can successfully and sustainably shape your CEM investments.

The study reveals that CEM can already be found in the customer relationship management of many telecommu-nications companies and has great potential as a meaningful enhancement of current CRM concepts. Read more about the many and varied opportunities customer experience management offers to your company.



3. Trends on highly competitive telecommunications marketsThe trends and the dynamic development on the telecommunications market form the framework for action and the starting point for a company’s CEM activities. This study takes a look at the B2C telecommunications market which is undergoing far-reaching technological, organizational, and competitive changes. At its core, the market is a high-performance market which is technologically advanced, saturated, and highly competitive.4

Telecommunications markets have been largely deregulated. Telecommunications providers worldwide must today survive on increasingly competitive markets, whereby the intensity of the competition on the markets which have only recently been deregulated rises substantially faster than was the case on the markets which were“ deregulated early.” What is more, the advances in technology and the related demand for new services and greater bandwidths are driving the market forward. This is the background for the analysis and design of CEM activities within the scope of this study.

3.1 Overview of Current Challenges Five challenges confronting deregulated telecommunications markets are especially relevant for customer experi-ence management. They affect the entire market spectrum, from market structure and development to (re)structur-ing of providers to redefinition of the product portfolio to brand identity and marketing.

Challenge 1: High level of competitive intensity with accompanying declining growth potential and increa-sing price pressure. Many telecommunications markets have already passed the phase of tumultuous growth in the mobile network and broadband sector or have even reached the point of stagnation.5 Business with data and content, on the other hand, is undergoing positive development, even though there has been a slowdown due to the financial and economic crisis in 2008 and 2009.6

Mobile NetworksAlthough the number of mobile network users is slowly reaching a stage of stagnation, the number of new mobile network subscribers continues to rise steadily. Mobile network penetration (number of SIM cards per capita of the population) exceeded 100% several years ago (currently 131% in Europe).7 Additional growth is expected in this area: in Germany, for example, an average of 1.7 subscriptions per capita of the population8 is prognosed for 2013. This high level is explained by the fact that many users own two or even more cell phones in the meantime; moreover, there are temporary overlaps of the contract terms when users change providers. Another – important – reason is the growing prevalence of data cards (e.g., in notebooks and netbooks, UMTS USB sticks, etc.) and the steady growth of the so-called M2M cards (machine-to-machine) such as those found in motor vehicles or smart meters.

4 This is indicated by an advanced fixed-mobile convergence (FMC) and telco-media convergence (TMC), a large number of competitors, a low price level, and a high degree of mobile network and broadband penetration. 5 cf. Bank of America Merrill Lynch: European Telecoms Matrix Q3 2009, pp. 4 et seqq. and pp. 16 et seqq.6 cf. Bank of America Merrill Lynch: European Telecoms Matrix Q3 2009, pp. 8 et seq.7 cf. Bank of America Merrill Lynch: European Telecoms Matrix Q3 2009, p. 38 cf. Pyramid Germany Forecast Q4 2008



The Average Revenue per Subscriber in Fixed Networks is declining

$33.69 $26.57$26.91$27.18

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2004A 2005A 2006A 2007A 2008E 2009E 2010E 2011E 2012E 2013E

Voice Telephony ARPS Internet Service ARPSInternet Service ARPS IPTV/Video Service ARPSSource: Pyramid Research Forecast Q4/2008

Figure 4: Average Revenue per Subscriber in Fixed Networks, Germany 2004 – 2013 (estimated) in US$

The Average Revenue per Subscriber in Mobile Networks is declining

Source: Pyramid Research Forecast Q4/2008

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

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2004A 2005A 2006A 2007A 2008E 2009E 2010E 2011E 2012E 2013E

Prepaid Postpaid DataVoicePrepaidPrepaid PostpaidPostpaid DataDataVoiceVoice

$11.64 $10.98$9.09 $7.81 $8.57 $7,42 $6,64 $6,36 $6,23

$6.12

$40,37$39,28$38,46$38,11$39,96

$45,70$46,00$45,23$48,57

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$21,08 $19,67 $18,91$16,13 $15,03 $14,70 $14,49 $14,24

$5,42 $5,47 $5,32 $5,70 $6,04 $5,47 $5,37 $5,75 $6,28

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$40.37$39.28$38.46$38.11$39.96

$45.70$46.00$45.23$48.57

$50.91

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$21.08 $19.67 $18.91$16.13 $15.03 $14.70 $14.49 $14.24

$5.42 $5.47 $5.32 $5.70 $6.04 $5.47 $5.37 $5.75 $6.28

$7.01

Figure 3: Average Revenue per Subscriber in Mobile Networks, Germany 2004 – 2013 (estimated) in US$



In contrast, the average revenue per subscriber (ARPS) has demonstrated a declining tendency for several years now (see the example of German in Fig. 3). The greater part of the revenues still comes from voice telephony, but data applications are enjoying increasing popularity. Overall, an average growth rate of data revenues amounting to 25% is expected for Europe.9

Fixed NetworkThe fixed network market has experienced the greatest changes in the area of DSL broadband connections. In the meantime, more than 55% of all European households have a broadband connection.10 There has been a corre-sponding decline in the number of narrowband connections. However, growth in the DSL sector has slowed down substantially. A relatively new service on the market is digital television via IPTV and the accompanying use of optic fiber technology (FTTx). Continued high growth rates (26% p.a. across Europe) are expected in this field, although the forecasts for the individual countries vary widely.11 Among other factors, this is a consequence of the varying degrees of availability of alternative infrastructures (e.g. cable). The average revenue per subscriber is also declining for fixed networks (cf. Fig. 4).

Fixed Mobile ConvergenceTechnically convergent FMC products will not become a mass business in Europe in the near future. By the year 2013, only 0.82% of the population will be using FMC connections.12 A powerful trend in the market, in contrast, is the product bundling of mobile network and broadband services.

Challenge 2: Reconfiguration of the value chain – back to the universal provider. The profound changes throughout the entire telecommunications industry caused by new technologies, expanded services, and changes in customer requirements are reflected in the transformation of the value chain. Stagnating revenues in the traditional core areas of voice transmission, especially in the fixed network business, are increasing the pressure exerted by competitors and shareholders.

Growth potential on the saturated markets can be developed solely through new services and products such as IPTV, VoD, and fixed-mobile hybrid products. More and more often, these services are being offered in bundled form as Triple Play and Quadruple Play products from a single source. Investments in broadband technology (e.g., UMTS, HSDPA, VDSL), transmission technology (e.g., IP, IMS, SIP), data compression (e.g., MP3, H.264, MPEG-4), and infrastructural advances such as broadband connection expansions represent the essential basis for these new services. In view of declining revenue per subscriber in the narrowband and DSL fields and a corresponding development in mobile networks, expansion decisions must be considered thoroughly and targeted because the maneuvering room for investments is limited and wide-area expansion is expensive.13 On the other hand, expan-sion is unavoidable if providers want to ward off the increasing competition from alternative broadband services (e.g., from cable network operators).

Before convergent and bundled products can be offered, mobile network and Internet service providers (ISP) previously maintained as separate entities must be either integrated with the fixed networks, or alternatively partners from the various areas must conclude cooperative ventures.

9 cf. IDC European Telecom Services Database Q2 200910 cf. IDC European Telecom Services Database Q2 200911 cf. IDC European Telecom Services Database Q2 2009, CAGR for Germany until 2013 30%, for the Netherlands 23%, for Italy 47%12 cf. IDC European Telecom Services Database Q1 200913 cf. OECD: Communications Outlook 2009, p. 21



Challenge 3: Expansion of the product line through developments such as fixed-mobile convergence and telco media convergence Another noticeable development is the expansion of the product line within the framework of FMC, TMC, Triple Play, and Quadruple Play.14 This includes products from the area of content such as IPTV, VoD, music-on-demand (MoD), as well as the provision of mobile, stationary, or combined (hybrid) voice and data services. Related to this is the greater differentiation within the portfolio of end devices such as set-top boxes, VDSL/WLAN routers, smart-phones (with features such as WLAN, GPS, and multimedia capability), IP telephones, and completely new end device categories such as multimedia fixed network telephones. This expansion increases the demands made on the complexity management in sales and service. The success of the iPhone® for each of its exclusive distribution partners shows that there are substantial opportunities for telecommunications providers in this development as well.15

Many telecommunications providers want to use this as a stepping stone to enter business fields closely related to communications such as smart metering and home management or assisted life (tele-medicine, alarm devices for senior citizens, etc.). There are two especially important motives behind this expansion of the product line. One is the development of new markets with growth potential, while the other is the long-term bonding of the customers to the company on highly competitive markets, especially by offering basic services and the additional benefits of a customized bundling of products or features.

14 cf. Ovum: Regional Telecoms Trends: Western Europe 04/2009, p. 1015 cf. Bank of America Merrill Lynch: European Telecoms Matrix Q3 2009, p. 8 et seq.

Kategorie Beispiel Betriebssystem

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Proprietär


Category Example Operating System

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Iphone OS, Windows Mobile, Android OS

Goolge/Android OS, Windows 7, Linux

Mac OS X, Windows 7


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Figure 5: New Categories for Telecommunication Devices



When operating in this environment, the telecommunications industry must prove itself in comparison with com-peting technologies of established satellite TV and cable network operators (who also offer services in the core sector of telecommunications – e.g., broadband and voice services). This requires convincing customers of the technological and commercial competitiveness of the core services and overcoming hurdles to acceptance among customers. This is precisely the point where CEM becomes an essential success factor.

Challenge 4: From convergence to cross-usability and ubiquityConvergence is the buzzword being heard everywhere; telecommunications and IT providers have been preaching and using it for some time, with varying degrees of success, and it is now becoming tangible thanks to develop-ments such as fixed-mobile convergence (FMC) and telco media convergence (TMC). But, at the same time, it is becoming clear: convergence is not enough. The relevant requirements from the customers’ viewpoint are cross-usability and ubiquity. Customers do not care what technology is used to transmit their data or how the functions they use are supported. Their primary concern is simple, intuitive, and secure use. Telecommunications companies pick up on this in their specific product development, for example, employing key phrases such as “e-home” or “connected life and work”. The names alone are clearly indicative – in contrast to early product designations influ-enced more by technology – of the usage context. But this welcome tendency must not exhaust itself in the brand-ing of the products. A consistent customer experience oriented to simplicity and usability in the pre-purchase phase (and for pilot customers in the start/exploratory and use phases as well) is a decisive success factor for overcoming acceptance hurdles related to new products.16

Challenge 5: Strengthening the emotional customer loyalty through differentiated brandingOn the telecommunications market, classic corporate brands are more successful than product brands. Owing to the rapid pace of technical progress, the products are generally too short-lived to establish a separate product brand with stable properties.17 The following marketing strategies can be observed on the market:

The number of business area brands (fixed network brand, mobile network brand, business customer brand, •etc.) is declining, which is related to the development back in the direction of a universal provider. A major trend towards international umbrella brands can also be observed among internationally active telecommunications companies.18

On the other hand, an increasing number of segment brands is to be noticed. Multi-brand strategies are among• others a form of offensive strategy for telecommunications service providers (e.g., a no-frills brand differentiated from the core brand). Moreover, the use of segment brands makes it easier to address specific target groups. Examples of this are the ethnic brands such as Ay Yildiz (for customers of Turkish origin in Germany) or Movida (for Hispanics in the USA) or lifestyle brands for young people or senior citizens.19

In addition, the trend to co-branding with attractive product brands as a way to enhance the company’s own •brand with the supplementary brand attributes of the partner (such as the Apple iPhone® for AT&T, T-Mobile Germany, and other exclusive partners) is becoming solidly established.

In every case, the branding is of great significance for customer experience management because the brand strongly influences the expectations held by customers with respect to the products, the services, and the form of interac-tion with the particular company. Conversely, the customer experience in a concrete usage and interaction context has a major effect on the brand image of a company. A brand identity cannot be successfully communicated long-term if the customer experience does not match.

16 cf. TM Forum: TMF Insights Report Customer Experience Management, 09/2009, p.10. 17 cf. Detecon Opinion Paper: International Brand Positioning and Insights from Brain Research, 08/2009, p. 4. 18 cf. ibid, pp. 6 et seqq. 19 cf. Detecon Opinion Paper: Multi-Brand Management on Telecommunications Markets, 08/2007, pp. 9 et seqq.



3.2 Focus: The new customer experience orientationIn view of the challenges confronting the telecommunications market described above, an ever greater significance is being attributed to the specific design of customer experiences with companies. Industry experts today already regard customer experience management (CEM) to be a decisive enhancement of CRM for the coming decade.20 Of just under 300 managers surveyed in the USA, 64% consider the “customer experience” to be of critical i mportance within the framework of the corporate strategy – and their number is rising.21

The concept of the “total customer experience” was created back in 2002 by Berry/Carbone/Haeckel and describes a perspective of looking at the way companies perform their services.22 It describes customer experiences through-out the entire buying process, from the search for information to the complaint. The authors recommend exploi-tation of the uniqueness of the customers’ experience of the service performance specific to the company as a way to differentiate one’s own company from the competition. The prerequisite for this is the overall view of the customers’ contacts (from their perspective) with the company. All the feedback from customers should be used to improve their experience with the company’s performance.

Since that time, the ideas of Berry et al., have been widely accepted in the telecommunications industry as customer experience management and various approaches have been developed and tried in practice. CEM has already become established as an organizational unit in some telecommunications companies and is more and more frequently the subject of Detecon projects conducted for domestic and international clients. It is certain that CEM has great potential to supplement current CRM concepts in a meaningful way.

In the following chapters, customer experience management will be spotlighted on the basis of surveys among experts and customers within the framework of a market study. The results will be consolidated in the Detecon CEM Framework. In conclusion, the recommendations for action will summarize the results to achieve an optimal design of customer experience.

20 J. Hauk, C. Jost, A. Luyken, C. Schulz (2007): Detecon study CRM 2010 and Beyond – Opportunities and Challenges for Telecommunications Companies on High-Performance Markets, Eschborn. 21 Temkin, Bruce D (2008): Obstacles To Customer Experience Success, Forrester. 22 LL. Berry, Lewis P. Carbone, and Stephan H. Haeckel (2002): Managing the Total Customer Experience, MIT Sloan Manage- ment Review, Spring 2002, Volume 43, Number 3.



4. Survey of expertsMethod and respondents of the studyOf the 37 experts from 29 different institutions surveyed for our study using face-to-face and telephone inter-views as well as online questionnaires, 30% are classifiable as C Level. This is indicative that customer experience management is now perceived in the executive suites as being relevant for persisting in a high competition environment. Besides experts from the telecommunications market, we also interviewed decision-makers from other industries and academicians so that a broad and diversified range of experience could be considered during preparation of the study. We therefore assume that many of the study results can be transferred to other indus-tries as well. Some organizations have already set up structural units for which CEM is the primary concern (19% of the respondents). CEM is met with great interest on the most widely divergent markets, domestic as well as international (respondents from 10 countries and 4 continents) and is in the process of establishing itself as an overlapping corporate strategy.

Figure 6: Overview of Participants in the Detecon Study

4.1 CEM from the Viewpoint of ExpertsHow the expert understand customer experience managementWhen asked about their understanding of customer experience management, 53% of the respondents described it as the generation of positive experience for customers. Many of them (42%) noted that the consistency of the customer experience across all of the customer touch points and business transactions – the horizontal perspective – was important.

The vertical perspective, i.e., the creation of consistent experience worlds with the brand, and the fulfillment of the companies’ performance promise is rather disregarded in comparison. Only 8% of the respondents indicated in an unprompted interview that customer experience management is characterized via the brand.



Assuming the customers’ perspective (36%) in order to better design the interactions with them (31% of the re-spondents) is an important task for CEM. Moreover, 19% regard CEM as a learning process between customers and company for the optimization of the service performance. Taking emotions into account during the buying process and the avoidance of negative experiences (17% of the respondents for each point) indicate that the creation of loyalty and customer bonds are important tasks of CEM (cf. Figure 7).

Brand as center stage

Avoiding negative customer experiences

Integration and consideration of emotions throughout the buying cycle

Learning from customers‘ feedback

Design of interactions with customers

Taking customer perspective

Consistency across all CTP and business transactions

Creating customer experiences

Source: Detecon

8%

17%

17%

19%

31%

36%

42%

53%

How do you understand customer experience management?

Figure 7: CEM from the Participants‘ Point of View (categorized)

Figure 8: Relevance of Customer Experience according to phase of Customer Life Cycle (Mentions in % of Respondents)

Course of customer relationship

Time

Inte

nsity

of

Rel

atio

nshi

p

... presales

... buying phase

... usage of products and services

... information request

... with the basic services

... malfunction or other faults

... the retention phase

or in case of churn

47%

24%

15%

41%

All experiences are equally important to consider…

15%

15%

Potential customers

Current customers

Lost customers

Experiences are relevant during ...

32%

21%

Source: Detecon



Relevance of customer experience in the customer life cycle phases The question as to what customer experiences along the customer life cycle are especially relevant for customer experience management divides the respondents into two camps. All of the experiences are relevant for 41% of them. Customer experience management is understood by these respondents as a continuous and reliably positive confirmation of experiences for customers. A second group of 47% of the respondents believes that only very specific moments are relevant for CEM. Of these so-called “moments of truth,” the technical malfunction is menti-oned as being of utmost significance for the telecommunications industry. Owing to the significantly higher emoti-onal commitment of customers when making buying decisions, e.g., for IPTV or complex installations of integrating hardware in private households, 53% regard the (pre-)purchase phase with a cross-channel search for information by customers, the advising, and the initiation of the sale, up to and including the booking, to be especially relevant for customer experience (cf. Figure 8).

The usage phase is also especially relevant for customer experience for 24% of the respondents. In the fixed network sector, this significance arises from the complex process of distributing the end devices and the service provisioning, including the on-site installation and support during the set-up for the first usage. In the mobile network sector, the phase between purchase and first use is significantly simpler but due to the emotional involve-ment in the selection of a mobile end device when concluding or extending a contract, equally important to the customers and therefore for the CEM.

Bill Price General manager and founder of Driva Solutions, former Global Vice President of Amazon and author of the bestseller, “Best Service Is No Service”

How do you understand Customer Experience Management?CEM is the art and science of figuring out what each customer wants and needs, then surpassing their requirements in a cost-effective, consistent manner that creates an awesome impression on them.

Which customer experiences are most important for companies?The most important ones are before someone buys something from you, after someone bought something from you and when something goes wrong.

How do your clients record and analyze customer experience with their company?One way is to analyze unstructured data and unstructured speeches. But this also implies feedback loops to integrate the voice of the customer into their daily work. When a customer has a problem they can act directly and solve the problem. Another way is to use WOCAS (What our Customers are saying?). It is an instrument we have developed for a better understanding of the customer.

Do you think it is important to generate different experience depending on the type of customer or of the product or on other categories?Yes, regarding to the customer you should separate your most important ones and the new ones. For the products you should generate different experience based on complexity or newness of the products for each customer. Doubtless customer experience is heavily influenced by regional and cultural differences. This is an often underestimated factor.

What are your key factors for success in managing customer experience?Listen to your customers. Act in order to the voice of your customer. Be proactive to prevent your customer from bad experience.



Intended customer experiences through CEM Over the course of the development of the telecommunications market, communication, products, and advertising have become more emotional. The feelings and experience(s) of the customers which are of special significance in the view of the respondents can be differentiated into three categories:

(1) Experiences related to the company or brand: Owing to the saturation of the market, the current customer base of one’s own or of other companies is becoming more important. 33% of the respondents would like to demonstrate their appreciation to their customers. This is to be achieved by seeking to secure the customers’ trust, thereby hoping to erect additional barriers to a change – for no less than 30% of the respondents, the com-munication of reliability and the communication of trustworthiness are important customer experiences. Many respondents also establish the high relevance of positive experiences in the customer relationships by means of their company-specific design of concrete experiences; this is not simply interchangeable from the customers’ viewpoint and is a major differentiating point in competition.

(2) Product-related experiences: Satisfying the individual needs of customers is designated as the most important experience and prerequisite for success (42% of the respondents). The reason for this is the trend away from simple access products to added-value services and the growing importance of FMC and bundled products as growth drivers for the telecommunications market. Enthusiasm for new and innovative products is also regarded as especially relevant (30% of the respondents). The creation of “consistent experiences” for customers is mentioned by 18% of the respondents as one of the top five experience goals: customers’ expectations concerning the brand and the perceived customer contact and service quality must be consistent and positive at every single touch point. The trail is blazed by the consistency of individual experiences with the company’s overall benefit promise: the right mix of function, price, and emotional advantages will determine the market success of future offers.

Bra

nd-r

elat

edPr

oduc

t-rel

ated

Inte

ract

ion-

rela

ted

Source: Detecon

Individual satisfaction of customer needs

Feeling of appreciation

Reliability/Trust

Delight/surprise/enthusiasm

Consistent experiences

Simplicity

Competency

Proactivity 9%

12%

18%

18%

30%

42%

30%

33%

Figure 9: Intended Emotions triggered by Experience Measures



3) Interaction-related experiences: For many of the respondents, the key to the success of customer experience management is the way of reaching a new perspective on processes and channels which results from assuming the customers’ viewpoint. Simplicity continues to be a constant theme for the complex service “telecommunica-tion” (18%); but making this experience possible during the shorter and shorter innovation cycles is not getting any easier. The customers’ experience of the company’s pro-activity is regarded by 9% of the respondents to be the result of modern customer contact management. A provider can make a lasting impression on the customers’ emotional attitude by anticipating complaints or frankly dealing with malfunctions such as a network failure.

Dr. Bernd Weber Director “Neurolmaging”– Life & Brain GmbH

Can the buying behavior of customers be influenced by neuroscience?Today’s focus is primarily on the analysis of key stimuli which influence the way people make decisions, whether subconsciously or consciously. Trust, satisfaction, and loyalty are analyzed according to the same procedure – but at the moment, such an analysis is not being conducted with a commercial focus.

How can stimuli for buying decisions, just to name one example, be identified in the brain?Magnetic resonance imaging allows us to view neural activation in specific areas of the brain. This is possible because cognitive efforts, such as making decisions, result in a stronger flow of blood than is the case in stimulus-free situations. As the flow of blood increases, the oxygen content rises at the same time – and the increase in oxygen in the blood can be detected by MRI. So it is possible to determine which areas of the brain are involved in specific cognitive processes.

What have you found to be the factors which most strongly affect customer satisfaction and customer loyalty in a positive sense?From a neurological viewpoint, the greatest influence comes from stimulating the human “reward system” and “learning system”. For example, creating experiences which go beyond the expectation levels of customers is enormously important in this respect. It is highly interesting to see that the past plays more of a subordinate role with respect to expectation levels or the exceeding of expectations. This is a very interesting aspect, especially concerning retention measures towards the end of a con-tract term, because customers do not “bear grudges” from a neurological viewpoint! This means that the presentation of a new offer shows the same brain physiology for both new and current customers. However, past interaction is interesting for the learning capability of the brain. Certain experiences are significantly more important than others because these moments remain deeply anchored in customers’ memories. This learning function confirms the significance of good complaint manage-ment as well as the necessity of initiatives to avoid complaints and contacts which do not generate value for customers and company, e.g., a contact induced by invoice items which are unclear.



Capturing and analyzing customer experienceAll of the respondents capture or analyze in some form the experience of their customers with the respective com-pany, its performance, or the services it provides. Marketing is frequently mentioned as an important function for the creation of an overall view of customers’ experiences. The surveyed companies frequently implement external measures for the recording and analysis of experiences; they mostly engage specialized external agencies (38% customer surveys, 28% studies). Internal measures are applied less frequently: analysis of customer contacts (24%), complaints (17%), and terminations (17%) are the most widely used because the coding of the customer feedback or behavior is done immediately by the employees at the front-end system and the administrative expenditures for the processing of the information are relatively low. Qualitative surveys such as employee surveys (7%) or discussion group interviews (3%) which always bear a substantial effort for categorization and consolidation are conducted less often. The hollistic (external and internal) information potential is exploited very rarely by the companies.

Internal MeasuresExternal Measures

0% 10% 20% 30% 40%

7%

Loyalty analysis 3%

Social media analysis

Brand analysis

10%

Usability analysis 10%

Net Promoter Score 17%

Mystery shopping 17%

Satisfaction analysis 21%

Studies 28%

Customer surveys 38%

0% 10% 20% 30% 40%

Employee surveys

Usage data analysis

‘Operations day’ for executives

Call assessment

Feedback management

Termination analysis

Complaint analysis

Customer contact analysis

Discussion groups

Source: Detecon Source: Detecon

3%

7%

10%

10%

14%

14%

17%

24%

17%

Figure 10: Ways to Capture Customer Experience (% of Respondents; Multiple Answers)

Many companies prefer case-based learning as a way to determine the customers’ perspective, while expectations and requirements are explored by the use of surveys. Although many of the respondents confirmed the value of the information from these sources, the company can frequently use the generated knowledge only in very specific cases.



1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Relevance

Frequency

Generation of customer insights

Employee empowerment Moments of truth

Source: Detecon

Figure 11: Relevance and Frequency of named CEM Measures23

TOP 10Customer Experience

ManagementMeasures

Moments of Truth

Generation of Customer Insights


Customer Experience Design

Proactive Complaint Management

Development of a CEM Currency

Customer Service Excellence Program

Individual Needs Based Selling

Disaster Recovery and Business Continuity Planning

Channeling Voice of the Customer into Action

Source: Detecon

1

2

3

4

5

6

7

8

9

10

Figure 12: The TOP 10 CEM Measures

4.2 Overview of Current CEM Measures4.2.1. CEM Measures for Designing Customer Experiences Possible ways to design customer experiences were identified during the interviews with experts by asking un-prompted questions. The interviewees mentioned a variety of more or less non-overlapping key words, concept names, and project approaches. Some of them were mentioned especially frequently and discussed at length by the respondents.

A group of 10 measures regarded as particularly important for customer experience was derived (cf. Figure 12):

23 Relevance on a scale from 1 to 5 | Best rating = 5; frequency on a scale from 1 to 5 | x, very frequent = 5, multiple answers possible



The 10 most important CEM measures in detail

Moments of Truth

Exploiting the “moments of truth”: The fact that they combine the three fundamental ideas behind CEM is alone enough to point up their great importance: • Theassumptionofthecustomers’perspectivetoevaluatethecompany’sperformanceonthemarket• Theawarenessthattheevaluationoftheperformancecapabilityisdeterminedbycriticalmomentswhenthe company’sperformanceorfailuretoperformisperceivedespeciallyclearly• The starting point for action behind this concept related above all to the “last mile of providing service” to the customers which is especially perceptible or discernible for them

Customer Insights

“Customer insights”: Manycompaniesgotogreatlengthsintheirattemptstounderstandtheserviceexpectationsandperceptionoftheircustomers.Unlikethe“momentsoftruth”,thegenerationof“customerinsights”isnotconcernedwiththespecificmoment,butratherwithageneralexplorationofthecompany’sstrengthsandweaknessesfromthecustomers’viewpoint.Furthermore,theattemptismadetoidentifythebasicrequirementsandthedelightelementsofproductsandservices.


“Employee empowerment”: Theexperienceofthecompany’sperformanceisstronglymarkedbytheinteractionofcusto-merswiththecompany’semployees.Ensuringtheirfundamentallyfriendlyattitude,customerorientation,sincereconduct,fairadvising,competentinformation,andfasthelparewell-knownsuccessfactors.Theimportanceoftheemployeeswasfrequentlysummarizedbytherespondentsusingthekeyphrase,“employeeempowerment”,meaningtheprovisionofasupportiveinfrastructureandtheassignmentofdecision-makingauthoritytotheemployeesindirectcontactwithcusto-mers.

Customer Experience

Design

“Customer experience design”: Thecustomer-friendlydesignofproducts,services,andinteractionaswellascustomer-centricoptimizationmeasuresforacompany’sbasicservicesaresecuredbycustomerexperiencedesign.Thefocusisontheoptimizationofthecustomerexperiencesandexperiencewithintheframeworkofthe“customerjourney”generatedforcustomersbythedesignofcompanyservices.

Pro-active Complaint

Management

“Pro-active complaint management”: Thewaycomplaintsarehandledisregardedasakeyqualityindicatorforcustomerorientationandacompany’sperformancecapability.Afterall,acomplaintisanimportant“momentoftruth”fromthecusto-mers’viewpoint.Thecompany’sreactionisexperiencedas“extremelypositiveornegative”,resultingincorrespondinglystrongemotionalreactions.Thatiswhymanyoftherespondentsview“pro-activecomplaintmanagement”ascriticalforacompany’ssuccess.Earlyrecognitionofcausesofcomplaints(e.g.,byusingtriggersintheCRMsystem)makeitpossibletosatisfycustomersevenbeforetheyhavetimetovoiceacomplaint.

Development of a CEM Currency

“Development of a CEM currency”:Acommonbiaswithrespectto“soft”orexperience-orientedoptionsforactionsnowappearstobeathingofthepast.Themeasurementoftheeffectsofmeasuresforthepositivedesignofcustomerexpe-rienceisnowmentionedasofequalimportancewiththemeasuresthemselves.Companiesdependonacombinationofinternalandexternalviewpointswhenmeasuringtheseeffects.The“developmentofaCEMcurrency”means,forexample,thatitmustbepossibletomodelstatisticallyvalidrelationshipsbetweenthelargelysatisfaction-orientedkeyperformanceindicators(KPI)andthefinancialindicators(e.g.,turnover,CMI,customervalue,etc.)inaCEMdashboardorsimilarinstru-ment.ThisisthewaytocreatetransparencywithrespecttotheeconomicefficiencyofaCEMmeasures.

Customer Service Excel-lence Program

“Customer service excellence programs”: Significantvariationinthecompany’sperformancehaveanespeciallyunfa-vorableeffectontheperceivedqualityoftheservices.“Customerserviceexcellenceprograms”thereforeattempttoachieveadesirablebasiclevelintheCE-relevantKPIsortostabilizefirmlyahighlevel,e.g.,byorchestratingvariousserviceandcustomerexperienceinitiatives.Astheystrivetoachievethesegoals,customerserviceexcellenceprogramsutilizefindingsfromespeciallysuccessfulorespeciallypoorperformancesofservicestothecustomers.

Individual Needs Based

Selling

“Individual needs based selling”: Inadditiontothenumerousapproachesintheareaofservicedesign,serviceperfor-mance,andafter-sales,theindividualneedsbasedsellingalsopushesitswayintothetopgroupofthecustomerexperiencemeasures.Thisisbasedontheawarenessthattheusage-orientedaddressandadvisingofcustomersisanessential,butoftenneglected,determinant forcustomersatisfaction,elationdelight,and loyalty.Companieswhichattributedparticularimportancetothismeasureaimedaboveallat the idealqualityof theiradvisingservicesandthesubsequent improvedsuccessquotaaswellasthereductionoftheterminationrate,whichsimultaneouslyhaspositiveeffectsoncustomersa-tisfaction and loyalty.

Channeling Customer Voice into

Action

“Channeling customer voice into action”: Thesignificanceof thecustomerperspectiveandof theknowledgeaboutcustomerscanbeseenas implicit inmanycustomerexperienceconcepts.Customerfeedbackmanagement,customersurveys,workshopswithcustomerparticipation,and“case-basedlearning”areutilizedwiththisobjectiveinmind.However,theassessmentoftheacquiredinformationisconsideredtobemoreimportantforthesuccessofthemeasuresthantheapplicationofthesemethods.“Channelingcustomervoiceintoaction”inthiscontextreferstotheattemptstoturnuncoor-dinatedisolatedactivitiesintoaholisticlearningprocesswhichmakesthisvaluableinformation,sodifficulttoconsolidate,generallyavailablewithinthecompany.

Disaster Recovery

and Business Continuity Planning

“Disaster recovery and business continuity planning”: Astheyconcernanindustrywhichprovidesverylargegroupsofcustomerswithtelecommunicationsservices,disruptionsinthetechnicalinfrastructurequicklyturnintoaquestionoftrustandsurvival,eagerlyseizeduponbythemedia.So“professionalinterventionmanagement”includescrisis,disaster,andcompensationmanagement.Thegoalistocreatestructuresandprocesseswhichcanbeactivatedquicklyintheeventthatcomplexproblemsarise.



Figure 13: Intended Differentiation of Customer Experiences(Mentions in %, Multiple Responses)

4.2.2 Differentiated and Selective Experience DesignThe differentiated treatment of customers is one of the most important strategies for the improvement of effectiveness and efficiency in customer management. The experience-oriented design of products, services, and interactions must also be subjected to the test of economic efficiency as well. When asked which differentiation approaches were especially promising of success, 24% replied that this depended on the expectation attitude of the customers. This in turn is dependent on the strategic positioning of the company on the market (premium versus discount provider), the emotional commitment of the customer when deciding to buy a specific product, and, ultimately, on the price of the product.

79% of the study participants associate the triggering of varying experiences with the classification in customer seg-ments, e.g., differentiated according to customer value. This can be explained by the high proportion of customer contacts in the area of service, where the efficiency of customer service is strongly determined by a rigorous orien-tation to customer value and customer life cycle.

Orientation on the acquisition process is significant for the selective design of customer experiences: depending on the particular process step (search for information, purchase, installation, use, and replacement), the require-ments and consequently as well the customers’ expectations for the company’s performance vary. Although this awareness sometimes plays a role in product and service design as well as in process re-engineering, it is virtually ignored in the design of distribution channels. This also explains the seemingly contrary statement by many of the respondents that the non-differentiation of customers is an important component of the CEM approach. After all, the consistent image with respect to products, prices, and the fulfillment of the brand promise across all distribution channels is the goal of customer experience management.

Source: Detecon:

Other Categories

79 %

Product GroupCustomer Group

depending on lifestyledepending on revenuedepending on customer behavioraccording to the most important and new customersdepending on stage in customer life cycle

Categories for Experience Differentiation

52 %

24 %

depending on complexity of the productdepending on customer needs/preferencesoptimized experience for key products depending on geographic

location/regionprocess: provision, relocationaccording to customer loyalty

��

� �

� �

� �



4.3 Objectives, success factors, and effectiveness4.3.1 Objectives of Customer Experience ManagementThe ideal result of customer experience management is the positive surprise of the customers and the over- fulfillment of customer expectations on the basis of functioning processes. The most important objective of CEM, as mentioned by 45%, is the surprise or delight of the customers, followed by measures to create loyalty and the establishment of trust with respect to the customers.

Increase in cost efficiency, profitability of marketing, sales, and service

Positive perception of the brand and differentiation from competition

Surprise and delight of customers

Emotional customer loyalty & strengthened loyalty through greater trust, etc

Increase in revenues through recommendations (customer advocacy, positive word-of-mouth)

Increase in customer satisfaction through (over)fulfillment of customers' expectations

Objectives of Customer Experience Management

Source: Detecon

10%

10%17 %

14%

14%

24%

45%

Figure 14: Objectives of CEM from the Participants‘ Point of View

No fewer than 24% of the respondents intend to build up an emotional customer bond by means of CEM, e.g., through emotional relationship points such as reliability, integrity, reachability, etc. 14% expect an improved com-pany image and subsequently a positive differentiation from the competition. The goal of increasing turnover through improved recommendation quotas is mentioned just as frequently. The fact that the improvement of cost efficiency and profitability is regarded as of equal value with the goal of increasing customer satisfaction is a clear indication of the market maturity of the CEM approach.

4.3.2 Success Factors In the opinion of the study participants the success of customer experience management is determined by three key factors: integration of the employees (59%), hollistic company thinking and action (48%), and the exploitation and provision of customer data (44% of the respondents).

1. Employees make a lasting impression in many ways in their contacts with customers, long remembered as part of the customers’ experience. The significance of the specific know-how at the customer touch points as well as the immediate effect of the employees’ personalities on customers are revealed by the high correlation between employee motivation and customer satisfaction. Employees who live and breathe customer orientation, supported by pride in the companies’ products and by appropriate incentive systems, are further success factors.

2. An essential prerequisite for the implementation of a successful CEM is a holistic way of thinking across the boundaries of processes and channels by taking up the customers’ viewpoint. Since the customers’ experiences are influenced by the various partial services of the business departments in the company, measures must be taken to prevent “silo thinking” in the organization. A prerequisite for achieving this is close coordination among the involved business units.



Bob Fletcher CEO North American Customer Service at Arvato Digital Services and former Executive Vice President of the Service Academy of Deutsche Telekom

What is your understanding of customer experience management (CEM)?For some, CEM is just another word for customer relationship management (CRM), but CEM can be much more. If done correctly, it can uncover the real needs of your customers. A company has to listen to its customers. CEM is not only about listening, it’s about changing. CEM means changing to align yourself with your customers’ experiences. Find out why there was a mistake and resolve it so that other customers don’t experience the same thing. View complaints as a chance to improve yourself. Uncover the reason for the problem and fix it. That’s it. That’s CEM.

I believe the Telco customer experience of the future will be based on innovations like location-based services. For example, a customer is in a shop holding a product in their hands and their mobile device lets them know that the same product can be bought for half the price in a shop one block away. Or a provider automatically giving credits to customers whose calls have been dropped. Don’t wait for the customers to complain. Most of them never will – they just leave. You have to be proactive.

People often talk about emotions in connection with CEM. How important are these emotions for CEM? Emotional ties ultimately increase loyalty, but be careful. Many customers may not want to have a relationship with their service providers – especially an emotional one. That’s why it is so important to listen to the customer and understand their expectations.

How should a company catch up on the experiences of its customers? In terms of the Telekom Service Academy, I help executives learn more about their customers. One central element is working at the frontline face-to-face with the customer. This is the most effective way to experience the true customer experience and also the employee experience, which is key to improving the customer ex-perience. The CEO of Fedex worked for one week in a warehouse without anybody having any idea who he was. Everyone should do that.

The positioning of the people in charge of CEM with the aim of creating specific customer experience worlds brings about a high level of transparency and short communication paths among the responsible positions (constant sharing of contents, regular communications, etc.). Some companies operationalize CEM goals with CE-relevant key performance indicators.

3. Making all of the collected information about the company’s performance capability from the customers’ perspective available from a central source is regarded as critical for success. Methods mentioned as usable for this purpose include the assessment of customer contacts (operational systems), the customer feedback management (forums, blogs, complaint reports, etc.), and customer surveys (customer satisfaction or customer loyalty indices, etc.).



4.3.3 Analysis of the effects of CEM measures 75% of the respondents measure the effects created by measures intended to design experience, whereby custo-mer satisfaction is the most frequently mentioned target value (62%). In the view of our study participants, the relevant KPIs include customer loyalty indices, net promoter score (NPS), and various customer satisfaction indices (overall satisfaction, contact satisfaction, complaint satisfaction). Many regard the TRI*MTM customer loyalty index as especially relevant. It encompasses, along with customer satisfaction, also the intention to buy again and to recommend to others. Moreover, it can serve as a cross-company benchmark. Only 24% of the respondents who measure the effect analyze the relationship of the calculated KPIs to the economic data such as turnover, contri-bution margin I, customer value, etc.

25% of the interviewees do not measure the actual success of CEM measures and their effect. They criticize the lack of validity of the statistical relationship between the survey results and the effects of the results over time. In additi-on, the point in time of the survey plays a decisive role in determining which factors from the customers’ viewpoint play a relevant role for the assessment of company performance. For example, in the case of a complaint, the com-petence in finding a solution is all-important for the customers’ satisfaction, while the agent’s advising competence is important for the customers buying a new product.

No

YesTurnover/revenues

24%

Other KPIs 52%

Loyalty 52%

Satisfaction 62%

If yes, on the basis of ...

Source: Detecon

� Delight measured through positive word-of-mouth

� Promptness of payment

� Number of products, services or locations used

� Churn reactions

� Specific analysis of advertising effects

� Product experience

� Number of queries received by customer service

� “Brand Performance”

� Campaign evaluation

75%75%

25%

Answers of participants, whether they measure the effect of CEM

Figure 15: Customer Experience Performance Measurement (% of Mentions; % of Subset)



4.3.4 Management of Employees on the Basis of CEM IndicatorsThe consistent implementation of the customer experience management requires a comprehensive setting of targets for marketing, sales and service. In the best case, meeting these targets is secured by a common CEM reporting system and the corresponding steering committee. 87.5% use the findings as signposts for instructions to their employees, whereby customer satisfaction is the management figure most frequently mentioned.

However, there has to be a high level of differentiation concerning the employee’s functional role or level of responsibility in the company. The most important difference is whether an employee is integrated into service performance chain with direct customer contact or not. Moreover, some of the respondents were of the opinion that the merger of sales and service tasks and the related crossover targets set for employees are supportive of customer-oriented behavior.

All respondents agree that managing employees solely on the basis of CE-relevant KPIs does not lead to an optimi-zation of the company’s business goals. They have the inherent risk that employees’ self-optimization will be one-sided in this direction. Nor does it suffice to define the company’s overall achievement of its targets as a part of the employees’ targets. CE KPIs should be tied to “indicators which can be influenced directly” as well as to personal turnover or cost reduction targets.

Churn 7 %

Financial KPIs 17%

Other customerloyalty indices 17%

Net Promotor Score 24%

Customersatisfaction 45%

Source: Detecon

If yes, on the basis of ...

Yes

No

12.5%

87.5%

Answers of participants, whether they set CE optimized incentives for employees

Figure 16: CEM Oriented Target Systems for Employees(% of Mentions; Multiple Answers Possible)



5. The customer perspective: results from basic researchIn the following chapter, the customer perspective regarding successful customer management and the empirical relationship between “emotional customer loyalty” and company success will be presented on the basis of research results of the forum! Group. Some companies are less troubled by hard economic times than others. What makes them successful? Companies with a high level of customer orientation generate a strong “emotional customer loyalty” which verifiably contributes to the company’s economic success. Companies with excellent relationship management can depend on their regular customers and need not concentrate solely on the high-cost battle for new customers on shrinking markets.

5.1 Customer ChampionshipThe Deutsche Gesellschaft für Qualität e.V. (German Society for Quality), Frankfurt, and forum! Marktforschung (forum! Market Research), Mainz, searching for the companies with the best customer relationships in Germany since 2008 within the format of the competition, Deutschlands Kundenchampions® (Germany’s Customer Champions). Deutschlands Kundenchampions® are outstanding, empirically verifiable examples which prove that consistent service and customer orientation are a key opportunity for companies to position themselves successfully on the world market.24 The following causality chain can be derived from the findings gleaned from the competition and the many years of scientific base conducted by forum! within the scope of the Excellence Barometer®25:Companies with a high level of customer orientation generate a strong “emotional customer loyalty” with their customers, and this in turn verifiably and clearly contributes to the company’s economic success.26

To put it simply: successful companies act as “customer champions”; they have grasped what factors make lasting impressions on customers and secure their loyalty to the company, its products, and its services. Germany’s custo-mer champions orient their “relationship management”– as a major building block of their management philoso-phy – concretely to the needs of their customers. Thanks to this orientation, customer champions are demonstrably more successful than other companies.

Customer champions are characterized by the following:They create an especially strong emotional customer loyalty; they exploit an optimal mix of outstanding •

performance and first-class image to turn their B2B and B2C customers into fans of their companies.

They “live and breathe” customer orientation throughout the company. The entire organization is conceived • with the customer in mind.

Customer champions take advantage of every contact between customers and employees to strengthen the • customer relationship. They rely on the “human factor”, thereby adding to the relationship the all-important “drop of heart’s blood.”

The high degree of customer orientation among their employees exerts a positive influence on the emotional • customer bond.

They have excellent customer relationships, independently of the size, industry, and business model of the • company itself.

24 In conducting this competition, the initiators want to heighten the awareness of companies for opportunity and disseminate the latest findings from research and practice for the improvement of a company’s performance capability. By promo- ting public discussion and offering the chance to learn from the best, the competition contributes to the development ment of excellent relationship management in companies. For additional information, go to: www.deutschlands-kundenchampions.de.25 The Excellence Barometer® (ExBa®) is the benchmark study on the performance capability of the German economy. The goal of the ExBa® is to identify corporate success factors and communicate them to organizations in Germany. The initiators of the study are the Deutsche Gesellschaft für Qualität e.V. (German Society for Quality), Frankfurt, and forum! Markt- forschung GmbH, Mainz (forum! Market Research). For additional information, go to www.exba.de26 This can be clearly demonstrated on the basis of business data which can be evaluated (cf. Chapter 5.3)



5.2 Success Factors of Customer Champions As described above, successful companies are disproportionally in many cases customer champions: they constructively utilize the awareness that every customer contact bears within the opportunity to intensify the customer loyalty. Success factors of customer champions can be derived from the ExBa® Business 2009 Benchmark Study.

Firmly anchored in the corporate model and everyday life of the companyThe topic of “customer orientation” has been anchored as a firm role model of the company for more than 90% of the surveyed German companies. Moreover, 72% of the successful companies base concrete target values for their customer orientation on this model; only 63% of the less successful companies do the same. 58% of the sur-veyed successful companies conduct an evaluation of the target values of customer orientation and rewards/penal-ties for the achievement/non-achievement of these targets – in comparison with only 45% of the less successful companies.27

Brand management and strategic positioningFurthermore, brand management and strategic positioning are important levers. Strong emotional bonds are cre-ated when companies set themselves perceptibly apart from their competitors through their special strengths. Successful companies, for example, involve their customers in the (further) development of products and services, thereby creating a strong sense of identification.

Target group related offeringsCustomers appreciate individual products customized to meet their specific needs. About half of the survey com-panies regularly carry out the target group segmentation necessary for this purpose, the successful ones more frequently than the less successful ones. Customer loyalty programs hold promise of success only if they are oriented to the unique selling proposition of the company.

Responsibility for customer loyalty Important starting points are self-analysis and self-criticism. Only a few companies are prepared to regard them-selves as responsible for weakening customer loyalty. Three-fourths mention external factors as the reason behind the weakened customer loyalty; only 17% look for the causes in their own area of responsibility.

Service quality and sustained customer orientation A close relationship can be clearly discerned between service quality and customer orientation of the employees and the emotional bonding of customers to the company. The degree of customer orientation among employees is decisively influenced by their motivation, in turn a product of their personal traits (intrinsic motivation) and the general conditions at their place of work (extrinsic motivation). The contact between employees and customers offers excellent opportunities to shape a business relationship emotionally and consequently uniquely: successful companies have motivated employees and higher customer orientation.

If a sustained impression of customer orientation is to be created, it is not enough to look solely to the employees with customer contact. The overall impression made by the company must generate a consistent image in this respect. In other words, the general attitudes of the company towards customer orientation, not just the attitudes and behavior of the employees and their superiors, must be shaped in such a way that they are credible and con-vincing for customers.

27 Studie ExBa® Business 2009, www.exba.de



Word of mouth recommendationRecommendations for services and products generated by customers (e.g., in the form of product reviews on online portals or among friends and family) are especially effective because they are perceived as highly credible from a customer viewpoint. “Using testimonials to convince others” does not yet enjoy the attention it deserves, but has tremendous inherent potential which can be exploited when companies know their loyal customers and specifically make use of communications channels.

Communication of successThe importance of the communication of success within the scope of professional relationship management is frequently underestimated. Who wouldn’t like to be the customer of a successful company? There is need for action in this area. Successes are a big item during upswing phases – but problems arise when customers are expected to perceive the company as successful in economically troubled times. This is when employees play a key role because their positive sense of their own company translates into positive perceptions by customers as well.

Complaint management Complaints put loyalty to the test. Customers expect companies to outdo themselves when complaints are made. The bar for efficient and professional complaint management is to reach “outstanding” satisfaction for the custo-mer voicing the complaint! “Mere” satisfaction will not get it done – rating the handling of a complaint as “good” is not sufficient to achieve positive effects (cf. Figure 17).

Satisfaction with Handling of Complaints

foru

m! C

usto

mer

Loy

alty

Inde

x

74

79

66

60

52

3635

100 (very satisfied) 75 50 25 0 (very dissatisfied)

Reference line =Loyalty index of customers without complaintsMean value: 74

Source: forum! Marktforschung

Figure 17: Cohesion of Complaint Satisfaction and Emotional Customer Loyalty

Opportunity for emotional identification with the provider Whenever products become more and more substitutable, customer loyalty is a major source of sustained company success. But this works only if the company possesses an unmistakable, differentiated identity and offers customers the opportunity to identify themselves emotionally with it. Customer experience management provides a meaning-ful opportunity to deepen customer loyalty substantially.



5.3 Emotional Customer Loyalty5.3.1 Significance and Measurability of Emotional Customer Loyalty

Customer satisfaction is essential for the success of a company – but it is not enough. More than one-fourth of the customers are highly satisfied with the performance of a company, but they nevertheless do not have a durable tie with it. The decisive target value for companies is the emotional customer bond28: emotionally loyal customers buy more frequently, are less sensitive to prices, and less susceptible to offers from competitors. Emotionally loyal customers are enthusiastic fans of their company and recommend it more often.29 Yet emotional customer loyalty is not static; it fluctuates constantly. Measurements must be repeatedly taken over the course of time. Two drivers influence the emotional customer bond: the emotional side (image) and the rational side (satisfaction). The overall image is a composite of the perception of individual image factors – the customers’ overall satisfaction is built up as a conglomerate of numerous individual satisfaction moments.

28 The customer loyalty index developed by forum! from the ExBa® research measures the strength of the emotional bond on the basis of six weighted indicators. These indicators have proven to be especially suitable for distinguishing between profitable and non-profitable customers29 ExBa® research

forum!Customer Loyalty

Index

Commitment


Willingness to recommend

Intention to buy again

Willingness for cross-buying

Unique Selling Point (USP)

Trust

Figure 18: The forum! Index for the Measurement of Emotional Customer Loyalty

What is the purpose of a customer loyalty index?

Theemotionalcustomerloyaltyisoneofthemostimportantdriversforthesuccessofacompany.Measuringthedegreeofcustomers’loyaltytoacompanyrequiresaninstrumentwhichmakesthesedriversassessableandcomparableinabenchmark.Theforum!customerloyaltyindexenablesthemeasurementofthecusto-mer bond and is thus an important management instrument.

How does the forum! customer loyalty index work?

The index for themeasurement of theemotional customer loyalty developedby forum!market researchandusedextensivelyasatriedandproveninstrumentisgeneratedfromthesixindicators“intentiontobuyagain”,“willingnesstorecommend”,“cross-buyingwillingness”,“claimtoexclusivity”,“trust”,and“commit-ment”.Standardizedweightingfactorsareappliedtocalculateaweightedindexonthebasisoftheanswersfromrespondents.Theresultisahardindicator,anditsdevelopmentcanbetrackedoveraperiodoftimebyrepeatedlytakingmeasurements.Theindexismeasuredonascaleof100pointsandcanbecomparedwithaveragevaluesfromtheforum!research.



5.3.2 Emotional Customer Loyalty and Company SuccessMost markets are characterized by high market saturation and fierce competition. The differentiation potential of products declines, and even product innovations generally only have a brief differentiation impact. The Internet has created a high degree of market transparency which is highly appreciated by customers. During the last few years, customers have developed into avid bargain-hunters, and this tendency has been reinforced by manufacturers and retail trade alike through their focus on prices. It has long been clear that there is a price to be paid: the stability of customer relationships is eroding. The subsequent decline in customer loyalty is a constant factor throughout all industries. So the stability of customer relationships is decisive for the success of the company. But how are stable customer relationships established and sustained? There are plenty of customer loyalty programs – but their effects are often disappointing. A substantial part of the customer base is very satisfied, but feels virtually no sense of loyalty to the company – seemingly disloyal for no reason?

So what are the essential tasks for companies to create an emotional bond with their customers? The key to this bond is frequently seen in customer satisfaction. There is a general assumption that satisfied customers will also remain loyal. That is why companies invest in performance, conduct satisfaction surveys, optimize their product lines and their service, train staff members, and set up loyalty programs. But these investments often fail to produce the hoped-for returns because satisfaction does not automatically translate into a emotional bond. The ExBa study impressively documents this fact with the aid of a cluster analysis in which customer groups are formed according to satisfaction and emotional customer loyalty.

SöldnerTerroristen

Gefangene

Fans

Below-average Above-average

S ympathis anten

21 %

27 %

34 %

11 %

8 %

ExBa customers (B2C)Source: forum! Marktforschung

MercenariesTerrorists

Prisoners

Fans 21%

27%

34%

11%

8%

Followers

Bel

ow-a

vera

geA

bove

-ave

rage

Overall satisfaction

Emot

iona

l Loy

alty

Figure 19: Customer Typology based on Satisfaction and Emotional Customer Loyalty

Five groups can be distinguished here: in the upper right of the portfolio, in the area of high satisfaction and emotional customer loyalty, we find the “followers” and “fans” of the company.

Followers: The followers are satisfied, but highly critical. Nevertheless, they display a very strong emotional customer loyalty. They are evidently prepared to forgive small mistakes made by the com-pany because the emotional side of the customer relationship provides adequate compensation for such failures. As long as the company continues to strengthen the emotional aspect, these customers are highly unlikely to leave the fold.

Fans: The level of satisfaction for fans is above average, and they are strongly bonded emotionally; a company does not need to be concerned about these customers in the least.



So in total, companies in Germany have only about 48% (b-to-c)30 of their customers on the “save side”. But this also means that about half of the customers do not have a stable customer relationship to their providers. These potentially at-risk customers break down further into three groups.

Terrorists: Terrorists are as good as lost for the continuation of the customer relationship – unless there are massive obstacles to a change such as contractual commitments or a lack of alternatives. Importantly, terrorists represent a risk to a company’s image because they communicate their nega-tive experience.

Prisoners: Although highly dissatisfied, prisoners still have certain but weak emotional customer loyalty with the company and its products.

The size of this group in the consumer sector is 34% of the customers – about one-third.

Mercenaries: Although their level of satisfaction is above average, they have only weak emotional customer loyalty to the company. In this case, the rational side of the customer relationship is in good shape, but not the emotional aspect. Despite the high level of satisfaction, these customers have a potential churn risk or are latently prepared to change. If other providers entice them with a good offer, they are gone.

Customer orientation raises the level of the emotional customer loyality and the fan quota The key conclusion here: whether customers intend to buy again in the future and are willing to recommend the company to others is dependent on their emotional ties to the company. Clear customer orientation in all of the company’s activities strengthens the emotional customer loyalty and raises the fan quota within the customer base.31 Fans are keen to recommend: the company to other potential customers – and pinpointing ways to optimize products and services to the company. Fans are customer experience front runners with a positive attitude towards the company.

30 The study examined this aspect for the B2B area as well and came to conclusions which are structurally similar. 31 Companies with very high contact satisfaction with customers have almost three times as many fans (51%) as companies with average or low contact satisfaction (15%). Cf. forum! B2C commissioned study.

Satisfaction Loyalty Groups in Dependency on Contact Satisfaction

Source: Customers from commissioned study of forum! Marktforschung

15%

51%

42%

34%

30%

12%

8% 6%

Very highcontact satisfaction

Average/lowcontact satisfaction

Fans Followers Prisoners TerroristsMercenaries

Figure 20: Customer Orientation Expands the Fan Community



Emotional customer loyalty supports commercial successEmotional customer loyalty correlates verifiably with customers’ purchase behavior: emotionally loyal customers buy more often and higher quantities, are less likely to be enticed by offers from competitors, forgive mistakes and mishaps more readily, and actively recommend the company to others. That is why an emotional customer bond has a measurable effect on business success: companies or branches with strongly loyal customers have substan-tially higher profits than their comparable partners whose customers display only weak loyalty.

Retail study: Correlation of Emotional Customer Loyalty and Return on Sales

Source: forum! customer survey for a retail company; retail branches

Ret

urns

on

Sale

s

Emotional Customer Loyalty

Figure 21: Correlation of Emotional Customer Loyalty and Return on Sales

Emotional customer loyalty and commercial success

Source: Deutschlands Kundenchampions 2009; mean value on a scale of 0 (do not agree at all) to 100 (agree completely)or from -2 (much worse) to +2 (much better) in comparison with an average company in the sector

88

87

85

81

76

65

70

66

62

60

69

45

Willingess torecommend

Trust

Long-term customerrelationship

Commitment

Claim to exclusivity

Willingness forcross-buying

Companies with highly customer-centric staff Companies with less customer-centric staff

1,4

1,5

1,3

1,3

1,4

1,3

1,0

1,1

1,2

1,0EBIT

Revenue growth in percent

Productivity

Gross profit in percent

Development of the marketshare of the most successful

product

Figure 22: Emotional Customer Loyalty through Customer Orientation and Customer Experience Management

The six factors of the index for emotional customer bonds have an effect on economic indicators. The degree of emotional customer loyalty correlates to the return on sales and other commercial indicators. Indicators such as “EBIT”, “growth in turnover in percent”, “productivity”, “gross profit in percent”, and “development of the market share of the most successful product” are significantly influenced by the customer orientation of the employees.



6. The Detecon CEM FrameworkThe Detecon CEM Framework merges the results from the expert survey and the findings from the customer’s viewpoint into a holistic presentation of the elements of a practice-oriented customer experience management. These elements display the various interdependencies and relationships in a complex self-regulatory cycle. This is why the long-term success of CEM measures can be secured only by means of a systematic and orchestrated composition of all factors. The individual fields and their relationships are described in the following and subse-quently operationalized in Chapter 7 in the form of concrete recommendations for action.

Customer Experience

Product and Brand Communication

HR-Excellenceand Channel

Synchronization

Quality and PerformanceManagement

CEM Measures

Interactions

Brand

Product/Service

Customer Insight

Customer Insight Brand Halo-

Design

Design

Source: Detecon

FulfillmentExpectation

Figure 23: The Detecon CEM Framework

Customer experienceThe focus of the CEM Framework is on the customer experience which arises through the individual customer’s comparison of expectations and fulfillment: if expectations are exceeded, the result is an emotionally positive customer experience, but if expectations are not fulfilled, the customer experience is correspondingly negative. A fundamental approach of CEM is the influencing of expectation levels and their generation as well as the perception of their fulfillment by the targeted design of brand, product/service, interactions, and special CEM measures. The following tasks must be taken into consideration.

Customer insightThe generation of customer insight is of great relevance at a number of points in the CEM self-regulatory cycle. The process serves the continuous determination of customer expectations and needs for each customer group, laying the baseline for customer-oriented product and brand development as well as expectation-oriented experience and interaction design. Moreover, the systematic surveying and observation promote the determination of performance perception and experience effects from the interplay of product, brand, interaction, and specific CEM experience moments.

So a company’s strengths and weaknesses from the customers’ viewpoint can be revealed and optimized with an effect on the experience in the sense of a continuous improvement process. Furthermore, it is possible to distin-guish in this way between basic requirements and delight elements, and the moments of truth for each customer segment can be identified. Well-known methods to achieve these goals are customer surveys, discussion group interviews, and usability studies, but complaint management and feedback management programs belong here as well.



Product and brand communicationThe development of customer expectations is based to a significant degree on the perceived product and brand communication. CEM concepts can benefit from this by influencing specific customers’ expectations level and making it easier or even possible to exceed expectations. If, for example, the company’s communications convey unrealistic promises, it is virtually impossible to fulfill the resulting expectations through CEM. To this extent, the product and brand communication is an integral component of the CEM Framework so that customers’ expecta-tions attitudes can be steered and exceeded actively to create positive experiences.

Brand haloThe brand affects the customers’ perception of performance just as it creation influences expectations (halo effect). This can be a positive factor if the perception is improved by the brand. But in the very same way, a brand can also have undesirable impact on performance perception; for example, consumers may evaluate the price level of a brand provider as being worse than it actually is in objective terms. This occurs particularly often in situations in which customers are unable or unwilling to make an objective evaluation because of an overwhelming flood of information, limited involvement, or deliberate lack of transparency on the part of the market. By specifically designing the brand, CEM can steer the perceived fulfillment of expectations as well as the development of expectations.

Quality and performance managementCompanies secure the operational fulfillment of performance targets as defined in the course of the product or service design with the aid of quality and performance management (e.g., using a CEM KPI dashboard). In this case, CEM defines the criteria of the company’s measurement of quality on the basis of the disclosed quality percep-tion determinants of the customers and assures goal-oriented performance of the basic service.

HR excellenceEmployees with frequent customer contact have a lasting impact on customer experience. The significance of the specific know-how at the customer touch points as well as the immediate effect of the employees’ personalities on customers are revealed by the high correlation between employee motivation, emotional customer loyalty, and the company’s success. When employees are motivated to live and breathe customer orientation through leadership, proudness of the product(s) and the appropriate incentive systems, the result is a decisive aid to effectively turning CEM activities into positive customer experiences.

Channel synchronizationThe objective of channel synchronization is the assurance of consistency of interactions across all channels as an essential prerequisite for consistent results and for presenting a uniform image of the company to the customers.



Crossover coordinationKey to the implementation of a successful CEM is a perspective and thinking which overarches the boundaries of processes and channels by taking up the customers’ viewpoint. Close coordination with and among the involved business units is a mandatory prerequisite in achieving this. Setting up positions responsible for CEM or CEM boards to coordinate the realization of specific customer experience worlds paves the way to high transparency and short communication paths between the responsible positions. Since customers’ experiences are affected by the most widely divergent partial performances of the company’s functional units, “silo thinking” must be prevented and a holistic CEM approach including the integration of all of the relevant stakeholders has to be the clear target.

Increasing the company’s successThe goal of the CEM Framework is the creation of profitable customer experiences through fulfilling or even exceeding customer expectations and avoiding dissatisfaction among customers. The CEM effect chain makes clear what impact the systematic design of customer experiences has on company value. The individual levers must also be applied during the profitability evaluation of the various measures.

Special attention is to be paid to the costs because it is also possible, with the help of specific measures, to increase satisfaction and loyalty and simultaneously to lower costs. One example here is the systematic reduction of customer contacts without long-term value.

Effects of Customer Experience Management

Source: Detecon

Customer Value/Shareholder Value

Financial Excellence

Loyalty

Satisfaction

Fulfillment > =

Expectation

Customer Experience Management

� ARPS

� Churn

� Market Share

� Pos. Word of Mouth

� Brand Equity

� Cost ��

�

�

�

�

�

Figure 24: Effects of Customer Experience Management



7. Recommendations for ActionThe following recommendations for action for telecommunications providers have been crystallized for the optimal design of the elements of the CEM Framework. The recommendations build successively on one another and, in their totality, contribute to the successful implementation of customer experience management in the company.

7.1 Knowing what customers really wantChallengeUnder the aforementioned market requirements telecommunications providers are often oriented primarily to economical and technological interests. The actual requirements of their customers often tend to recede into the background. But the company’s orientation must continuously be aligned with the actual needs of its customers.

Solution“Customer experience management is the art and science of figuring out what each customer wants and needs.” (Bill Price, cf. interview box, p. 17). First and foremost goal is the company’s orientation to the customer needs (customer centricity). When all of a company’s products and services are based on genuine customer needs and requirements, you can provide an ideal experience to your customers. But doing so means you must systematically determine customer needs, perception and expectations via surveys and observations. Analyze your customers’ requirements by uncovering the strengths and weaknesses of your company from the customers’ perspective. By taking the customers’ perspective, you can lay the foundation for defining the basic requirements and enthusiasm elements.

ApproachThe first step is to collect the customers’ needs and requirements. As you do so, you should take into account all of the customer contact points and business transactions. The external and internal sources of information shown below are available to you. Since this collected data has been found or gathered in many different units of the company (service, marketing, product development, market research, etc.), it is essential to consolidate all of these acquired data.

This could be handled by a centralized customer experience intelligence department, for example. This is where the puzzle is put together and crossover conclusions are drawn which are sent back to the involved units. They can then be used as regular input for the customer-centric segmentation, brand design, product development, and service design.

External Sources Internal Sources

� Customer surveys: personal, phone, written, online General and/or transaction-related

� Discussion groups with customers

� Market analysis and studies

� User shadowing (close observation of customers) or long-term accompaniment of selected households

� Mystery Shopping

� Forums (Internet evaluations)/Social media analysis

� Brand fit tests

� Product use and usability studies

� Behavior analysis of customers

� Survey of customer contact employees

� Discussion groups with customer contact employees

� Pride Diary (employees write down daily/weekly their emotions from customer contacts)

� Customer contact analysis

� Customer days/Operations day (every manager spends a set period of time in call center or points of sale every year)

� Web analysis

� Feedback management

� Complaint analysis

� Service disruption analysis

Figure 25: Derivation of Customer Experiences



7.2 Fix the Basics ...ChallengeThe basic services cover the minimum requirements of a customer. The starting point for the optimal design of customer experiences, the compulsories for telecommunications companies begin with the securing of reliable and high-quality basic services as well as recognizing errors and defects early and initiating measures to counteract them.

SolutionAvoid dissatisfaction and generate a positive learning experience through the repeated fulfillment of customer expectations; this will reduce the risk of churn, negative word-of-mouth advertising, and the contact volume of your inbound channels. The assumption of the customers’ perspective during the operational improvement of pro-ducts, processes, and services does not inevitably lead to solutions which presume an annulment of the corporate framework – such as the dissolution of heterogeneous process worlds, making logistic expenditures leaner, or con-solidating complex IT system landscapes. Closing the gap between customer expectations and perceived perfor-mance is achieved much more readily by improving the company’s activities on the “last mile” to the customer.

Approach1. Reactive identification of possible improvements in processes which do not (over)fulfill customer expectations. The analysis of customer contacts is an excellent method for the identification of inadequate basic services. You should concentrate here on non-valuable customer contacts. These are primarily complaints and advising elements which are not relevant for sales which arise during the entire customer life cycle. By identifying (e.g., using retroac-tive customer surveys or observations at the points of sale) and analyzing reasons for the contacts, you will obtain an overview of which basic requirements for products and processes are currently not being fulfilled. Make use of these findings and respond by implementing quick fixes which harmonize inconsistent results upstream of the customer and avoid errors in performance.

Contact Reasons Example of Measures

Sales

Complaint

Inquiries during the provisioning process

Unknown invoice items

Lack of transparency of services, products or tariffs

Give your customers the opportunity to track the provisioning process online and notify them by SMS or e-mail about next steps and delivery dates.

Invoice items have to be easy to understand for all customers orexplained if necessary. Make sure all customers know how to read their invoice when they receive their first bill (e.g. add an insert to the bill).

Avoid queries and check the consistency of the services you offer across all contact channels.

Failure to change customer master data

Hotline overload

Malfunctions of product or technology

Avoid dissatisfaction and ensure an error-free change process for customer address and account data by integrating your front-end systems.

Avoid long waiting queues on hotlines and offer customers a way to address their requests directly, e.g. via self-service portal or FAQ list, including an intelligent search engine.

Make sure that properties such as bandwidth and product featurescorrespond to your offers. Create transparency within your tariff plans.

Figure 26: Examples of Measures for Process Improvement

2. Design of customer-friendly processes corresponding to customers’ requirements. Ultimately, the high quality of new products is one of the decisive elements for the perception of the quality of all of the products and services in regular operation. The product and support quality must be optimized for the fulfillment of customer expectations before the market launch.



The key method is the assumption of the customers’ perspective during product and process design. The desired business process and the desired product properties must be described from the experience viewpoint of the custo-mers and the expectations must be defined from the customers’ viewpoint. The well-known kano model32 from the automotive industry makes it possible to structure customers’ expectations and to take them into account during the configuration of your own (basic) services. All of the customer-centric processes across all channels should be considered during the definition of the basic services. But product-specific basic services as well as basic processes must be assured. This could, for one, concern a transparent and understandable rate schedule, but assuring the usability and functionality of the services (promised bandwidths or simple installation and usability) should also be warranted to customers. Involvement of customers, e.g., in workshops, by using customer feedback or by con-ducting surveys are an essential prerequisite.

7.3 ... and jump in for your customers when you fail!

ChallengeMany telecommunications providers have set themselves the goal of designing their products and services to be customer-centric. But despite their strenuous efforts, the services perceived on the market do not always satisfy their own standards. The causes may be infrastructural problems or complex, cross-unit processes which cannot be re-engineered in the short or middle term.

SolutionIdentify the critical situations, the so-called moments of truth for your customers (see interview box, p. 43). They can lead to a high level of dissatisfaction, but specific CEM measures can also transform them into a positive experience. If a company wants to be able to act in the event of poor performance at a moment of truth, suitable options for a solution must be prepared and kept ready for use. Create the general conditions in your service and marketing organization so that you can act professionally instead of merely reacting in the event of potential customer dissatisfaction.

ApproachThe key method is the assumption of the customers’ perspective at the moment of truth. This requires consider-ing the relevant business process from the experience viewpoint of the customers and describing it in accordance with the customers’ expectations related to the company’s performance. If you want to be able to act in case of discrepancies between the performance and customers’ expectations, you must identify the trigger of the negative experiences on the basis of business transactions or customer behavior and develop countermeasures. Examples of moments of truth, triggers, and countermeasures in the telecommunications industry are shown below.

32 N. Kano: Attractive Quality and Must-be Quality; Journal of the Japanese Society for Quality Control, H. 4, S. 39-48, 1984

Figure 27: Examples of Moments of Truth, Triggers, and Countermeasures

Moment of Truth Customer Expectation Trigger Example of Measures

Number portability: customer is temporarily not reachable

Continuous reachability Requestfornumberportability Configurecallforwarding/waiveallrelatedcosts

Customer problem cannotbesolvedrepeatedly by customerservice

Instant and simple solution Exceedingadefinedcallfre-quency(e.g.,>3timesaweekpercustomer)

Forwardcallertoaspecializedteamwithincustomerserviceorassignanindividualcasemanager

Complexinstallationofhard-wareondayofprovisioning

Enjoyproductbenefitsimme-diately

Shipmentofhardware/activati-on of products

Enable customers to perform installationbefore/ondelivery(e.g.,withservicefilms,avatars)



The customer’s expectations at a moment of truth are highly dependent on the individual customer type as well as on the product in question, its basic price, and the service promised by the company. Falling short of customers’ performance expectations is unacceptable in particular with respect to products with high involvement and far-reaching buying decisions such as IPTV or premium cell phones (e.g., iPhone®). Negative experiences must be eliminated completely in these cases so that the premium standard and the related expectations are seen to be legitimate. The satisfactory handling of complaints is essential to secure emotional customer loyalty. This requires that companies systematically record complaints and prioritize their processing over other requests. Customer orientation and empowerment of the employees is mandatory in this respect. Options for actions must be kept on stand-by particularly for mass phenomena such as mass faults (e.g., failures caused by storms). If a systematic crisis management with defined escalation plans cannot step in here, there is a risk that large groups of the customer base will have negative experiences with the company going beyond the concrete unsatisfactory usage experience. But such experiences are often one of the decisive factors related to intensity and duration of media coverage.

Despite all of your efforts: “... when you fail”, you will never be able to restore the satisfaction of 100% of the affected customers. Dissatisfaction remains inevitable and also requires the preparation of appropriate strategies for action. When dealing with dissatisfaction, a company’s ability to provide answers to customer queries, for example, is of great significance. A standardized CRM system across all touch points featuring a detailed customer history is the necessary prerequisite so that the company can provide the relevant information to customers. In many cases, sincere, trust-inspiring conduct by company employees is decisive for the long-term stabilization of the customer relationship rather than the momentary restoration of satisfaction.

But caution is advised: even a wonderful remedy for a problem will not bind customers long-term if they must expect the problem to occur again in the future.

7.4 Ice the cakeChallengeBy and large, customers view telecommunications services as commodities. Low customer involvement in combina-tion with extensive homogeneity of the products makes it more difficult to stand out from the competition. Besides the legal methods for binding customers, e.g., contract terms and the related barriers to change, companies must take steps to promote the sustained loyalty of their customers by means of emotional measures.

SolutionDelight your customers by going beyond the core services. Create differentiation and emotional customer loyalty to your company through individual experiences. Come up with measures which are beyond the expectation horizon of your customers, creating surprising moments which are perceived by the customers and remain fixed in their memories. Even a small step beyond the customers’ performance expectations will generate sustained satisfaction and positive emotions. Use the power of positive emotions to further your customers’ involvement and, ultimately, to turn them into your fans. Remember, fans remain true to your company, and because of their convictions, they recommend your company in their surroundings.

Approach1. First the compulsories – then the freestyleThe elementary foundation for creating of outstanding experiences is fulfilling the customers’ expectations for the company’s basic services, thereby preventing dissatisfaction. Many providers, either consciously or unconsciously, conduct delight campaigns for the symptomatic compensation of customer dissatisfaction. But dissatisfied custo-mers often view such enthusiasm attempts as hypocritical or superfluous if the basic performance is unable to satisfy even their fundamental requirements.



The counterproductive result is even greater dissatisfaction and increased distrust with respect to these attempts to obtain loyalty. A frequent mistake in this context is issuing credit notes when there are reoccurring technical faults. Instead, ways and means must be found to make connectivity available to the customers as quickly as possible (e.g., through call diversions to the cell phone free of charge) and to eliminate the cause long-term (e.g., replacement of infrastructure susceptible to failure).

2. Creating effective highlightsOnce the basic service has been secured, surprising moments such as an appreciative anniversary mailing, can be meshed with sales campaigns (cf. Figure 27). The improved basic attitude leads to significantly rising success rates. Moreover, a need-oriented campaign offer can in itself generate loyalty if it is perceived to correspond to actual requirements. Do not underestimate the importance of details and small displays of attention. A clever birthday/Christmas text message or a voucher for a romantic video-on-demand evening can also trigger an experience. One special case in this context is the win-back management. Extraordinary experience moments can be utilized to win back especially valuable customers who are prepared to terminate. For example, an invitation to an exclusive product presentation opens the way to a perfect display of the brand or making product benefits clear (example: IPTV). Make sure that customers are blocked for sales actions if they have reported faults or lodged complaints which have not yet been resolved.

Occasion CEM Measure Break

Valentine's Day Video-on-demand voucher on

4 Weeks

Sales and Service

Offer oriented to needsAnniversary Anniversary mailing 4 Weeks

Conclusion

„You send a lot of text messages; our text message package would help you to stay in contact even better!„

Text message offer Status information

„Your text message package has been successfully activated, have fun!„

Response to feedbackFirst mobile Internet use Obtain feedback Real Time

„Congratulations on your first mobile use of the Internet! Were you satisfied with it?„

Yes Mobile Internet Offer Status information

Problem solution

Status information Provision Check-up Call

Source: Detecon

How to interweave CEM, Sales, and Service

Multi-stage sales process: IPTV

Teaser

No Service Check

Follow-upDetailed Information

Figure 28: Customer Experience Management, Sales and Service

3. Pay attention to timing in your customers’ emotional cycle Assure maximum requirement orientation by creating highlights specific to the customer life cycle (e.g., welcome, anniversary, retention) as well as to segments (such as a premium customer care). You must make sure here that the segmentation is actually oriented to requirements and is not solely value-oriented. The timing of measures should be coordinated precisely so that experiences are distributed over the term of the customer relationship. A burst of measures leads to inflationary demands and ultimately to disappointed expectations in times of reduced activity. Constant attempts to delight customers carry the risk that they will become accustomed to these small pleasures and come to see such highlights as a part of the basic service. Finally, give consideration to the correct contact and communications behavior for the customer requirements (low vs. high involvement customer with low or high contact needs) and promote your customers’ involvement systematically through emotionalizing mass communi-cations (examples: the Vodafone one-hit wonder campaign or the Paul Potts campaign of Deutsche Telekom).



Torben Roffka Head of Benefit & Loyalty Programs – Deutsche Telekom AG, T-Home 1. How do you identify the moments of truth (MoT)?Moments of truth occur – from the customers’ perspective – during periods of critical interaction. The performance during these interactions has a lasting effect on the customer relationship (“make it or break it”).

That is why MoTs can often be determined only after they have passed. Moreover, the feedback or information from the customers is required to determine the gap between the requirement and the perceived performance. Important instruments for the identification of moments of truth are the analyses of complaints and of forums/blogs/social networks; these are the sites where customers make concrete statements about their especially good or bad experience with companies.

2. In your opinion, to what extent do MoTs stand out from the total of all contacts?Generally speaking, you cannot determine from one contact whether it will develop into a MoT for the customer. However, with the help of the above-mentioned ex-post analyses, you can very quickly recognize the relevant and especially frequently addressed customer experiences.

Critical customer contacts also stand out because of their relatively great effects on the measured customer loyalty (e.g., TRI*MTM customer loyalty index). Simultaneously, the same thing is true for all MoTs as for complaints: a solution to the problem provided in a reasonable period of time can result in a long-term increase in the customer’s satisfaction.

3. Which MoTs do you regard to be decisive for all customer groups?The decisive MoTs for all customers or, to put it more precisely, all product groups are these:

On the other hand, we must not forget that a customer’s individual expectations as well as the company’s performance define MoT. Customers with an affinity for technology, for example, make completely different demands on a provider than a customer who is keen on service.

What can companies do to generate specific benefits from the MoTs?Ideally, MoTs are designed as positive surprise or to exceed customer expectations (“surprise and delight”) on the basis of customers’ functioning processes (“fix the basics”). To achieve this, howe-ver, telecommunications providers must identify the important MoTs of their target groups and have complete command of their performance at these moments. There is an opportunity here to shape unmistakable and emotional experiences for customers, making a tremendous contribution to distin-guishing one’s own company from the competition.

Query / Purchase• Problem-solving•

Provision• Complaint•

Usage• Billing•



Markenversprechen

Image

Markenversprechen

Image

Brand Promise

Image

Customer ExperienceCustomer Experience

Horizontal Consistency

Call Center

eChannel

…

Call Center

eChannel

…

Call Center

E-Channel

…

Interaktion 1

Interaktion 2

…

Interaktion 1

Interaktion 2

…

Interaction 1

Interaction 2

…

Vertical

Source: Detecon

Consistency

Figure 29: Horizontal vs. Vertical Consistency of Customer Experiences

7.5 Walk the talk of your brandChallengeThe image of a company and its brand promise are the communicative projection screens of the strategic market positioning of a company. They have a decisive influence in forming customers’ expectations for the quality and performance of its services and, consequently, direct influence on the customer experience (see the chapter on the CEM Framework). The values and properties conveyed via the brand, unfortunately, do not always correspond to what customers experience with the company, its products, and employees (vertical inconsistency). Moreover, special product or service offerings in the various channels lead to differing experiences at two contact points (horizontal inconsistency).

SolutionConsistency leads to trust and a sense of sincerity. Brand values and corporate identity must be communicated during every single experience. Do not make any brand promises which you cannot keep. Especially in time of information overload creating unique and holistic customer experiences enables you to differentiate yourself from competition.

Approach1. Measures for the creation of vertical consistency between brand promise/image and customer experience. Your first step is to evaluate your corporate image from the customers’ perspective and to compare it with the brand promise. Analyses of specific advertising effects will help you to determine the brand fit. If brand promise and customer experience diverge from one another, either the image components which are to be transported or the resulting demands must be adapted to the corporate experience. If you position your brand as a premium provider, for example, your customers will expect faster reactions with a greater willingness to consider their wishes in the event of service queries than would be the case for a discount brand. An important indicator for the brand fit is the resonance in the pertinent blogs, forums, and social networks concerning your company’s performance as percei-ved on the market. Pre-launch quality checks of products and processes are also important. Products should not be released until it is certain that the brand promise can also be fulfilled. Take into account the secondary experiences of your customers with their friends (“word of mouth”) which affect your image as well. This is where the avoidance of dissatisfaction pays for itself twice over. Special service programs for decision-makers and opinion leaders (e.g., VIPs) will also help you to disseminate positive secondary experiences in especially relevant target groups.



2. Measures for assuring horizontal consistency of interactions at the various contact points. Furthermore, the brand values of the company must be communicated at all of the contact points and throughout the entire customer life cycle. This affects both measures of corporate communications and corporate design as well as a corporate culture which has been brought into line with the brand. The point is to communicate to the customers a consistent experience which fits the brand both by means of consistent, high-quality service and by the commu-nication of the brand values in every contact situation. It may also be necessary to pursue a multiple-brand strategy to address various target groups and not to overextend the main brand.

Possible measures extend across touch point boundaries include the following:Crossover definition of service and interaction targets•

Cultural anchoring of the brand promise in the company’s guidelines for managers and employees, including • regular evaluation of the degree of compliance

Consistent design of offers, discounts, and benefits (e.g., discounts for new customers also for current • custo mers when extending their contracts to prevent learned disloyalty)

Regular conducting of customer experience reviews/audits•

7.6 Employees – your keys to successChallenge:In their customer interactions employees must represent the credibility and sincerity of the company’s CEM con-cepts. The challenge here is to select and train the right employees for the right topics so that their skills and capa-bilities are appropriate to the requirements of the specific interaction.

Solution:Besides their professional qualifications, customer orientation should be a decisive selection criterion for the hir-ing and assignment of your customer contact employees (“hire the smile and train the skill”). In addition to this “emotional fit”, you should strive to ensure that all of the employees not only know your company values, but that they identify with them and live them in their work! Otherwise, there will never be a sincere dialog during the talks with the customers. Emotional customer loyalty is based to a large extent on the effect of the gratitude displayed towards the customers. This can only be generated in a personal sense by your employees. So motivate your em-ployees to act on their own initiative and in accordance with the particular context, and equip them with the tools required for individual solutions satisfying to customers.

Approach:Develop your employees into solution-oriented contact people in the interaction with customers:

Invest in employee training programs and communicate to them that a positive customer experience should • always have one of the top priorities;

Make sure that your employees understand “quality before quantity” as a corporate strategy and work • philosophy. Ensure that credibility, a calm manner, trust, and consistent information are conveyed in all interactions with customers;

Stand behind definite values with your company’s name, and communicate this in the customer contacts;•

Secure high availability and easy access for your customers in the contact center;•

Maintain direct and transparent communications with both your employees and your customers.•



Competent and well-trained employees raise the first contact resolution rate and lower the subsequent contact rate. Give your employees a chance to be successful by providing to them all of the relevant customer data such as the complete contact history and current products. But ability is only one of the components for success. Employees must stand behind their company’s CEM strategy and want to serve the customers because they are personally motivated to do so. And ultimately, they must also be allowed to do so.

In other words, as expressed by this can-want-to-may principle 33, qualifications, a well-grounded service culture, values, and empowerment are required. Moreover, although performance based compensation is an effective instrument for steering behavior, it also involves a certain risk. There is a danger that the individual target values will not be compatible with the supraordinate company goals. That is why indicators for long-term objectives such as the first contact resolution rate are recommended. When calls are quickly concluded (short call handling time), but lead to multiple subsequent contacts, neither the customer nor the company have benefited. So be sure that you have a consistent target system which promotes customer orientation. Since conduct in complex, dynamic environ-ments cannot be steered completely by means of a target system, a healthy value culture based on the concept of “principles, not rules” 34 must take care of the rising number of unforeseeable special cases.

7.7 Communicate your success successfullyChallengeSuccess must be communicated especially during times of crisis. It is part of the psychological make-up of human beings, a kind of anthropological constant, one might say, that they tend to think in terms of risk rather than of opportunity and to experience failure more intensively than success. This is backed up by the results from numerous customer and employee surveys conducted by forum! Marktforschung: employees have a tendency to assess the suc-cess and overall image of their company more pessimistically than the customers. To put it bluntly, the customers have more confidence in the company’s abilities than its own employees!

SolutionUtilize the communication of success to set yourself apart from the competition and to create a bond between your customers and your brand and company. Customers, prospects, and other possible target groups of the communi-cation are keen to find safe harbors, especially during times of uncertainty. They want information efficiency, orien-tation functions, and risk reduction; in short, they want to feel that their decisions have been confirmed. Credible communication of success has a direct effect in this case and helps your key factor “employees” to be convincing in their approach to customers.

ApproachCorporate successes require successful communication if they are to achieve an ideal effect. Positive perception requires care – and the care must be continuous and based on a strategy. So it is absolutely essential to make self-confident use of all of the meaningful potential channels of your communications, once you have segmented the target groups and defined the communication goals. The same rules apply to external and internal communica-tions. Success creates trust and loyalty (among customers and employees). Plan your communications for the short, middle, and long term. Strategy without actions paralyzes a company; actions without a strategy make it blind. Employees are the most effective and most important brand ambassadors of your company. Take this into account in your communications, make use of the opportunities your staff offers you – both in the form of customer contact and in the form of the communications channel – in your strategic deliberations and operational realization.

33 J. Hauk, C. Jost, A. Luyken, C. Schulz (2007): Detecon study CRM 2010 and Beyond – Opportunities and Challenges for Telecommunications Companies in High-Performance Markets, Eschborn, p. 48.

34 cf. Detecon (2004): Vom Wissen zum Können – Merkmale dynamikrobuster Höchstleister (From Knowlegde to Competence – Characteristics of dynamic robust high performance companies), pp. 34 et seqq.



10 Regeln

der Erfolgs-

kommunikation

Wer nicht kommuniziert, mit dem wird kommuniziert.

Erfolgreiche Kommunikation ist ein Produktionsfaktor.

Kommunikation braucht Führung, Perspektive – und Flexibilität.

Kommunikation ist erfolgreich, wenn sie kontinuierlich und langfristig stattfindet.

Wichtige Botschaften müssen auf glaubwürdigen Kanälen transportiert werden.

Strukturelle Kommunikation ist immer erfolgreicher als individuelle Kommunikationsauftritte.

Erfolgreiche Erfolgskommunikation arbeitet integriert und multimedial.

Erfolgreiche Kommunikation ist Hierarchie von Botschaften und Maßnahmen.

Erfolgskommunikation braucht Analyse, Strategie – und eine Lernkurve.

Wer Erfolg kommuniziert, ist erfolgreicher.

1

2

3

4

5

6

7

8

9

10

10 Rules for

Communicationof Success

Wer nicht kommuniziert, mit dem wird kommuniziert.

Erfolgreiche Kommunikation ist ein Produktionsfaktor.

Kommunikation braucht Führung, Perspektive – und Flexibilität.

Kommunikation ist erfolgreich, wenn sie kontinuierlich und langfristig stattfindet.

Wichtige Botschaften müssen auf glaubwürdigen Kanälen transportiert werden.

Strukturelle Kommunikation ist immer erfolgreicher als individuelle Kommunikationsauftritte.

Erfolgreiche Erfolgskommunikation arbeitet integriert und multimedial.

Erfolgreiche Kommunikation ist Hierarchie von Botschaften und Maßnahmen.

Erfolgskommunikation braucht Analyse, Strategie – und eine Lernkurve.

Wer Erfolg kommuniziert, ist erfolgreicher.

If you do not communicate others will communicate about you.

Successful communication serves as a factor of production.

Communication requires leadership, vision – and flexibility in action.

Intended messages will succeed if communicated continuously on long-term basis.

Important messages must be transported via credible channels.

Following structured communication plans is always more successful than secluded actions.

Communicating successes successfully means integration of all channels and multimedia.

Successful communication is built on simple messages and subsequent targeted measures.

To communicate successfully you need analysis, strategy and patience along the learning curve.

Who talks about successes will be more successful.

1

2

3

4

5

6

7

8

9

10


Figure 30: 10 Rules for Communication of Success

7.8 Put the customer on your payroll ChallengeDuring the customer interactions, your employees receive large amounts of diversified information about your cus-tomers and their experiences with the products and the company. The challenge here is to record, then systemize the unstructured information from the interactions so that you can discern desires and problems from the custom-ers’ viewpoint and use these data for the improvement of your company.

SolutionCustomers know your strengths and weaknesses. Utilizing customer feedback enables you to uncover systematically defects in performance. You can develop improvement measures which are ideally suited to the needs and require-ments of your customers. Moreover, it helps you to avoid negative scaling effects at an early stage. The prerequisite for this solution is a culture of handling errors in the company which allows employees to deal constructively with mistakes made by the company. Moreover, people must be designated in the organization as responsible for cate-gorizing customer feedback and integrating it into a continuous improvement process for the further development and optimization of the company. Successful companies are characterized in this respect by constant monitoring and contemporaneous implementation of the improvement measures.



Figure 31: Professional Feedback Management

ApproachThe feedback circuit comprises the phases collection, analysis, and optimization.The collection of customer information helps you to “know what customers really want.” It is dependent on the systematic capture of information in the CRM or a dedicated feedback management system. This is where the information, once it has been categorized, must be saved.

The next step is the analysis and learning phase during which the information is regularly categorized, then dis-cussed by quality or feedback review boards with the aim of identifying the necessary measures. During this step, it is absolutely essential to determine the causes of praise or dissatisfaction (e.g., by using cause and effect diagrams). It is advisable to involve experienced customer contact employees as well as quality managers in this process. You will frequently find additional critical customer events in complaint management. They can be ideally dealt with in the course of a systematic analysis of complaints. But the evaluation of courtesy or welcome calls can frequently be helpful as well, indicating where there are malfunctions in the provision and acquisition process.

To convert these learnings continuously into improvement measures, you must select the appropriate actions as indicated by the cause analysis and implement them, in part across business unit boundaries. The introduction of regular monitoring of the progress of the implementation is recommended so that the improvement of the customer experience in the pertinent business processes is confirmed during the implementation as well as after the conclusion of the initiatives. The obtained results should also be disseminated throughout the organization. When employees are “vaccinated” with these experiences, they are transferred into the collective memory for action, so to speak.

Avoid “banana products” that do not mature until the customers have them. This is an especially important rule for large telecommunications providers: “prototyping in the niche” goes before “widespread roll-out”. You can use pilot measures or a “test and learn” center to cultivate feedback loops specific to each case. The goal is to try out new products, the processes, and the customer responses first and then to operationalize the confirmed findings.

Source: Detecon

Input

Shops

Contact Center

E-Channel

Retail partners

Letter

E-mail

Technicians

Corporate sales

Web

Blogs

Product tests

Communities

Surveys

Magazines

Discussion groups

Forums

Fax

@

1. Collection 2. Analysis 3. Improvement

Feedback reception

Feedback categori-

zation

Storing feedback

Complaints

Opinions

Recommen-dations

Ideas

Feedback reporting

Feedback based controlling

Use of information

Implementation planning

Monitoring ofimplementation

Transition of improvements measures into regular

operations

Selection of improvement measures

Communication of improvements

Feedback analysis



7.9 Experience by participation

ChallengeIn their relationship to their telecommunications provider, customers are often given the feeling that they are victims of an arbitrary machine lacking in transparency. The desires and problems of the individual seem to vanish in anonymous mass production. When there is a malfunction, all the customers can do is reach for the phone and call the service line, hoping to at least reach a customer service employee and perhaps even to solve their problems quickly with the employee’s help. However, a number of contacts are often required because customers are not proactively told about the status of their order or of the progress in remedying the problem.

Inconsistent information about product availability exacerbates the feeling of arbitrariness. Another point is that some customers attempt to formulate suggestions for improvements during surveys, but never receive any com-ments on them and ultimately see no response.

SolutionCreate positive experiences by involving your customers: actively include their input when making changes and integrate their suggestions for improvement, thereby improving the customer experience long term and demon-strating your appreciation. Create transparency about the processes and relationships within the company, and let your customers play a part in shaping the business relationship (e.g., with the selection of the contact channels preferred by the customer). Your customers will thank you with their involvement, acceptance, loyalty, and recom-mendations.

ApproachInclude your customers in the development and improvement processes of products and services (e.g., through discussion group interviews, product tests), thus demonstrating your appreciation of their patronage. In addition, use the dialog about your products and your company on social media channels (e.g., social networks, moderated forums) to create transparency and trust. Have your online support provide sites and moderated forums in which customers can exchange their experiences with problems, including helping them to help themselves. Self-service offers enable customers to deal with their requests on their own initiative and contemporaneously. For example, the opportunity to carry out oneself the diagnosis of a line or end device problem by measuring online the performance of connections is widely and consistently accepted as positive.

Be honest about known weaknesses which crop up during processes by explaining the malfunctions simply and transparently. Proactive communication regarding process status or in the event of faults or process delays demons-trates fairness and generates trust. Proactive customer feedback helps you to establish an emotional relationship to customers.

But participation also means thinking in terms of contact chains which process the customers’ reactions. Campaigns based on triggers activated by a defined customer activity (e.g., initial use of data) raise the context and relationship to requirements of sales actions and consequently the acceptance by customers. The same is true of sales campaigns which utilize the information and experience from the previous customer contacts so that a requirement-oriented offer can be submitted at the right point in time and with the right address. When in doubt, let your customers decide about frequency, channel, and topic of offers by indicating their preferences.

Make use of the company’s fans you have won and customers who participate especially actively in member gets member programs, and demonstrate your appreciation by establishing exclusive communities. The resulting sense of belonging to a company generates a feeling of loyalty in the long term.



Dr. Gesche JoostDirector Design Research Lab, Deutsche Telekom AG

What does CEM mean for you, and what aspects of CEM do you concentrate on during your work in the Design Research Lab?Custom experience management is for us the design of products and services integrating the direct and indirect participation of customers. We immerse ourselves in the everyday lives of our customers to explore qualitatively their habits in using technologies, products, and services and to understand their needs. Besides the close observation of customers (user shadowing), we achieve this primarily through the use of qualitative surveys and integration of customers into the creation process of a service. For example, we ask customers to describe briefly the cell phone or customer service of the future. We call this approach co-design or participatory design. The customers are fundamentally regarded as partners in a dialog and not only as the users of a company’s services. They are the best experts concerning their wishes that one can imagine and see their involvement as the highest form of personal appreciation. Generally speaking, our approach receives a highly positive response from our test subjects. What is more, this has an added benefit of generate a positive attitude towards the company.

Where do you see the greatest potential for improving the relationship between customers and company?The greatest potential is in an extensive image transformation in the direction of greater openness and dialog. A company should show that it gives careful consideration to its customers and attempts to understand them. All of our surveys have led to extremely positive feedback and a change in the way the participants view Telekom. We demonstrate that we appreciate the value of our customers and create a basis of trust for the sustained solidity of the customer relationship.



7.10 Develop your CEM currencyChallengeAs the CEM Framework illustrates, the relationships of the effects between CEM measures and customer behavior and the related commercial effects are highly complex. Many companies are not able to conduct a cost-benefit analysis of their CEM investments.

SolutionBecome familiar with the success factors of your CEM. Make the CEM actions measurable, and apply your success levers precisely and constantly. You must place the commercial efficiency of your CEM measures in the foreground so that you can create a relationship to economic relevance as well as observe a felt, qualitative success.

Approach1. Develop a CEM dashboardDevelop a CEM dashboard which models valid contexts between the customer-centric key performance indicators (e.g. customer loyalty index) and the financial indicators (e.g., turnover, customer value). You will need to develop a set of performance indicators (KPI) so that you can measure the effect of your CEM activities. One important perfor-mance indicator is the customer contacts, categorized according to cause (e.g., number of complaints, number of queries about Product A, number of disputed invoices) because they reveal something about the development of the interaction with the customers. Since customer loyalty is the key to company success, you should regularly and long-term calculate the customer loyalty index.

2. Determine and manage using the drivers of customer loyaltyMeasurements of satisfaction reveal little about the relationship between a CEM measure and the desired customer behavior. But the effect of CE-oriented actions on customer behavior should be at the forefront. So in the first step you should be able to determine and systematically record the desired behavior patterns (e.g., increase in success rates, increase of turnover, reduction of termination rate). Identify the drivers/factors for these behaviors (e.g., appreciation, relieve, gratitude) in the second step. Finally, you must develop measures which further the positive drivers and lessen the force of the negative ones. You must regularly validate the effect of the measures.

A time series analysis is a tool which enables you to use the drivers to derive statistical relationships between the CEM activities and their effects on customer loyalty and sales behavior (e.g., increases in customer loyalty index result in an average reduction of the termination rate by x%). In addition, you will uncover interesting findings about the time periods of the effects, necessary intensity of the contacts, etc. The ex-post capture of the data is preferable to the ex-ante survey. The simple behavior intention alone does not create a reliable basis for interpreta-tion; quite frequently, it deviates significantly from the behavior actually shown in the situation.

3. Anchor the CEM goals in the employees’ targetsInclude the CEM performance indicators along with financial targets in the management of your employees (differentiated according to customer contact and support employees) so that the agreed targets for the employees support customer-centric conduct. The experiences of the customers with the customer contact (e.g., satisfaction with contact, initial contact solution rate, recommendation rate) should make a contribution to the determination of the achievement of targets for customer contact employees along with the productivity indicators (e.g., CHT in the call center) and sales KPIs (e.g., address rate, conversion rate). The same principle applies to CEM management and support employees. They should also be rewarded in terms of the effects of the measures for which they are re-sponsible (e.g., anchoring of the customer assessment and user experience with the Web site for the Web specialist as component of the variable compensation).



8. Appendix

8.1 Recommended ReadingBonnemaizon, A.; Cova, B.; Louylot, M.: Relationship Marketing in 2015: A Delphi Approach; in: European Management Journal, pp. 50-59, 02/2007

Bruhn, M.; Stauss, B.: Kundenintegration im Dienstleistungsmanagement – Eine Einführung in die theoretischen und praktischen Problemstellungen, in: Bruhn, M.; Stauss, B. (Ed.): Kundenintegration – Forum Dienstleistungsmanagement, 2009

Berry, L.; Carbone L.; Haeckel, S: Managing the Total Customer Experience, 2002

Carlzon, J.: Moments of Truth, 1987

Deutsche Gesellschaft für Qualität; forum! Marktforschung (Ed.): Der emotionale Entscheider. Lieferantenauswahl, Kaufprozesse und Kundenbindung im Business-to-Business-Bereich. Sonderstudie Excellence Barometer (ExBa®), 2006

Deutsche Gesellschaft für Qualität; forum! Marktforschung (Ed.): Emotionaler Supergau Beschwerde. Benchmarkstudie zur emo-tionalen Kundenbindung und dem Kommunikationsver-halten von Beschwerdeführern im Business-to-Business- und Business-to-Consumer-Bereich Sonderstudie Excellence Barometer (ExBa®), 2007

Deutsche Gesellschaft für Qualität; forum! Marktforschung (Ed.): Qualität bewegt. Excellence Barometer (ExBa®), Benchmark-studie zur Excellence in der deutschen Wirtschaft, 2008

Deutsche Gesellschaft für Qualität; forum! Marktforschung (Ed.): Benchmarkbericht zum Wettbewerb “Deutschlands Kunden-champions 2008”, 2008

Deutsche Gesellschaft für Qualität; forum! Marktforschung (Ed.): Qualität bewegt. Excellence Barometer (ExBa®), Benchmark-studie zur Excellence in der deutschen Wirtschaft, 2008

Deutsche Gesellschaft für Qualität; forum! Marktforschung (Ed.): Erfolgreich in starken Zeiten. Excellence Barometer (ExBa®), Benchmarkstudie zur Excellence in der deutschen Wirtschaft, 2009

Deutsche Gesellschaft für Qualität; forum! Marktforschung (Ed.): Benchmarkbericht zum Wettbewerb “Deutschlands Kunden-champions 2009”, 2009

Duncan, L.: Customer Experience Management vs. Customer Relationship Management, 2006

Eberwein, P.; Luyken, A.: Customer Experience Management – Kundenerlebnisse profitabel gestalten, Detecon, 2009

Forrester: Focus on Customer Experience, Not CRM, Forrester, 2008

Forrester: Obstacle to Customer Experience Success, 2009

Gentile, C.; Spiller, N.; Noci, G.: How to Sustain the Customer Experience, in: European Management Journal, pp. 395–410, October 2007

Gouthier, M. H. J.: Service Excellence in Deutschland – Wohin soll die Reise gehen?, in: Gatermann, I./Fleck, M. (Ed.): Technolo-gie und Dienstleistung – Innovationen in Forschung, Wissenschaft und Unternehmen, Beiträge der 7. Dienstleistungstagung des BMBF, 2008

Gouthier, M. H. J.: Mitarbeiterstolz im Call Center – Eine theoretisch-konzeptionelle Betrachtung auf Basis der Affective Events Theory AET, in: Benkenstein, M. (Ed.): Neue Herausforderungen an das Dienstleistungsmarketing, 2008

Hauk, J.; Jost, C.: Paving the way to customer centricity, CRM Strategy – Directions for a customer-driven service provider: Detecon Management Report 03/2006

Hauk, J.; Jost, C.: Wo der Schuh drückt (Mystery Shopping), in: TeleTalk, 05/2007

Hauk, J.; Jost, C.; Luyken, A.; Schulz, C.: Study CRM 2010 and Beyond – Opportunities and Challenges for Telecommunications Companies on High-Performance Markets, Detecon, 2007

Hauk, J.; Jost, C.; Schulz, C.: Konzepte für ein zukunftsorientiertes Customer Relationship Management, in: Berater Guide 2008 (Handelsblatt), Das Jahrbuch für Beratung und Management, 2007

Harvard Business Review: Welcome to the Experience Economy, 1998

Harvard Business Review: Understanding Customer Experience, 2007

Kwortnik, R.; Thompson, G.: Unifying Service Marketing and Operations With Service Experience Management, in: Journal of Service Research, 11/2009

Penkert, A. ; Funk, J.; Schlereth, J.; Schulz, C.: Kundenservice der Zukunft – Trends und Herausforderungen für das Kundenservice-geschäft, Detecon, 2010

Reimann, E.; Sexauer, H.: Kundenbeziehungsmanagement / Vorgehensweisen – Checklisten – Best Practice, 2007

Schmitt, B.; Mangold, M.: Kundenerlebnis als Wettbewerbsvorteil, 2004

Schwager, A.; Meyer, C.: Das Kundenerlebnis verbessern; in: Harvard Business Manager, p. 58, April 2007

Stauss, B.; Seidel, W.: Preiskündiger und Qualitätskündiger: Zur Segmentierung verlorener Kunden, in: Link, J.; Seidl, F. (Ed.): Kundenabwanderung – Früherkennung, Prävention, Kundenrückgewinnung, 2009

Telemanagement Forum: Customer Experience Management: Driving Loyalty & Profitability, 2009

Wöhler-Moorhoff, F; Dieter, S.; Schwill, M; Telco 2010 – Emerging telecommunication landscapes, Detecon, 2004



8.2 GlossarAHT Average Handling Time

ARPS Average Revenue Per Subscriber

ATL Above the Line

B2B Business to Business

B2C Business to Consumer

BTL Below the Line

CAGR Compound Annual Growth Rate

CE Customer Experience

CEM Customer Experience Management

CEO Chief Executive Officer

CLC Customer Lifecycle

CTI Computer Telephony Integration

CXO Chief x Officer

(Member of the Executive Board)

CRM Customer Relationship Management

CM Contribution Margin

DMB Digital Multimedia Broadcasting

DVB-H Digital Video Broadcasting – Handhelds

EBIT Earnings before Interest and Taxes

EBITDA Earnings before Interest, Taxes,

Depreciation and Amortization

ExBa Excellence Barometer Benchmarkstudie

FMC Fixed Mobile Convergence

FTTx Fibre to the x

GPS Global Positioning System

GSQ German Society for Quality

HSDPA High Speed Downlink Packet Access

IMS IP Multimedia Subsystem

IP Internet Protocoll

ISP Internet Service Provider

IVR Interactive Voice Response

KPI Key Performance Indicator

M2M Machine 2 Machine

MoD Music on Demand

MoT Moments of Truth

MP3 MPEG-1 Audio Layer 3

MVNO Mobile Virtual Network Operator

NAB Needs, Attitude and Behavior Segmentation

NPS Net Promoter Score

RoCEM Return on CEM

SIP Session Initiation Protocoll

Telco Telecommunications Company

TMC Telco-Media-Convergence

TRI*MTM Customer Loyalty Index of TNS Infratest

UMTS Universal Mobile Telecommunications System

USP Unique Selling Proposition

VDSL Very High Speed Digital Subscriber Line

VIP Very Important Person

VoD Video on Demand

VoIP Voice over IP

WLAN Wireless Local Area Network



8.3 The AuthorsChristian Jost works as a Senior Consultant in the Global Competence Team CRM at Detecon International GmbH. His consulting activities focus on CRM strategies, CRM process design, customer care, and complaint management. Christian Jost studied business administration, specializing in information and service management, in Ingolstadt and Santiago de Chile. He has been working intensively in the field of customer relationship management since 2002. His projects include the pilot planning and implementation planning of a cross-divisional service concept for a Tier 1 carrier and the project management for the establishment of a retention organization for a leading telecom-munications provider.

Contact: +49 6196 903316 or [email protected]

Patrick Eberwein is a Consultant in the Competence Practice Organization at Detecon in Bonn. At the conclusion of his course of studies of international business administration at the University of Applied Sciences of Bonn, focus-ing on corporate consulting and corporate development, he wrote his final thesis on the topic, “CRM for Automo-tive Suppliers in the OEM Business and in Spare Parts Business”. He has been a member of the Global Competence Team CRM of Detecon International GmbH since July 2007. He is an expert on the topics of lead management and customer experience management.

Contact: +49 228 700 2563 or [email protected]

Joachim Hauk works as a Managing Consultant and Team Head of the CRM Team at Detecon International GmbH in Eschborn. His consulting work focuses on CRM design and implementation strategies, multi-channel manage-ment, customer value management and CEM, campaign management, and CRM process design. Joachim Hauk studied business administration, specializing in marketing, banking administration, and journalism, in Mannheim and Mainz. After a number of years of professional experience in the banking world, he moved to corporate consul-tancy in 1999 and has been involved with the complex of topics related to CRM at Detecon since 2001. The scope of his experience includes many various CRM projects for international clients in telecommunications and in other industries, ranging from CRM strategy to support for implementation.

Contact: +49 6196 903370 or [email protected]

Onno Hoffmann works as a Senior Consultant in the CRM Group at Detecon International GmbH. Onno Hoffmann studied business administration, specializing in information management and management information systems, in Ingolstadt. He is an expert on the topics of CRM strategy, service and loyalty programs, and customer contact management. He has been involved with topics related to the broad field of customer relationship management since 2004. His projects include the drafting of concepts and implementation of VIP programs as well as various developments in loyalty management for telecommunications providers.



Contact: +49 89 54636515 or [email protected] Luyken works as a Consultant in the CRM Group at Detecon International GmbH. After finishing his course of studies in business administration at the Universities of Potsdam and St. Gallen, focusing on marketing and innovation management, he wrote his final thesis on the topic “CRM 2010 and Beyond — Opportunities and Challenges for Telecommunications Providers on High-Performance Markets”. He has been a permanent member of the CRM Group at Detecon International GmbH since 2007 and has participated in both domestic and interna-tional CRM projects. He is an expert on the topics of Telco CRM, service strategy, service differentiation, CRM sales, campaign management, and customer experience management. He has been responsible for various projects in these related fields, both as an expert and project manager, and has written a number of publications.


Dr. Christoph Schumacher is General Manager of forum! Marketing- und Kommunikationsberatung in Mainz. He heads the consulting unit of the forum! Group and supports clients in the analysis and optimization of their corpo-rate and organizational relationship management. The holder of a doctorate in political science and communica-tions specialist has had extensive experience in the investment goods industry and is regarded as a specialist for questions of integrated organizational communications. For many years, Dr. Christoph Schumacher was the head of the headquarters unit for marketing and communications for global leaders in the production of investment goods, including in-house full-service communications agencies. Schumacher is an advocate of a marketing ap-proach characterized by communications extending from the strategic concept to the operational implementation. He has been passing on his comprehensive professional experience from the industry as a lecturer at the Heinrich Heine University Düsseldorf since 2000, where he teaches the subjects of “corporate communications” and “press and public relations”. Moreover, he is a scientific advisor to the knowledge magazine, “life + science”, published for school students by the Klett-Verlag.


For their support during the study, we wish to thank warmly: All of the study participants•

Fabian Krane•

Rolf Lichter•



8.4 Detecon International GmbHWe make ICT strategies workDetecon is a consulting company which unites classic management consulting with a high level of technology expertise. Our company history is proof. Detecon International is the product of the merger of the manage-ment and IT consulting company Diebold, founded in 1954, and the telecommunications consultancy Detecon, founded in 1977. Our services focus on consulting and implementation solutions which are derived from the use of information and communications technology (ICT). Clients around the world in virtually all industries profit from our holistic know-how in questions of strategy and organizational design as well as the utilization of state-of-the-art technologies.

Detecon’s expertise bundles the knowledge from the successful conclusion of management and ICT consulting projects in more than 160 countries. We are represented globally by subsidiaries, affiliates, and project offices. As Detecon is a subsidiary of T-Systems International, the business customer brand of Deutsche Telecom, we as c onsultants profit from an infrastructure which spans the globe and is maintained by a major international player.

8.5 The company forum! forum! GmbHforum! is an internationally active market research and consulting company; through its business units, forum! Marktforschung and forum! Marketing- und Kommunikationsberatung, forum! is the leader in the field of analysis and optimization of corporate relationship management. International clients from the B2C and B2B sectors as well as non-profit organizations profit from the outstanding know-how of forum! Marktforschung and forum! Marketing- und Kommunikationsberatung.

Excellence Barometer®: Basic research on the performance capability of the German economy forum! Marktforschung, acting jointly with the Deutsche Gesellschaft für Qualität e.V. (DGQ), is one of the few market research institutes in Germany to conduct its own basic research on the success factors of relationship management: the Excellence Barometer® (ExBa), a benchmark study on the performance capability of the German economy recognized across Germany. The close relationship to the Institute for Journalism of the Johannes Gutenberg University in Mainz is indicative of the up-to-dateness and innovation of the research models and techniques which are used.

Initiator of “Deutschlands Kundenchampions”In cooperation with the Deutsche Gesellschaft für Qualität e.V. (DGQ), forum! conducts an annual competition all across Germany, Deutschlands Kundenchampions, seeking the company with the best customer relationships. The goal of the competition is to establish a benchmark for the quality of the customer relationship management and to honor exemplary customer centricity.

Organizer of the Mainz Relationship Management Congressforum! is also the organizer of the annual Relationship Management Congress in Mainz. Know-how, best practices, and valuable contacts related to corporate relationship management are communicated here to decision-makers from the world of business.

Detecon International GmbHOberkasseler Straße 253227 Bonn – Germany

[email protected]

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Detecon Study Customer Experience Management in the Telecommunications Industry. Market survey and action recommendations for the optimal design of customer experiences