Five Tools to Close Customer Experience Strategy Gaps 06092014

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For Customer experienCe proFessionals

Why Read This RepoRT

In today’s age of the customer, firms need to build customer experience into the overall company strategy — rather than bolting it on as an afterthought. To align employees and partners, customer experience leaders need to help their firms prioritize target customers, reframe value propositions, and craft a clear vision for what the company seeks to achieve. Forrester has identified tools that help leaders engage key stakeholders in closing these strategy gaps.

Five Tools To Close Customer experience strategy Gapsby paul Hagenwith Harley manning and Curt nichols

June 9, 2014

sTRaTeGy Gaps UndeRmine CUsTomeR expeRienCe eFFoRTs

In the age of the customer, firms need a new approach to competition that puts customer experience (CX) at the center of their overall company strategy.1 To make this pivot, strategies in the age of the customer should provide a customer-centric vision for the organization, focus the company on customer-centered differentiation, and provide specific guidance on how to serve customers. Unfortunately, many company strategies fail at some of these basics. Firms struggle to improve CX because their strategies:

■ Lack a sense of urgency about customer experience improvements. CX initiatives can easily get lost among other more established types of business efforts like improving operational efficiency or trying to penetrate a new market.

■ Fail to identify target customers they can win, serve, and retain based on CX. Companies don’t always factor customer experience into how they identify target customers. When that happens, firms can find themselves trying to satisfy buyers who are a mismatch with the experience the company delivers.

■ Construct inside-out value propositions. Firms that frame value propositions in terms of products or internal value focus employees away from the value that customers seek.

■ Don’t provide sufficient CX guidance to employees. Vague brand statements like “our aim is to delight our customers with every interaction” leave executives, managers, and employees to their own interpretations of what “delight” should look and feel like.

■ Don’t align marketing and IT behind delivering a great experience. When technology leaders drive an agenda that internal efficiency and cost savings dominate, they focus on improving today’s operational environment and risk overlooking capabilities required to deliver new value propositions.2

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Five tools to Close Customer experience strategy Gaps 2

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Tools Can help Companies Close Customer experience strategy Gaps

Although these problems are serious, customer experience leaders have solved them. To help companies with lower levels of customer experience maturity, Forrester has identified and adapted five tools that customer experience professionals can use to close their firms’ strategy gaps.

■ Create urgency with STEER CX. CX leaders need to identify the issues that require a firm to immediately focus on customer experience.3 They can do this by conducting an analysis of social, technological, economic, environmental, and regulatory (STEER) elements to highlight the macroeconomic factors that make customer experience an urgent priority (see Figure 1).4 Duke Energy conducted a macroeconomic analysis to identify the factors affecting its business, including regulatory changes, new economic conditions that spawn competition from industry outsiders, customers’ changing expectations, and a $4 billion market opportunity (see Figure 2).

■ Prioritize customers with needs-based targeting. Strategies must focus a company on the customers whom it can serve best . . . and those whom it should not acquire in the first place. A needs-based prioritization tool helps CX leaders align stakeholders across the company around the buyers whose needs and motivations the firm has the best capabilities to serve (see Figure 3). The China division of a global building products company used this kind of approach when it made a hard choice to stop selling to low-margin price-focused buyers. Instead, it targeted firms that sought high-performance products and technical expertise. The result: a 22-point jump in Net Promoter Score along with a 24-point jump in average wallet share.5

■ Define value propositions in customer terms with the jobs-to-be-done frameworks. Firms must articulate a value proposition in terms of how the organization helps customers accomplish goals. Customer jobs-to-be-done tools like a value proposition canvas help companies discover the contexts and objectives that motivate customers (see Figure 4).6 With this tool, firms can zoom out to discover strategic opportunities to serve clients and zoom in to identify more tactical opportunities to improve the experience.7 Intercom, a mobile messaging service, frames every design problem as a customer job and looks for the triggering event and the customer’s desired outcome.8

■ Craft a customer experience vision with an it-feels/it-means model. Every company needs a vivid description of the intended experience to act as a North Star that directs how employees and partners perform their work. Southwest Airlines created an It-Feels/It-Means model to articulate the CX it seeks to deliver to customers. To create your own North Star, write down how you’d like your customers to describe the intended experience in their own words (see Figure 5). In the it-means section of the model, describe the guiding principles for how employees should deliver the desired experiences.




■ Drive business technology capabilities with CX ecosystem mapping. CX leaders need to create links to their business technology (BT) counterparts to ensure that systems support the intended experience. A customer experience ecosystem map can help achieve this goal by documenting the explicit connections between people, processes, and technologies within a firm on the one hand and what a customer actually experiences on the other hand (see Figure 6).9 USAA’s shift from selling auto loan and auto insurance products to selling a carbuying solution based on a journey highlighted redundant technology capabilities (e.g., financial applications for insurance and a loan) as well as new capabilities needed to serve customers (e.g., car inventory at dealerships, digital applications to configure a car).10

Figure 1 STEER Analysis For CX Helps Companies Create A Sense Of Urgency

Source: Forrester Research, Inc.113651

RegulatorySocial

Why CX now?

Economic

EnvironmentalTechnological

• Which social factors are changing customers’ needs or expectations?• What technology conditions are affecting the way your customers

do business with you?• Which economic factors are changing the competitive landscape?

(How is the de�nition of your market changing?)• Which environmental factors are changing your company’s goals?• What regulatory changes affect the way your customers interact with your �rm?




Figure 2 Duke Energy’s Macroeconomic Analysis Created Urgency For CX


Duke Energy is being squeezed by many forces that are disrupting ourtraditional business . . . what does this mean to us?

New competitorsfrom outsideindustries enteringthe market

Declining satisfactionpotentially inhibitingadditional productand service sales andincreasing cost-to-serve

Source: Duke Energy




Figure 3 Prioritize Customers Based On Their Motivations


Co

mp

etit

ive

stre

ng

th

High

Low

HighLow Attractiveness of segment

Source: B2B International website (http://www.b2binternational.com/publications/b2b-segmentation-research)

Price-�xated buyers

Cutting-edgers

Conventionalists

Innovators

Operationalzealots

Needs-basedsegments




Figure 4 Jobs-To-Be-Done Frameworks Orient Value Propositions On Customers


Source: Business Model Alchemist website




Figure 5 Southwest’s It-Feels/It-Means Model Helps Guide Employees


Intuitive

• Instinctive and hassle-free• Like Southwest has anticipated

the aspects of my travel journey

• The experience is straightforward andclear and doesn’t require extra thought

• Processes are smooth and things “justmake sense”

It means . . .It feels . . .

Source: Southwest Airlines

Figure 6 CX Ecosystem Mapping Helps Align Marketing And BT


Source: Mulberry House Consulting




Recommendat i o n s

enGaGe The playeRs in The eCosysTem To Fill sTRaTeGy Gaps

The tools described above are meant to actively engage a wide breadth of stakeholders across the ecosystem — employees, customers, and partners — in the strategy building process. Use each tool in interactive work sessions to:

■ Align leaders. As part of creating a vivid description of the intended experience, the customer experience leader at a pharmaceutical company invited representatives from multiple business units to participate in vision sessions. The sessions forced participants to grapple with differences as well as to find common ground across the divisions.

■ Involve partners. Partners need to see a holistic picture of customers’ relationship with a company. Caterpillar identified a European dealer with which it had “chemistry” to pilot a redesign of how it delivered some of its services. The pilot started with face-to-face customer interviews and service blueprinting to identify operational changes. The result: a 20% improvement in customer satisfaction.11

■ Include customers. Customers can be high-value participants in the use of the tools we described. A voice of the client (VOC) leader at United Healthcare’s OptumHealth services invited customers to self-select into segments based on needs, such as the propensity to partner with the firm and not spending level or size. The new needs-based segmentation helped the firm align funding levels and investments to the actions that drove the best outcomes.

endnoTes1 Firms perform better financially when they focus on customers instead of products. See the May 20, 2014,

“Customer Experience Strategy: Build It In; Don’t Bolt It On” report.

2 The challenge of systematically understanding and serving customers derives from the fact that increasingly powerful customers enjoy the freedom to take whatever journey suits their perceived need. See the October 10, 2013, “Technology Management In The Age Of The Customer” report and see the October 21, 2013, “Linking Customer Engagement To Business Capabilities In The Age Of The Customer” report.

3 These could range from an existential crisis from new competition and churn to an opportunity to grow.

4 Forrester adapted the analysis by having firms focus the analysis on the ways in which macroeconomic factors affect the company’s ability to deliver value to customers (e.g., technology factors that change the kind of value proposition a firm delivers, regulatory factors that increase competition and thus customer choices).

5 Net Promoter, Net Promoter Score, and NPS are registered trademarks of Bain, Fred Reichheld, and Satmetrix Systems. Source: Bain (http://www.bain.com/search.aspx?q=Net+Promoter); Satmetrix Systems (http://www.satmetrix.com/).

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6 Gains describe the outcomes that customers expect; pains describe negative emotions or obstacles associated with customers trying to do the jobs.

7 Customer jobs-to-be-done models also help company leaders identify which customer journeys to map.

8 Source: Paul Adams, “The Dribbblisation Of Design,” Inside Intercom (http://insideintercom.io/the-dribbblisation-of-design/); Paul Adams, “How We Design At Intercom,” Inside Intercom (http://insideintercom.io/how-we-design-at-intercom/).

The jobs-to-be-done framework originated with Clayton Christensen. Source: Clayton Christensen Institute (http://www.christenseninstitute.org/key-concepts/jobs-to-be-done/).

Alan Klement has a compelling approach to framing problems to design based on customer job stories. Source: Alan Klement, “Replacing The User Story With The Job Story,” Medium (https://medium.com/the-job-to-be-done/af7cdee10c27).

9 Forrester defines the customer experience ecosystem as “the complex set of relationships among a company’s employees, partners, and customers that determines the quality of all customer interactions.” See the February 28, 2013, “The Customer Experience Ecosystem” report and see the February 26, 2013, “How To Map Your Customer Experience Ecosystem” report.

10 Source: Martin Mocker and Jeanne W. Ross, “USAA: Capturing Value from Complexity,” MIT Sloan Management Center for Information Systems Research, March 22, 2013 (http://cisr.mit.edu/blog/documents/2013/03/22/mit_cisr_wp389_usaa_mocker-pdf/)

11 Treat the partner ecosystem as an extended workforce. See the October 11, 2013, “Engage B2B Partners To Deliver Unified Customer Experiences” report.






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Five Tools to Close Customer Experience Strategy Gaps 06092014