Managing the Total Customer Experience

Managing the Total Customer Experience

A ConsorTiuM bEnChMArking sTudy BEST-PRACTICE REPoRT

P ®A COP U B L I C A T I O N S

Managing the Total Customer Experience • ©2005 APQC�

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copyright©2005 APQC, 123 North Post Oak Lane, Third Floor, Houston, Texas 77024-7797. This report cannot be reproduced or transmitted in any form or by any means electronic or mechanical, including photocopying, faxing, recording, or information storage and retrieval.

Additional copies of this report may be purchased from the APQC Order Department at 800-776-9676 (U.S.) or +1-713-685-7281. Quantity discounts are available.

ISBN 1-932546-57-x

statement of purposeThe purpose of publishing this report is to provide a reference point for and insight into the processes and practices associated with certain issues. It should be used as an educational learning tool and is not a “recipe” or step-by-step procedure to be copied or duplicated in any way. This report may not represent current organizational processes, policies, or practices because changes may have occurred since the completion of the study.

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Project Personnel

study personnel Rachele Williams, project manager Steve Huynh, project support Kimberly Lopez, project support Peggy Newton, project support Gerry Swift, project support Steve Wright, project support Angelica Wurth, project support APQC

subject matter expert Patricia Seybold, CEO Patricia Seybold Group

editor Krystl Campos

Designer Connie Choate

Managing the Total Customer Experience • ©2005 APQC �


Contents of Study Report

4 Sponsor and Partner organizations A listing of the sponsor organizations in this study, as well as the best-practice (“partner”) organizations that were benchmarked for their excellence in managing the total customer experience.

7 Executive Summary A bird’s-eye view of the study, presenting the study focus, the methodology used throughout the course of the study, key findings, and a profile of the participants. The findings are explored in detail in the following sections.

15 Study Findings An in-depth look at the findings of this study. The findings are supported by quantitative data and qualitative examples of practices employed by the partner organizations.

69 Partner organization Case Studies Background information on the partner organizations, as well as their innovative research and development practices.

113 Index

Managing the Total Customer Experience • ©2005 APQC��

Sponsor Organizations


bank of america corp.

bt group

citigroup

city public service of san antonio

Deere & co.

Direct energy

eastman Kodak company

sears

servicemaster

sun microsystems

tiaa-cref

usaa

usps

Verizon Wireless

Washington mutual

Wells fargo home mortgage

Managing the Total Customer Experience • ©2005 APQC ��

Partner Organizations


air products and chemicals

caterpillar financial

cisco systems

harrah’s entertainment

lands’ end


e are all customers. Each day, we interact with numerous organizations through a variety of access channels such as phone, fax, e-mail, and face to face at the storefront. As consumers, we know firsthand the frustration when

the information that is delivered to us via various access channels—not to mention by different employees or messages conveyed via different media—is conflicting or inconsistent. Similarly, as business customers, we engage in daily interactions with vendor representatives and encounter similar challenges. Regardless of whether we are business or consumer customers, we desire “one version of the truth” in information and message and a seamless customer experience in any access channel and throughout our customer life cycle.1

At the same time, we are employees. As employees of self-proclaimed customer-focused businesses, we crave the tools, technology, information, and empowerment in order to be able to provide excellent customer service. We want easy access to information about our customers and about our products and services so that we can deliver “one version of the truth” to our customers.

The Managing the Total Customer Experience Best-practice Report is, in a nutshell, about how organizations provide one version of the truth to their employees serving customers and to customers serving themselves and/or in their interactions with customer service representatives, across access mechanisms and the customer life cycle. Over the years, APQC has conducted a number of consortium benchmarking studies on related topics such as call centers, customer value measurement and management, and customer satisfaction. This study sought to fill a research gap in best practices in the holistic customer experience. The study scope was comprehensive, covering everything from organizational cultures and structures that foster a total customer experience mindset, to the technology that supports it and serves as the foundational backbone, to the metrics and performance measurement systems that monitor organizational success. Some topics were covered in more depth than others, depending on the relative strengths of the best-practice partners studied. The study team’s hope is that readers will learn valuable high-level insights and best practices about the variety of factors that impact and contribute to the total customer experience.

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Executive Summary


1 Source: Harrah’s site visit.

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stuDy scopeDrawing on input from the subject matter expert and secondary research, the

APQC study team identified four key areas for research. These areas guided the design of the data collection instruments and were the basis on which the study findings have been developed:

1. understanding the business case for concentrating on the total customer experience;

2. organizational structure and support implications of improving the total customer experience;

3. investigating the technology enablers to create a seamless, transparent customer experience; and

4. measuring the impact of managing the total customer experience.

oVerVieW of finDings anD organiZation of reportThis report is about managing the total customer experience. The total customer

experience, in this context, means ensuring a consistent, positive customer experience across access channels/customer touch points and across the customer life cycle. How do organizations accomplish this? The study team found a number of key findings, or themes, illustrated by the best-practice partners. These findings are organized into chapters centered around four key questions about how organizations manage the total customer experience.1) how do organizations that are leaders in customer experience operate? This includes

considerations of the organizational culture that facilitates a total customer experience, the organization structure and accountability mechanisms that foster it, employee training and empowerment, provision of information to dealers and other third parties that influence the customer experience, provision of information to customers and customer self-service, capturing customer feedback, and understanding customer needs and processes.

2) What do best-practice organizations do to deliver a total customer experience? This chapter addresses the mechanisms that best-practice organizations have put in place to understand customers and customer knowledge management, to measure and monitor what matters to customers, to deliver a consistent experience across channels and the customer life cycle, and to streamline customer interactions with the organization.

3) What are the results from investing in the total customer experience? This chapter discusses how some best-practice partners have demonstrated the return on investment from their efforts to manage the total customer experience.

4) how is technology used to provide a good customer experience? This includes how best-practice partners leverage technology to facilitate a positive and consistent customer experience.

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9Managing the Total Customer Experience • ©2005 APQC

Greater detail on the practices at Air Products and Chemicals, Cisco Systems, and Lands’ End can be found in their case studies.2

In general, the findings from this benchmarking study are no surprise—they are practices that most companies would expect to be prevalent in an organization that successfully manages the customer experience. This point was succinctly put by one of the site visit hosts at Lands’ End, a company well known for its great customer service, who stated, “It is not rocket science, but you can make it rocket science.” Admittedly, some best-practice partners were stronger in certain areas than others, and the study team did not find any one single organization that excelled in every aspect of managing the total customer experience. In addition, since the study scope is very comprehensive, coverage of any particular topic is broad rather than in-depth. However, across the portfolio of organizations studied, a collage of best practices to manage the total customer experience emerged. The learnings and the value from this benchmarking report, as with any benchmarking report, originate from the observation of how the best-practice partners address these challenges, the examples and stories that they provided at their site visits, and ultimately the demonstration that their efforts to manage the total customer experience have paid off for both the customer and the company.

The following key findings, or themes, emerged.

chapter 1—how Do organizations that are leaders in customer experience operate? • Best-practice organizations establish and nourish a customer-centric culture.• Best-practice organizations empower employees to understand and anticipate

customers’ needs and to delight customers.• Best-practice organizations ensure that employee recruitment, training, and

performance management all focus on customer experience delivery.• Best-practice organizations empower dealer/channel partners to understand and

anticipate customers’ needs and to delight customers.• Best-practice organizations empower customers to provide valued input and to

help shape company priorities.• Best-practice organizations enable customers to manage their own relationships.• Best-practice organizations bathe their organizations in actionable customer

information.• Best-practice organizations align the company and culture around customers’

needs and customers’ processes.• Best-practice organizations make customers’ priorities their priorities in

monitoring and managing performance.

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2 Please reference the Baldrige application summary available on the Caterpillar Financial Services Corporation Web site for greater detail on their processes for customer and market knowledge. Many of the practice examples described throughout this report derive from this Baldrige application summary.

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• Best-practice organizations have visionary customer-centric leaders who believe that high-quality customer experience engenders customer loyalty and improves customer and company profitability.

• Best-practice organizations have integrated customer experience into the framework of their organizations’ operations at every level.

chapter 2—What Do best-practice organizations Do to Deliver a good total customer experience?• Best-practice organizations understand customers deeply; they segment customers

to anticipate and meet their needs.• Best-practice organizations know who their customers are and what interactions

and transactions they have had with the organization.• Best-practice organizations understand what different types of customers need in

different phases of the customer life cycle and tailor the customer experience for those life cycle stages.

• Best-practice organizations understand what customers care about in different contexts—what outcomes are they trying to reach and what context they are in.

• Best-practice organizations identify and anticipate customers’ moments of truth—what the “make or break” points are in customers’ processes.

• Best-practice organizations take proactive steps to anticipate customer-impacting critical issues and to avoid them.

• Best-practice organizations measure, monitor, and improve what matters to customers.

• Best-practice organizations deliver a consistent and seamless branded customer experience across channels and touch points and all stages of the customer life cycle.

• At best-practice organizations, employees work together to create a “one-stop shopping” environment designed to streamline customers’ interactions with the organization.

• Best-practice organizations strive for single-contact problem resolution.

chapter 3—What are the results from investing in a total customer experience?• The business case for investing in the customer experience is based on competitive

differentiation—the quality of the customer experience is viewed as a competitive differentiator by best-practice organizations.

• Investing in delivering a brand-consistent, high quality, end-to-end customer experience across interaction channels and throughout the customer life cycle generates higher customer lifetime value and a growing number of loyal, profitable customers, which translates into profits and greater company value.

• Investing in streamlining customer-critical processes decreases customers’ time-to-decision and increases revenues.

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3 USAA did not complete the detailed questionnaire.

• Investing in streamlining customer-critical processes decreases costs-to-serve and increases profitability.

• Investing in improving employee experience to improve customer experience results in greater employee and customer loyalty and lower costs-to-serve.

chapter 4—how is technology used to provide a good customer experience?• Best-practice organizations use technology to identify and to understand

customers and track customer behavior. • Best-practice organizations use technology to provide customers the ability to

serve themselves throughout their customer life cycles. Customers are willing and able to serve themselves to accomplish most of their desired outcomes.

• Best-practice organizations use technology to provide customers with a consistent view of their accounts across channels and touch points. Customers can manage their own accounts.

• Best-practice organizations use technology to provide customer support and service personnel with the information that they need and provide a consistent view of the customers’ account across channels and touch points.

With the exception of Caterpillar Financial and Harrah’s, case studies explore the partners’ best practices in more detail at the end of the report.

participant backgroundFifteen sponsors3 and all best-practice partners

completed the detailed questionnaire.Figure E.1 depicts the industry breakdown for the

organizations participating in the detailed questionnaire. Other industries indicated by respondents included gases/chemicals, gaming, consumer packaged goods, and machinery/equipment.

Two of the five best-practice partners responded on behalf of their entire organization; two on behalf of their division, agency, or business unit; and one partner provided information for both.

The best-practice partner organizations studied sell to both businesses and consumers, as indicated by Figure E.2.

The best-practice organizations interact with customers through a variety of touch points and access channels, as shown in figures E.3, page 12 and E.4, page 13.

figure e.1: industry representation

Financial services 30%

Telecommunications 10%

networking/Computer/ Telecommunications equipment

retail 10%

utility 10%

other 30%

industry categories industry representation

10%

Both

Business end

Consumers

Figure E.2

Partners (n=5)

Primary Customers

40%

20%

40%

Frequency of Response0 20 40 60 80 10010 30 50 70 90

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apQc’s consortium benchmarKing methoDologyThe APQC consortium benchmarking study

methodology was developed in 1993 and serves as one of the premier methods for successful benchmarking in the world. It was recognized by the European Center for Total Quality Management in 1995 as first among 10 leading benchmarking organizations’ models. It is an extremely powerful tool for identifying proven successful practices and for facilitating the transfer of these practices.

apQc’s four-phased methodologyphase 1: plan

The planning phase of this study began in the summer of 2004. During this phase, research conducted by APQC was used to help identify successful organizations to participate as best-practice partners. In addition to this research, APQC staff members, the subject matter expert, and sponsoring organizations identified potential participants based on their own experiences and knowledge. Each recognized organization was invited to participate in a screening process. Based on the results of the screening process, as well as organization capacity or willingness to participate in the study, a list of 12 potential partner candidates was developed (eight initial plus four more generating from additional contacting and screening post-kickoff per sponsor request).

The study kickoff meeting was held November 18, 2004, during which the sponsors refined the study scope, gave input on the data collection tools, and rank-ordered the top four potential partner organizations, which were asked to host a site visit: Air Products and Chemicals, Cisco Systems, Harrah’s Entertainment, and Lands’ End (Caterpillar Financial was selected as partner no. 5 after the subsequent contacting and screening to fill a gap in service-company partners).

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Other

Consultants

Figure E.3

Partners (n=5)

Sales/Service Channels

40%

0%


Brokers 0%

Franchisees 0%

E-tailers 0%

Integrators 20%

Retailers 20%

Resellers 20%

Agents 20%

Dealers 20%

Partners 20%

Other includes banking centers, direct sales,

realtors/builders,in-house sales, and online through

company Web site.

apQc’s benchmarking model: the four-phased

methodology

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phase 2: collectThree tools were used to collect information for

this study:1. screening questionnaire—qualitative and quantitative

questions designed to identify best practices within the candidate partner organizations;

2. detailed questionnaire—quantitative questions designed to collect objective, quantitative data across all participating organizations; and

3. site visit guide—qualitative questions that parallel the areas of inquiry in the detailed questionnaire and serve as the structured discussion framework for all site visits.

The five partner organizations selected for continued participation in the study responded to the screening questionnaire as well as the detailed questionnaire. Additionally, four of the five partner organizations hosted half-day site visits attended by sponsors, other partners, members of the study team, and the subject matter expert (Cisco Systems hosted a virtual site visit since key participants in the visit are located in Europe). The APQC study team prepared case studies of the site visits and submitted these to the partner organizations for approval or clarification.

phase 3: analyzeThe subject matter expert and APQC analyzed both

the quantitative and qualitative information gleaned from the data collection tools. The analysis concentrated on examining the challenges organizations face in the study focus areas and key themes and enablers in managing the total customer experience.

An analysis of the data, as well as case examples based on the site visits, is contained in this report.

phase 4: adaptAdaptation and improvement, stemming from

identified best practices, occur after readers apply key findings to their own operations. APQC staff members are available to help sponsors create action plans appropriate for the organization based on the study.

Other

Other distribution channels

Wireless handheld device

Figure E.4

Partners (n=5)

Customer Access Mechanismsand Touch Points

20%

20%

0%


Kiosk/ATM 0%

Catalog 20%

Sales force (telesales) 20%

Field service 20%

Fax 40%

Interactive voice response 40%

Store, branch, dealership, etc. 60%

Sales force (direct) 60%

Mail 60%

E-mail 80%

Marketing/Advertising 100%

Web site 100%

Customer service call center 100%

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subJect matter expertisepatricia seybold, author and founder and ceo of the patricia seybold group

With more than 24 years of experience consulting to businesses in a variety of industries, Seybold assesses and predicts the ways in which both business and consumer customers will make new demands on companies. Her clients include National Semiconductor Corporation; Wells Fargo & Company; L.L. Bean, Inc.; the International Monetary Fund; Cisco Systems Inc.; Monster; The Toro Company; Sabre Holdings Corporation; Snap-on Incorporated; KeySpan Corporation; Symantec Corporation; and Orient Overseas Container Lines (OOCL).

Seybold’s book, Customers.com (Times Books, 1999), provides insight into how 16 still-thriving companies designed their e-business strategies to improve revenues, increase profitability, and enhance customer loyalty. Seybold’s second book, The Customer Revolution: How to Thrive When Customers Are in Control (Crown Business, 2001), describes how 13 global businesses in a variety of industries manage by and for customer value while they continuously improve the quality of the customer experience they deliver. Her books have been translated into more than 10 languages.

about apQcA recognized leader in benchmarking, knowledge management, measurement, and

quality programs, APQC helps organizations adapt to rapidly changing environments, build new and better ways to work, and succeed in a competitive marketplace. For more than 25 years, APQC has been identifying best practices, discovering effective methods of improvement, broadly disseminating findings, and connecting individuals with one another and with the knowledge, training, and tools they need to succeed. APQC is a member-based nonprofit serving more than 500 organizations around the world in all sectors of business, education, and government. Learn more about APQC by visiting www.apqc.org.

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Study Findings

17 Chapter 1: How Do organizations That Are Leaders in Customer Experience operate?

37 Chapter 2: What Do Best-Practice organizations Do to Deliver a Good Total Customer Experience?

53 Chapter 3: What Are the Results from Investing in a Total Customer Experience?

61 Chapter 4: How Is Technology Used to Provide a Good Customer Experience?


The study team was interested in understanding the operating characteristics at organizations successful in managing the total customer experience—

ranging from the corporate culture that fosters a customer experience mindset, to how the customer experience is factored into the framework of an organization’s operating environment. Some of the findings at best-practice organizations are more tangible, like bathing the organization in actionable customer feedback; others, like fostering a customer-centric culture, are much harder to emulate. All, however, were found to be important influencers of and contributors to a positive, consistent customer experience.

Key Finding:Best-practice organizations establish and nourish a customer-centric culture.

Best-practice partners indicated that a strong organizational history in customer-centricity, visionary leadership, and executive support are the greatest contributors to a customer-centric culture at their organization (Figure 1).

The best-practice partners have deeply ingrained customer-centric cultures. In a customer-centric culture, the business revolves around customers’ needs. Customers’ needs are taken seriously and acted upon. The partners demonstrated that a customer-centric culture is not necessarily one in which “the customer is always right,” but it is a culture in which customers’ needs and contexts are deeply understood. Every effort is made to align the company’s values and business

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How Do Organizations That Are Leaders in Customer

Experience Operate?

Competitive landscape

Employee training

Employee compensation/incentives

Figure 1

Partners (n=5)

Greatest Contributors to a Customer-centric Culture

(Rank-ordered, with 1 being the least contributor)

2.2

2.2

3.3

Frequency of Response2 4 61 3 5

Enabling technology 3.7

Executive-level support 4.5

Visionary leadership 4.8

Strong organization history incustomer-centricity

5.2


processes with the right thing for the customer. For example, lands’ end accepts returns with its “Guaranteed. Period.”® credo. The company accepts any return for any reason at any time. air products and chemicals has trained employees to recognize and deliver services and experiences that customers need and value. harrah’s employees greet customers with, “Good luck!” and take every opportunity to make their valued customers feel special, and cisco takes pains to empower customers to be able to serve themselves. caterpillar financial deeply understands its customers’ business processes and aligns its processes and metrics around those of its customers.

Each company’s founder and/or current leader also believes in putting customers’ priorities at the top of the corporate strategy agenda, in bathing the organization in continuous customer input and feedback, in empowering and supporting employees and channel partners to meet and exceed customers’ expectations, in investing in customer-impacting technologies, and in monitoring and improving the quality of customers’ experience with the brand—in people, products, services, and processes. All partners exhibit a culture and values based on the principle that a customer-centric company—one that cares about the quality of the customer experience—delivers higher value to customers, employees, and shareholders.

linking of customer experience to brand promiseThere is a strong correlation in most organizations between the brand image that

the organization wants to project to its customers and prospects and the customer experience the organization delivers. The customer experience/brand marriage is reflected in the corporate culture. Organizations that are successful in delivering a great customer experience have strong brands that are supported by corporate cultures in which the customer experience is recognized as part of the brand differentiation.

In an era of tough competition, the customer experience/brand linkage combined with a strong customer-centric culture provide the competitive differentiation that today’s organizations seek.

lands’ end provides a good example of establishing and nourishing a customer-centric corporate culture. Founder Gary Comer put customers at the center of corporate strategy from the beginning.

Lands’ End’s customer-centric culture has survived the departure of its founder and its merger with giant retailer Sears. The current management team and its employees have the Lands’ End customer-centric culture so deeply ingrained in them that it has already permeated parent company Sears.

Figure 2 shows three of the “Lands’ End Principles of Doing Business,” which demonstrate the company’s customer- and employee-centric culture.

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figure 2: the lands’ end principles of Doing business4

1. We accept any return, for any reason, at any time. our products are guaranteed. no fine print. no arguments. We mean exactly what we say: guArAnTEEd. PEriod.

2. We ship faster than anyone we know of. We ship items in stock the day after we receive the order. At the height of the last Christmas season the longest time an order was in the house was 36 hours, excepting monograms, which took another 12 hours.

3. We believe that what is best for our customer is best for all of us. Everyone here understands that concept. our sales and service people are trained to know our products and to be friendly and helpful. They are urged to take all the time necessary to take care of you. We even pay for your call, for whatever reason you call. 4 ©1992, Lands’ End, Inc. All rights reserved.

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cisco systems provides another example of an organization that has established and nourished a customer-centric corporate culture at the highest levels. As stated by John Chambers, CEO, the company views customer success as the foundation of its culture:

“Customer success is not only a personal passion of mine, but our first priority as a company. No matter how good we are, the one thing that can bring us down is getting too far away from our customers. I’ve seen it happen time and time again, which is why we take a fanatical approach to customer success and view it as the foundation of our culture.”

— John Chambers, CEO

Cisco really “walks the talk” when it comes to customer experience: 100 percent of Cisco badged employees’ annual bonus is dependent upon meeting Cisco’s customer satisfaction goal (the criteria may vary by grade level, however). Performance-to-goal is accessible to all employees 24 hours per day, seven days per week via the intranet.

Figure 3 summarizes the customer-centric values discussed by the best-practice partners at their site visits.

Key Finding:Best-practice organizations empower employees to understand and anticipate customers’ needs and to delight customers.

Employees at study best-practice organizations are empowered, both to take actions on behalf of their customers and with information about customers in order to more efficiently serve them. lands’ end is an example of a company that encourages employee empowerment to understand and anticipate customer needs and delight customers. The company’s culture is based equally on customer service and an employee focus. Employee input and involvement is relied upon heavily in corporate decisions. Lands’ End’s employees are true customer advocates: They are encouraged to take whatever time necessary to resolve a customer’s question or issue. They understand their customers so well that customer service representatives serve as proxies for customers’ needs and reactions during any new product design and/or process improvement effort in the company. In addition, Lands’ End invests heavily in employees so that they can anticipate and address customers’ needs. For example, the company’s detailed product training enables a sales associate to fit the correct polo shirt to the lifestyle needs of each customer and/or to anticipate which style of clothing will be most appropriate. Employee empowerment and a collaborative work environment are key factors contributing to the resulting high employee tenure/low turnover at Lands’ End.

figure 3: customer-centric Values at best-practice partners

air products Consistently provide the customer only the and chemicals products and services they truly value.

caterpillar delight customers by understanding and financial exceeding their expectations.

cisco systems “We take a fanatical approach to customer success and view it as the foundation of our culture.”

harrah’s Focused on building loyalty and value with its entertainment valued customers through a unique combination of great service, excellent products, unsurpassed unsurpassed distribution, operational excellence, and technology leadership.

lands' end believe that what is best for our customer is best for the company.

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At caterpillar financial, employee empowerment begins with the Shared Values statement of the Business Excellence Model, “freedom and responsibility to exceed expectations of those we work with and serve,” and is translated into action by:• agility in serving customers,• financial authority, and• flexibility in employee policies and freedom in daily management.

Empowerment in serving customers at Caterpillar Financial is reflected in the authority given to employees to develop flexible customer solutions. Also, the performance development process cascades responsibility for serving customers and accomplishing the strategic plan to every employee. Caterpillar Financial cites authority given to employees for credit approval, documentation, and funding as examples of financial empowerment.

At harrah’s, approximately 350 personal hosts are assigned to the best customers and are empowered to ensure that these customers have a VIP service experience. Hosts are specially trained for their interactions with these customers and are supported by software that provides a complete customer view. Harrah’s is taking this to the next level with operational customer relationship management. The purpose of this initiative is to (1) integrate historical and current data in real time using an active data warehouse and real-time information (customer history, current play data, Total Rewards tier, VIP code, available offers, location, etc.); (2) develop event monitors and real-time triggers (possibly including a real-time business rules engine, lucky and unlucky triggers, approaching profile play, and VIP interaction alert); and (3) deliver offers and interactions to the gaming floor. In essence, Harrah’s employees will be able to leverage all the data captured on its most important customers in real-time in order to surprise and delight customers on the gaming floor.

The role of the agent in cisco’s Customer Interaction Network is to take ownership of calls on first contact; agents are empowered to achieve one-call resolution. To drive that goal, a metric shift from time on the call to the value of the call has taken place. For example, how long a customer stays on the line is no longer a metric; what is important is the agent going the extra mile to get the customer’s problem resolved, as well as to show the customer how they can self-serve to handle the same kind of issue in the future.

In addition to being empowered to take actions on behalf of their customers, employees at the study best-practice partners are empowered with information about customers and their contexts. For example, air products employees maintain comprehensive customer account plans that are managed on an ongoing basis and that detail information on important customer accounts. In addition, a sales force automation tool provides contact information and other background data for customer-facing employees to use to learn more about customers.

At harrah’s, a customer-focused, data-driven approach is core to the organization’s strategy. The company uses a Teradata warehouse to provide one view of the customer and one account to its employees for a seamless, consistent customer experience across

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properties and across access channels. Access to the data warehouse is provided to all key customer contact employees. Comprehensive customer information is housed in the data warehouse, including which offers that a customer has received, which properties they have visited, what restaurants they have patronized, and what comps they use.

lands’ end employees have a comprehensive view of the customer’s account (purchase history, behavior, customer survey results, etc.) as long as it is within their job responsibilities.

caterpillar financial’s philosophy is that, as a service organization selling the most generic of commodities—money—the effective use of information allows the organization to add value to the basic commodity they provide to their customers. To accomplish this, Caterpillar Financial’s systems fully support the key core processes and support processes and allow access to users, dealers, employees, and suppliers. For example, CustomerExpress, Caterpillar Financial’s customer relationship management software, provides employees and dealers one convenient portal to the full array of customer information.

cisco customer service agents use a knowledge-based Web portal called ISAAC, which streamlines access to information documented through many years of operation at Cisco, to leverage previous answers and solutions and resolve customer issues and questions.

More information about the specific software used by the best-practice partners to facilitate a consistent customer experience is detailed in Chapter 4 of this report.

As will be further discussed in Chapter 3, best-practice partners have made a strong linkage between employee satisfaction and customer satisfaction. Employees are surveyed regularly to ensure that they are feeling satisfied, empowered, and supported.

Key Finding:Best-practice organizations ensure that employee recruitment, training, and performance management all focus on customer experience delivery.

Good customer experience starts with empathetic employees who are naturally inclined, trained, and motivated to understand customers’ needs and who are empowered to help customers achieve their desired results.

recruiting and retaining customer-friendly employeesStudy participants list the top factors considered in recruiting employees to

deliver a positive total customer experience as communication skills, empathy/ability to relate to customer issues, risk taking/willingness to go the extra mile, and sense of humor (Figure 4, page 22). Recruiting new hires with the “right” customer service skills is important. For example, air products has created internal job competency profiles to identify the necessary skills—from a behavioral perspective—for its employees to effectively execute their job responsibilities. These competencies are

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divided into commercial experience, communication skills, and technical skills. Harrah’s hires people able to provide excellent service. Decision makers in the hiring process rely on personality tests, and they test communication skills, levels of empathy, and the ability to relate to customer issues. At cisco, quality customer service begins with creating an appropriate job profile for the CIN agent, whether in-house or outsourced. The job profile should clearly articulate the necessary job skills and requirements to provide a good customer experience. The recruiting function was very involved in ensuring the profile was effectively created as well as utilized. Once candidates are identified and hired, they complete a comprehensive training program.

Factors Included in Recruiting Employees to Deliver a Positive Total Customer Experience

In addition to employee empowerment discussed earlier, best-practice partners endeavor to retain their customer-friendly employees through an investment in training, open communication with employees, an “open door” culture with senior management, and various employee recognition programs. At lands’ end, for example, recognition, collaboration, and communication are a focus to foster customer-friendly, empathetic employees. Management has an

open-door policy and is committed to meeting with an employee within 24 hours when they have an issue that they need to discuss. Lands’ End utilizes multiple communication channels to keep employees informed and address any concerns; these include quarterly meetings with the CEO, communication meetings for both hourly and salaried personnel, distributing information via the company intranet (LEnet), department meetings, and the company newsletter (Common Threads). The company advocates both formal and daily employee recognition. For example, longer tenured employees are formally recognized (such as through 10-, 20-, and 25-year celebrations and the “20+ club”); on a daily basis, Lands’ End leadership recognizes high-performing employees through leader recognition kits (thank you, congrats, birthday), the Leaders Corner, celebrations of key milestones/completion of projects, and spot bonuses. As a result of stressing the importance of employee relationships, Lands’ End was able to re-enter the “100 Best Companies to Work For,” as ranked by Fortune magazine in 2002.

No response

Other

Psychometric tests

Figure 4

Partners (n=5)

Factors Included in Recruiting Employees to Deliver a Positive

Total Customer Experience

20%

0%

0%


Intelligence tests 0%

Personality tests 20%

Sense of humor 60%

Risk-taking/Willingness togo the extra mile

60%

Empathy/Ability to relate to customer issues 100%

Communication skills 100%


cisco encourages teamwork and collaboration in its employees in order to deliver the best solutions to customers. The “Teamwork across Cisco” recognition program is one of several programs that reinforce cross-functional employee collaboration. The purpose of this program is twofold.1. It provides opportunities for high-level exposure (theatre- and organization-wide)

for teams that have produced successes for Cisco.2. It highlights cross-functional teamwork and collaborative behaviors and provides

a way for all employees to share knowledge, experiences, and successes.

The CEO and senior leadership recognize teams through different media and at various events during the year including the company and all-hands meetings. The experiences of the quarterly finalists are shared with the entire organization through the Cisco Employee Connection, the “Teamwork across Cisco” Web site, and senior leadership Web sites. These stories are communicated so that every employee and manager has clear examples of cross-functional teamwork and collaboration. In addition, each member of the quarterly winners receives a desktop award to commemorate this event. Then, at the end of each fiscal year a “Team of the Year” is selected and a $5,000 charitable contribution is made in the team’s name.

Performance management for CIN agents focuses on customer experience delivery by rewarding agents on their cross-functional ability, on the number of skill sets they posses, their availability, and overall customer satisfaction. These agent measures are important for Cisco as they focus on value add and the contribution of quality feedback.

Cisco has also been formally recognized by an independent party for its employee-friendly practices. The company was No. 28 on Fortune magazine’s 2004 “100 Best Companies to Work For” list.

training customer-friendly employeesEighty percent of partners state that they engage in formal customer experience

training for their employees. Types of customer experience training listed by participants included:• customer segmentation training,• soft-skills training,• customer issue training,• new hire training,• customer satisfaction training,• customer role-play, • role-specific skill-based training,• sales training,• technical/internal operating system training,• one-to-one coaching,• training on first-time resolution,• direct customer observation, and• company-specific special training programs.

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Employee training and motivation at the best-practice partners focuses on customer experience delivery. For example, harrah’s engages in two types of training to ensure employees deliver a consistent and positive customer experience: (1) focus training that is centrally developed and consistent throughout the company and (2) daily buzz sessions that communicate just-in-time information to the employees such as which customers will be arriving on property each day and what types of questions they can expect customers to ask during the day’s shifts. Buzz sessions also include updates on the group’s performance ratios. (Front-line employees have performance ratios that link behavior, measurement, and reward.) In addition, every employee at Harrah’s receives a basic education about the Total Rewards loyalty program. The customer service director educates the front-line employees about customer tiers so that they can deliver on the desired customer experience for each tier (for example, Diamond customers are more valuable customers to the company and therefore receive a better customer experience) but not necessarily about the specifics of customer segmentation, as this is detailed and might be confusing.

Employees play a pivotal role in managing the branded customer experience at air products and chemicals. Therefore, the company stresses the importance of training employees to support the goal of implementing the customer segmentation strategy and to deliver against the company brand. Segmentation training for customer-facing employees includes up to eight hours of classroom training combined with learning applied on the job. The size of the training session does not exceed 20 participants, and Air Products provides job aids to support the application of role-appropriate behaviors. Branded customer segmentation training teaches the desired behaviors for segmentation champions and role models in the new segmentation strategy. In this training, subject matter experts are sometimes utilized to support materials development.

lands’ end also believes in the criticality of employee training to deliver a consistent customer experience, regardless of which customer service representative a customer speaks with, and to ensure employees have the necessary product knowledge to assist customers with their orders. Employees are encouraged to wear, touch, and feel the clothes so that they can convey product expertise to customers. New employees receive approximately 77 hours of training. The training is conducted daily for six to seven hours a day, over two to three weeks. Approximately 10 hours are spent on product training, 17 hours on service training, 20 hours on systems and process training, and 23 hours of handling live calls along with a trainer to provide support if needed.

In order to keep current employees updated and “in the know,” two to three hours of continuing training are provided on a monthly basis to anyone with customer contact. This training covers anything new appearing in catalogs, as well as systems training. Additionally, company leadership also receives continuing training on a monthly basis. Approximately one and a half hours per month is spent developing consistent leaders by focusing on coaching techniques, preserving the company culture, and aligning communication with strategic initiatives.

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importance of employees in managing the total customer experience reinforced through performance management systems

Study best-practice organizations not only hold executives accountable for the customer experience via a link to compensation, but also hold other employees accountable in this fashion (Figure 5). For example, at Cisco Systems, the incentive compensation for all employees (not just customer-facing) is influenced by customer satisfaction results.

At Harrah’s, the results of the customer satisfaction surveys also impact employee compensation directly. Although 75 percent of the corporate bonus is based on operating income or revenue, 25 percent of the property bonus and 10 percent of the corporate bonus is determined by the customer service scores. The reward for high customer satisfaction is tangible to front-line employees: Each can earn up to $200 per quarter based on his or her property’s performance. Each week, employees receive a detailed customer service scorecard broken down by tier and type of service (e.g., food and beverage, reception, etc.) showing the company’s performance.

To foster employee camaraderie and ensure that the total customer experience is positive, employees receive bonuses based on the entire property’s performance, not on their individual performance. However, the company can analyze customer satisfaction results on a department-by-department basis and compare across departments.

In general, 60 percent of partners indicate that executives are held accountable for the customer experience through a direct link to compensation (Figure 5).

Key Finding:Best-practice organizations empower dealer/channel partners to understand and anticipate customers’ needs and to delight them.

Some study participants sell and service their products/services through third-party avenues, such as partners, dealers, agents, and resellers (Figure E.3, page 12). It can sometimes be challenging to ensure a consistent customer experience via these third-party channels, especially if the third party sells and services other brands and if your organization has little to no control over the third party. Best-practice partners have attempted to overcome this challenge by empowering their dealer/channel partners to understand and anticipate customers’ needs and to delight them.

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Other

Linked to employee rewards (non-monetary)

Linked to compensation

Figure 5

Individuals (n=5)

Mechanisms for Fostering Accountability for the Customer Experience

0%

13%

86.7%


Executives (n=15)

0%

46.7%

46.7%

Linked to role-specificobjectives

40%

Linked to positiverecognition 93.3%

20%

20%


air products and chemicals has formed a Distributor Advisory Council to help ensure a consistent customer experience with its distributors. The purpose of the Distributor Advisory Council is to improve the relationship between Air Products and the distributors in order to accelerate mutual profitable growth. The council consists of managers from the distributors, a sales manager, the distributor manager, a senior representative from the technology department, and a marketing representative. This council is an advisory council, not a policy making council. The council provides input into the definition and implementation of work processes, services provided, and the brand experience. This council meets twice a year and provides a forum for the sharing of best practices. Air Products also utilized the council meetings to ensure a consistent brand experience for all customers through the network of distributors. Distributors are expected to share the same tenets of the company brand—understanding, integrity, and passion—as well as the same commitment to the product line. The company wants customers to associate the Air Products name with all their distributor interactions.

Dealers are at the heart of caterpillar financial’s service delivery. Having the territory manager co-resident in each dealer’s location ensures that the company can support its dealers in listening to, understanding, and even anticipating customers’ needs along with the dealer.

lands’ end was purchased by Sears in 2002, and Lands’ End clothes can now be purchased in Sears retail outlets. To facilitate the Lands’ End customer experience in Sears stores, Lands’ End began an “Ambassador” program, whereby Lands’ End employees were placed in select Sears stores to train Sears personnel on the product lines. This has resulted in positive feedback from customers, as well as an increase cisco systems surveys both direct customers and indirect customers (customers that access the company’s products via resellers) to measure satisfaction with the customer experience and to facilitate a consistent customer experience. Cisco’s resellers and system integrators are heavily supported and empowered through both self-service and employee-assisted channels such as Cisco’s innovative ISAAC knowledge base and its global Customer Interaction Network.

While harrah’s does not deliver its services through channels per se, the corporate philosophy is that when engaging in acquisitions (such as the recent acquisition of Harveys), one of the first activities that the organization undertakes is to implement the underlying technology so that the new properties are tied into the existing properties’ customer knowledge and loyalty program. Customers have one account, which is linked to one customer database, so that their treatment at different properties is consistent, and they are encouraged to visit multiple properties in order to continue to earn rewards points (cross-market play).

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Key Finding:Best-practice organizations empower customers to provide valued input and to help shape company priorities.

The study team found that the best-practice partners are not just customer-centric; they are customer-driven. Customers’ priorities around products, service delivery, and the customer experience shape the company’s strategy.

For example, in response to feedback from customers in focus group sessions, harrah’s revamped its Total Rewards customer loyalty program in June 2003. The new rendition of the program remains profitability-based and is called Total Rewards II. Company leaders researched extensively before making the changes to Total Rewards. They conducted focus groups and created sophisticated models for each segment. They determined that customers wanted control of their accounts and visibility of the program; it was mysterious and complicated before. Total Rewards II gives the customers complete insight into how they earned a reward credit and how much they have in their accounts. Now the program is completely bankable and portable. The change has been well received by customers.

caterpillar financial also serves as an example of an organization that considers customer priorities as a key factor in corporate strategy setting. From a corporate strategy-setting standpoint, all strategies, action plans, and individual goals are evaluated based on their impact on customers and linked to specific critical success factors in Caterpillar Financial’s Business Excellence model (one of which is customer satisfaction: “We must delight our customers by understanding and exceeding their expectations”) in order to ensure that key stakeholder needs are deployed through every level of the organization. At a more granular level, the needs and expectations of Caterpillar Financial’s three key customer groups (users, dealers, and Caterpillar business units) are systematically captured through a variety of customer listening posts (such as surveys, focus groups, industry councils, etc.) and used as a key input, along with key core process performance data, to divisional SWOTs and planning workshops at the Annual Leadership Conference. (The Annual Leadership Conference is a week-long session conducted each June in which overall corporate strategies are translated into preliminary division and support department strategies.)

Key Finding:Best-practice organizations enable customers to manage their own relationships.

In addition to being customer-driven, best-practice organizations empower customers to manage their own relationships with the organization and to self-serve. Prospects and customers interacting with best-practice organizations are proactively empowered through a variety of self-service and tightly integrated assisted-service channels to transact business, track status, answer questions, and resolve problems.

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As illustrated by Figure 6, best-practice partners provide customers access to a variety of information, most notably unique account identification, access to current orders and transactions, access to and update of customer information, and access to past orders and transactions.

As illustrated by Figure 7, three out of five best-practice partners indicated that they are able to provide real-time, self-service capabilities to customers regarding product/service purchase; product usage, training, or guidance; and product delivery status.

lands’ end, as an innovator in online retailing, provides a variety of support mechanisms for customers to self-serve, including the ability to change the customer’s account profile, “ship to” addresses for all of a customer’s family members and giftees, status tracking, and the ability to change or cancel an order in progress. Customer self-service at Lands’ End is supported by Lands End Live™, a collaborative Web chat feature whereby online customers work with a Lands’ End representative through live text chat.

Customer self-service at Lands’ End goes a step further than the traditional through a program called Lands’ End Custom™, whereby online customers can

easily design their own clothes and have them custom made to their specific size requirements. Lands’ End Custom™ is powered by “smart” sizing software, which compiles consumer size data, self-assessment information, and garment choices to produce a fit prediction. The software then uses this information and tests it versus the historic consumer size database. The result is then a pattern generated for the specific selection. The cost range for this service is $49 to $79, which the company feels is very competitive. The overall result of Lands’ End Custom™ has been profitable growth through new consumers, deeper relationships, and higher customer lifetime value.

Lands’ End has a rather unique philosophy regarding customer self-service: to “meet the customer in their channel of choice,” be it online, in a face-to-face retail environment, or over the phone. In other words, the company does not push customers to the less expensive (for the company) online environment and, furthermore, makes a live customer service representative easily accessible to Internet customers. (The company’s toll-free phone number is visibly placed on each page of its Web site.) This is a refreshing attitude in an online atmosphere, where customers are often routed to the company’s channel of choice.

Examples of customer self-service opportunities abounded at the site visits to the best-practice partners (and more detail can be found in their site visit summaries); for example, caterpillar financial’s FinancExpress allows users and dealers to initiate

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Access to customer service incidents

Consistent view on allinteraction channels

Customer preferences andpermissions

Figure 6

Partners (n=5)

Types of Customer Information Available to Customers

60%

60%

60%


Access to bills and invoices 60%

Unique contact identification 60%

Access to product/accountinformation across product lines 60%

Access to past orders/transactions

80%

Access to and update of customer information 80%

Access to current orders/transactions 80%

Unique account identification 100%


their own quotes, credit application, and documents 24 hours per day, seven days per week, and AccountExpress provides users and dealers the ability to access and maintain their account records online.

Key Finding:Best-practice organizations bathe their organizations in actionable customer information.

Best-practice organizations gather, analyze, and act upon customer feedback on an ongoing basis from a wide variety of customer touch points. They also strive to integrate disparate sources of customer input and feedback into a holistic customer experience measurement and management framework that is integrated into a balanced performance management scorecard. They bathe their organizations in focused customer input and feedback.

Detailed questionnaire responses from partner organizations indicate that the most used mechanisms to capture customer feedback are satisfaction and loyalty surveys (used by all five partners); followed by logging of customer support and service calls and incidents (four out of five); focus groups; regular debriefs of front-line customer personnel; input into a shared repository by field sales; and reviewing e-mails, regular mail, and/or suggestion cards and categorizing issues (three out of five).

Three out of five partners collect feedback from non-customers as well, primarily via focus groups and satisfaction and loyalty surveys. Not surprisingly, all partners and route customer feedback information back to the appropriate organizational process owner for continuous improvement of the process, in summary and raw data form. All partners have taken steps to link this customer feedback to behavior.

caterpillar financial has a very holistic, integrated framework for gathering and reporting voice of the customer information. The company uses a variety of customer listening posts—from e-mail to phones, from executive sponsors to territory managers to dealers, from incident-based surveys to annual surveys—which are linked, analyzed, and reported back to the appropriate process owners in order to take action for process improvement.

harrah’s sends out 1 million customer surveys each year (and gets 350,000 back) after customers visit a property and/or interact with the company. Harrah’s feeds customer feedback and input to each property manager, who, in turn, shares that information with all employees and sets priorities daily. All customer surveys are centrally coordinated and analyzed and correlated directly to the individual customer.

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User profile management

Change of customer information

Product/Service selection

Figure 7

Partners (n=5)

Percentage of Organizations Able to Provide Real-Time,

Self-Service Access

40%

40%

40%


Account status inquiry 40%

Product/Service information 60%

Product delivery status 60%

Product usage, training, or guidance 60%

Product/Service purchase 60%


Harrah’s can monitor very precisely the relationship between customers’ survey responses and feedback on a variety of interaction touch points and life cycle stages, with customers’ actual spending and referral behavior.

cisco has a holistic and comprehensive customer information gathering and application framework. Cisco uses both general/comprehensive customer loyalty and satisfaction surveys to calibrate how the company is doing overall, as well as incident-based customer surveys that are administered after customers interact with the company to resolve an issue, buy a product, get information, and/or manage their accounts. Customer feedback and input is fed directly back to employees based on their jobs and roles in the company. Customer feedback and input is updated and reported continuously. Employees can see how their team/role/function is doing on customer satisfaction and loyalty 24 hours per day on the intranet. Employee rewards and recognition (including performance-based pay) are linked to meeting or beating customer loyalty goals.

Key Finding:Best-practice organizations align the company and culture around customers’ needs and customers’ processes.

All partners have defined what their core processes are, and four out of five have mapped these core processes against the customer experience. Almost all have redesigned business processes to improve the quality of the total customer experience. The most common processes redesigned include problem resolution, customer handoff/transfer, and product developing and packaging and/or launch (Figure 8). Eighty percent of partners have instituted a process to continually monitor the impact of redesigned processes on the total customer experience. Sixty percent of partners have implemented an employee suggestion program designed to feed customer experience changes.

For example, caterpillar financial aligned its internal processes around its customers’ processes—these are referred to in the company’s Baldridge application summary as Key Core Processes (KCPs).5 In order to accomplish this, the company’s business process improvement team began by mapping out the life cycles for customers in all of its industry segments. The team discovered that although customers’ financing needs,

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Other

Process classification framework

Lead-to-order

Figure 8

Partners (n=5)

Process Redesigned to Improve the Quality of the Customer Experience

20%

20%

20%


Quote-to-cash 40%

Billing 40%

Returns handling 60%

Product repair 60%

Product development and packaging and/or launch 80%

Customer hand-off/transfer 80%

Problem resolution 80%

5 See company’s Baldrige application summary for listing of Key Core Processes.


equipment usage, and context varied greatly by industry, the actual life cycle stages and the processes within each stage were very similar.

At cisco, the first step taken to improve the customer experience was to identify key business processes (Figure 9). In order to make the company more efficient, streamlining processes was a priority. To accomplish this goal, the Business Process Operations Council (BPOC), a corporate council made up of select executives, identified necessary key processes. The council has representatives from all Cisco service lines who are tasked with analyzing processes across the enterprise. Additionally, the company created a common front-end support organization across all customer-facing functions. The main questions that Cisco had to answer were how to streamline the customer interface to ensure that the key processes were going to work and how the customer interaction at the first level would be aligned with the optimization of the processes.

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cisco customer experience: common first-line support

ideato

offering

Figure 9

marketto

sell

Quoteto

cash

issueto

resolution

forecastto

Delivery

• research to concept• Concept to commit• design to prototype• Validate to ramp up• Monitor to improve• improve to EoL

• research to market identification• Market identification to plan• Campaign to lead• Lead to order• Account strategy to relationship

• Quote to order entry• order validation to commitment• delivery to revenue recognition• invoice to cash• Contract to renewal

• source to buy• Forecast to plan• Plan to build• ship to receive/install• Commit to deliver service

• issue detection to problem identification• develop solution to resolution• return to replace• Closed loop feedback

common front end support organization across customer facing functions

customer


Key Finding:Best-practice organizations make customers’ priorities their priorities in monitoring and managing performance.

Best-practice organizations use voice of the customer input and their own understanding of customer-critical processes to pinpoint areas for improvement. For example, caterpillar financial identified key metrics to meet or exceed for each of its customer-critical processes.

lands’ end monitors the time from order placement to product delivery; turnaround time on customer questions received via e-mail; and metrics that revolve around the customer experience at the contact center, such as service level, occupancy rate, call volume and handle time, and call abandonment rate.

A common customer-driven priority for all partners is first-contact resolution. No matter how the customer chooses to interact with the organization—by phone, Internet, e-mail, direct sales, telesales, dealer representative—and no matter what stage of the customer life cycle, a top customer priority is to get the right answer or resolution in a single interaction.

While 80 percent of the best-practice partners track first-contact resolution, few organizations were willing to share their actual first-contact resolution numbers in their detailed questionnaire response, so general observations about the actual rates are hard to make. Average first-contact resolution rates at the three partners who were willing to share this information in the detailed questionnaire were in the low- to mid-90 percentage range.

Best-practice organizations strive to provide first-contact problem resolution. No matter what touch point or channel the customer chooses or what stage of the customer life cycle (planning, exploration, decision making, purchasing, usage, upgrades, renewals, account management, problem resolution)—the partners’ goal is to answer their question or resolve their issue satisfactorily in a single interaction. For example, a primary goal of the cisco systems Customer Interaction Network is to create a one-stop shop for customers to answer their questions on their first contact with Cisco.

In another example of a company making its customers’ priorities its priorities, Caterpillar Financial identified its customers’ most critical scenarios and a handful of key customer experience “moments of truth”—the “rubber-meets-the-road” points that are most important to customers, along with the particular attributes that customers cared about for each one. For example, the company set and monitored specific metrics for turnaround times for the moments of truth that mattered most to customers such as: receive a finance proposal promptly, receive credit approval promptly, receive accurate documents and correct funds in a timely manner, receive requested modifications quickly, and complete payoff promptly.6

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6 Source: “Caterpillar Financial MBNQA Application Summary.” www.cat.com (retrieved April 2005).


Key Finding:Best-practice organizations have visionary customer-centric leaders who believe that a high quality customer experience engenders customer loyalty and improves customer and company profitability.

“I will never be critical of any action you take on behalf of a customer.” — Gary Comer, founder, Lands’ End

This study found that the CEO and/or founder at best-practice organizations is a prime supporter of the customer experience. For example, Gary Loveman, current president and CEO of harrah’s entertainment, was the original driver of Harrah’s customer loyalty and tiered customer experience program and strategy. Before joining Harrah’s in May 1998, Loveman was associate professor at the Harvard University Graduate School of Business Administration, where he taught service management in the M.B.A. and executive programs and worked with James Haskett, author of the service profit chain. Loveman worked as a consultant for Harrah’s during the preceding seven years, helping to design and execute its executive development and education programs. The arrival of Loveman to Harrah’s catalyzed changes in the corporate marketing group, where critical pieces of the customer experience (including the loyalty program, customer promotions, and direct mail campaigns) are owned. He brought on a new vice president of relationship marketing (now senior vice president of relationship marketing). A key metric that Loveman and his reports rallied around in 1998 was consolidating play: At the time, customer satisfaction data revealed that Harrah’s was earning only 36 percent of its customers’ gaming budget. Harrah’s effort to consolidate its customers’ play through its customer loyalty program and other initiatives has resulted in the company earning a 10 percent increase in share of gaming budget in 2004.

air products and chemicals’ founder Leonard Pool based his company on providing a value-added service to customers—on-site provisioning of gases to its industrial clients, a breakthrough service in the industry at the time.7

lands’ end founder Gary Comer codified the company’s commitment to excellent customer service from the beginning in “The Land’s End Principles of Doing Business” and instilled this commitment as an integral piece of the corporate culture. These eight principles shape the way business is conducted throughout the various departments in the organization, including the fundamental belief that “what is best for the customer is best for everyone.” While the founder was a great supporter of the customer experience at Lands’ End, all employees throughout the organization are tasked with the responsibility of promoting a positive customer experience, so there is no champion specifically responsible for driving change toward a customer-oriented culture within the organization.

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7 Source: www.hoovers.com (retrieved November 2004)


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While CEOs at best-practice partners are prime supporters of the customer experience, the customer experience champion tends to be a high-level executive who reports to either the CEO, president, or an executive or senior vice president.

Key Finding:Best-practice organizations have integrated the customer experience into the framework of their operations at every level.

Best-practice organizations have integrated the customer experience into the framework of their organizations’ operations. The executive team sets the tone, priorities, and culture. Voice-of-the-customer information arrives from all touch points and is fed back into operations at various levels in the organization: to employees, to business unit managers (on a frequent basis), to division managers (usually on a monthly basis), and to the operating committee (who review these performance metrics quarterly or semi-annually). Customer feedback, satisfaction, customer loyalty, and key metrics are usually incorporated into the company’s performance management systems. An operating committee or steering committee reviews customer issues, customer metrics, and customer satisfaction and loyalty scores and trends.

the role of executive steering committees and other executives in the customer experience

Executive steering committees/business councils at several best-practice partners provide a forum for a high-level discussion of the customer experience/customer service. For example, at harrah’s, the CEO, as the champion, discusses the customer experience in monthly meetings. The chief operating officer, who is ultimately accountable for the customer experience, hosts weekly meetings on the customer experience scores with the operations leaders. Finally, each individual Harrah’s property has its own customer service director, and these individuals meet daily to talk about customer experience issues. The customer experience is also discussed at weekly and quarterly executive committee meetings. Each quarter, the company’s marketing council meets. It is chaired by the CEO and comprises marketing leaders from throughout the company. Harrah’s has models to identify individuals with the potential of becoming very profitable gaming customers, and marketing leaders from throughout the company discuss how to provide them with differentiated service within the Total Rewards program. The senior vice president of relationship marketing manages the Total Rewards customer experience program, while the vice president of brand operations is responsible for the quality of the service experience.

At caterpillar financial, customer satisfaction is one of the six critical success factors discussed at the monthly Business Excellence Council meetings. (The council is a cross-functional decision-making body represented by high-level corporate executives and chaired by the president.)


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the importance of the customer experience recognized at the highest levelsThe commitment of lands’ end’s founder to customer experience and the

organization’s recognition of the importance of the customer experience at the highest levels has already been discussed. In another example, at caterpillar financial a discussion of the results from the various customer listening approaches is conducted on the first day of the Business Excellence Council’s semi-monthly meetings. At harrah’s, the vice president of service operations reports on customer satisfaction and how the company is rallying to serve the customer at quarterly operating committee meetings.

In general, study participants indicated that the customer experience is most often talked about at monthly executive committee meetings and through sharing customer stories and sharing and discussing customer experience surveys.

central coordination/planning; Distributed, field-level implementationAt harrah’s, customer segmentation and segment-specific marketing campaigns

and reporting is centralized, but the customer experience is delivered at the property level. Some marketing campaigns are also handled out of the property. There is a property customer service director at each casino that monitors the quality of the customer experience delivered at that property. These property customer service directors report to the general managers of their properties, with a dotted line to the vice president for customer satisfaction.

lessons learned about how customer experience leaders operateLessons learned about the organizational structure and visionary leadership to

foster a positive total customer experience at best-practice organizations include the following.• Customer experience is how you deliver your brand. It is your main competitive

differentiator.• Employee empowerment, partner empowerment, and customer empowerment

are fundamental values in a customer-centric culture.• Best-practice organizations understand and streamline business processes and

policies that impact customers.• Visionary leadership and top-down support are critical.• Having a holistic operational framework around the customer experience is

important (e.g., the customer experience is monitored and acted upon at every level of the organization)—this comes from receiving customer input at all levels and frequencies and acting upon it at all levels and time intervals, as well as from making customer metrics part of organizational key performance indicators.

• Titles are not so important. Most best-practice partners do not seem to need formal customer experience roles and titles because the customer experience has been operationalized within the company and its culture.


In Chapter 1, the study team presents a picture of how best-practice partners are focused and organized to provide the total customer experience. It discusses the

conditions that exist in such organizations—top management support, well-equipped channel partners, and well-trained employees bathed in customer information.

This chapter sets the frame in motion at a tactical level. It demonstrates what an observer would see in the daily operations as teams segment and serve customers. It highlights the decisions that customer-facing employees make one at a time as they live out the organizational strategies. It shows how employees are tearing down silos to provide seamless service. The following is what happens when customer-centric strategies are acted upon.

Key Finding:Best-practice organizations understand customers deeply, and they segment customers to anticipate and meet their needs.

Best-practice organizations invest in understanding and segmenting their customers, then they design and execute customer experiences to address the specific issues that matter most to each customer segment.

harrah’s, air products, caterpillar financial, and lands’ end segment customers to provide a customer experience that is tailored to the needs of each group. This study highlights two drivers for customer segmentation: (1) to anticipate the needs of each segment and (2) to deliver products and services differently to each segment. Some partners are driven by both.

to anticipate needsPartners use segmentation to understand and anticipate various customer needs and

requirements in order to better tailor experiences for each segment. In this context, the point is not to provide increased service or perquisites to the most valuable customers but to provide the product or service that best meets customer requirements.

c h a p t e r 2m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

What Do Best-PracticeOrganizations Do to Deliver a

Good Total Customer Experience?


In 1998, Caterpillar completed a distribution study that included research for its distribution network, users, and industries where Caterpillar products are used. From this study, Caterpillar Financial defined its industry criterion as 13 industry segments within the two primary markets that Caterpillar serves: equipment and engine. The equipment market includes mining, general construction, heavy construction, industrial, waste, quarry and aggregates, forestry, and paving. The engine market includes industrial engines, marine, oil and gas, electric power, and OEM truck engines.

Once the industry segments were identified, industry councils were created to provide a deep understanding of the customer needs, market opportunities, and industry-specific success factors for the various industry segments.

Other customer segmentation criteria include application, customer demographics, and transaction size.

air products’ customer experience program is based on customer segmentation by customer value analysis and customer profitability analysis (Figure 10). By carefully studying the needs and expectations of different types of customers across product lines, the company has been able to segment customers based on a combination of their potential for profitability, their strategic fit with Air Products, and what attributes they value, such as technical focus and innovation. Air Products was able to lower its costs-to-serve while still providing acceptable levels of service to companies in different market segments.

Air Products describes its customer “moment of truth” as revolving around understanding what each customer segment truly values at each touch point. Because the company deals business to business, customers are not just the end-users of the product: They are employees in different roles—purchasing agent, plant managers, engineers, chemists, etc. Air Products may have between 20 and 30 contacts in up to five to six functions in the client company. The organization must understand what each of these customers value and render a solution that is appealing to customers and fits within prescribed service levels for that customer segment.

lands’ end uses customer segmentation in its catalog marketing to promote children’s apparel only to customers with children or grandchildren and to promote warm clothing to people who live in cold climates. Representatives suggest light-weight clothes to customers in warmer climates and high-end items to customers who have purchased more expensive items in the past. When a representative receives a call from a high-end customer, he or she receives a prompt to inform that customer of other luxury items such as cashmere.

to Deliver products and services Differently to each segmentSome partners use segmentation to deliver different levels and types of services

to customers and to market effectively. They deliver consistent, managed levels of customer experience to different customer segments based on their current and future value to the company.

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harrah’s uses tiered levels of customer experiences to influence customer loyalty and repeat buying behavior. The more customers participate in the Total Rewards loyalty program, the greater their level of rewards and perquisites. Total Rewards identifies tiers of card holders, and the company uses the tiers to differentiate service. The Gold tier is the entry level; Platinum is the middle tier, and Diamond is the top tier. (In 2004, the company successfully created a fourth tier for extremely high-value customers, but the general public knows about the three tiers.) Harrah’s creates different levels of experiences for each; for example, Diamonds have access to a special Diamond lounge, designated lines for check-in, preferential treatment at restaurants, and faster payout if they win a jackpot. Customers aspire to reach the next level of rewards and experience.

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customer segmentation Deployed through a branded customer experience at air products

customersegmentation

Deployment

businessstrategy

Development

customerfeedbackanalysisprice and

profit management

bestpractices

customerValue

analysis

profitabilityanalysis

service levelagreements (sla)

supply chainrequirements

behavioraltraining

salesforce.com

brandpromise

profitabilityanalysis

customerfeedbackanalysis

performancemanagement

score Cardresults vs. kPisbusiness Performance

segmentation Plan Customer categories offerings business rules Channel strategy Work level activities by category Targets by category

competencyprofiles

operational TargetsLeversProduct – services hierarchy

Figure 10


In addition, Harrah’s uses detailed segmentation for its relationship marketing program, segmenting customers by age, pocketbook, type of gaming (slots versus table-play), location, and psychological profiles.

air products manages its various customer segments by established business rules that outline what services or technical support customers receive, according to their segmented category. The company simplifies its offerings, reduces complexity, and manages the customer segments by these established business rules.

lands’ end uses marketing segmentation to win back customers who haven’t shopped in a while, to send the correct catalogs to the people for whom certain products would be of interest (e.g., people with children or grandchildren, men, women, shoppers interested in linens vs. apparel, and customers in warm climates or cold climates).

Key Finding:Best-practice organizations know who their customers are and what interactions and transactions they have had with the organization.

Best-practice organizations have detailed customer profiles, customer transaction information, and interaction histories. When customers call the company, they are speaking with an old friend, even if the employee who handles the interaction has been employed by the company for only a month. When customers self-serve, they find that the company remembers more about their transactions than they do. Acting as historians of the relationship, best-practice organizations create intimacy and increase productivity because the parties do not have to repeatedly introduce themselves to one another.

harrah’s targets its most valuable customers—and they like it. Customers enjoy their service experience with Harrah’s and understand that its offers are customized based on their play level. Total Rewards provides rich incentives for customers to play.

Harrah’s customers insert their cards into a slot machine, and the system tracks how long they play and whether they win or lose. Customers hand their cards to the employees at the gaming tables, and the system tracks the average bet and length of play. Using “Web Book-It,” Total Rewards members can make hotel reservations online with their offer codes already filled in for them.

Harrah’s is investing in making transactional information even more real-time than it is today. They intend for gaming customers who walk across the street from one establishment to another with a changed status to be fully recognized.

lands’ end has a complete history of everything that customers have purchased for as long as they have been customers. It knows to whom it has sent specific catalogs and whether the customer bought from the catalog. It knows about customer issues and how they were resolved. Its customer-facing employees access the following information as they are speaking with the customer: (1) a unique account identification, (2) unique contact identification, (3) customer preferences and permissions, (4) product/account information across product lines, (5) current

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orders/transactions, (6) past orders/transactions, (7) bills and invoices, (8) customer service incidents, and (9) updated customer information.

In some mature core businesses at air products, 20 percent of customers contribute 80 percent of revenue and volume purchased. Therefore, difficult choices must be made regarding how to best segment the customer base. The number of customer segments varies from business to business. Air Products distinctly separates what does and does not qualify as segmentation. The underlying philosophy is not to treat all customers in the same way but rather to treat each segment in the same way.

Key Finding:Best-practice organizations understand what different types of customers need in different phases of the customer life cycle and tailor the customer experience for those life cycle stages.

Partners recognize that customers’ needs vary at different points in their life cycle. The study team asked partners and sponsors to name the stages in the customer life cycle during which they measure how effective their organization is at providing a high-quality total end-to-end customer experience. Results are shown in Figure 11.

harrah’s highly segmented direct marketing approach is predicated upon the customer life cycle. Customers at different stages of the life cycle receive different messages and offers from the company to increase the value of that customer to the company. For example, a direct marketing message to a new customer would focus on welcoming him or her and explaining Total Rewards.

The company uses different outreach programs and promotions for customers after their first visit to a property to create an incentive for them to return for the second and third time. Once customers have returned two or three times, their needs change again, and Harrah’s wins them back differently.

The company has discovered that attracting a customer to a Harrah’s property a second or third time is critical to solidifying the customer relationship. Therefore, the company’s offer to a newer customer may be more aggressive than an offer to a more established customer (as long as the newer customer fits into a future-value profile). Conversely, when a customer changes a pattern of behavior, comes less frequently, and then visits once, he or she is recognized immediately, and the company responds aggressively to increase loyalty.

lands’ end takes special care of its first-time customers by calling them back two weeks after their purchases. During the call, the representative ensures that the

Not applicable

Plan

Explore

Figure 11

Partners (n=5)

Stages in the Customer Life Cycle in Which Effectiveness Is Measured

20%

20%

40%


Select 40%

Renew/Replenish 40%

Use 40%

Retire/Replace 60%

Buy 80%

Maintain 80%


customer is satisfied with the order. The call-backs have proven to be successful in increasing customer retention and re-purchasing.

The customers of at least two partners (Air Products and Caterpillar Financial) are businesses, and the companies recognize that their relationships with the various roles within the customer organization (such as receiving clerk, accountant, sales representative, chief financial officer, and product consumer) are important. They have processes in place to address the needs of each person with whom they interact.

Key Finding:Best-practice organizations understand what customers care about in different contexts—what outcomes are they trying to reach and what context they are in.

Examples abound of partners who adjust their products and services based on the outcome that the customer is trying to reach.

harrah’s understands that many of its customers have an expectation about how long they want their money to last during a gaming session. The company carefully monitors the time spent and money wagered in order to respond appropriately if the customer isn’t falling within his or her entertainment profile.

caterpillar financial understands that customers in different industries and in different sizes of companies have different goals and parameters.

Understanding the context within which customers are contacting the company calls for an exceptional type of employee. cisco has transformed its representatives, who were laboring to meet customer needs one-by-one in a “necessary evil” call center, into highly skilled and knowledgeable agents who add value to each call. Through training, these agents recognize the big picture presented by the customers and the outcomes they are trying to reach. They add value to every call by educating the customer and documenting the answer for future use. In addition, they add value by selling a unique solution that, in the past, customers would have to seek out through contacting the company multiple times.

Key Finding:Best-practice organizations identify and anticipate customers’ moments of truth—what the “make or break” points are in customers’ processes.

Figure 12 lists a variety of metrics that organizations use to track improvements in the customer experience. Most partners measure the effectiveness of the customer interaction at the “moment of truth,” which is the key point of contact in which the customer can either be pleased or frustrated.

Ease of doing business with the company is important to customers at the moment of truth, and 60 percent of the partners measure customer steps reduced and customer time saved, which reflect ease of doing business. In addition, 40 percent of partners measure and manage the interactions during which the customer feels frustration and aggravation.

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The senior vice president of relationship marketing at Harrah’s noted in their site visit that sometimes customers go to other companies just to change their luck. In other words, the company has done nothing specifically wrong, but the customer is tempted to distance himself just because he can. Best-practice companies catch the customers during these vulnerable moments and give them reasons to increase their loyalty.

If a harrah’s customer is losing money at a rate that disappoints her, Harrah’s operational customer relationship management system will compensate by issuing special perquisites or by triggering a visit by a “Luck Ambassador” who can stop by to chat.

The company purposefully identifies the customers that it wants to make more loyal and targets them through direct marketing. For example, it knows that if it can attract a customer for a third visit, the customer is likely to become loyal.

caterpillar financial concentrates its efforts on the few key moments of truth that customers have made clear are the most important to them. For example, in the loan origination process, moments of truth include receiving a prompt and appropriate finance proposal, receiving credit approval promptly, and receiving accurate documents and correct funds in a timely manner. During the loan modification process, customers want to receive their requested modification quickly. During the loan termination stage of the life cycle, customers want to complete their payoff promptly. Throughout their life cycle, customers want a timely and complete response to requests.

lands’ end realizes that if customers cannot see and feel the material that a product is made from, they cannot decide whether to purchase it. The company offers swatches of every fabric (except leather, cashmere, and quilts).

Key Finding:Best-practice organizations take proactive steps to anticipate customer-impacting critical issues and to avoid them.

As previously discussed, study best-practice partners understand their customers deeply, including their customers’ critical success factors. Often times, these organizations are able to take a proactive stance with regards to any anticipated customer issues and design processes to mitigate them. lands’ end, for example, realized that customers are often frustrated by the fact that “one size does not fit all” (i.e., a size 6 purchased at one retailer may be different than the same size purchased at another

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figure 12: metrics used to track improvements in the customer experience partners participant (%) n=5

Customer loyalty/retention 100

Customer satisfaction 80

Cost-to-serve 80

Customer complaints/compliments 60

Time-to-resolution 60

moments of truth, key points of contact 60

customer steps, reduced 60

Profits per customer 60

customer time saved 60

number of customers/market share 40

Employee feedback 40

number of products per customer 40

share of wallet 40

Additional business 40

Customer frustration/aggravation reduced 40

Customer renewals 20

Customer churn 0

Customer lifetime value 20

Customer referrals 20


retailer). In response, the company created Lands’ End Custom clothing, powered by “smart” sizing software, to allow online consumers to easily and affordably design their own clothes. Customer feedback to this program has been very positive, and it has resulted in profitable growth for the company through new customers, deeper customer relationships, and higher customer lifetime value.

One of air products’ three brand tenets is understanding: The company promises that it will consistently anticipate customer needs and provide what the customer truly values. For example, in one business discussed during the site visit, supply chain performance is critical, but some commodities are resource-constrained. Air Products was able to proactively offer a “no run outs” value proposition to certain customers, who were willing to pay more to be protected.

In another example, since a significant percentage of employee incentive compensation is tied to customer satisfaction at cisco, transactional customer satisfaction surveys (“bingos”) are proactively analyzed to allow the corporation to resolve any customer issues identified in the bingos ideally before they affect the organization-wide customer satisfaction score (and thus, employee compensation).

Key Finding:Best-practice organizations measure, monitor, and improve what matters to customers.

Organizations have the capability to measure almost everything, and they can be paralyzed from taking action unless they know to focus on the attributes that customers value. Partners learn what customers value in a variety of ways but rely greatly on frequent and regular survey programs to educate them about customer needs. Following are examples of companies who have researched what customers really require to remain loyal and have concentrated on them.

harrah’s customer survey asks a key question: “Would you recommend Harrah’s?” The answer is tracked not only overall but also after any organizational or procedural change that affects the customer. This loyalty metric is linked to two organizational attributes: “wait time” and “employee helpfulness and friendliness.” Personnel from the chief executive to the front line focus laser-like on the two. The company knows how long customers have waited on the phone and at the front desk and whether they are greeted appropriately. The company generates reports by property and touch point. For example, reports can show how the Total Rewards center at Harrah’s Las Vegas is performing in terms of “friendly/helpful” versus “wait time.” The metrics are also assessed by customer segment, and an appropriate wait time for a Platinum customer may not be acceptable for a Diamond customer.

To better serve its customers and improve procedures, Harrah’s measures play time, play winnings, and rewards received. It captures metrics on customer time saved, customer steps reduced, cost-to-serve, customer loyalty, and share of wallet.

lands’ end’s measured goals include high first-contact resolution, time to answer the phone (20 seconds or within the first ring), and delivery time (within 48 hours).

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caterpillar financial’s comprehensive customer listening approaches yield both quantitative and qualitative information, which is used to determine key user and dealer requirements and their relative importance in making purchase decisions.

The chief focus of the Customer Interaction Network is first-call resolution, which is a key metric for cisco. Cisco wants its customers to receive answers quickly without the need for transfer. Agents have ownership from the first contact, not from when they receive the last transfer and not when the issue becomes more complex.

Several partners (notably air products and caterpillar financial) benchmark their customer experience measures to compare their performance to others.

Best-practice partners measure customer satisfaction and loyalty in the following ways. 1. They perform continuous incident-based customer

satisfaction and loyalty surveys at customer-critical moments of truth, so they can tell how well they are doing at these customer-critical points.

2. Partners tend to retain the identity of the customers surveyed for these incident-based surveys in order to take rapid remedial action and to correlate customer satisfaction at customer-critical points with customers’ actual buying and referring behavior.

3. Partners identify a few customer-critical metrics and educate employees about their importance so that everyone works together cross-functionally to meet or beat customers’ expectations.

The table in Figure 13 summarizes some of the customer experience measures that the partners discussed during their site visits.

The keystone of the customer experience is customer satisfaction data. All partners collect customer satisfaction/loyalty data, though they do so at intervals ranging from weekly to annually to as-needed.

Study participants recognize that measuring employee satisfaction is also important in providing a great customer experience. For example, harrah’s recognizes the intrinsic link between employee performance and customer satisfaction, and lands’ end believes that a synergy exists between employee satisfaction and customer satisfaction. It believes that the one way to ensure a consistent positive customer experience is to maintain a positive employee experience. All study participants capture employee satisfaction information, primarily via surveys.

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company

air Customer loyalty index products Turnaround time for samples

caterpillar key core process metrics, such as financial • response time to customer request for quote • Turnaround time for credit approval decision • Turnaround time to fund the loan • response time to requested customer modifications • First-contact resolution Customer satisfaction index dealer satisfaction index

cisco dashboard of metrics by call type (first-contact resolution and taking advantage of cross-selling opportunities are included): • Calls escalated • Calls handled • Calls resolved • Calls transferred • Calls dropped

Value per transaction for Cin agents Customer satisfaction by call type Customer loyalty by call type

harrah’s Consolidated play/share of gaming budget Cross-market play Customer satisfaction Customer loyalty First-contact resolution

lands’ end Answer 90 percent of incoming calls in less than 20 seconds occupancy rate of between 86 percent and 92 percent Call abandon rate of less than 1.5 percent First-contact resolution (currently 94 percent) Cost per call Call handling time delivery time

figure 13: sample customer experience measures


Key Finding:Best-practice organizations deliver a consistent and seamless branded customer experience across channels and touch points and all stages of the customer life cycle.

Providing a seamless end-to-end customer experience across touch points and throughout the customer life cycle has become a major goal for partners. Linking their brands to the customer experience comes naturally for some of the partners. lands’ end, for example, has always had a reputation for excellent customer service—service is a part of its identity, its brand. harrah’s has always realized its dependence on its loyal customers and uses its brand to build loyalty as it expands its holdings. In the early 1990s, caterpillar financial made a commitment to pursue business excellence, which required the organization to be customer-centric, so an explicit business case for managing the total customer experience was not required or necessary. Since 1998, Caterpillar Financial has used industry segmentation to ensure that customer and market focus is aligned with its business units.

Other partners recently transformed their companies to provide a branded customer experience. For many years, air products viewed the customer as king and perceived itself as being all things to all customers. The approach to customers has evolved over time to a new “one company” approach involving segmentation deployed through a branded customer experience.

The study team asked both partners and sponsors how well they link the quality of the customer experience to their brands. Partners see their customer experience definitely linked to the organization’s brands: On a scale of one (not linked) to five (highly linked), the partners’ average rating was four.

Following are some examples of partners aligning the customer experience with the corporate brand.

harrah’s has a unique relationship with each of its customers, but all customers can access the company through carefully branded touch points including phone (both inbound to customer service call centers and outbound via telesales), e-mail, the Web site (www.harrahs.com), on-site (at the casinos), and marketing initiatives (direct mail).

Most customers’ experiences involve Total Rewards. Customers sign up at no cost and earn rewards credits toward meals, rooms, entertainment, and merchandise. They can view their rewards balances and tier scores online, at a Total Rewards center in each casino, and on the slot machines as they are playing. In the casinos, customers will soon be greeted by “Luck Ambassadors” at key points in their life cycle and based on customer experience triggers (for example, if they have lost their cards).

In order to deliver a consistent branded customer experience, air products uses multiple customer touch points to reinforce its one-company approach to customer service. It realizes that a single customer may interact with direct or indirect sales, customer service, technical service, credit and collections, marketing and product management, manufacturing, and Web ordering.

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To ensure that customers have a seamless and consistent branded experience, the company created a brand architecture around the three tenets of “Understanding,” “Integrity,” and “Passion.” This architecture is referred to as the “Brand Bull’s Eye” (Figure 14). Air Products conducted a significant amount of worldwide research to create the model and solicited input from many customers throughout various segments. The interview results legitimized the brand of the company.

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apci’s brand bull’s eye

Figure 14

brand essenceLasting relationship built

on understanding

brand aimTo settle for what’s best for our

customers both in terms oftechnology and value

determination

dedication

Enthusiasm

openness

substantiators

Commitment

honesty

relationships

knowledge

They give me big company support with localcompany commitment

how it makes me feelas a customer

the bull’s eyeour commitmentsto our customers

They increasemy knowledge andmy business capability

They think aboutmy business andtreat my money asif it were their own

They look afterme well and getthings done right

They help mestay ahead

our best practiceoperates whereverwe operate in the world

brand characteristicsunderstanding, integrity

and passion

When we saysomething we do it

We push qualitystandards higher and higher involving customers and suppliers

We anticipatecustomer needswith innovativeproducts

We put great effortinto communicatingclearly abouttechnology

We give customersproposals which sayup front how we can lower costs


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Air Products links managing the branded customer experience with the brand. From a customer perspective, each principle of the brand comes with a promise from the company. For understanding, the company promises that it will consistently anticipate customer needs and provide what they truly value. For integrity, Air Products promises that it will always be true to its word. If the company commits to a promise, they promise to deliver and to do so in a safe manner. The company has been identified as one the safest chemical companies in the United States over the last five years. For passion, Air Products promises to strive to exceed customer expectations to achieve a mutual benefit. As discussed previously, the company culture now focuses on achieving a “win-win” result for the company and customer. Company commitment is predicated on the customer’s value to the company and what that customer will truly agree to purchase.

When utilizing the branded customer experience for deploying customer segmentation, Air Products has the following objectives:• delivering a consistent experience across all customer touch points (people,

Web sites, literature, etc.);• managing customer expectations by consistently delivering as promised;• creating brand equity, or preventing the brand from eroding;• creating customer loyalty and perceived value;• mitigating the risk of becoming too internally focused; and• preventing employee indifference.

The Web site for Air Products, www.airproducts.com, is a touch point for the customer and has also been part of the evolution toward providing customers with a branded customer experience.

Key Finding:At best-practice organizations, employees work together across job functions to create a “one-stop shopping” environment designed to streamline customers’ interactions with the organization.

One of the most significant findings among best-practice partners is the degree of cross-functional cooperation that has been institutionalized in order to make it easier for customers (and the partners and employees who serve them) to do business.

harrah’s invests significantly in technology to power its customer database and relationship marketing; one of the first activities that the organization undertakes when it acquires another company is to implement the underlying technology so that the new property is tied into the existing properties’ customer knowledge and loyalty program. Customers have one account, which is linked to one customer database, so that their treatment at different properties is consistent, and they are encouraged to visit multiple properties in order to continue to earn rewards points.


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When Harrah’s implemented its “Web Book-It” initiative to allow Total Rewards members who receive an e-mail offer to make hotel reservations online, they pulled together a task force of cross-property and cross-functional participants. This cross-functional, cross-property team met regularly to provide consistent answers online, in the call centers, and at the hotel properties; ideally this team handles complimentary offers, casino rates, and support rate calendars.

Because lands’ end customers use various media simultaneously to make purchases, the employees cannot operate in silos. Managers estimate that approximately 50 percent of its business is conducted via the Internet. Even though the Web site has been designed to be user-friendly and capable of completing purchases, customers choose to take additional steps. If a customer decides to contact a representative after exploring the Web site, 63 percent of the time the customer will make contact via telephone, 25 percent via e-mail, and 12 percent via Lands’ End Live. (Lands’ End Live is a feature that was introduced to customers in 1999 that allows Internet customers to work with a representative through live text chat or by clicking a button on the site that asks a representative to call back.)

Lands’ End contributes to a streamlined customer experience by making every one of its employees responsible for the customer relationship. No single person is the “champion” of the customer relationship. All employees are responsible for promoting a positive customer experience.

The company focuses on training with the understanding that employees must have the necessary product knowledge to assist customers with their orders. Training for new hires is extensive, but the company feels that ongoing product training is necessary in order to keep customer service consistent. During the training process, trainers ensure that the front-line customer service representatives literally hold the products so that they can learn about the product features and better convey product details consistently to customers.

The goal of training is for customers who contact the call centers to have the same experience, regardless of the representative who answers that call, whether the question has to do with fit or style, with billing or shipping, or with refunds or returns.

cisco has developed the Customer Interaction Network to provide one-stop shopping to customers. Before the CIN, customers would receive a different experience depending on where in the company they called in. The CIN provides a seamless and consistent experience; its purpose is to transform the front-line contact centers into a cross-functional virtual organization that increases customer satisfaction and showcases Cisco products, best practices, and the power of the Internet.

The concept of CIN has developed over time. The company looked at its various call centers; they had one agent acting reactively to the request of one customer. The call centers evolved into contact centers that empowered the customers to use other access channels. The contact centers focused on serving many customers with one answer. It educated the customer to solve his or her issues.


The next evolution was CIN, the preventative cross-functional collaboration in which a customer reaches a wider spectrum of resources with a single call (Figure 15).

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migration to a customer interaction network at cisco

call center

Figure 15

one: onereactive / responsivesilo by organization

Answer the QuestionTeach the Agents

tools for best practice:stand alone mediaiCM, global / Follow the sun

contact center

cross-functionalcustomer interaction

Many: oneProactivesilo by organization

Teach the CustomerPromote the WebMerge Call / Web

tools for best practice:interconnected MediaWeb / Phone CollaborationE-mail ManageriPCC Foundation

All: AllPreventativeCross-FunctionalCollaborative

Teach Across Contact CentersFeedback on the Webseamless Experience

tools for best practice:intelligent infrastructureiPCC Media blending / iCM v5shared Contact Portalsshared Web Tools

Value to the Customer

time

productivity

Best-practice organizations consider their channel partners as important as their cross-functional employees in the creation of a satisfying “one-stop shopping” experience. Channel partners who are poorly prepared and supported can ruin a company’s effort to provide a seamless customer experience.

While it is important to empower various channels to serve customers, best-practice partners go above and beyond empowering. Through their ongoing support, they make interacting with channel partners a seamless part of the customer experience.

Whether customers interact with air products directly, through local distributors, by going online, or by calling the company, Air Products strives to provide a completely consistent experience. Because all customers are organized into segments with service levels established and understood by both Air Products employees and its channel partners, customers receive the same answers and the same service levels.

Air Products has a network of distributors and agents that play a critical role in facing customers; they become part of the customer experience. To ensure that the experience is good, the company (1) selects its distributors carefully and (2) supports them through an advisory council.


Air Products evaluates and selects the distributor best suited for a relationship with the company. In one highly technical global business, it ensures that the distributors’ sales forces are also highly technical and consist of chemists or chemical engineers. This scientific background increases the understanding necessary to sell products to customers. Distributors who can sell products that complement the Air Products product line are also viewed as beneficial channels to market.

As discussed in Chapter 1, Air Products established the Distributor Advisory Council to foster relationships with its distributors so they can provide a branded and consistent customer experience, thereby accelerating mutually profitable growth.

For caterpillar financial, independent dealers represent a primary distribution channel. The dealers are protective of their long-term relationships with the users and want high user satisfaction, quick turnaround, fast funding, and easy-to-use processes. They rely on Caterpillar to work by their side, and they are not disappointed. Through territory managers who office on-site, dealers are well supported to represent the Caterpillar brand experience.

Key Finding:

Best-practice organizations strive for single-contact problem resolution.

As discussed in Chapter 1, 80 percent of the partner organizations measure “one-stop shopping” through their level of first-contact resolution. They ensure that the customer has to make only one contact to have a question answered, order a product, or lodge a complaint. Fifty percent of the partners report that their levels of first-contact resolution are trending upward.

High levels of first-contact resolution not only mean satisfied customers but also increased productivity—transferring customers from one area to another consumes resources. Those with high levels of first-contact resolution have improved their work flows and torn down their silos. They have created an environment in which the company is transparent to the customer, that is, the customer can easily understand how to do business with the company. As previously discussed, four of the five best-practice partners measure first-contact resolution.

In addition to striving for first-contact resolution, best-practice organizations do not leave customers wondering what happened to their product, suggestion, or complaint. The study finds that all partners have a formal process for closing the loop on outstanding issues. Partners realize that reconnecting with customers to answer questions, notify them of changes, or inform them of progress is essential to an excellent customer experience.

All of the partners use verbal communication to keep the customer up-to-date; 80 percent use written communication.

lands’ end has specific customer support representatives who are tasked with closing the loop with customers on issues such as out-of-stock items and follow-up calls to first-time buyers.

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Eighty percent of the partners have the capability of letting the employees know how the loop was closed with the customer. When agents know how issues are resolved, they are more capable of solving the same issue with a different customer more quickly and efficiently.

harrah’s first-contact resolution is tracked at the call centers and is currently above 90 percent and trending upward.

To streamline a customer’s interaction with lands’ end, call centers operate 24 hours a day, seven days a week. Operators are encouraged to spend as much time with the customer as necessary, which allows them time to converse with the customers to give them advice, cross-sell, and make sure their orders are complete. For example, if the customer on the phone or chat line needs someone to measure a garment, that employee is able to walk quickly to a central closet, locate the article of clothing, and measure any dimensions the customer needs.

Lands’ End also closes the loop proactively. The company concentrates on delivering quickly. If the company is unable to deliver an item, an operator personally calls the customer back to let him or her know. (The call-back program works to increase sales because the customer typically orders one or two more items to replace what is not available.)

Additionally, having associates that are well trained and can easily access requested information lends itself to achieving first-call resolution. Currently, the company’s first-contact resolution level is at 94 percent.

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While it theoretically makes sense that providing a consistent, positive customer experience would logically lead to increased customer satisfaction and thus,

increased profitability for the organization, the bottom line is that many organizations are struggling with quantifying this relationship and with proving the explicit value of their investments (people, process, and technology) in the total customer experience to management. One of the critical scope areas of this benchmarking study was exploring what results best-practice organizations have been able to demonstrate as a consequence of their total customer experience initiatives and how they proved “the business case” to their management, if required.

Key Finding:The business case for investing in the customer experience is based on competitive differentiation: The quality of the customer experience is viewed as a competitive differentiator by best-practice organizations.

“The surplus society has a surplus of similar companies, employing similar people, with similar educational backgrounds, coming up with similar ideas, producing similar things, with similar prices and similar quality.’ So what is

different? The difference is customer segmentation deployed through a branded customer experience.”

— Air Products site visit representative (quote from Kjell Nordström and Jonas Ridderstråle, Funky Business)

Good customer service can be a double-edged sword in the battle for market share: not only is it a key differentiator (especially if the product provided is a commodity), but, like organizational culture, it is often hard to emulate. This is well-recognized by study participants: The primary impetus for study participants to concentrate on the total customer experience is marketplace competitiveness (100 percent), followed closely by executive-level directive (80 percent). Forty percent cite customer


What Are the Results from Investing in a Total Customer

Experience?


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feedback as the impetus for change. The biggest business drivers for improving the total customer experience are competition and commoditization.

air products believes that the best way to differentiate its products and services in a commodity marketplace is customer segmentation deployed through a branded customer experience.

For caterpillar financial, being a captive lender does not mean that customers, including Caterpillar dealers, are required to use the company’s services; therefore, the company recognizes that strong customer relationships are critical to its success.

Instilled in lands’ end’s culture of customer service is the idea of building close customer relationships as a competitive differentiator, and the “rest will take care of itself.”

Key Finding:Investing in delivering a brand-consistent, high quality, end-to-end customer experience across interaction channels and throughout the customer life cycle generates higher customer lifetime value and a growing number of loyal, profitable customers, which translates into profits and greater company value.

good customer experience increases customer loyalty, Which Drives profitabilityBest-practice partners believe, and several can explicitly demonstrate, that their

efforts and initiatives to manage the total customer experience have resulted in increased customer satisfaction and loyalty, which in turn correlate into increased organizational profitability. Three of the five best-practice partners have created an economic model that objectively links the impact of their efforts to manage the total customer experience on revenues and profits. Two out of three partners indicate that this model was internally developed (the third used a consultant/vendor for model development).

harrah’s can track customer satisfaction scores to profitability at an individual customer level and has been able to demonstrate that changes in customer satisfaction drive changes in revenue. The results of its analysis demonstrate the importance of keeping loyal customers satisfied and of moving target customers’ satisfaction scores upward. A migration in a customer’s satisfaction score from a B to an A, for example, translates to an increase in revenue from that customer by 10 percent to 15 percent. Likewise, when a customer moves from a C to an A, this increase is even more dramatic. On the other hand, if a customer moves from an A to a B, or a B to a C, his or her revenue declines dramatically. Therefore, a key focus of marketing and IT at Harrah’s is to enhance the customer experience. In 2004, Harrah’s achieved approximately 50 percent A scores across all properties and programs.

Harrah’s Total Rewards customer-loyalty program has enabled Harrah’s to assemble a database of more than 28 million players who accumulate cash, comps, and other benefits by playing at any of their casinos.


caterpillar financial measures customer expectations, repeat business, and loyalty via the comprehensive customer listening approaches. By combining satisfaction data and actual repeat business volume for multiple years, the company can statistically validate that highly satisfied customers finance more equipment with Caterpillar Financial, thus creating a link between satisfaction and profitability.

lands’ end’s culture is such that the inherent link between employee satisfaction, customer satisfaction, and profitability is taken for granted (although an explicit economic model has been created).

While there are many factors that feed into an organization’s overall financial performance and results (of which customer service is just one), the publicly traded benchmarking partners have generally been doing well financially over the last several years, and one would like to assume that these organizations’ efforts to manage the total customer experience have played a part in this. For example, in 2004, harrah’s entertainment generated $4.5 billion in revenues (an increase of 10 percent8), and its stock price has been on the increase over the last several years.

air products’ stock price has also been generally increasing over the last several years. The stock price of Caterpillar, parent company of caterpillar financial, has also been increasing: Caterpillar’s sales and revenues in 2004 were up 33 percent from the previous year (the best in company history).9

Key Finding:Investing in streamlining customer-critical processes decreases customers’ time-to-decision and increases revenues.

Three out of five study best-practice partners can quantify the impact of their efforts to manage the total customer experience on revenues.

At air products, using profitability analysis to drive customer segmentation to tailor customer experiences for different types of customers has served as a key tool to more than double profits. By focusing on providing the tools and information that its smaller business customers needed in order to decide whether or not a custom-designed product would fit their needs, Air Products was able to lower its costs to provide custom samples, to shorten the time to adoption, to dramatically increase the adoption of custom products, and dramatically improve the cycle time for break even.

caterpillar financial is able to correlate specific customer metrics with increased profitability. For example, by shortening the total time to loan approval by industry segment, Caterpillar Financial was able to increase equipment sales by its dealers without sacrificing loan quality. By improving the turnaround time on loan modifications—something customers cared about a lot—Caterpillar Financial was able to improve collections.

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8 Source: www.hoovers.com (retrieved April 2005) 9 Caterpillar Inc. Investor Summary (retrieved April 2005)


lands’ end tracks the recency, frequency, and order size by customer. The company correlates catalog drops to customers’ buying behavior and shortens customers’ time-to-decision by providing tools and resources to help customers make up their minds, such as good decision-making tools on their Web site (e.g. sizing charts and product comparisons). For example, Lands’ End offers a free swatching service to its customers, whereby customers request swatch cards of different fabrics for products that they are considering buying that are then mailed to the customer within 24 to 48 hours. While this generates a cost to Lands’ End, the company has found that a high percentage of these customers (in the 70 percent range) call the company back to place an order.

Lands’ End also carefully monitors the payback on customer experience initiatives taken at other stages in the customer life cycle. For example, once customers have made an initial purchase, Lands’ End customer service representatives are involved in a “first-time buyer call-back program” whereby representatives call these first-time customers back within two weeks of purchase to ensure that everything is all right with the order (no upselling involved). The company has found this program to increase customer retention and rebuying. Similarly, the “item unavailable call back program” (representatives call a customer back personally if an item is unavailable) has also been rewarding for both customers and the company because it typically results in the customer ordering other items as a result of the call.

Key Finding:Investing in streamlining customer-critical processes decreases costs-to-serve and increases profitability.

By focusing on monitoring and improving what matters most to customers, best-practice partners are beginning to show lower costs-to-serve (and therefore increased profitability).

air products and chemicals reported that by aligning customer experience with customer segments, it was able to reduce its cost per project by 50 percent, while increasing project adoption rates by 70 percent and shifting its break-even on one product line from 3 years to four months.

caterpillar financial has dramatically reduced its costs to support its end-customers and its dealers by empowering both through the use of technology (for example, the introduction of FinancExpress to automate loan processing for dealers in 2001 increased dealer self-service, thereby reducing Caterpillar Financial’s costs-to-serve dramatically, at the same time that more loans are processed more quickly and more products are sold).

cisco has reduced the cost and complexity of managing separate voice and data networks and increased its ability to deliver much higher first-contact resolution to customers, partners, and employees, with greatly reduced costs-to-serve. By moving to a single, cross-functional, 24 by seven “follow the sun” customer/partner/employee support model, Cisco is able to lower its costs-to-serve and deliver much more complete single-contact resolution.

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Key Finding:Investing in improving employee experience to improve customer experience results in greater employee and customer loyalty and lower costs-to-serve.

A similar story is told by the detailed questionnaire with regards to the ability of study participants to go one step further in the service-profit chain and quantitatively link employee satisfaction to customer satisfaction/loyalty and in turn to organizational profitability: Three out of five best-practice partners have been able to quantitatively prove this linkage.

lands’ end recognizes the pivotal role that employees play in delivering on the total customer experience to the extent that the corporation has implemented a heavily employee-centric (in addition to customer-centric) culture through a significant investment in training, an open-door environment with leadership, and an open communication policy with employees, which has resulted in high tenure and low employee turnover.

APQC conducted a recent secondary literature search to explore the explicit quantitative relationship between employee satisfaction and customer satisfaction. This concept is an entrenched one over the years, and a number of studies have demonstrated this relationship. Below are some sample statistics from the literature search.• A five-point improvement in employee attitudes will drive a 1.3 point improvement

in customer satisfaction, which in turn will drive a 0.5 percent improvement in revenue growth.10

• A 5 percent increase in employee commitment results in a 2 percent gain in customer loyalty, which in turn drives a 2 percent gain in profit.11

• Correlation of customer satisfaction and employee satisfaction is 0.86.12

• Correlation of employee satisfaction and patient satisfaction is 0.89.13

• Taco Bell identified outlets with the lowest levels of staff turnover as generating up to double the sales of those at the highest end.14

10 Source: “The Employee-Customer-Profit Chain at Sears.” HBR. January-February 1998.11 Source: Hill, Nigel. “Does Customer Satisfaction Pay.”12 Source: Dr. Dale Lake of the University of Michigan, cited in article “Linking Organizational

Characteristics to Employee Attitudes and Behavior” by James Oakley.13 Source: “What Goes Around Comes Around.” The Satisfaction Monitor. Mar/Apr 1999.14 Source: “Putting The Service-Profit-Chain to Work.” HBR. Mar/Apr 1994.


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business results from customer experience investments“We have gone about creating a business that seeks to envelope customers in as

many reasons to be loyal as we can find…The results of this exercise has been truly unbelievable.”

— Gary Loveman, CEO Harrah’s (Source: “The Service Profit Chain and Building Customer Loyalty,” Taking Knowledge and Best Practices to The

Bottom Line, APQC, 2001 )

The following examples discuss the overall business results at several of the best-practice partners from their customer experience investments.

“Our acquisitions have received considerable attention, but they are only one part of Harrah’s growth story,” CEO Gary Loveman said. “Over the past 6 years we have contended with recession, a post-9/11 travel slump, new competitors in multiple markets and the longest strike in the history of the Atlantic City gaming industry. Despite this litany of challenges, our company has posted same-store sales growth in all but one of the last 24 quarters. This remarkable record of consistent organic growth is a tribute to the effectiveness of our marketing and technological capabilities and our focus on delivering superior customer service. Cross-market play—gaming by customers at Harrah’s properties other than their ‘home’ casino—rose 15.3 percent from the fourth quarter of 2003. More than $1 billion of Harrah’s revenue is cross-market. Tracked play—gaming by customers using the company’s Total Rewards player cards—increased 10.8 percent from the year-ago fourth quarter. And fourth-quarter 2004 same-store revenues increased 7.5 percent over the year-ago period.”15 Seventy-six percent of Harrah’s revenues can be directly tied to members of Harrah’s Total Rewards loyalty program with tiered customer experience levels.

Harrah’s measures its share of wallet—what percent of its customers’ gaming budget it has. Since 1998, share of wallet has increased from 36 percent of customers’ gaming spend to 46 percent. At a customer level, Harrah’s knows what score the customer gave, what marketing and offers the customer has received over time, what score the customer gave last year, and his or her projected revenue.

For caterpillar financial, the Business Excellence journey (which includes the company’s processes to manage customer and market knowledge) has had very positive effects for Caterpillar Financial’s business, including managed assets, customer satisfaction, and efficiency. In addition, over the past six years, the percentage of dealer deliveries financed to end users (PODD, the company’s measure of market share) has increased by 11 percentage points.

cisco systems site visit representatives readily admit that the business case for the Customer Interaction Network was based on pure customer satisfaction—Cisco employees listened to customer suggestions and created a “one-stop shop” to address all front-line queries and processes with a single contact. Cisco has strong beliefs

15 Company press release: Feb. 2, 2005—“Harrah’s Entertainment Reports Record 4th Quarter and Full Year Results.”


that it can increase revenue (through capturing lost revenue opportunities, increased customer satisfaction and loyalty, and increased share of customer spend) and decrease expenses in the process, but this was not a driving factor in the business case. While it is too early in its implementation to discuss the ultimate business results from the Customer Interaction Network, preliminary input from customers has been favorable. In addition, not only is the CIN anticipated to increase customer intimacy and satisfaction, but a positive byproduct will also be its favorable impact on operational efficiencies through increased Web self-service and resolution, increased resource utilization, reduced cost for communications infrastructure, and reduced agent attrition. In general, over the past year (fiscal 2003 to fiscal 2004), the company experienced approximately a 17 percent growth in sales.16

16 www.hoovers.com (retrieved April 2005)

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An essential complement to the people and processes in place to manage the total customer experience is the technological backbone that facilitates it. How

is technology used at best-practice organizations to provide a consistent, positive customer experience? The study team was interested in understanding the various touch points available to customers in order to interact with these organizations, including self-service touch points, as well as interactions with customer service representatives through various mechanisms. Additionally, this study focused on how these organizations create strong relationships and connections among the various touch points and how these transitions were made seamless to the customer. In some instances, technology enablers had the common goal of providing the customer with real-time access to the status of customer orders or requests. Overall, best-practice organizations actively use technology to empower customers, employees, and partners. The most dramatic finding regarding technology enablement was not around which types of technologies were used, but rather the extent to which customers were encouraged to engage in self-service.

Key Finding:Best-practice organizations use technology to identify and to understand customers and track customer behavior.

All of the best-practice partners have mature customer information systems that maintain accurate records of customer accounts, transactions, and customer history. While all of the partners felt that they could do even better in managing their own view of customer information and in analyzing that information, they all have robust customer information systems.

lands’ end’s mainframe-based customer information system tracks all present and past Web and catalogue orders. Customer profiles and family members’ profiles are maintained in a centralized database that is used as the source for segmented marketing campaigns.


How Is Technology Used to Provide a Good Customer

Experience?


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In 2004, harrah’s invested approximately $16 million in marketing IT projects. The organization currently has approximately 500 IT professionals, with more than half of these in corporate IT, while the remainder are located at local properties. There is a significant concentration of IT staff members at the corporate level, which is very different from Harrah’s competitors.

Harrah’s is using innovative technologies on its database platform to drive loyalty, lower costs, and deliver a significant competitive advantage in every market. Total Rewards, tiered cards, relationship marketing, national promotions, the Web site, revenue management, reinvestment optimization, and operational CRM are capabilities that rest on the platform.

Technology is also utilized at Harrah’s to segment customers and track customer behavior through direct marketing. The majority of direct marketing occurs around campaigns that target segments. Segments are created centrally and cannot be modified. (In a few programs, segments can be filtered.) When customers accept offers, the bar codes on the redemption slips are scanned with an electronic wand to capture the code. Harrah’s knows explicitly that the offer has been redeemed and by whom.

The marketing team then studies the responses to offers and analyzes a behavior change report. It determines whether the customer who accepts the offer becomes more loyal. Currently, approximately one half of the trips to Harrah’s properties are offer-driven, which is both good news and bad news (the company does not want every customer trip to be associated with an offer). Marketing looks at “offer layering” to understand the true profitability of an offer.

caterpillar financial has a customer relationship management system that is used to track and manage customer relationships, as well as a set of financing and accounting systems and tools that impact customers. CustomerExpress, the company’s customer relationship management software, provides employees and dealers a single view of the customer including individual satisfaction and loyalty data.

air products and chemicals equips its customer-facing personnel with a customer contact management application (salesforce.com). Most of customers’ transactional history and records are contained in the new SAP system that is currently being rolled out. In addition, employees have access to a customer loyalty dashboard, which provides detailed feedback on customer survey results and a “red alert” tracker for resolving customer issues.

cisco systems has a number of different CRM systems to keep track of different customers and product lines. The company is currently in the process of moving to a single cross-functional CRM database.


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Key Finding:Best-practice organizations use technology to provide customers the ability to serve themselves throughout their customer life cycles. Customers are willing and able to serve themselves to accomplish most of their desired outcomes.

The most significant finding in the technology realm is the degree to which best-practice partners have enabled their customers to serve themselves via the Internet and/or IVR (Figures 16).

As can be seen from Figure 16, partner organizations have made it a point to enable customers to perform a wide variety of tasks, from checking on the status of a product delivery, to setting up a product, to resolving a problem or issue, scheduling an appointment, managing a service contract, paying or contesting a bill, changing the customer profile or account information, purchasing products or services, getting help or guidance, and receiving alerts and notifications. This “outside in” approach to customer self-service is a key differentiator for best-practice organizations. Partners expect customers to serve themselves and want to enable customers to do so.

air products and chemicals offers its customers self-service functionality via its AP Direct suite of applications. This is a customer portal that enables customers to customize their own views into a variety of applications (such as orders placed via EDI, real-time pricing information, and auctions).

At the core of caterpillar financial’s success are the dealer self-service and customer self-service applications that enable both dealers and customers to serve themselves. End-users and dealers can use FinancExpress to initiate their own quotes, credit applications, and documents 24 hours per day, seven days per week. AccountExpress provides users and dealers the ability to access and maintain their account records online.

cisco has long been a strong proponent of enabling customer self-service throughout the customers’ life cycle by providing self-service tools to both end-customers and dealers that enable them to configure their own systems, place orders, change orders, track shipments, get technical support, and renew maintenance contracts. With the advent of the Customer Interaction Network, customers who have difficulty using the Web site to accomplish their desired outcomes will be able to get directly to an empowered contact center representative who can handle any

Product/Service information

Product/Service selection

Alerts and notifications

Figure 16

Partners (n=5)

Effectiveness of Customer Self-Service Capabilities

(1 - Not effective, 5 - Very effective)

4.6

4.4

4.0

Average2 41 3 5

Product/Service purchase 5.0

Account status inquiry 5.0

Product usage, training, or guidance

4.7

Change of customer information 4.8

Billing questions 5.0

Appointment scheduling 5.0

Product set-up 5.0

Service/Approval work flow 5.0

Product delivery status

5.0

User profile management

5.0

Renewals or replenishment

5.0

Problem resolution 5.0


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question the customer has at any point in the customer life cycle and then co-browse with the customer to show him how he can find the solution online the next time.

Lands’ End provides a best-in-class Web site that more than 50 percent of its customers use to place and manage their orders. The Web site is seamlessly integrated into Lands’ End contact center operations. Sales associates can assist customers via live chat (Lands’ End Live) or by pushing particular Web pages to the customer and/or enabling co-browsing.

harrah’s provides customer self-service via the Internet site as well as via IVR for customers to manage their Total Rewards accounts, to book reservations, to avail themselves of special offers, and to redeem rewards.

Key Finding:Best-practice organizations use technology to provide customers with a consistent view of their accounts across channels and touch points. Customers can manage their own accounts.

Study best-practice partners not only enabled customers to serve themselves via the Internet and via other self-service technologies, but they also give customers complete control over and access to their own account information (Figure 17).

harrah’s uses technology in order to provide self-service tools to its customers. For example, Harrah’s customers use their loyalty cards at the gaming machines to identify themselves. As a result, Harrah’s is able to track play in real-time and to provide players real-time updates on their account balances and on points earned and redeemed to date through print outs on the slot machines. Harrah’s is also able to make real-time offers to customers through the gaming machines. Customers feel in control because they have up-to-the-minute information about their accounts.

On September 20, 2000, the company relaunched its Web site as part of the integrated customer experience. A significant portion of Harrah’s strategy is to migrate some of its relationships with its customers to the online medium but not lose face-to-face interaction. The company has a two-pronged Internet strategy.1. Relationship management adds functionality

that will enhance the profitability of customer relationships through:

a. self-service through a less-expensive channel (view offers, book online),

b. dynamic marketing such as last-minute offers, andc. deeper knowledge of the customer to leverage

customer information.

Access to customer service incidents

Consistent view on allinteraction channels

Customer preferences andpermissions

Figure 17

Partners (n=5)

Types of Customer Information Available to Customers

60%

60%

60%


Access to bills and invoices 60%

Unique contact identification 60%

Access to product/accountinformation across product lines 60%

Access to past orders/transactions 80%

Access to and update of customer information 80%

Access to current orders/transactions 80%

Unique account identification 100%


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2. New customer acquisition increases awareness of Harrah’s among prospects through strategic partnership; an exciting, memorable Web site; and strong online advertising.

Additionally, in September 2001, Harrah’s launched “Web Book-It” so that Total Rewards members can make hotel reservations online with their offer code already filled in for them. Subsequently, “Yield on the Web” was launched, which enables online reservations to be yielded.

caterpillar financial leverages different types of technology to successfully handle high monthly volumes of customer contacts. Users and dealers demand accurate, timely, complete, and responsive service. This requires substantial investment in information management systems and hardware. The primary Web-based support technology is Express Track, a suite of online services including FinancExpress, AccountExpress, and CustomerExpress.• FinancExpress is Caterpillar Financial’s proprietary e-commerce solution and is

used to transact most equipment financing. It gives users, dealers, and Caterpillar Financial employees varied access to the same information. Users and dealers may initiate their own quotes, credit applications, and documents 24 hours a day, seven days a week.

• AccountExpress provides users and dealers the ability to access and maintain their account records online.

• CustomerExpress, Caterpillar Financial’s customer relationship management software, provides employees and dealers a single view of the customer.

In addition to Web-based self-serve technology, Caterpillar Financial provides Interactive Voice Response (IVR) technology for access to buyouts/contract balances, interest paid information, payment history information, ordering an invoice, and paying online via Western Union.

providing customers with a consistent View of their account informationRegarding the availability of comprehensive account information, the best-practice

organizations felt that they provided an in-depth view of account information to both their employees and customers.

Additionally, best-practice organizations ranked themselves at an average 4.2 out of five on the completeness and consistency of customer and product/service information across access channels.

Total Rewards customers at harrah’s have a comprehensive view of their account information across access channels—customers can view their rewards balances and tier scores online, at a Total Rewards center in each casino, and on the slot machines as they are playing.

cisco created a common front-end customer support organization across customer-facing functions using the Customer Interaction Network. An objective was for a customer to be very autonomous in accessing answers through Cisco’s Web site with


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the ability to launch a collaboration agent to assist if needed. The end result consisted of having all access media well blended, whether via e-mail or telephone call.

lands’ end provides customers with an industry-leading Web site that enables customers to handle virtually any kind of transaction they want or need to do. Customers have access to their complete profile (including stored personal profiles, stored address books, and reminders).

Key Finding:Best-practice organizations use technology to provide customer support and service personnel with the information that they need and provide a consistent view of the customers’ accounts across channels and touch points.

Best-practice organizations also rely on technology enablers to provide their customer service personnel with the necessary information to perform their job duties. The best-practice organizations rank themselves fairly high on the level of ease for both their employees and their customers to find necessary information (4.2 out of five).

At cisco, a customer service agent routes customers to the right tools using the ISAAC portal. ISAAC is a knowledge-based tool containing information documented through many years of operation at Cisco. With ISAAC, agents view the knowledge base to try to answer customers’ questions. This functionality enables agents to leverage previous answers and solutions. Agents are also able to provide an end-to-end solution to callers and consequently resolve their issues.

The ISAAC tool enables Cisco to capture knowledge that can be accessed by multiple agents. In addition to streamlining processes, the ISAAC tool enables agents to build up their knowledge base so that they can take more second line calls. For example with the ISAAC tool, an agent in Germany is able to access knowledge and information created by an agent in another location. This tool enables agents to instantly expand their own knowledge and skill set. Agents use a red flag system to document customers’ feedback and offer opportunities for improvement.

Cisco’s use of ISAAC also contributes to the company’s goal of maintaining a positive morale among its agents. If an agent is unable to resolve a customer issue, he or she may feel a sense of dissatisfaction as a result. In order to address that issue and avoid future instances, agents can use Cisco’s red flag system to inform the organization about the details of the customer interaction, what steps the agent tried to take, and how the agent could have solved the issue better (i.e., with additional tools or information). This red flag system makes a big difference in how agents feel they can impact future solutions. There is a team at Cisco that takes this feedback from the system and updates the tools. The next time the agent should be able to close out the call, bringing more value not only to the customer but to the organization.

harrah’s uses a Teradata warehouse to provide one view of the customer and one account to its employees for a seamless, consistent customer experience across properties and across access channels (hotel front desk, Total Rewards center, reservations center, marketing, etc.). Access to the data warehouse is provided to all


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key customer contact employees. Comprehensive customer information is housed in the data warehouse, including which offers that a customer has received, which properties they have visited, what restaurants they have patronized, and what “comps” they use.

At air products, a number of technology enablers contribute to the overall customer experience. One such enabler is the Customer Loyalty Dashboard. This tool is an internal Web site that has been in place since 2001 and can be accessed by any employee with a password. The employee can then click on a given area and find loyalty information sorted by business, region, customer, segments, etc. The areas on the dashboard include customer loyalty, business overview, key loyalty drivers, survey results, and individual reports, among other factors. Other technology enablers for customer management capabilities include the Air Products portal on the Internet, intranet sites designed for specific business units, the digital “war room” for customer value analysis, and SFA for use by the sales team in gathering customer data. Technology is also utilized to gather data from employees.

lands’ end provides employees with access to even more information about customers than the customers themselves can see. For example, Lands’ End’s sales associates can view customers’ complete purchase histories, so that if a customer would like to reorder clothing in the same style, the employee can easily locate the past purchase.

The best-practice partners place a heavy emphasis on investing in technology such as call-center automation, e-business and e-commerce, customer relationship management, customer contact management, knowledge management, and e-enabled products and services to facilitate a seamless customer experience (Figure 18).

As Figures 18 illustrates, all of the best-practice partners place significant emphasis on the use of technology to improve the overall experience for their customers. Figure 19, page 68 summarizes the specific software used by the best-practice partners to facilitate the customer experience.

While various technologies were utilized for different objectives, each best-practice organization realized the value of investing time, resources, and capital into IT and other leading-edge capabilities to help facilitate a seamless, transparent customer experience. Other

Application integration with customers’ applications

Search technology

Figure 18

Partners (n=5)

Technologies Used to Makethe Customer Experience a

Seamless Process

0%

0%

20%


Mobile/Wireless handhelds 20%

Customer/Partner portals 20%

Content management 40%

E-enabled products/services 80%

Knowledge management 80%

Customer contact management 80%

Customer relationship management

100%

E-business/E-commerce 100%

Call center automation 100%


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lessons learnedBest-practice organizations use technology to

empower customers to serve themselves and to empower employees and partners to better service their customers. Although each organization begins with a strong foundation of customer information, none of the partners designed their customer relationship management systems from the inside out. Instead, they opened up access to customers and partners to enable them to reach in from outside the organization in order to help themselves to the information and transactions they needed.

As discussed earlier, partners have gravitated toward providing cross-functional, one-stop shopping customer service “behind the glass” in order to help customers accomplish their outcomes without having to make several hops or phone calls. The technology infrastructure that employees use to provide single-contact resolution and to help customers and partners takes advantage of the technology that was already in place to enable customer self-service.

Best-practice partners also provide employees with portals or dashboards that let them see how they are doing on customer loyalty and satisfaction and let them track issues to resolution.

figure 19: facilitating software

type of technology software

Customer relationship Teradata, sAs, Cognos, E.Piphany, management siebel

Customer contact right now, siebel management

knowledge infolease, FinancExpress, siebel, management Cognos

Call Center automation iCM, iVr

E-business/E-commerce Elemica, AP direct, Edi, rosetta net, iPT, AccountExpress

Customer/partner portals sAP, Jetspeed

Mobile/wireless handhelds AT&T Mobile, Wireless not supported

E-enabled products/services sAP r/3, Account/Express

Content Management sAP, siebel

search technology google


Partner Organization Case Studies


71 Air Products and Chemicals

85 Cisco Systems

97 Lands' End


air proDucts

Air Products provides gases such as argon, hydrogen, nitrogen, and oxygen to manufacturers, health care facilities, and other industries. The company also

produces chemicals, including catalysts, surfactants, and intermediate chemicals used to make polyurethane intermediate products, amines, and emulsions derived from vinyl acetate monomer. It also makes gas containers and equipment that separates air, purifies hydrogen, and liquefies gas. Headquartered in Allentown, Pa., Air Products has operations in more than 30 countries around the world. European headquarters are at Hersham, near London, and Asian headquarters are in Singapore, with offices in Tokyo and Hong Kong.

The company is recognized for its innovative culture, operational excellence, and commitment to safety and the environment and is listed in the Dow Jones Sustainability and FTSE4Good Indices. The company has adopted ISO 9000 as its model for quality assurance and has obtained multiple ISO 9001 certifications.

Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home health care services, natural gas liquefaction, and advanced coatings and adhesives. The company ranks 295th in sales and 277th in total assets among Fortune magazine’s April 2004 list of the 500 largest corporations in the United States.

Air Products was founded in 1940 in Detroit, Mich. by industrial district manager and entrepreneur Leonard Pool. The company’s value-add was based on what, at the time, was considered a breakthrough service—the provision of on-site gases to its industrial clients (e.g., building oxygen-generating facilities near large-volume users and then leasing them to the users). By building and operating its own air separation plants and supplying gas “over the fence” to customers on a take-or-pay basis, Air Products became the first company to put into practice what would later become the marketing norm for the industrial gas industry. The company went public in 1961.


Air Products and Chemicals


air proDucts

This case study looks at the work of one business within Air Products. The process and experience depicted in the case study are “works in process” and are being replicated globally throughout all applicable businesses within Air Products.

the customer experience at air productsAir Products describes the customer experience at its organization as focused,

deliberate, and consistent. While the company used to have a cross-selling approach, where a customer was a specific customer of one of the business units, such as the Chemicals Group or the Gases and Equipment Group, the company is now moving toward a “one company” approach. The vision of one company at Air Products is that a customer experiences consistent service across all business units and all touch points. Touch points include any interaction between Air Products and the customer; this includes people, collateral brochure material, and systems interaction.

The company describes its “moment of truth” in adopting this new approach as realizing the need to understand what each customer segment truly values at each touch point. Air Products realizes customers are not just the end-users of the product, but people and functions within a customer organization that either influence or support the buying decision. Air Products may have 20 to 30 contacts in up to five to six functions for a single customer on an ongoing basis. The company strives to understand the value of each of these touch points and render an appropriate solution.

Transitioning to a one-company approach and changing company has been a challenging task. Air Products performs customer segmentation as an umbrella approach and delivers segmented offerings through a branded customer experience, meaning that the customer experiences Air Products in a fashion consistent with the company’s brand promise, characterized by understanding, passion, and integrity. These values will be defined later in this case study. Driven by business strategy, segmentation allows the company to focus on which customers have increased importance to Air Products. The deployment of this process through a branded customer experience sets the standard of behavior for customer-facing employees.

Customer segmentation is the unifying theme in managing the branded customer experience at Air Products. This process can be divided into the “What,” the “How,” and the “To.”

The “What” of Air Products’ customer segmentation process is a tactical deployment, not a strategy. The desired end result is to operationalize the overall business strategy, integrate and coordinate actions in order to have the same face for the customer regardless of the touch point, understand the values of the customers, and deploy resources appropriately.

When describing the “How” in deploying the segmentation effort, Air Products indicates that it begins by separating the customers into categories contingent on criteria that assess the value that Air Products provides to the customers, as well as the value that the customer provides to Air Products. In some mature core businesses at


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Air Products, 20 percent of customers contribute 80 percent of revenue and volume purchased. Therefore, difficult choices must be made regarding how to best segment the customer base. Air Products also simplifies its offerings, reduces complexity, and manages the customer segments by established business rules. These rules outline what services or technical support customers receive, according to their segmented category.

The purpose, or the “To,” of this customer segmentation is to ultimately reduce the cost to serve across the business units, as well as increase the perceived value of Air Products to the customers. The number of customer segments varies from business to business and is not the same as a sales channel or channel to market.

Air Products distinctly separates what does and does not qualify as segmentation. The underlying philosophy is not to treat all customers in the same way, but rather to treat each segment in the same way. The company stresses that its customer segmentation is tactical rather than strategic, dynamic and ongoing, and intended to increase perceived value and decrease the cost to serve. It is also an essential prerequisite to performing other margin enhancement projects and does include treating individual customers differently.

Conversely, segmentation is not a substitute for strategy, which is synonymous with reducing full-time equivalents, or allocating dollars directly to the bottom line.

When utilizing the branded customer experience for deploying customer segmentation, Air Products has the following objectives:• delivering a consistent experience across all customer touch points (people,

Web sites, literature, etc.);• managing customer expectations by consistently delivering as promised;• creating brand equity, or preventing the brand from eroding;• creating customer loyalty and perceived value;• mitigating the risk of becoming too internally focused; and• preventing employee indifference.

evolution/history of managing the branded customer experience For many years, Air Products viewed the customer as king and perceived itself as

being all things to all customers. The approach to customers has evolved over time to a new philosophy. The customer focus has remained intact during this evolution, and the current culture at Air Products is now to consistently provide the customer with only the products and services that they truly value. This is also the focus of the segmentation theme discussed previously. Value is defined by the company as what the customer is willing to pay for, and the company’s current stance is to strive for more of a win-win situation for the customer and the company.


customer touch points/access mechanismsIn order to deliver a consistent customer experience, Air Products utilizes multiple

customer touch points to reinforce its one company approach to customer service. Within the sales realm, there are both direct and indirect sales staff. The direct sales personnel consist of sales associates who have technical knowledge that they can easily articulate; indirect sales refers to the technically oriented niche distributors. These resources are technologically competent in their particular market segment in order to facilitate business dealings with buyers.

Another touch point is customer service personnel, who handle the incoming order entries, as well as any other customer-related issues that arise. Other points of contact for customers include:• technical service and applications development—this includes technical support

resources who impact sales by establishing technical credibility;• credit and collections department;• marketing and product management;• manufacturing;• AP Direct—his is the company’s Web site for electronic orders, as well as a method

to check the status of orders; and• miscellaneous signage, Web sites, etc.

www.airproducts.com

The Web site for Air Products, www.airproducts.com, is a touch point for the customer and has also been part of the evolution toward providing customers with a branded customer experience. Air Products initially invested in the Web site, AP Direct, with the belief “if you build it, they will come.” At first, the site manually entered orders into an ERP (enterprise resource planning) system. In addition to order entry functionality, AP Direct also contains a suite of other applications that promote effective and efficient customer self-service.

Presently, AP Direct has effectively integrated ERP into the order entry system. Additionally, the current online service is continually adding functionalities to target specific audiences and provide improved online customer self-service.

unDerstanDing the business case for managing the total customer experiencelinking the customer experience to the organization’s brands

The Air Products brand is characterized by understanding, integrity, and passion. Customer surveys have demonstrated that these are the characteristics that customers associate with the company. This branding is reinforced visually throughout the company’s facilities via posters. Figure 20 outlines the brand essence that is focused around the three tenets of understanding, integrity, and passion. This architecture is referred to as the Brand Bull’s Eye. A significant amount of worldwide research was conducted to create this model, including many customer interviews

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throughout different business segments. The interview results legitimize the brand of the company.

Air Products has linked managing the branded customer experience with its brand. From a customer perspective, each principle of the brand comes with a promise from the company. For understanding, the company promises that it will consistently anticipate customer needs and provide what the customer truly values. For integrity, Air Products promises that it will always be true to its word. If Air Products makes a commitment, it promises to deliver and to do so in a safe manner. Safety is a core value at Air Products. The company has been identified as one the safest chemical companies in the United States over the last five years. However, within a customer segment, the company will only commit to whatever is in the customer offering. For passion, Air Products promises to strive to exceed customer expectations to achieve a mutual benefit. As discussed previously, the company culture now focuses on achieving a

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apci’s brand bull’s eye

Figure 20

brand essenceLasting relationship built

on understanding

brand aimTo settle for what’s best for our

customers both in terms oftechnology and value

determination

dedication

Enthusiasm

openness

substantiators

Commitment

honesty

relationships

knowledge

They give me big company support with localcompany commitment

how it makes me feelas a customer

the bull’s eyeour commitmentsto our customers

They increasemy knowledge andmy business capability

They think aboutmy business andtreat my money asif it were their own

They look afterme well and getthings done right

They help mestay ahead

our best practiceoperates whereverwe operate in the world

brand characteristicsunderstanding, integrity

and passion

When we saysomething we do it

We push qualitystandards higher and higher involving customers and suppliers

We anticipatecustomer needswith innovativeproducts

We put great effortinto communicatingclearly abouttechnology

We give customersproposals which sayup front how we can lower costs


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win-win result for the company and customer. Company commitment is predicated on the customer’s value to the company and what that customer will truly agree to purchase.

organiZational structure anD support implications of managing the total customer experiencestructure and accountability

Air Products has created a structure of processes and tools to achieve its objective of deploying customer segmentation through a branded customer experience. The management of this process begins with the business strategy. In this stage, Air Products attempts to develop additional capabilities by performing profitability analysis and customer feedback analysis, largely around loyalty studies and customer value analysis research.

From this strategy work, the company determines operational targets, business levers, and the product-services hierarchy. This then leads to the customer segmentation phase. In this first phase of the process, several tools are used. Price and profit management is one such tool. Customer feedback analysis is also performed in the segmentation phase, and includes a complaint resolution process. This process is currently being examined further to identify areas for improvement.

The customer value analysis portion of this section has been conducted on three previous occasions with positive results. Here, the company looks at what offering attributes the customer values, how the company performs against those attributes, and how competitors perform. This is a more sophisticated tool, requiring surveying beyond the customer base. Additional interviews must be conducted with competitors’ customers to assess Air Products’ value performance relationship in the market relative to its competition.

Profitability analysis is another crucial portion of the structure. It is important that the company understand the profitability implications at the business and customer levels. In addition, the company performs a competitive analysis by finding and analyzing industrial best practices. This relatively new effort is evolving into a formal program and includes internal and external benchmarking.

Within Air Products, internal service level agreements are utilized as the move toward a multi-tiered approach within the customer service organization takes place. Agreements are reached between the Air Products business units and support groups, so that the business units clearly understand what level of service each customer segment will receive. Customer service levels are determined by business predicated on the segmentation.

These tools and programs lead to the segmentation plan, which includes:• customer categories;• offerings;• business rules;• channel strategy, direct or indirect;


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• work-level activities by category (Segmentation is largely behavioral and systems, so activities are defined by category of customer [e.g., for sales calls, the frequency of calls allowed is determined by each segmentation category of customer].); and

• targets by categories.

This leads to the deployment phase, where the initial contact with the customer utilizing the branded customer experience occurs. External consultants and the literature indicate that segmentation often fails because of poor execution in the deployment phase.

Another part of the deployment effort is the use of a sales force automation tool (SFA) as the communication vehicle for customer-facing employees. This resource provides contact information and other background data for customer-facing employees to use to learn more about customers.

Air Products also performs internal job competency profiles to identify the necessary skills—from a behavioral perspective—for its employees to effectively execute their job responsibilities. These competencies are divided into commercial experience, communication skills, and technical skills. Additionally, the business area leadership provides all customer-facing employees behavioral training in order to drive a consistent experience at the customer level.

Senior management is critical to building the impetus, momentum, alignment, and buy-in for the branded customer experience. Key senior management for the business specifically addressed in this case study include the group vice president of the affected group and vice president of customer engagement. In addition, in order to successfully shift the company culture to the one-company approach for customers, there must also be business unit leadership and engagement from middle level managers in the customer segmentation process.

During the customer segmentation process, Air Products consistently links segmentation criteria to the business strategy. The company has identified four prerequisites in order to sustain a branded customer experience:• communications,• training,• job aids, and• performance monitoring.

role of the employee in the branded customer experienceEmployees play a pivotal role in managing the branded customer experience at

Air Products. Therefore, the company stresses the importance of training employees to support the goal of implementing customer segmentation and to deliver against the company brand. Segmentation training for customer-facing employees includes up to eight hours of classroom training combined with learning applied on the job. The size of the training session does not exceed 20 participants, and Air Products provides job aids to support the application of role-appropriate behaviors.


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Leading customer segmentation training involves front-line managers who manage customer-facing staff in order to understand the customer-facing role. Branded customer segmentation training teaches the desired behaviors for segmentation champions and role models in the new segmentation strategy. In this training, subject matter experts are sometimes utilized to support materials development.

customer support processesIn addition to receiving customer-facing behavioral training, employees at Air

Products also receive customer support tools in order to facilitate the delivery of a branded customer experience. In addition to receiving scenario-based skill practice training, employees also receive guidelines for dealing with emotional customer behavior. These guidelines include:• managing the response to the situation,• empathizing with the customer’s concerns,• identifying the customer’s problem,• clarifying the problem,• working toward a solution, and• thanking the customer.

Another set of guidelines involves how to effectively handle objections. When dealing with objections from a customer, the sequence of events is: • promoting dialogue, probe to understand;• checking understanding;• responding to the issue; and • verifying satisfaction.

inVestigating the business process changes reQuireD to create a total customer experience

In order to create a branded customer experience, Air Products faced the challenges of having resources that were not focused on customer segments by value or return and creating a significant opportunity to improve profits by reallocating customer investments. The response to these challenges was to create and implement the customer segmentation process driven by business strategy as the critical tool to achieving aggressive growth strategies. This would allow the company to align key customer attributes to its own strategic imperatives. The four components of the segmentation strategy were:1. customer segmentation process as a key work tool to execute business growth

strategy;2. customers evaluated, scored, and segmented according to financial value, growth

potential, and strategic fit with the Air Products strategy;3. stringent rules created to govern the cost to serve each segment across all customer-

facing functions; and


4. the economic impact of segmentation analyzed and embedded into business line operating targets.

In order to implement this strategy Air Products had to first create a core, cross-functional segmentation team. This team developed the segmentation criteria to align with overall business strategy elements. It also developed an attributes matrix for segmenting customers in order to determine what criteria a customer had to possess to drive the strategy forward. Within each category, the team listed attributes that would determine potential, such as the customer’s growth rate and market share. The attributes were determined as part of a large group function across Air Products’ teams. After three iterations, the list of attributes was narrowed down to the final objective list. Often, the segmentation team would interview customers to validate information. Customers received a number of points based on their position in the market. For instance, if a customer was within the top five in their market, then they would be a candidate for the top-level customer segment.

After segmenting the customer base, the company created a master list of services that they offered and ranked these activities by function and importance. The services could be divided into four categories: technical services, sales services, commercial services, and supply chain services. These services were then prioritized by asking if Air Products could provide varied levels of service for different customers and which customers had the highest potential for creating additional value based on the strategy. If a customer met the established criteria, then Air Products would provide the product or service. After these service levels were developed by segment, the segmentation team created channel strategies and customer account plans. This was critically important as it linked day-to-day actions with the segmentation plan, and thus ensured that the strategic goals of the business would be implemented.

Air Products’ segmentation team validated services with customers, trained customer-facing employees, created tracking metrics, established profit impact goals, and began implementing the process to institutionalize the change.

completeness/consistency anD ease of accessinformation/content repositories and accessibility

Regarding information access, Air Products utilizes both direct and indirect channels to create a branded customer experience. In the indirect channel, the company has a network of distributors and agents who play a critical role in facing customers. Additionally, Air Products has formed a Distributor Advisory Council to foster the relationship between the organization and its distributors.

In some business units within the company, Air Products chooses to work with distributors, and in other cases the company enters into agreements with sales agencies or a field sales person. This decision is considered the first phase of the process to determine channels to market. When making this decision, the first factor considered is the cost to serve model. The costs of a field sales person to sell to a particular

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customer on a direct basis, including order processing, invoicing, etc., is analyzed when making the decision to use a distributor or sales agent.

When evaluating channel partners, Air Products must determine the facilitator that best mirrors Air Products’ values and capabilities. In this highly technical field, the sales force typically consists of chemists or chemical engineers, so one of the first criteria for choosing a distributor is also to have a technically oriented sales team. This background will increase the understanding necessary to sell the product. Additionally, distributors who can also sell products that complement the product line of Air Products are also viewed as beneficial channels to market.

When using distributors, the company requires them to take at least a truckload of materials. Distributors perform the functions of shipping, warehousing, receivables, etc., so utilizing them can be a valuable strategy.

Under a sales agency agreement, there is an agency selling the product to customers, and Air Products pays a commission to these agencies. In these arrangements, Air Products still performs tasks such as shipping, invoicing, order processing, and receivables.

The second phase of reaching the market is to establish the plan of action. Air Products utilizes the segmentation process to do this, in order to understand the customer’s value equation and how to best reach them.

Phase three is the implementation portion of the plan. Air Products does not want any customer to feel underappreciated because of how they are segmented. Customers require different servicing needs based on their segment, and distributors are skilled at further segmenting customers and assessing additional customer needs. Air Products relies on distributors for this assessment and at times gains additional customer insight from this service.

The fourth and final phase is management of the distributors and sales agents. Management includes establishing the underlying contract; communicating expectations, roles, and responsibilities; and overseeing the Distributor Advisory Council.

The purpose of the Distributor Advisory Council is to improve the relationship between Air Products and the distributors in order to accelerate mutual profitable growth. The Council consists of managers from the distributors, a sales manager, the distributor manager, a senior representative from the technology department, and a marketing representative. This Council is an advisory council, and not a policy making council. The council provides input into the definition and implementation of work processes, services provided, and the brand experience. This Council meets twice a year and provides a forum for the sharing of best practices. Air Products also utilized the Council meetings to ensure a consistent brand experience for all customers through the network of distributors. Distributors are expected to share the same tenets of the company brand of understanding, integrity, and passion, as well as the same commitment to the product line. The company wants customers to associate the name of Air Products during their interactions with distributors.


inVestigating the technology enablers to create a total customer experiencerole of it in Delivering the branded customer experience

A number of technology enablers contribute to the overall customer experience at Air Products. One such enabler is the Customer Loyalty Dashboard. This tool is an internal Web site that has been in place since 2001 and can be accessed by any employee with a password. The employee can then click on a given area and find loyalty information sorted by business, region, customer, segments, etc. The areas on the dashboard include customer loyalty, business overview, key loyalty drivers, survey results, and individual reports.

Other technology enablers for customer management capabilities include the Air Products portal on the Internet, intranet sites designed for specific business units, the digital “war room” for customer value analysis, and SFA for use by the sales team in gathering customer data. Technology is also utilized to gather data from employees.

measuring the impact of managing the total customer experiencecustomer measures

When measuring the outcome of managing the branded customer experience, Air Products relies on both internal and external benchmarking, as well as a variety of other sources. The company’s benchmarking efforts have taught Air Products that unless they deliver what the customer wants from a service perspective, they will not be able to achieve long term business results.

Analyzing customer segment goals and results has shown the company that there is more to achieve through customer segmentation than decreasing the cost to serve the customer. Increasing profit and growth are the ultimate benefits that Air Products hopes to attain through its segmentation efforts. From 2002 through 2004, the organization has increased its customer margin by 30 percent.

Additionally, during this time period, this business has realized a 50 percent decrease in cost per project because of increased effectiveness in focusing on identifying customers that would deliver results, as well as no longer performing technical work as a sales tool. Instead, this type of work is now more of a value deliverable.

customer feedbackAir Products also utilizes mechanisms to collect customer feedback and analyze

customer loyalty. Through benchmarking efforts, the company has realized the importance of understanding the voice of the customer (VOC). This has been the crucial first step in shifting the company toward a customer-focused culture. The cross-functional team at Air Products selected Burke, Inc. to assist in the creation of an ongoing VOC process.17 The ongoing customer loyalty process at Air Products includes gathering information through surveys of customers around the world via

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17 Ricci, Robert. Move from Product to Customer Centric. Quality Progress. November 2003.


telephone and the Internet, disseminating survey results throughout the organization, and tying the information to the business strategy to highlight critical improvement needs.18 Members of the different business units have been involved in both the survey creation and the identification of customers to contact. This involvement at the business unit level has been critical in obtaining overall support for the changing culture. Eventually, the company began surveying customers on a regional basis with different business units each quarter, which helped the customer loyalty processes evolve into an ongoing listening post for the entire company.19

Air Products acknowledges that although measuring customer loyalty is valuable, it is merely a measurement of itself. The company realizes the need in the future to move beyond just measuring customer loyalty and also focus on a market value analysis, including comparisons to competitors.

summary anD lessons learneDRegarding lessons learned in managing the branded customer experience, Air

Products acknowledges that in the past they have done the following:• overestimated the organization’s ability to change;• overestimated the data quality and availability of information;• overestimated the infrastructure’s capabilities;• underestimated the challenges of global segmentation and deployment, such as

cultural differences and language barriers;• underestimated the time to go through one iteration;• underestimated the power of the brand when attempting to change the company

culture; and• underestimated the need for having “firewalls,” resulting in data “leaks.”

From these lessons learned, Air Products points to the following as critical factors contributing to an organization’s success in managing the branded customer experience:• having the business own the outcome,• meeting the business where it is,• having an Executive Leap of Faith (E.L.F.),• having a business champion,• having accurate information,• having a capable infrastructure, and• having a process for performance management.

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18 Ibid.19 Ibid.


Looking ahead, Air Products has established goals to further its effectiveness in this area. First, it is working to integrate tools in managing the branded customer experience that will create a consistent touch and feel for the customer. Additionally, the organization plans to develop new capabilities across the various businesses. For example, a “tool chest” is being developed from a marketing perspective to be integrated across the businesses. Also, Air Products will be finalizing segmentation efforts for customers who have not yet gone through the process. Furthermore, the organization plans to revisit businesses that have already been segmented. This is done to review the results of the business, how customers responded, and any business strategy changes and how that might impact the segmentation and offering. It also serves as a “refresher” course and again reinforces the commitment to the branded customer experience at Air Products. Finally, the company drives the branded customer experience into everyday work. Air Products believes the branded customer experience manages customer expectations, creates customer loyalty and perceived value, mitigates the risk of becoming too internally focused, and “short-circuits” employee indifference. In summary, Air Products believes that the branded customer experience has equity for the company.

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Cisco Systems develops and markets hardware, software, and services for Internet solutions. Its products include routers and switches, remote access servers,

Internet Protocol (IP) telephony equipment, optical networking components, and network service and security systems. Cisco sells its products and services directly through its own sales force and indirectly through a network of channel partners, including resellers and integrators. The company primarily sells its products to large businesses and telecommunications service providers (switchers and routers account for about 65 percent of sales) and also markets some products to small businesses and consumers. Cisco faces many competitors in all of its market segments. Key competitors include 3Com, Extreme Networks, Juniper Networks, and Nortel Networks.

Founded in 1984, Cisco sold its first product in 1986, and the company went public in 1991. Since 1993, Cisco has used acquisitions to broaden its product lines. These acquisitions also enabled it to acquire engineering talent in short supply due to a highly competitive industry environment. In 2001, as a result of the technology industry downturn, it faced multiple challenges. The biggest challenge was that Cisco had invested heavily in IP telephony equipment and services, and customer purchases slowed dramatically. Therefore, Cisco’s CEO John Chambers decided to change the structure, aligning the business by core technologies instead of customer segments.

the customer experience at ciscoCustomer success is not only a personal passion of mine, but our first priority

as a company. No matter how good we are, the one thing that can bring us down is getting too far away from our customers. I’ve seen it happen time and time

again, which is why we take a fanatical approach to customer success and view it as the foundation of our culture.

— John Chambers, president and CEO

cisco systemsm a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Cisco Systems


Customers experience Cisco through marketing and advertising, Web presence, Interactive Voice Response (IVR), and customer service contact centers. Cisco customers evaluate their experience based on ease of use and access. Ease of use and access refers to how customers are able to get to needed answers by navigating through the organization, either through people, IVRs, the Web site, or e-mail. The company’s goal is to ensure that its customers feel they can count on Cisco to provide them with immediate value-added service. As a result, Cisco established its Customer Interaction Network (CIN) to provide consistency across multiple business lines as part of its total customer experience. Management of the total customer experience process is overseen by multiple steering committees and champions.

unDerstanDing the business case for managing the total customer experience

For 20 years, Cisco has grown at an extremely rapid pace, mainly through acquisitions. Because of its growth, multiple contact centers were established to handle the large number of customers needing service. As a result, customer interaction was siloed, and customers were getting lost in Cisco processes. The customers’ perceptions were that Cisco was very bureaucratic and solutions were too difficult to access. For example, Web tools had been implemented without regard for ease-of-use functionality. Customers attempting to use Cisco’s Web tools often got lost and confused. This situation prompted Cisco’s problem statement—to make changes in the way customers were serviced and improve the overall customer experience.

identifying customer-centric processesAs Figure 21 indicates, the first step taken to improve the customer experience

was to identify key business processes. In order to make the company more efficient, streamlining processes was a priority. To accomplish this goal, the Business Process Operations Council (BPOC), a corporate council made up of select executives, identified necessary key processes. The council has representatives from all Cisco service lines who are tasked with analyzing processes across the enterprise. Additionally, the company created a common front-end support organization across all customer-facing functions. The main questions that Cisco had to answer were how to streamline the customer interface to ensure that the key processes were going to work and how the customer interaction at the first level would be in line with the optimization of the processes.

The strategic objective for Cisco was streamlining the customers’ first contact via the Web site to ensure that value-added actions were taking place. Cisco acknowledges that it is more typical for its customer to go to a Web site than to use a phone number. Therefore, Cisco’s goal was to ensure that customers would be able to find answers easily by navigating its site. To achieve that goal, Cisco had to ensure that its Web pages were easy to navigate and that Web collaboration was effective. A scenario Cisco kept in mind was if a customer navigating through its Web site was unable to obtain support or even create a service request online, then the customer might quickly

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leave the site and move to a competitor’s site. The thought of competition was a key motivator for ensuring that the Web site would satisfy customers’ needs.

the customer interaction network (cin)Since Cisco customers access services through various media, it was imperative

that customers have meaningful and useful contact the first time. To accomplish that goal, Cisco created a common front-end customer support organization across customer-facing functions. This change resulted in the creation of the CIN, powered by Cisco’s own technology. In the beginning, the call center experience was made up of captive interaction in a one-to-one scenario. One customer spoke to one agent, and consequently, one question resulted in one answer. Some Web interaction existed but mostly internally through the agent’s access, browsing for documentation. With the arrival of the contact center, some media blending took place, and customers had some interaction via the Web site. Cisco decided to take the next step in completing media integration by leveraging its full suite of technologies. This would allow customer autonomy in accessing answers through Cisco’s Web site and the ability to launch a collaboration agent to assist if needed. The end result consisted of well-blended access media, whether via e-mail or telephone call. The initial contact center went through an evolution to become the CIN as depicted in Figure 22, page 88. Cisco approached and presented its ideas for the CIN to customers, and the ideas were well received.

cisco customer experience: common first-line support

ideato

offering

Figure 21

marketto

sell

Quoteto

cash

issueto

resolution

forecastto

Delivery

• research to concept• Concept to commit• design to prototype• Validate to ramp up• Monitor to improve• improve to EoL

• research to market identification• Market identification to plan• Campaign to lead• Lead to order• Account strategy to relationship

• Quote to order entry• order validation to commitment• delivery to revenue recognition• invoice to cash• Contract to renewal

• source to buy• Forecast to plan• Plan to build• ship to receive/install• Commit to deliver service

• issue detection to problem identification• develop solution to resolution• return to replace• Closed loop feedback

common front end support organization across customer facing functions

customer


The driver for establishing CIN was to increase customer intimacy, but the byproduct was having a more efficient operation. From an internal stand point depicted in Figure 23, the new CIN took advantage of operational efficiencies. For example, if customers were able to access the Web site instead of an agent via telephone, then IT support, vendor support, and administration costs would diminish. The benefits to the company were clear and tangible. By increasing customer intimacy, Cisco could capture customers’ wants and needs and ensure that no opportunities for sales would be lost. To achieve that objective, the presales department’s involvement was critical so that all inbound activities would be clearly identified.

organiZational structure anD support implications of managing the total customer experiencemigration to a customer interaction network

Cisco created a more effective customer experience by assigning the responsibility of champion of the total customer experience effort to the director of IP telephony. Along with the champion, the manager of customer service is directly accountable for CIN’s effectiveness and success. These individuals meet on a regular basis to review operations as well as performance.

CIN resulted from bringing all the Cisco call centers together and having agents input customer information into a single, shared Web portal based on Cisco proprietary technology. CIN was completed in March 2004 and piloted for three months in Europe and the United States. The goal of the pilot phase was to see if new agents would be able to resolve the customer’s problem, escalate properly, or get the customer on his or her way to resolution. The result of the pilot was that 80 percent of the calls were either resolved, escalated, or on the way to resolution. CIN has since been fully launched in Europe, and it is slated to be implemented in the remainder of the United States and Asia Pacific.

Prior to CIN, agents answered questions from callers in the one-to-one scenario. With CIN as the next step, Cisco has empowered customers to leverage other access points in a many-to-one scenario. In the many-to-one scenario, agents are more proactive in educating customers about how to solve their own issues. Educating customers is accomplished, in part, by informing them how to access answers via the Web site.

cisco systems

The Evolution of the Contact Center

Figure 22

CIN showcashes the largest business transformation impact for call centers in over 20 years—and it does so using our technology.

Customer Interaction Network Why This Is Important to Cisco

CIN integrates the Internet, phone, and shared corporate-wide knowledge for a dramaticallyenhanced customer experience.

CIN resonates with our largest customers: It offers a new value proposition to call centers and addresses many of the CXO “care abouts” around customer interaction.


cisco systems

In the establishment of CIN, the next phase was cross-function collaboration, where a customer could call in and obtain answers to a wider spectrum of questions. Cisco’s desire was to empower its customers to be more self-sufficient. The main objective of the CIN rollout was first-call resolution, which is a key metric for Cisco. First-call resolution means that customers can get their questions answered or issues resolved by the first agent on the line without having to be transferred to an additional agent.

Figure 24, page 90 shows the workflow of CIN starting with a customer request through to resolution. The intelligent routing provided by Cisco’s Internet Protocol Contact Center (IPCC) solution sends customers to support in their native language. An agent routes customers to the right tools using the ISAAC portal, a knowledge-based tool containing information documented through many years of operation at Cisco. With ISAAC, agents view the knowledge base to try to answer customers’ questions. This functionality enables agents to leverage previous answers and solutions. Agents are also able to provide an end-to-end solution to callers and, consequently, resolve their issues.

employee’s role in the customer experienceThe role of the agent in Cisco’s CIN is to take ownership of calls on first contact.

Cisco’s goal is to achieve one-call resolution, thus becoming a one-stop shop. To achieve that goal, a metric shift from time on the call to the value of the call took place. For example, how long a customer stays on the line is no longer a metric; what is important is the agent going the extra mile to get the customer’s problem resolved. The agent’s goal is not to flood customers with multiple questions, but to empower them and give them ownership of their own success.

Figure 23

Key Business Levers

Operational Efficiencies• Increased Web self-service and resolution

• Increased resource utilization

• Reduced TCO for communications infrastructure

• Reduced agent attrition

Revenue Growth• Capture lost revenue opportunities (Cross-sell/up-sell)

• Increased customer satisfaction and loyalty

• Increased share of customer spend

OrganizationValue

DifferentiatedServices

NecessaryEvil

CustomerValue

High

High

Low

Low

CIN

CallCenter

ContactCenter


The role of the agent becomes more strategic as he or she becomes the voice of the customer. Agents are the ears of the company since they are the entry point for customers. Agents identify the type of relationship Cisco has with specific customers, in terms of support contracts (e.g., gold level support) and must effectively follow processes and document pertinent information.

inVestigating the technology enablers to create a total customer experience the Vendor model

The CIN was established based on an outsource model for the front line as shown in Figure 25. With traditional processes, Cisco had silos in the organization. It was very difficult for a customer to go from an incorrect department to the right one. The ISAAC tool enables Cisco to capture knowledge that can be accessed by multiple agents. In addition to streamlining processes, the ISAAC tool enables agents to build up their knowledge base so that they can take more second line calls. For example with the ISAAC tool, an agent in Germany is able to access knowledge and information created by an agent in another location. This tool enables agents to instantly expand their own knowledge and skill set. Agents use a red flag system to document customers’ feedback and offer opportunities for improvement.

In 2004, Cisco conducted a rigorous request for proposal (RFP) process lasting approximately six months. An RFP team was assembled to review the possible vendors. The RFP team of 30 employees had representation from existing call centers, the second line call center, and also from cross-functional groups with representation from areas such as procurement and HR. GEM was selected as the vendor in Belfast.

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Figure 24

How Customer InteractionNetwork Works

Breadth of knowledge – allows for escalations to tier 2

Request resolved

Allows for feedback on documents

Leverage the Internet

Allow agent to take customer to the

Internet – hands free Web collaboration

GEM agents

Contact Center Technology

Core customer expert

CiscoLive! Cisco.com / CECISAAC web

portal

Intelligentrouting

Customerrequest “Customer interaction

network” agent


In 2005 Cisco will select other site-specific vendors. A key criterion for selecting site-specific vendors is a good culture match. Other criteria in vendor selection are that the vendor must have a local “look and feel” and operate 24 hours per day, seven days per week. Cisco wants to ensure that vendor-managed agents are offered a career path as they contribute to the value-added customer experience.

As shown in Figure 26, page 92, agents are cross functional and not organized by business line. Agents are rewarded on their cross-functional ability, on the number of skill sets they posses, their availability, and overall customer satisfaction. These agent measures are important for Cisco as they focus on value add and the contribution of quality feedback. Although Cisco is engaged in outsourcing, it wants to continue to capture knowledge utilizing the ISAAC tool as its mechanism to obtain quality feedback. The feedback can then enable the company to improve processes.

Cisco has three basic call types: a simple call hand-off, a typical front-line request, and a call with a request that may require a more complex level of support. Cisco’s goal is to continue to build the ISAAC tool’s capability so that agents are able to take more of the second level support calls, thereby increasing value. The goal is to reduce the amount of calls that are transferred and have the first agent resolve issues and close out the call.

Cisco is concerned with maintaining a positive morale among its agents. If an agent is unable to resolve a customer issue, he or she may feel a sense of dissatisfaction as a result. In order to address that issue and avoid future instances, agents can use

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Figure 25

New Outsource Model for Front Line

Traditional Process:• Silo (within organizations) negotiations.

• Little investment on tools, automation once outsourced. High learning curve.

• Difficult to switch and ramp up.

• Volume or time based measurements.

New Process:• Ongoing streamline of operation – tools

• Ongoing taking on more level 2 functionality – depth

• Ongoing growth across the company – expanded skills – breadth

• Measure VALUE, not just volume.

• BECOMES STRATEGIC ARM OF CISCO – strong “voice” of the customer experience.

Satisfaction

Resources

$$$

$

$


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Cisco’s red flag system to inform the organization about the details of the customer interaction, what steps the agent tried to take, and how the agent could have solved the issue better (i.e., with additional tools or information). This red flag system makes a big difference in how agents feel they can deliver future solutions. There is a team at Cisco that takes this feedback from the system and updates the tools. The next time, the agent should be able to close out the call, bringing more value not only to the customer, but also to the organization.

Figure 27 shows Cisco’s vendor management model. The value-added pricing model is an integral part of vendor selection, and value is determined by adhering to or exceeding the service level agreement (SLA). SLAs consist of a single statement of work along with clearly articulated and established global standards. All current and future Cisco vendors will have a consistent statement of work on a global basis.

Figure 26

Outsourcing the Common Front Line and Incenting the Right Behavior

Quality, learn, and improve:

Representing the voice of the customeragents can identify and flag suboptimal customer experiences.

Web collaboration:

Using Web collaboration to help customersfind and learn to use our online resources

Three basic call types identified:• Simple call hand-off• Typical front-line requests• Requests that traditionally require second level support

Quality,Learn,Improve

PureTransfer

Handleor ResolveFirst Line

WebCollaboration


Handleor ResolveBeyondFirst Line

WebCollaboration


Value Add for the Customer

Valu

e A

dd P

rici

ng fo

r the

Ven

dor

Figure 27

Value of New Vendor Management Model

Pay for ValueReward for Value Benchmarking

Single, Global SOWand Vendor Management

Global Standards

CostImpact

Processand change

• ISAAC• ICM• Collaboration• IPCC• Web portal to CRM systems

• Organization independent• Utilize ISAAC• Capture experience• Capture barriers

CIN front line

Old, now second time

�Customersays . . .

�Idea andimprove


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measuring the impact of managing the total customer experiencecustomer tracking

Cisco tracks the reasons customers are calling to ensure that it is adding value. Some calls must be escalated immediately, such as a network being down. The ISAAC tool enables agents to select the right category to request action and subsequently finish out the call. The action class in ISAAC will indicate what the agent did. The Cisco.com registration scorecard shows not only why a customer is calling, but also what the agent did to assist them. The following list of action codes are commonly used to track interaction with customers.• Dropped Call• Escalated: ISAAC Info Inadequate• “Escalation Only” Process• Handled: Follow Up Initiated• Last Resort: No Process Found• Resolved: No Further Contact Required• Sales Lead or Marketing Form Submitted• Transfer to Named Employee

Figure 28 shows the survey methodology Cisco uses to measure customer satisfaction. The sources for the survey are customers who have experience with Cisco products and services. According to its latest numbers, Cisco reports that out of 64,000 people who replied to a survey, 47 percent of the respondents were staff. This is a good indicator for Cisco because it wants to obtain feedback and information from people who actually touch its product and deal with its services. Primary and secondary surveys are conducted in order to pull information from multiple sources.

Figure 28

Survey MethodologySource Customers with experience with Cisco products and services

Survey: August 1 - July 15

The date in this report represents feddback captured August 1, 2003 - April 30, 2004

100% Online Web Survey

Customer Profile 63,998 customer replies

9% CxOs/Execs, 8% directors, 27% managers, 46% staff, 10% other

Segment Distribution of Survey Sample

Enterprise37%

BP 33%

Consumer 3%

Commerical27%

Theatre Distribution of Survey Sample

Japan 4%

U.S.40%

EMEA30%

APAC18% AI 8%


On its survey, Cisco asks customers to rank their experience. The company tries to minimize the use of numeric scales to simplify international data collection. This approach allows for greater consistency, since numerical rankings may be confusing depending on the country of the customer. When an agent must escalate a call to a tier-2 agent, the customer will not be surveyed until the call is closed and resolution achieved.

Loyalty is another key metric that Cisco measures. The loyalty scorecard is derived from the customer satisfaction surveys. Cisco has information on the impact on the bottom line resulting from increased customer loyalty. Cisco measures value, marketing, competition, and account teams. The account teams are measured because of their direct contact with the customers; they obtain feedback related to product satisfaction. Also, Cisco operates through a large reseller network. It is important that they know how the resellers are doing with the end customer.

Some of the data sources Cisco uses in its measurement analysis include:• global customer satisfaction survey,• U.S. customer–outbound transactional survey, and• USA brand marketing research brand equity.

agent compensationAgents are compensated in accordance with customer satisfaction. There is

a hotlink, “Customer Satisfaction,” on Cisco’s internal Web site accessible by all employees. Employees are able to view customer satisfaction at any time on a day-to-day, hour-to-hour basis. When an agent clicks on the button “Customer Loyalty Analyzer,” he or she will get a screen showing the loyalty chart. “Trapped” is a category in which customers are using Cisco products but may not have the option of using other products because there is no competition. For example, it may be a Cisco customer who made a sizeable investment in their network, and they do not wish to introduce a new product that will not be compatible.

When time for bonuses approaches, Cisco considers the base salary, the incentive target percentage, and the company’s financial performance. The company has a focus cycle where employees are reviewed, and a formal evaluation is conducted. This event is a face-to-face meeting between managers and employees to assess performance.

Cisco creates an overall customer satisfaction scorecard annually drawing from various data sources.

the customer interaction network Quality control centerCisco’s quality control center for the CIN will be moving into a new building in

May-June 2005. This building is referred to as the connected building because the entire building has wireless capabilities using IP connected telephones, and there are no hard-wired telephones. The building is able to accommodate up to 400 people, and it is part of the executive briefing tour for customers. Within the control center, Cisco will have a set of agents testing new documents, software, new releases of ISAAC, and various other Cisco products. The center enables the agents to test in a real time

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environment. These agents will be tasked to ensure that products are well-designed and that documentation is effective.

internal benchmarkingThe quality control center currently enables Cisco to conduct internal

benchmarking, and the key objective of the center is to find real-time improvements. For example, the company can compare call handling times across geographic locations: An agent in San Jose, Calif. may be able to successfully close out a call and resolve customers’ problems in 3.5 minutes on average, and he or she can be compared to an agent in Australia who is taking seven minutes to do the same task. Cisco sees an opportunity to improve. The causes for the difference might include that the agent needs a refresher course in a particular area or category or perhaps it is the country of origin’s culture. There are many areas that can be investigated and benchmarked.

summary anD lessons learneDQuality, communication, and technology enablement

One of the key lessons for Cisco was the need to focus on quality. Quality begins with creating an appropriate job profile for the CIN agent, whether in-house or outsourced. The job profile should clearly articulate the necessary job skills and requirements to provide a good customer experience. The recruiting function was very involved in ensuring the profile was effectively created as well as utilized. Once candidates are identified and hired, they complete a comprehensive training program including basic information, such as who is Cisco. Outsourced agents must understand that they work for Cisco and not the vendor. This is the first step in ensuring quality.

The second step in quality assurance is effective training. Once agents get on the floor, their calls are monitored. Cisco has people shadowing agent actions on live calls to ensure that they are providing the right answers to the customers. Surveys are used, and feedback is provided to ensure that the perception of quality matches among the agent, Cisco, and the customer.

A critical success factor is having a successful communication plan. Cisco noticed that once there were any deviations from its communication plan, the roll out was delayed. A clear communication plan is necessary, and changing the interaction model with each country is imperative.

Additionally, the customer experience team’s relationship with the IT organization is critical. Technology enablement allowed Cisco to unify its contact centers to provide a helpful single access point. The ISAAC tool provides ways for agents to find answers to customer issues by capturing information and reusing solutions. Another example of effective IT support took place in Europe. Cisco had many phone numbers its European customers could use, and IT was able to successfully route calls to the appropriate areas with comparative ease. The technology components are a differentiator in Cisco’s total customer experience.

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Lands’ End was launched in 1963 by Gary Comer as a mail-order supplier of sailing hardware and equipment. Responding to customer inquiries, the

company gradually added clothing and accessories. By 1977, sailboat hardware had been eliminated from the company’s product line. Lands’ End went public in 1986 and was purchased by Sears in mid-2002 to enhance Sears’ apparel division.

Lands’ End offers traditional, casual apparel for men, women, and children via catalogue (The Lands’ End Catalogue; Lands’ End Men; Lands’ End Women; Lands’ End Women, The Plus Size Collection; Lands’ End Kids; Lands’ End for School; Lands’ End Home; Lands’ End Business Outfitters) and retail outlets—the company runs about 30 retail and outlet stores in the United States, United Kingdom, and Japan, and its products can also be found in parent company Sears’ stores. Lands’ End’s primary customer base is middle-aged, married professionals. In addition to clothing, the company also markets accessories, home goods, luggage, holiday items, and corporate gifts to consumers.

Lands’ End operates 16 outlet and inlet stores in four states—Wis., Ill., Minn., and N.Y.—plus three outlet stores in the United Kingdom and one in Japan. The company primarily markets to consumers via its catalogues and mails out more than 270 million catalogues annually worldwide.

Lands’ End was a successful early entrant to e-tailing. (It began selling products online in 1995.) Today, Landsend.com is the world’s largest retail Web site (in business volume) and offers such innovative features as:• a My Virtual Model service that allows customers to create a 3-D model of

themselves and “try on” clothes before they buy online;• a My Personal Shopper service that suggests products to customers based on the

preferences that they provide; and• Shop With A Friend, which allows two customers to browse the Web site together,

communicate with one another, and add items to a single online shopping cart.

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Lands’ End


Lands’ End has a reputation for excellent customer service. Some examples of its customer-friendly policies are listed below.• The “Guaranteed.Period.” return policy allows customers to return any items at

any time for any reason for refund or replacement.• Specialty shoppers are available to help customers with sizing questions, gift ideas,

and wardrobe coordination from 7:30 a.m. to midnight every day.• The company will hem and cuff trousers free of charge for customers and supplies

swatches of fabric (as well as additional buttons or luggage parts or repairs) to customers who request them.

• The “Lost Mitten Club” will replace any child’s mitten lost in the same season at half the price of a pair, with free shipping.

the customer experience at lands’ endThe underlying philosophy at Lands’ End is that what is best for the customer is

best for the entire company, and the organization strives to provide each customer with a personal experience that builds a lasting relationship. The founder of Lands’ End, Gary Comer, summarized Lands’ End’s work ethic and dedication to customer service in “The Lands’ End Principles of Doing Business.”20 These eight principles shape the way business is conducted throughout the various departments in the organization.1. We do everything we can to make our products better. We improve material and

add back features and construction details that others have taken out over the years. We never reduce the quality of a product to make it cheaper.

2. We price our products fairly and honestly. We do not, have not, and will not participate in the common retailing practice of inflating mark-ups to set up a future phony “sale.”

3. We accept any return, for any reason, at any time. Our products are guaranteed. No fine print. No arguments. We mean exactly what we say “Guaranteed. Period.”®

4. We ship faster than anyone we know of. We ship items in stock the day after we receive the order. At the height of the last Christmas season the longest time an order was in the house was 36 hours, excepting monograms which took another 12 hours.

5. We believe that what is best for our customer is best for all of us. Everyone here understands that concept. Our sales and service people are trained to know our products and to be friendly and helpful. They are urged to take all the time necessary to take care of you. We even pay for your call, for whatever reason you call.

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20 ©1992, Lands' End, Inc. All rights reserved.


6. We are able to sell at lower prices because we have eliminated middlemen, because we don’t buy branded merchandise with high protected mark-ups, and because we have placed our contracts with manufacturers who have proved that they are cost conscious and efficient.

7. We are able to sell at lower prices because we operate efficiently. Our people are hard working, intelligent, and share in the success of the company.

8. We are able to sell at lower prices because we support no fancy emporiums with their high overhead. Our main location is in the middle of a 40-acre cornfield in rural Wisconsin.

To contribute to these principles, the Lands’ End customer call center is staffed 24 hours a day, seven days a week. During the off-peak times of year, the call center is staffed with approximately 2,300 sales representatives, while during the peak season, this number increases to about 3,100.

Lands’ End has four primary call centers through which customers can experience the organization’s customer service. The first center is located at the company’s headquarters in Dodgeville, Wis. This was the first call center for Lands’ End and began in 1979 with only nine telephones. The Dodgeville center is the only location that is open 24 hours a day and also handles incoming calls from the United Kingdom and Canada. There are between 600 and 900 representatives at this center that focus exclusively on customer sales. These representatives handle various types of calls including sales for Lands’ End for Men, Lands’ End for Women, Lands’ End for Kids, Lands’ End for School, and calls received from the “800” number provided on the Lands’ End Web site. In addition, this call center receives incoming calls on behalf of the Wisconsin Board of Tourism organization.

Some of the more specialized services provided by the Dodgeville call center include the first-time buyer call-back program. The company has been providing this service since 1999. Two weeks after a customer has made his or her first purchase from Lands’ End, a customer service representative will call that customer to ensure that he was satisfied with the order. This practice has proven to be successful in increasing customer retention, as well as re-purchasing in the future.

Another similar service provided by the Dodgeville representatives is the call-back program for unavailable items. Representatives personally call a customer to let him know that an item that he ordered is unavailable. As with the first-time buyer call-back program, this service has proven to have positive results with customer retention, as well as adding money to the overall order since the customer usually orders an additional one to two items to substitute for the unavailable item.

Another call center is located in Cross Plains, Wis. This center was added to the organization in 1988 and is open from 6:00 a.m. until midnight, seven days a week. There are approximately 600 to 800 representatives working at this center, including half of the group that handles calls originating from the number posted on the Internet. (These calls are divided between the representatives at this center

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and the Dodgeville center representatives.) Additionally, this center receives all calls originating from Sears locations.

Reedsburg, Wis. is another call center location for Lands’ End. This is one of the organization’s larger centers, with approximately 700 to 1,000 representatives. The Reedsburg location was built in 1992 and is open seven days a week between the hours of 7:00 a.m. and 11:00 p.m. This center, as with the other call centers, receives a variety of calls for different areas of Lands’ End merchandise. Similar to the Dodgeville center, this center was approached by an external organization, Weber, the grill manufacturer, to handle its incoming calls as well. Lands’ End officers have indicated that these external partnerships have proven beneficial to all parties involved.

The most recent addition to the call centers is located in Stevens Point, Wis. This center was opened in 2001 and is staffed by approximately 250 representatives during the peak customer season between the hours of 8:45 a.m. and 2:00 a.m. Approximately 150 of the representatives handle Lands’ End–related calls, while the remaining 100 representatives handle calls from Sears Direct.

evolution/history of managing the total customer experienceThere was no particular impetus that caused Lands’ End to concentrate on the

total customer experience. Providing a positive customer experience has always been a crucial part of everybody’s job function and the overall company culture. Even when the company has gone through significant changes in its environment, leadership has stressed the need for there not to be a resulting change in the customer experience. Since Lands’ End believes that a strong synergy exists between employee satisfaction and customer satisfaction, they feel that one way to ensure a consistent positive customer experience is to maintain a positive employee experience as the company undergoes periods of transition.

One of the significant changes was the company’s first restructuring in 1999, which resulted in a number of layoffs. Naturally, the remaining employees experienced a mixture of fear and decreased morale as a result of the restructuring. Lands’ End leadership reinforced its strong commitment to the employee base to ease the resulting anxiety. To do this, the company has an open-door policy when it comes to communicating with employees. If an employee requests to meet with a member of management, the organization has committed to meeting with that employee within 24 hours of the request. Employees are encouraged to speak with the person with whom they feel comfortable, regardless of that person’s title. This has allowed employees to feel as if they are being listened to and that their concerns are not being ignored.

Additionally, Lands’ End utilizes multiple communication channels to keep employees informed and address any concerns. These channels include quarterly meetings, communication meetings, distributing information via the company intranet, and utilization of the company newsletter.

Another significant change for Lands’ End was becoming part of the Sears organization three years ago. To assist in this transition, Lands’ End began an


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“Ambassador” program, where Lands’ End employees have been placed in select Sears stores to train Sears personnel on the product lines. This has resulted in positive feedback from customers, as well as an increase in sales. Fortunately, Sears has given Lands’ End a significant amount of autonomy and has not changed its unique culture. This has been instrumental in not causing a sense of “culture shock” for Lands’ End employees.

As a result of stressing the importance of employee relationships, Lands’ End was able to re-enter the “100 Best Companies to Work For,” as ranked by Fortune magazine in 2002. The leadership at the organization points to the tenets of respect, pride, camaraderie, trust, and fairness in employee relations as crucial factors in making this list.

customer touch points/access mechanismsFigure 29 below illustrates the various elements of the

customer sales and service division.A brief description of some of these touch points

follows.• business tech—This section is the group that assists with

performing analytic processes.• ace—This stands for Achieving Customer Excellence

and encompasses customer management. Lands’ End believes that it is not only technology that provides quality customer service but also the people and processes that are put into place.

• customer service—This small group handles “secondary tier” calls, which cover issues such as lost packages, etc.

• internet—This is a small group that handles incoming e-mail messages from customers.

• promotions—This group conveys to employees what promotions have been created by the marketing department that they should be aware of.

• learning and development—This group provides employee training, which is a primary focus of the company.

• specialty shoppers—This product group of about 40 individuals has a high degree of product knowledge to assist employees when needed.

Some other significant touch points for customers include those listed below.• order editing—This group is tasked with correcting all orders that have been placed

on hold, including orders where the items were not available and orders where a credit card had been placed on hold.

• return specialists—These specialists, located on the Dodgeville campus, review, research, and resolve more complex returns where contact needs to be made with the customer.

CustomerSales

Customer Sales and Service

SpecialityShoppers

Learning and Development

Promotions

Internet

CustomerService

OrderServices

ACE

BusinessTech

Figure 29


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• mail opening—This team opens orders that have been physically mailed to the company. This accounts for a small percentage of orders, but some customers still prefer this method.

• gift certificates—These representatives are tasked with the daily processing and mailing of all gift certificates. The first electronic gift certificate was ordered February 4, 1999, and gift cards were introduced in spring 2004.

• parts—Through this service, customers can get a needed part for an ordered item, such as shoelaces or buttons. Additionally, if a customer loses an item, such as one mitten, they can receive a replacement for one-half of the original cost through the “Lost Mitten Club.”

• swatching—This is a free service that has grown tremendously over recent years. Currently, the company is sending out over 300,000 swatches a year for all items except leather, cashmere, and quilts. After performing an audit, Lands’ End has found that 73 percent of the time a customer who has requested a swatch will call back to place an order.

landsend.comLands’ End estimates that approximately 50 percent of its business is conducted

via the Internet. Even though the Web site has been designed to be user-friendly, if a customer decides to contact a representative after shopping on the Web site, 63 percent of customers will make contact via telephone, 25 percent will contact via e-mail, and 12 percent use Lands’ End Live.

Lands’ End Live is a feature that was introduced to customers August 30, 1999. This feature allows Internet customers to work with a Lands’ End representative through live text chat or by clicking a button on the Web site that asks a representative to call them back. Within the 12 percent of Lands’ End Live contacts, 87 percent are text chats, while 13 percent select the “call me back” feature.

unDerstanDing the business case for managing the total customer experience

“We believe what is best for the customer is best for all of us.”— Lands’ End business operating principle no. 5

As discussed previously, there was no explicit catalyst for Lands’ End to focus on the total customer experience. Providing customers with a positive experience and building lasting relationships has always been the mission of the company.

Lands’ End has taken this commitment to a culture of customer service and aligned it with its commitment to the employee base. The overall philosophy is that strong employees will create a strong customer experience. The company takes pride in customer feedback, and various customer letters and testimonials decorate the hallways of the company facility.


In order to foster a positive culture for employees, and consequently the customers, Lands’ End encourages employees to provide input and become involved in decision making. This collaborative work environment includes a casual dress code every day; having everyone be on a first-name basis with everyone else; and modern, state-of-the-art facilities. The goal is to make the company atmosphere similar to a family atmosphere. The fact that the various facilities are all located in small town settings has made this objective even easier to attain. It is not uncommon for employees to see each other when shopping or during other activities outside of the office.

organiZational structure anD support implications of managing the total customer experiencestructure and accountability

In managing the total customer experience, Lands’ End has created a structure that they believe will best deliver a positive customer experience. Figure 30 outlines the corporate structure. Some of the executives listed in this chart have been employees for more than 20 years and are, therefore, also a tribute to the company’s strong commitment to its employees.

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the lands’ end customer sales and services and lands’ end business outfitters organizational chart

Directorlebo operations

Jackie Johnson-Caygill

Vice president css and leboJoan Conlin

Figure 30

executive assistantAmy gordon

senior manager special services

Mary Judkins

senior manager rb contact center

and promotionsrhonda Clerkin

Directorbusiness operations/ace

kurt Van dyn hoven

senior managerDV and cp contact centers

diane huza


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The vice president of CSS and LEBO reports directly to the executive vice president of employee services and customer sales. The senior manager of the special services department, indicated above, oversees the handling of all incoming mail, Internet inquiries, and the quality program. The senior manager of the Reedsburg (RB) contact center manages customer service at this center, as well as promotions and the specialty shoppers group, while the senior manager of the Dodgeville and Cross Plains contact center oversees a portion of the Internet group and employee services.

As discussed previously, all employees throughout the organization are tasked with the responsibility of promoting a positive customer experience, so there are no champions specifically responsible for driving change toward a customer-oriented culture. The importance of the customer experience is evident at many levels, including the executive level, as illustrated by the founder’s creation of the Lands’ End principles of doing business, cited previously.

contributors to a customer-centric cultureLeadership at Lands’ End is one of the more impactive contributors to the

customer-centric culture. Company leaders spend a significant amount of time fostering this culture. The customer sales and service department has certain expectations of its managers and therefore encourages them to:• be innovative in order to stimulate progress,• be accountable for their people,• communicate with their employees,• have the courage to see reality and then act on it,• show integrity and build trust, and• set a good example.

As mentioned in the above list, effective communication with employees is a critical factor in promoting a positive working environment, especially since Lands’ End has experienced organizational changes. Although the company believes face-to-face communication is the most advantageous method, several other channels are utilized by company leaders to keep employees updated as to company developments. These channels include the company newsletter, Company Threads; quarterly meetings with the CEO; regular department meetings; anniversary luncheons; and birthday meetings, among others.

role of the employee in the customer experienceAs discussed, employees play a pivotal role in managing the total customer

experience at Lands’ End, and the company views its employee loyalty as unique. The average length of service for regular employees is 11 years. There are 2,600 employees who have more than 10 years of service and 250 employees with more than 20 years of service. Lands’ End recognizes this kind of service by giving service awards to employees at the 10-, 20-, and 25-year mark.


Lands’ End believes that employees cannot be recognized frequently enough, so there are also other forms of day-to-day recognition for employees. These include celebrations of key project milestones, spot bonuses, leader participation in employee events, and leader recognition kits that serve to convey appreciation, birthday wishes, etc. Additionally, there are a number of pieces of recognition at the division level, including peer-to-peer recognition, cook-outs, ice cream socials, pot-luck lunches before the peak season, and “Bravos.” The “Bravo” is an example of recognition between employees, where one employee recognizes another in writing and highlights how that employee has provided excellent customer service.

Since the employees at Lands’ End are crucial to providing a beneficial customer experience, the company also stresses the importance of training to ensure a consistent customer experience. Without adequate training, employees will not have the necessary product knowledge to assist customers with their orders.

The learning and development department of Lands’ End is in charge of providing employees with the necessary training. Although this department is housed at the Dodgeville campus, there are also representatives at the other centers for the sake of consistency. The expectations of the learning and development department are to support the eight principles of doing business at Lands’ End, while upholding the company culture, serving as a role model, and focusing on quality and teamwork.

The training process for new hires is extensive, but the company feels it is necessary in order to keep customer service consistent. The goal is for customers who call the call centers to have the same experience, regardless of the representative who answers that call. Additionally, having associates that are well-trained and can easily access requested information lends itself to achieving first-call resolution. A new employee will receive approximately 77 hours of training. The training is conducted daily for six to seven hours a day, over two to three weeks. Approximately 10 hours are spent on product training, 17 hours on service training, 20 hours on systems and process training, and 23 hours on handling live calls along with a trainer to provide support if needed.

In order to keep current employees updated and “in the know,” two to three hours of continuing training is provided on a monthly basis to anyone with customer contact. This training covers anything new appearing in catalogs, as well as systems training. Additionally, company leadership also receives continuing training on a monthly basis. Approximately 1.5 hours per month is spent developing consistent leaders by focusing on coaching techniques, preserving the company culture, and aligning communication with strategic initiatives.

When selecting trainers, Lands’ End uses veteran sales representatives who can provide personal experiences to help new employees learn the process. In 2004, 119 trainers were used for basic training, continuing training, and individual mentoring.

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customer support processesAs previously discussed, Lands’ End has specific customer support representatives

who are tasked with “closing the loop” with customers on issues such as out-of-stock items and follow-up calls to first-time buyers. Additionally, the call centers in both Dodgeville and Reedsburg provide “Tier 2” support to the front-line representatives for calls that need to be escalated, such as replacement and special orders. These representatives also provide service to international customers through mailings to 180 countries outside of the United States.

inVestigating the business process changes reQuireD to create a total customer experience

In order to enhance the overall customer experience, Lands’ End has redesigned certain business processes to improve the quality of the total customer experience. These processes include:• customer transfers,• product repairs,• product packaging,• problem resolution, and • returns handling.

Continuously improving product quality and offering new services with the customer in mind is another crucial ingredient in managing the total customer experience at Lands’ End. Lands’ End designers add numerous features into the products to add quality, as well as distinguish them from those of competitors. For example, the locker loop is included on the back of shirts, which is a unique feature rarely seen elsewhere. All features like this one are also added to the products for children as well. During the training process, trainers ensure that the front-line customer service representatives literally get their hands on the products so that they can learn about the product features and better convey product details consistently to customers.

To further enhance the customer experience, the customer service representatives make suggestions or offerings based on past customer orders. One such example is the “Great Go-Togethers” program, which has been in place for the past 4 years. Under this initiative, if a customer orders a pillow, a prompt will appear to the sales representative reminding him or her to also offer the customer the opportunity to purchase a pillow protector. This is considered a “natural pairing.” Similar procedures are in place for ensembles; if a customer buys a swimsuit, then the representative will also inquire if that customer also needs sandals or towels. Not all customer service representatives were comfortable with this approach at first, so the change was made to only have the representative make these offers if it feels comfortable to them. Lands’ End estimates that approximately 30 percent of the sales representatives feel comfortable enough to use this technique.

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Another service aimed at enhancing the customer experience is the “Smart Service” program, which is currently in the pilot stage of development. The idea behind this program comes from collaboration between customer service and the direct marketing group. An example of this service is when a customer has purchased an item in the past that has later been updated or improved, that customer would be notified of the improvement the next time they contact the company to place an order. Another marketing approach is to emphasize certain products to a customer based on their geographic region, such as more light-weight clothes to customers in warmer climates. One other technique includes identifying customers who have purchased high-end items. When a representative receives a call from one of these customers, he or she will receive a prompt to inform that customer of other luxury items, such as cashmere. Again, the customer service representative must be comfortable with this approach and have a seamless, natural approach to offering these items to the customer.

completeness/consistency anD ease of accessinformation/content repositories and accessibility

Regarding information access, Lands’ End indicates that the following is information that is available to customer-facing employees as they communicate with customers:• unique account identification,• unique contact identification,• customer preferences and permissions,• access to product/account information across product lines,• access to current orders/transactions,• access to past orders/transactions,• access to bills and invoices,• access to customer service incidents, and• access to and update of customer information.

With regard to the customer, the company categorizes it as “very easy” for customers to locate any product or service information that they need in their preferred access channel. The company’s philosophy is one of “meeting the customer in their channel of preference,” rather than forcing them to use any particular (less-costly) channel, like the Web site.

customer self-service tasksThe following is a list of the customer self-service tasks that Lands’ End classifies

as “very important” to offer:• product/service information;• product/service selection;• product/service purchase;• product delivery status;

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• product usage, training, or guidance;• problem resolution; and• customer feedback.

Additionally, Lands’ End is able to provide real-time, self-service access to the customer tasks of:• product/service information;• product/service selection;• product/service purchase;• alerts and notifications;• change of customer information (e.g., change of address); and• product usage, training, or guidance.

inVestigating the technology enablers to create a total customer experience

A number of technology enablers contribute to the overall customer experience at Lands’ End. One such enabler is Lands’ End Custom Clothing, which is one of the more recent uses of technology for customer needs. This system was founded on the premise that one size does not necessarily fit all. Lands’ End realized that size availability of apparel and how well it fits are primary sources of customer frustration. For example, a size six article of clothing from one store may fit differently than the same size from a different maker. The Custom Clothing idea was created to address this issue. The idea of this service is for customers to design their own clothes and have them custom made to their size requirements. This solution provides an infinite selection for the customer and zero inventory for Lands’ End. The result of this initiative was increased customer satisfaction and the establishment of deeper customer relationships for the company. At first, this service was exclusively provided via the Internet, but because of good response, it is now a multi-channel option.

To assist customer service representatives in this endeavor, Lands’ End utilized “Smart Sizing” software. This software compiles consumer size data, self-assessment information, and garment choices and produces a fit prediction. The software then uses this information and tests it versus the historic consumer size database. The result is then a pattern generation for the specific selection. The cost range for this service ranges from $49 to $79, which the company feels is very competitive. This is one example of how Lands’ End has used technology to provide a positive customer experience. To date, this service has also proven to be an effective mechanism for increasing profits.

Technology is also important for staffing and scheduling of employees, since the highest expense in the call centers is agent wages. Staffing for call centers is done in four week intervals. Forecasting and scheduling are particularly important. Historical data assists with this type of forecasting. For example, if the direct marketing group estimates that a catalog will generate a certain amount of revenue, then the historical

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data will translate that figure into a number of calls, which will enable the department to accurately staff the center at the relevant time. Aspect technology is the primary system used for forecasting. Lands’ End finds this system reliable, calling it the “bread and butter” of forecasting.

Once the schedules have been established, they are managed on a daily basis. Centerwide floor supervision provides the needed management. This type of supervision looks at the entire enterprise, as well as the specific centers. Within the individual centers, supervisors constantly monitor activity by the half-hour, and then make staffing recommendations after predicting activity for future half-hours.

In order to do this accurately, supervisors need real-time staffing information. As a result, the Intra-day team process was created as a form of exception reporting. Any exception to the schedule should be reported, so a manager can then look at the report to determine if the necessary staff is present. For example, if 100 customer service representatives should be on the call center floor at a certain time, and there are only 80, then the difference should be reflected in the exception report. If there is a deviation, then that means a staffing issue must be immediately addressed.

Call routing is another area where technology plays a major role in the customer experience. Lands’ End must route calls from 375 “800” numbers, with 95 percent of those calls coming in on the company’s 12 main numbers. For its call routing needs, Lands’ End uses the CISCO ICM 4.6.2 and Spectrum 8 systems.

All calls are supervised from Command Central at the Dodgeville campus. From here, there is remote access to all the call centers, as well as a live, real-time view of all calls received at all the sites. To ensure consistency, all call routing or scripting changes are handled at the Command Center.

Some of the other call center products and solutions used include:• Aspect Series 6.11 WFM (workflow management),• Witness Systems e-Quality,• Cisco Collaboration Server (allows for the Web chat feature),• Sprint (Lands’ End’s inbound/outbound interexchange carrier), and• Nortel-Meridian PBX (Private Branch Exchange) for office phones.

Various modes of Web collaboration also contribute to Lands’ End’s use of technology to serve the customer who decides to access the company through the Internet. In addition to the live text chat feature, which allows a customer to avoid a voice call when placing an order or requesting information, there is also a page-sharing feature that allows one party to push a Web page for the other party to view. Another useful tool is the Form Share feature, which allows a customer to complete a Web form jointly with a sales agent. Of all these Web features, Lands’ End indicates that the text chat feature is the most used Web tool by customers.

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measuring the impact of managing the total customer experiencecustomer measures

When measuring the customer experience, Lands’ End has a number of service goals. The first is to answer 90 percent of incoming calls in 20 seconds or less. Additionally, the company strives for between 86 percent and 92 percent occupancy rate, which refers to how busy the representatives are during the work day. The company also has a goal of maintaining less than a 1.5 percent call abandon rate. In 2004, the service results for the contact centers were a service level of 90 percent, an occupancy level of 88 percent, and an abandon rate of 1.85 percent. Additionally, Lands’ End tracks first-contact resolution and has a current performance level of 94 percent.

Examples of financial measures that Lands’ End analyzes are the cost per call and the total variable expenses for the customer sales and services division as a percent of net sales.

the linkage between employee satisfaction information and customer satisfactionAlthough Lands’ End does not have concrete metrics to correlate employee

satisfaction to customer satisfaction, one of the original guiding principles of the company is that what is best for the customer is best for the company. Lands’ End believes that a simple approach is best when measuring customer satisfaction (or, as stated by one of the site visit hosts, “It is not rocket science, but you can make it rocket science.”) and that it is fruitless to attempt to quantify areas that are more qualitative. As the Lands’ End staff describes it, they look at calls and numbers, but they talk more to behaviors.

To capture employee satisfaction, the “Great Place to Work” survey is administered by the company once a year to a random sample of employees. This survey, which is the employee survey that the company spends the most time monitoring, is also administered to the entire employee population every three years. The survey gauges employee feelings and perceptions in areas such as recognition, company policies, the work environment, and empowerment.

customer feedbackTo Lands’ End, customer satisfaction is not enough; they also want to achieve

customer loyalty. Empowering the front-line employees to do whatever is necessary to please a customer is a major contributor to fostering customer loyalty and developing lasting relationships. To measure customer satisfaction, customers are surveyed on a quarterly basis. Additionally, focus groups are also conducted on a monthly and quarterly basis to collect customer feedback. Daily efforts to collect customer feedback include the logging of customer support and service calls; reviewing e-mails, regular mail, and suggestion cards; and debriefing sessions with front-line customer personnel.

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summary anD lessons learneD The site visit to Lands’ End illustrated the following best practices in managing

the total customer experience:• building a truly customer-centric culture does not happen overnight—it can take

decades;• having knowledgeable personnel that customers can contact by telephone, e-mail,

or live chat is critical, even for customers who prefer using the Internet;• investing in training and retaining employees is a key ingredient in managing the

customer experience;• make the sales associates into customer advocates by encouraging them to bring

customer ideas to the forefront;• a truly customer-centric culture will enable sales representatives to naturally do

the right thing for the customer; and• building customer loyalty through quality products and service can alleviate the

need for separate tiers of service for different types of customers.

To summarize, Lands’ End points to the following as necessary steps to successfully manage the total customer experience:• empower front-line employees,• invest in employee training,• maintain the quality of the products,• be a great place to work,• put the customers first,• focus on creating repeat customers,• make it easy for customers to contact a live person 24 hours a day, and• measure what matters to the customer.

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Index



i n D e xm a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Index(Includes sections headings

and figure titles)

air products and chemicals, pages 71–83 Completeness/Consistency and Ease of Access, pages 79–80 Investigating the Business Process Changes Required to Create a Total

Customer Experience, pages 78–79 Investigating the Technology Enablers to Create a Total Customer Experience,

page 81 Measuring the Impact of Managing the Total Customer Experience, pages 81–82 Organizational Structure and Support Implications of Managing the Total

Customer Experience, pages 76–78 Summary and Lessons Learned, pages 82–83 Understanding the Business Case for Managing the Total Customer Experience,

pages 74–76apci’s brand bull’s eye, Figure 14, page 47 and Figure 20, page 75business results from customer experience investments, pages 58–59central coordination/planning; Distributed, field-level implementation, page 35cisco customer experience: common first-line support, Figure 9, page 31 and Figure 21, page 87cisco systems, pages 85–95 Investigating the Technology Enablers to Create a Total Customer Experience,

pages 90–92 Measuring the Impact of Managing the Total Customer Experience, pages 93–95 Organizational Structure and Support Implications of Managing the Total

Customer Experience, pages 88–90 Summary and Lessons Learned, page 95 Understanding the Business Case for Managing the Total Customer Experience,

pages 86–88completeness/consistency and ease of access at Air Products, pages 79–80 at Lands’ End, pages 107–108


i n D e x

customer access mechanisms and touch points, Figure E.4, page 13customer sales and service, Figure 29, page 101customer segmentation Deployed through a branded customer experience at air products, Figure 10, page 39customer-centric Values at best-practice partners, Figure 3, page 19effectiveness of customer self-service capabilities, Figure 16, page 63facilitating software, Figure 19, page 68factors included in recruiting employees to Deliver a positive total customer experience, Figure 4, page 22greatest contributors to a customer-centric culture, Figure 1, page 17how customer interaction network Works, Figure 24, page 90importance of employees in managing the total customer experience reinforced through performance management systems, page 25industry representation, Figure E.1, page 11investigating the business process changes required to create a total customer experience at Air Products, pages 78–79 at Lands’ End, pages 106–107investigating the technology enablers to create a total customer experience at Air Products, page 81 at Cisco, pages 90–92 at Lands’ End, pages 108–109Key business levers, Figure 23, page 89lands’ end, pages 97–111 Completeness/Consistency and Ease of Access, pages 107–108 Investigating the Business Process Changes Required to Create a Total

Customer Experience, pages 106–107 Investigating the Technology Enablers to Create a Total Customer Experience,

pages 108–109 Measuring the Impact of Managing the Total Customer Experience, page 110 Organizational Structure and Support Implications of Managing the Total

Customer Experience, pages 103–106 Summary and Lessons Learned, page 111 Understanding the Business Case for Managing the Total Customer Experience,

pages 102–103lessons learned about how customer experience leaders operate, page 35lessons learned, page 68linking of customer experience to brand promise, pages 18–19measuring the impact of managing the total customer experience at Air Products, pages 81–82 at Cisco, pages 93–95 at Lands’ End, page 110mechanisms for fostering accountability for the customer experience, Figure 5, page 25metrics used to track improvements in the customer experience, Figure 12, page 43


i n D e x

migration to a customer interaction network at cisco, Figure 15, page 50new outsource model for front line, Figure 25, page 91organizational structure and support implications of managing the total customer experience at Air Products, pages 76–78 at Cisco, pages 88–90 at Lands’ End, pages 103–106outsourcing the common front line and incenting the right behavior, Figure 26, page 92percentage of organizations able to provide real-time, self-service access, Figure 7, page 29primary customers, Figure E.2, page 11process redesigned to improve the Quality of the customer experience, Figure 8, page 30providing customers with a consistent View of their account information, pages 65–66recruiting and retaining customer-friendly employees, pages 21–23sales/service channels, Figure E.3, page 12sample customer experience measures, Figure 13, page 45stages in the customer life cycle in Which effectiveness is measured, Figure 11, page 41summary and lessons learned at Air Products, pages 82–83 at Cisco, page 95 at Lands’ End, page 111survey methodology, Figure 28, page 93technologies used to make the customer experience a seamless process, Figure 18, page 67the evolution of the contact center, Figure 22, page 88the importance of the customer experience recognized at the highest levels, page 35the lands’ end customer sales and services and lands’ end business outfitters organizational chart, Figure 30, page 103the lands’ end principles of Doing business, Figure 2, page 18the role of executive steering committees and other executives in the customer experience, page 34to anticipate needs, pages 37–38to Deliver products and services Differently to each segment, pages 38–40training customer-friendly employees, pages 23–24types of customer information available to customers, Figure 6, page 28 and Figure 17, page 64understanding the business case for managing the total customer experience at Air Products, pages 74–76 at Cisco, pages 86–88 at Lands’ End, pages 102–103Value of new Vendor management model, Figure 27, page 92

Documents

Managing the Total Customer Experience