Understanding Customer Experience - by Christopher Meyer and André Schwager
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Understanding
Customer Experience
by Christopher Meyer and André Schwager
This article originally appeared in
Harvard Business Review
Article Reprint No. R0702G
brought to you by
Harvard Business Review articles are brought to you by Zurich HelpPoint as part of the Managing Risk Series.
Zurich neither endorses nor rejects the information presented in the article. We do not guarantee the accuracy of this information or
any results and further assume no liability in connection with this publication including any information or methods contained herein.Companies that systematically monitor customer experience can take
important steps to improve it—and their bottom line.
Understanding
Customer Experience
by Christopher Meyer and Andre Schwager
Anyone who has signed up recently for cell comparison shopping and thus price wars.
phone service has faced a stern test in trying to In the second, the company offered a hard-to-
figure out the cost of carry-forward minutes obtain rebate to stimulate a purchase. And in
COPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
versus free calls within a network and how it the third, the goal was to slash staffing costs,
compares with the cost of such services as push- despite soothing claims of 24-hour self-service
to-talk, roaming, and messaging. Many, too, availability. Unfortunately, such cunning makes
have fallen for a rebate offer only to discover for customer experiences that engender regret
that the form they must fill out rivals a home and then the determination to do business
mortgage application in its detail. And then elsewhere.
there are automated telephone systems, in Customer experience encompasses every
which harried consumers navigate a mazelike aspect of a company’s offering—the quality of
menu in search of a real-life human being. So customer care, of course, but also advertising,
little confidence do consumers have in these packaging, product and service features, ease
electronic surrogates that a few weeks after the of use, and reliability. Yet few of the people re-
Web site www.gethuman.com showed how to sponsible for those things have given sustained
reach a live person quickly at ten major con- thought to how their separate decisions shape
sumer sites, instructions for more than 400 ad- customer experience. To the extent they do
ditional companies had poured in. think about it, they all have different ideas of
An excess of features, baited rebates, and a what customer experience means, and no one
paucity of the personal touch are all evidence more senior oversees everyone’s efforts.
of indifference to what should be a company’s Within product businesses, for example, prod-
first concern: the quality of customers’ experi- uct development defers to marketing when it
ences. In the first example, the carrier offered a comes to customer experience issues, and both
jumble of phone services in part to discourage usually focus on features and specifications.
harvard business review page 1Understanding Customer Experience
Operations concerns itself mainly with quality, the company’s actual offerings, a company’s re-
timeliness, and cost. And customer service per- examination of its initiatives and choices will
sonnel tend to concentrate on the unfolding not suffice. The customers themselves—that is,
transaction but not its connection to those pre- the full range and unvarnished reality of their
ceding or following it. Even then, much service prior experiences, and then the expectations,
is rote: Otherwise, why would service reps ask, warm or harsh, those have conjured up—must
as they so often do, “Is there anything else I can be monitored and probed.
help you with?” when they haven’t even dealt Such attention to customers requires a
with the original reason for the call or visit? closed-loop process in which every function
Some companies don’t understand why they worries about delivering a good experience,
should worry about customer experience. Oth- and senior management ensures that the of-
ers collect and quantify data on it but don’t cir- fering keeps all those parochial conceptions
culate the findings. Still others do the measur- in balance and thus linked to the bottom line.
ing and distributing but fail to make anyone This article will describe how to create such a
responsible for putting the information to use. process, composed of three kinds of customer
The extent of the problem has been docu- monitoring: past patterns, present patterns,
mented in Bain & Company’s recent survey of and potential patterns. (These patterns can
the customers of 362 companies. Only 8% of also be referred to by the frequency with
them described their experience as “superior,” which they are measured: persistent, peri-
yet 80% of the companies surveyed believe odic, and pulsed.) By understanding the
that the experience they have been providing different purposes and different owners of
is indeed superior. With such a disparity, pros- these three techniques—and how they work
pects for improvement are small. But the need together (not contentiously)—a company
is urgent: Consumers have a greater number of can turn pipe dreams of customer focus into
choices today than ever before, more complex a real business system.
choices, and more channels through which to
pursue them. In such an environment, simple, What Customer Experience Is
integrated solutions to problems—not frag- Customer experience is the internal and subjec-
mented, burdensome ones—will win the alle- tive response customers have to any direct or
giance of the time-pressed consumer. (For more indirect contact with a company. Direct contact
on making the buying process simpler, see generally occurs in the course of purchase, use,
James P. Womack and Daniel T. Jones, “Lean and service and is usually initiated by the cus-
Consumption,” HBR March 2005.) Moreover, tomer. Indirect contact most often involves un-
in markets that are increasingly global, it is planned encounters with representations of a
dangerous to assume that a given offering, company’s products, services, or brands and
communication, or other contact will affect takes the form of word-of-mouth recommenda-
faraway consumers the same way it does those tions or criticisms, advertising, news reports, re-
at home. views, and so forth. Such an encounter could
Although few companies have zeroed in on occur when Google’s whimsical holiday logos
customer experience, many have been trying pop up on the site’s home page at the inception
to measure customer satisfaction and have of a search, or it could be the distinctive “po-
Christopher Meyer (cm@fastcycle plenty of data as a result. The problem is that tato, potato” sound of a Harley-Davidson motor-
.com) is the chairman of Strategic Align- measuring customer satisfaction does not tell cycle’s exhaust system. It might just be an e-
ment Group, a consultancy based in anyone how to achieve it. Customer satisfac- mail from one customer to another.
Portola Valley, California, that specializes tion is essentially the culmination of a series of The secret to a good experience isn’t the
in innovation and time-based competi- customer experiences or, one could say, the net multiplicity of features on offer. Microsoft
tion. He is the author of Fast Cycle Time result of the good ones minus the bad ones. It Windows, which is rich in features, may pro-
(Free Press, 1993). Andre Schwager occurs when the gap between customers’ ex- vide what a corporate IT director considers a
(aschwager@customersenseconsulting pectations and their subsequent experiences positive experience, but many home users
.com) is a former president of Seagate has been closed. To understand how to achieve prefer Apple’s Macintosh operating system,
Enterprise Management Software and a satisfaction, a company must deconstruct it which offers fewer features and configuration
founder of Satmetrix Systems, a custom- into its component experiences. Because a options. A customer’s experience with an Apple
er experience software company based great many customer experiences aren’t the di- device begins well before the purchaser turns
in Foster City, California. rect consequence of the brand’s messages or it on—in the case of the iPod, perhaps with
harvard business review page 2Understanding Customer Experience
the dancing silhouettes in the TV advertise- Thus, a supplier satisfies the purchasing de-
ments. The origami-like (and recyclable) pack- partment of its business customer by providing
aging enfolds the iPod as though it were a a balance of costs and benefits; it satisfies oper-
Fabergé egg made for a czar. A small sticker, ations by offering products or services that are
“Designed in California, Made in China,” com- easy to use; and it satisfies a customer’s execu-
municates the message that Apple is firmly in tives by expanding capacity at the same rate as
charge but also interested in keeping costs the customer and in general evolving alongside
down. Even Windows users appreciate the de- it. Accordingly, sales and marketing do not
vice’s intuitive, Mac-like feel and find that necessarily monopolize points of contact with
downloading tracks from iTunes is easier than customers: Operations people at the first com-
buying a CD on Amazon. Every Apple prod- pany deal directly with their counterparts at
uct is designed with the overarching purpose the second, and so forth. The functional nature
of making the time one spends with Apple an of the relationship—indeed, the fact that it is a
enjoyable experience. true relationship—creates a pervasive aware-
A successful brand shapes customers’ expe- ness of experience issues and priorities.
riences by embedding the fundamental value Whether it is a business or a consumer being
proposition in offerings’ every feature. For studied, data about its experiences are col-
BMW, “the Ultimate Driving Machine” is lected at “touch points”: instances of direct
much more than a slogan; it informs the com- contact either with the product or service itself
pany’s manufacturing and design choices. In or with representations of it by the company or
2000, Mercedes-Benz introduced a system some third party. We use the term “customer
that automatically controls the distance be- corridor” to portray the series of touch points
tween a Mercedes and the car in front. BMW that a customer experiences. What constitutes
would not consider developing such a feature a meaningful touch point changes over the
unless it amplified rather than diminished the course of a customer’s life. For a young family
driving experience. with limited time and resources, a brief en-
Service quality and scope matter, too, but counter with an insurance broker or financial
mostly when the core offering is itself a service. planner may be adequate. The same sort of ex-
For example, the tracking and shipping sup- perience wouldn’t satisfy a senior with lots of
port FedEx provides on the Internet and by time and a substantial asset base.
phone is as important to customers as its fun- Not all touch points are of equivalent value.
damental value proposition—on-time delivery. Service interactions matter more when the
In their concern with logistics—how some- core offering is a service. Touch points that ad-
thing is provided, not just what is provided— vance the customer to a subsequent and more
business-to-business companies take after valuable interaction, such as Amazon’s straight-
consumer-service companies. For both, the forward 1-Click ordering, matter even more.
goal is to provide a positive experience to the Companies need to map the corridor of touch
end user. The business partner or supplier of points and watch for snarls. At each touch
a B2B company helps the latter do that first point, the gap between customer expectations
by understanding where in its direct custom- and experience spells the difference between
ers’ value chain the B2B can make a meaning- customer delight and something less.
ful contribution, and then when and how. People’s expectations are set in part by their
Those are different undertakings from cap- previous experiences with a company’s offer-
turing and parsing a given human being’s ings. Customers instinctively compare each
internal, ineffable experience. A business’s new experience, positive or otherwise, with
“experience,” one might say, is its manner of their previous ones and judge it accordingly.
functioning, and a B2B company helps its Expectations can also be shaped by market
business customers serve their customers by conditions, the competition, and the cus-
solving their business problems, just as an ef- tomer’s personal situation. Even when it is the
fective business-to-consumer company fulfills company’s own brand that establishes expecta-
the personal needs of its customers. In a B2B tions, the customer can be set up for disap-
context, a good experience is not a thrilling pointment. For example, Dell transformed
one but one that is trouble-free and hence re- buying computers over the Internet from a
assuring to those in charge. risky to a reliable experience. When it ex-
harvard business review page 3Understanding Customer Experience
tended that set of procedures to the selection treatment were growing far more slowly than
and purchase of expensive plasma HDTV sets, expected. For HIV/AIDS patients, switching
however, it disappointed. Dell did an effective medications, Gilead discovered, is very differ-
job of creating positive customer expectations, ent from choosing an alternative cold remedy.
but they turned out to be better fulfilled by the Switching requires ending a trusted relation-
in-person sales force at Best Buy. ship in the hope of reaching an uncertain im-
Ideally, good design makes both the provement level. The company also learned
most routine and the weightiest customer that HIV-positive patients are far more inter-
experiences—checking a price, getting a ested in the potential adverse effects of a new
question answered, or placing a multimillion- drug than in its supposedly superior efficacy.
dollar order—pleasant and efficient. How- With this new understanding, Gilead decided
ever, even when dissatisfaction or wariness to emphasize in its marketing the new drug’s
arises, artful control of consumer experi- lower incidence of serious side effects. It also
ence can overcome it. segmented the patients’ physicians by their
In its development of a new AIDS drug, willingness to prescribe a different medication
Gilead Sciences provides a good example of from the ones they knew. Once Gilead made
how a failure to understand the experience it easier for patients to switch drugs, the mar-
and expectation component of a consumer seg- ket share of the company’s main competitor
ment’s dissatisfaction can turn into a failure to dropped 33%.
reach that segment. Upon releasing the new
medication, which had demonstrated advan- Why the Neglect?
tages over existing ones, Gilead noticed that CEOs may not actively deny the significance of
while sales to patients new to therapy were ro- customer experience or, for that matter, the
bust, sales to patients already undergoing tools used to collect, quantify, and analyze it,
CEM Versus CRM
Customer experience management and customer relationship management differ in
their subject matter, timing, monitoring, audience, and purpose.
What When How Monitored Who Uses Relevance to
the Information Future Performance
Customer Captures and At points of Surveys, targeted Business or Leading: Locates
Experience distributes what customer studies, observa- functional leaders, places to add
Management a customer thinks interaction: tional studies, in order to create offerings in the
(CEM) about a company “touch points” “voice of customer” fulfillable expecta- gaps between
research tions and better expectations and
experiences with experience
products and
services
Customer Captures and After there Point-of-sales data, Customer-facing Lagging: Drives
Relationship distributes what is a record market research, groups such as cross selling by
Management a company knows of a customer Web site click- sales, marketing, bundling products
(CRM) about a customer interaction through, automated field service, and in demand with
tracking of sales customer service, ones that aren’t
in order to drive
more efficient and
effective execution
harvard business review page 4Understanding Customer Experience
but many don’t adequately appreciate what data start flowing, the bogeymen come out of
those tools can reveal. Three forces in the the closet. Can we afford to do what customers
main conspire to preserve this gap. are asking for? How do we choose between
Too much money already lavished on conflicting preferences? Can we accept what
CRM. Having spent millions of dollars on cus- customers say they are experiencing without
tomer relationship management software, first telling them what they should be experi-
many CEOs consider their problem to be not a encing? Corporate leaders who would never
lack of customer information but a superfluity tolerate a large gap between forecasted and
of it. Before investing more time and money, actual revenues prefer to look the other way
executives justifiably want to know how cus- when company and customer assessments di-
tomer experience data are different and what verge, as they do in the Bain survey.
their value is. Executives also hesitate to act on findings
To put it starkly, the difference is that CRM because experience data are more ambiguous
captures what a company knows about a par- than customers’ actions—the orders they
ticular customer—his or her history of service place, for instance. However, statistical analy-
requests, product returns, and inquiries, among sis has developed to the point where it can
other things—whereas customer experience dependably quantify both the relative impor-
data capture customers’ subjective thoughts tance of each touch point and the experience
about a particular company. CRM tracks cus- it provided. It can also isolate key transac-
tomer actions after the fact; CEM (customer tions, accounts, regions, customer segments,
experience management) captures the imme- and so forth, and then parse the resulting
diate response of the customer to its encoun- data. About ten years ago, companies started
ters with the company. Employees accustomed collecting experience information electroni-
Corporate leaders who to reading the marketing department’s dry cally. Now they can instantly combine it with
analyses of CRM point-of-sale data easily grasp data collected from CRM systems and other
would never tolerate a the distinction upon hearing a frustrated cus- customer databases, conduct analyses of both
tomer’s very words. (For a detailed account of individual and aggregate responses in real
large gap between the difference between the two approaches, time, and then automatically route and track
forecasted and actual see the exhibit “CEM Versus CRM.”) issues needing resolution.
Moreover, many CEOs don’t sufficiently ap- Squishier are observation studies and ver-
revenues prefer to look preciate the distinction between customer sat- batim comments, which for that reason don’t
the other way when isfaction, which they believe they have heavily get the attention they deserve. Approached,
documented, and customer experience, which however, with the requisite empathy and in-
company and customer always demands further investigation. sight, they can be in their own way more re-
Lack of attunement to customers’ needs. vealing than concrete findings. For one thing,
assessments diverge.
Leaders who rose through customer-facing even consumers sharply aware of a product’s
functions, such as Cisco Systems CEO John or brand’s deficiencies can’t quite picture
Chambers, are more likely to act with refer- what might replace it. That’s why Henry Ford
ence to customer experience than those who said that if he asked his customers before
have not. When competing new technologies building his first car how he could better meet
are difficult to choose among, Cisco defers its their transportation needs, they would have
choice until key customers have registered said simply, “Give us faster horses.” Properly
their reactions. Because the company knows understood, the currents beneath the surface
there will be a market for the choice it finally that direct the flow of customer experience
makes, it can afford to commit itself later than data will indicate the shape of the next major
its competitors. transformation.
In contrast, executives who rose through
finance, engineering, or manufacturing often All Hands on Board
regard managing customer experience as the Many organizations place responsibility for
responsibility of sales, marketing, or customer collecting and assessing customer experience
service. data within a single, IT-supported customer-
Fear of what the data may reveal. It’s easy facing group. Doing so accomplishes at least
to say one’s business is customer-driven when three things: It saves money; it protects cus-
there are no data to prove otherwise. Once tomers from redundant and annoying solicita-
harvard business review page 5Understanding Customer Experience
tions; and it permits direct comparison of cus- used as a cell phone, the device consumed far
tomers on the basis of their location, choice of more power than it did when used as an orga-
product, or some other criterion. nizer. So customers who were heavy users of
But it is a mistake to assign to customer- the cell phone feature found that their Treos
facing groups overall accountability for the were often losing power—and often at an in-
design, delivery, and creation of a superior convenient distance from their rechargers.
customer experience, thereby excusing those Complaints about this problem began showing
more distant from the customer from under- up in Palm’s customer-service transaction sur-
standing it. veys. But the customer service department
In contrast to this common pattern, Palm could offer the Treo’s unhappy owners only
drew on customer experience to make the Treo minor power-saving tips.
one of its most successful products ever. A Dissatisfied with the status quo, customer
combination of cell phone and Palm Pilot, the service vice president Dan Gilbert, showing
original Treo used the same built-in recharge- unusual initiative, distributed the experience
able battery as the Palm organizers. When data his department had collected to product
Tracking Customer Experience: Persistent, Periodic, Pulsed
Companies can monitor various patterns of interaction with customers to gain a better under-
standing of the customer experience they are providing. Depending on the precise information
a company is seeking, it may choose to analyze past patterns, present patterns, potential patterns,
or a combination. Each pattern requires a distinct method of generating and analyzing data and
will yield different types of insights.
Pattern and Purpose Owner Data Collection Collection and Discussion and
Frequency and Scope Analysis Methodology Action Forums
Past Patterns: Captures Central group Persistent: > Web-based, in-person, > Analyzed within
a recent experience. or functions > Electronic surveys or phone surveys functions, central
> Intended to improve linked to high- > User forums and survey groups, or
transactional experiences volume transactions blogs both
> Tracks experience goals and or an ongoing feed- > Cross-functional
trends back system issues directed to
> Automatically trig- general managers
> Assesses impact of new
gered by the comple- > Strategic analysis
initiatives
tion of a transaction and actions directed
> Identifies emerging issues
> Focused, short-cycle, by general managers
timed data collection
Examples: Post-installation or > Feedback volun-
customer service follow-up, teered by users in
new-product-purchase follow-up online forums
Present Patterns: Tracks current Central Periodic: > Web-based surveys > Initial analysis by
relationships and experience group, > Quarterly account preceded by sponsoring group
issues with an eye toward business reviews preparation in > Broader trends and
identifying future opportunities. units, or person issues forwarded to
> Relationship studies
> Keeps a consistent yet deeper functions > Direct contact in general managers’
> User experience
watch on state of relationship person or by phone strategic and operat-
and other factors studies ing forums
> Moderated user
> Looks forward as well as > User-group polling > Deeper analysis of
forums
backward > Focus groups and emerging issues at
> Used with more critical other regularly the corporate, busi-
populations and issues scheduled formats ness unit, or local
level
Examples: Biannual account
reviews, “follow them home”
user studies
Potential Patterns: Targets General Pulsed: > Driven by specific > Centered within
inquiries to unveil and test management > One-off, special- customers or unique sponsoring group,
future opportunities. or functions purpose driven problems with coordination by
> Very focused and support from
> Interim readings of
central group
Examples: Ethnographic design trends > Incorporates existing
studies, special-purpose market knowledge of cus-
studies, focus groups tomer relationship
harvard business review page 6Understanding Customer Experience
development, which went to work on the prob- customer might desire, and what it sees as chal-
lem. The next-generation Treo came with a lenges to its competitiveness. Given the broad
battery that users replace. In 2005, sales were scope of the inquiry, this type of monitoring
71% higher than the previous year. shouldn’t be triggered solely by a customer-
Typically, however, a vigorous reaction to in- initiated transaction. Instead, information on a
telligence gathered on customer experience re- company’s key products and services should
quires general management to orchestrate a be gathered at scheduled intervals, or “periodi-
response to customer problems. Intuit learned cally.” Hewlett-Packard and the consulting firm
that when it tried to address the trouble cus- BearingPoint, for example, approach every
tomers were having installing a new release of key customer annually. By initiating contact
TurboTax. The solution turned out to be cross- with different customers at different times
functional, but no one who had been asked to throughout the year, BearingPoint has created
deal with it was senior enough to “own” the en- an almost persistent data flow that does not de-
tire installation process. pend on the completion of a given transac-
tion, while permitting comparisons among
Obtaining the Right Information customers on a range of issues. BearingPoint
There are three patterns of customer experi- learned in this fashion that the best practices
ence information, each with its own pace and it had established in one vertical-market
level of data collection. (For a detailed break- group had not migrated to other groups.
down of the three patterns, see the exhibit Present patterns are collected through sur-
“Tracking Customer Experience: Persistent, veys or face-to-face interviews, studies tailored
Periodic, Pulsed.”) to the subject, or some combination thereof. It
When companies monitor transactions oc- helps to prepare customers for the inquiry by
curring in large numbers and completed by in- telling them the purpose of the survey, how
dividual customers, they are looking at past they will hear about the findings, and what
patterns. Enterprise Rent-A-Car is supposed to role they might play in addressing them. Ac-
ask every driver returning one of its vehicles, cordingly, Hewlett-Packard rewards its account
“Would you rent from Enterprise again?” Any managers on survey-participation rates as well
new service a France Telecom customer re- as results.
ceives is followed by a brief questionnaire on Potential patterns are uncovered by probing
the quality of his or her experience. As these for opportunities, which often emerge from
two examples demonstrate, each attempt to interpretation of customer data as well as ob-
determine the quality of the experience di- servation of customer behavior. Like the
rectly follows the experience itself. So compa- study Gilead conducted, such probes are out-
nies receive by this method an uninterrupted, growths of strategies usually involving the tar-
or “persistent,” flow of information, which they geting of particular customer segments and
then analyze and communicate internally. Al- are therefore unscheduled, or “pulsed.” The
though surveys are the tool used most often findings are often used to inform the product
for gathering data on past patterns, customers development process.
are sometimes approached through online fo- Most companies apply a single summary
rums and blogs. Companies are mostly guided metric to data on past and present patterns.
by assertions that win customers’ strong agree- The customer experience metric Net Pro-
ment, but sometimes customers’ failure to moter, for example, registers customers’ expe-
react strongly to some feature or service can be riences in aggregate—that is, their positive
just as telling. For this reason, the employees ones minus their negative ones. Intuit’s founder,
evaluating results must be attuned to areas of Scott Cook, uses Net Promoter scores for goal
customer experience that a survey or other setting and engaging the organization’s atten-
tool does not directly address. tion, though he recognizes that a rising or
Analyses of present patterns are not simply falling score doesn’t begin to reveal what is
evaluations of the meaning and success of a re- driving the trend.
cent encounter. They envision a continuing re- As relationships with customers deepen,
lationship with the customer. Consequently, companies tend to collect data with greater fre-
questions may extend to the customer’s aware- quency. The patterns that emerge suggest fur-
ness of alternative suppliers, new features the ther areas of inquiry. For example, present-
harvard business review page 7Understanding Customer Experience
relationship studies may indicate that on-site port, “Spark Innovation Through Empathic
service experience is wanting. After improve- Design,” HBR November–December 1997.) In-
ments are made, it’s common to use a transac- tuit, for example, is a leader in “follow them
tion survey following each service call to assess home” studies. Company representatives visit
progress. A subsequent, more comprehensive customers where they live or work and observe
survey may show good experience with ser- how they use Intuit products such as Quick-
vice response time but low overall ratings, Books. It was from watching the smallest busi-
triggering a special study to identify custom- nesses struggle with QuickBooks Pro that the
ers’ priorities among a range of service experi- company recognized a need for a product like
ence factors. QuickBooks Simple Start. These tools lend
Low cost and ease of modification make sur- themselves to the measurement of present and
veys the overwhelming favorite for measuring potential patterns, for they entail more time,
past and present patterns. E-mail–based sur- preparation, and expense than transaction-
veys are superior to paper-based ones because based surveys.
they can be more easily shared; they allow
rapid distribution; they give the surveyor the Acting on Experience Information
flexibility to extend or abbreviate the question- Let’s take a look at a company we’ll call
ing according to the wishes of the respondent HiTouch—which is actually a composite of
or the substance of the response; they mini- companies—as it struggled to create a system
mize delays in analyzing the results; and they for managing customer experience. HiTouch,
lead to quick action, such as a referral to a gen- a business-to-business global financial services
eral manager should scores fall below a prede- provider, received a shocking wake-up call
termined level. E-mail surveys can also be when a top customer shifted half its business to
A well-designed survey is more easily tailored. For example, the surveys an archrival. HiTouch executives had just com-
Marvin Windows and Doors sends to its dis- pleted a quarterly account review classifying
not simply one that elicits tributors are different from those sent to archi- the relationship with this account as “superior.”
tects who buy its products. The stunned executives wondered what they
the desired information. A well-designed survey is not simply one could have missed.
It must itself avoid that elicits the desired information. It must it- From their efforts to salvage the account, Hi-
self avoid becoming an unfortunate aspect of Touch executives learned enough to initiate a
becoming an the customer experience. Hence, it shouldn’t companywide effort to improve the experience
unfortunate aspect of the be onerous for the taker or deny him the of all other major accounts. After conducting a
chance to communicate the special nature of mini-audit of existing customer-experience
customer experience. his experience. One way of keeping surveys programs, responsible parties, and results, it
mercifully brief is to avoid asking about mat- discovered that its vertical-market groups
ters like recent purchases that the company al- hardly went further than tracking leads and
ready has a record of. Nor should they be trig- analyzing buying patterns. Most employees
gered by the transactions of regular customers assumed customer experience was the job of
such as purchasing agents. Such customers are, marketing or sales. The company’s only CEM
after all, among those a business can least af- metric came from a mailed annual customer
ford to annoy. By the same token, corporate satisfaction survey whose wording hadn’t
sanctions imposed on dealers who receive low changed in three years.
scores shouldn’t be so harsh that retailers try to HiTouch engaged consultants to help with
discourage customers from responding by of- the initiative. Rather than spending a lot of
fering to fix any problem on the spot. The indi- time establishing formal customer experience
vidual customer may be placated, but wide- goals or a detailed plan, the consultants ar-
spread resort to this practice keeps general gued for a “fast prototype” relationship survey
management from obtaining a broad picture of top customers. HiTouch’s leaders identi-
of systemic problems. fied the touch points they knew had disap-
Surveys do have their limitations, and focus pointed their most important customers. Pre-
groups, user-group forums, blogs, and market- venting further customer defections, they
ing and observational studies can yield insights realized, would require customer experience
that surveys cannot. (For more on listening to goals for every stage of the value chain. These
users, see Dorothy Leonard and Jeffrey Ray- had to serve every vertical market’s financial
harvard business review page 8Understanding Customer Experience
objectives while being compatible with the “Do you believe HiTouch delivers the experi-
company’s branding. ence promised by its marketing and sales
As the issues piled up, it became clear that force?” The pilot survey included a summary
the effort needed an executive leader, a bud- metric that permitted HiTouch to compare
get, and dedicated resources. HiTouch’s top responses by location, service platform, and
sales executive, having become a believer in vertical market.
the process, stepped up. To ensure a good re- The sales executive noticed that meetings
sponse rate, he asked sales account executives about the pilot survey, in which salespeople
to prep customers receiving the survey. A few fed customer experience information back to
showed a predistribution draft to customers the customers themselves, differed from the
so that they could help refine issue selection typical sales call by shifting the dialogue away
and tone. Of the various questions settled on, from the individual transaction and toward
two key ones were “How important to your relationship development. They also provided
purchasing decision was HiTouch’s brand and an excellent opportunity to introduce to the
the service promise it seemed to make?” and customers HiTouch’s nonsales employees who
Rating Customers
The matrix in this exhibit organizes the cus- billings but high customer satisfaction, for ex- ample, customer A has the second-highest
tomers of HiTouch (a composite of actual ample, represent growth opportunities for billings and the second-highest forecasted
companies) on the basis of the level of atten- HiTouch. The bubbles on the matrix classify revenues, but its business is “at risk” because
tion they require. The vertical axis shows HiTouch’s customers according to a third di- its satisfaction scores are low. Customer B’s
billed revenues (products and services pro- mension: forecasted revenues (orders placed low billings, high satisfaction, and high fore-
vided and paid for). The horizontal axis but not paid for as well as potential orders), casted revenues suggest unexploited poten-
shows an aggregate score indicating level of indicated by bubble size. Letters inside the tial business for HiTouch.
customer satisfaction. Customers with low bubbles serve strictly as identifiers. So, for ex-
At-Risk Model
$25,000,000
$20,000,000
A
$15,000,000
Billed revenues
$10,000,000 Customers
with billed
revenues
above $10M
are considered
$5,000,000 high-value
B
0
Customer satisfaction
low high
Dangling Growth
bubble size represents
forecasted revenues
harvard business review page 9Understanding Customer Experience
were in a position to fix customer problems as tionship issues unearthed by customer surveys
they arose. In this fashion, salespeople began kicked off quarterly executive strategy discus-
to view their jobs less as a functional responsi- sions. Defections within each vertical-market
bility than as an organizational process. group dropped by an average of 16%.
Data from the survey began to flow within Not everything worked as hoped. The com-
24 hours of distribution. Many of customers’ pany set up an executive dashboard to keep
verbatim comments were blunt. Some execu- track of installation experience issues, but the
tives became defensive and tried to explain disclosure of high-volume transaction infor-
away what the data were saying rather than mation so upset the managers responsible
understand the concerns behind them. Some that they never got around to resolving the
never quit demanding yet one more data underlying issues. The dashboard was pulled
point. Others strained to launch company re- in favor of automatic triggers that channeled
sponses before fully understanding what was problems to specialists or general managers,
being said. who began to make good progress in solving
With 60% of the responses in, it became them. Increased analyst staffing and simpli-
clear which experiences were critical to overall fied reporting helped the general managers
satisfaction. However, they were different in identify new opportunities, an area they had
each vertical market, with few exceptions. been neglecting.
For each, summary scores were compared
with customer revenue. On that basis, finance The Employee Experience
placed every customer in one of four quad- Customer experience does not improve until it
rants (see the exhibit “Rating Customers”). becomes a top priority and a company’s work
• Model customers: good summary scores; processes, systems, and structure change to re-
good revenue. flect that. When employees observe senior
• Growth customers: good summary scores; managers persistently demanding experience
higher potential revenue. Candidates for cross information and using it to make tough deci-
selling and upselling. sions, their own decisions are conditioned by
• At-Risk customers: low scores; good reve- that awareness.
nue. Demanding decisive intervention. Not long after breaking every software-
• Dangling customers: low scores; low reve- industry growth record, Siebel Systems (now
nue. To be rescued or abandoned. part of Oracle) saw its satisfaction ratings begin
Auspiciously, the Growth segment had three to drop. An adopter of customer experience
times as many customers as any of the others. management, the company had gathered data
But on further examination it emerged that revealing that customers found a large dispar-
some of those customers didn’t buy as much as ity between actual and expected costs of own-
those in other quadrants. In fact, one of the ership of Siebel 6, a sales-force automation
largest remaining customers was squarely in tool based on a client-server architecture. The
the At-Risk quadrant. proposed solution, a shift to a Web-based ar-
The results of the initial survey coincided chitecture in Siebel 7, would require forgoing
with the start of the strategic-planning cycle. the development of other major features—and
By the following quarter, every vertical-market the revenues they generated—for two years.
team, having shown some customers the find- Yet Siebel’s leadership went ahead with the
ings and described what the team planned to shift anyway. Satisfaction levels soon returned
do about them, was ready to send out transac- to their formerly lofty levels, and employees
tion surveys of customers’ experiences with took heart as management placed experience
service installation and repair. Every team had ahead of revenues.
also set experience goals for itself and sched- Once persuaded of the importance of experi-
uled relationship surveys. ence, every function has a role to play.
A year later, current experience data had re- Marketing has to capture the tastes and stan-
placed ill-informed opinion at HiTouch. At dards of every one of its targeted market seg-
monthly operations meetings, vertical-market ments, circulate that knowledge within the
general managers reviewed key customer ex- company, and then tailor all consumer com-
perience issues, and actions taken, before re- munications accordingly.
viewing financials. A rolling summary of rela- Service operations must ensure that pro-
harvard business review page 10Understanding Customer Experience
cesses, skills, and practices are attuned to every ees’ individual capabilities, work processes,
touch point. (Present-patterns surveys are and attitudes. As for performance manage-
good for tracking high-volume touch points ment, of course customer experience results
such as call centers.) should affect compensation. But as we have
Product development should do more than learned in recent years, incentives that are too
specify needed features. It should also design powerful are more likely to distort behavior
experiences after observing how customers use than channel it productively.
products and services, learning why they use Account teams must progress from annual
offerings as they do, and figuring out how exist- surveys to detailed touch-point analysis,
ing products might be frustrating them. Ide- then translate present patterns of customer
ally, product developers will identify customer experience and issues gleaned from recent
behavior that runs counter to a company’s ex- transactions into action plans that are shared
pectations and uncover needs that haven’t with customers. Not every significant impli-
been identified. cation is readily apparent. Leaders need to
Information technology that can collect, ana- press the data to precipitate customers’ con-
lyze, and distribute CEM data, integrate the in- cealed longings.
formation with that generated by CRM, and •••
monitor progress must be in place. As the data Customer dissatisfaction is widespread and,
flow stabilizes, the form of presentation and its because of customers’ empowerment, increas-
degree of detail should be keyed to whichever ingly dangerous. Although companies know a
internal audience the data are meant for. A lot about customers’ buying habits, incomes,
level of detail that is appropriate for an analyst, and other characteristics used to classify them,
for example, can easily overwhelm a line man- they know little about the thoughts, emotions,
ager. CEM is a play within a play, so to speak; and states of mind that customers’ interac-
just as customers must have a good experience, tions with products, services, and brands in-
employees need to have a good experience di- duce. Yet unless companies know about these
gesting information about themselves. subjective experiences and the role every func-
Human resources should put together a com- tion plays in shaping them, customer satisfac-
munications and training strategy that conveys tion is more a slogan than an attainable goal.
the economic rationale for CEM and paints a
picture of how it will alter work and decision- Reprint R0702G
making processes. Since the front line deter- To order, see the next page
mines the bulk of customer experience, it or call 800-988-0886 or 617-783-7500
would be a good idea to study those employ- or go to www.hbr.org
harvard business review page 11The Zurich HelpPoint Perspective
for all of us. From claims to underwriting to look ahead, rather than in the rearview mirror.
operations, distribution, etc., every employee We know that our methods are working
has a role in our value chain. At Zurich, we when we receive testimonials from satisfied
have a branding statement, “We deliver when customers and brokers that we developed
it matters.” This is embedded in our culture products and services that help address
and permeates all levels of the company, their unique needs. We also track customer
providing a consistent and meaningful retention where we actively engage Claims
experience to our customers. and our customer service account executives.
One of my favorite lessons on customer service We are proud to say we have a 90% retention
comes from the story of a company that, after rate on these customers as of December 2010.
seeing a decline in business, tried to solve its
problems by finding a new ad agency. When How has information from tracking
company executives went to the offices of customers changed the way you
a potential ad agency, they were greeted by look at business and/or the way
STEVE HATCH
CHIEF CLAIMS OFFICER an unkempt individual, asked to wait in a you do business?
ZURICH NORTH AMERICA COMMERCIAL disorganized conference room and ignored A true assessment of customer data requires
for a significant period of time. When the a willingness to accept critical feedback, even
How is “customer experience
executives asked about the status of their if it means acknowledging that a customer’s
management” different
meeting, they were given no answers. Finally, needs are not being met. We must choose
from “customer relationship
the agency representatives arrived. Imagine to approach each situation as a challenge
management”?
the shock of the company executives when to improve and an opportunity to deliver on
At every turn, our customers are assessing
it was explained that the treatment they had our value proposition. The regular tracking
how our performance as an insurance provider
just received was based on feedback from the of candid customer feedback supports our
matches their expectations. To best assess our
company’s customers! The ad agency advised organizational philosophy of continuous
customers’ satisfaction, we must capture their
that advertising was not the problem at the improvement. It is our obligation to frequently
service expectations and impressions of our
business — it was customer service. realign with customers’ business needs and
organization and how we do business — in
work with them to help reduce risk, create
other words, we must manage customers’ The key here is that the multiple roles we
solutions and provide best-in-class service.
total Zurich experience. have at Zurich are all integrated into a system
that functions to help benefit our customers. While customer centricity will continue to be
Once we understand the experience of a
Reducing the quality of just one piece of this the overarching principle that governs our day-
customer, we can begin to manage the
system can significantly affect the customer to-day business practices, we will continue to
relationship according to their needs, priorities,
experience. build meaningful and specialized relationships
challenges, etc. Customer relationship
that bring success to our customers and, as a
management is absorbing all we know about
What is the best way to track result, to Zurich.
a customer’s experience and using that
knowledge to strengthen our relationship
customer experience? How do you
know you are asking the
with them, thereby creating even better
right questions?
experiences. Our relationships with customers
At Zurich, we track customer experience Zurich in North America is a part of Zurich
truly transcend to an alliance aimed at
through robust tools aimed at both customers Financial Services Group (Zurich), an insurance-
mutually reducing their cost of risk. We do based financial services provider with a global
and distribution channels. By evaluating
this by understanding their risks, identifying network of subsidiaries and offices in North
customer satisfaction survey results and America and Europe as well as in Asia Pacific,
loss trends and creating solutions to help drive
narrative feedback and reviewing our metrics, Latin America, and other markets. Founded
better claim outcomes. Customer experience in 1872, the Group is headquartered in Zurich,
we can get both subjective and objective
management and customer relationship Switzerland, and employs approximately 60,000
measures of how well we are serving people serving customers in more than 170
management are at the very center of our
customers and how this relates to the bottom countries, including more than 9,500 employees
strategy of customer centricity. in North America. www.zurichna.com
line of both the customer and Zurich.
Why should customer service be Customer expectations and experiences are
everyone’s business — not just that constantly changing, and frequent checks on
of sales and customer service? their satisfaction allow us to identify potential
We rely on our front line to be the face of issues that may lie ahead and tailor our actions
Zurich, but customer centricity is a cornerstone accordingly. In other words, this allows us toYou can also read
