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© Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page1 of 8
CUSTOMER EXPERIENCE STRATEGY
EXPLORING THE SUCCESS FACTORS
What is customer experience strategy?
A set of tactics or a program is often labeled "strategy", but let's not be
fooled by semantics.
In Strategy: An Executive's Definition,
an article by Booz Allen Hamilton, "strategy" is described as
a shared definition among executives when they are creating,
communicating, & implementing their choices on where to
play and how to win, to maximize long-term value.
Let's use this definition to examine customer experience strategy.
Shared Definition
A shared definition minimizes likelihood of resistance and maximizes
potential for collaboration. A shared vision integrates viewpoints and
clarifies WIIFM (what's in it for me) across functional areas. And just as
your body works as an indivisible system, so does customer experience
(CX) require your company to harmonize all functions. Is there a
shared definition across executives of all functional areas in your
company regarding customer experience?
When CX is a determinant of corporate strategy, companies tend to
have stronger business results, according to the ClearAction Business-
to-Business Customer Experience Management Best Practices Study. A
larger percentage of companies view CX as a subset of corporate
strategy, or unrelated to it. However, among the companies that
realize their whole existence is in thanks to good customer
experiences, and who treat their corporate strategy accordingly,
holistic approaches to CX management are more likely, and return on
investment is higher.
Creating, Communicating & Implementing
Co-creation of strategy is instrumental to buy-in and ongoing support.
Communicating your CX strategy has no limits, as constant awareness
is critical for company-wide implementation. Without full
implementation, you're leaving money on the table. Is there company-
wide co-creation, communication, and implementation of your CX
strategy?
Case Study: Establishing a
Customer Experience Strategy
Wilderness experts will tell you that using
a compass to find your way requires an
accurate starting point: if you don’t get
that part right, and start out a few
degrees off, you can end up in a very
different place than your intended. In a
recent conversation with Carol Borghesi,
former Senior Vice President of Client
Experience and Customers First Culture
at Canadian telecom provider TELUS, we
discussed what it takes to navigate the
corporate wilderness to ensure we’re on
the right trajectory for customer
experience (CX) return on investment.
Disconnected Customer Experience
Management & Financials
“Conventional wisdom about how we
run businesses leads us to an obsession
with quick wins,” explained Carol.
“There’s a complete disconnect
between the scope of the problem
and management’s desire to see
results. The language that businesses
speak is fluent finance. And it has been
devilishly difficult to get credible data
that shows the relationship between
reported CX and financial outcomes.”
“The most important things to
understand are the lead and lag
indicators, and what should be worked
on at the root level versus the surface
level, associated with three factors: CX,
operational results, and the financials.
Much of what creates customer
experiences are the decisions and
processes generated well ahead of the
front line.”
© Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page2 of 8
Shared enthusiasm is not the same as shared vision. The value of
passion cannot be underestimated, but strong emotions are a double-
edged sword when it comes to taking a group on a journey. Sharing a
vision across a company means there are common definitions of the
current situation, the desired situation, and how to bridge the gap.
There's a lot more to gaining shared vision about who your customers
are: what are they trying to achieve? Are different circumstances
shaping their processes and expectations? What do you know about
your customer’s world, in terms of pressures, challenges, frustrations
and triumphs relating to their overall objectives in getting and using
whatever you provide them? Informal comments by customers can
be the best source of insight about who they are and what makes
them tick.
We often assume that "supportive executives" means shared vision and
executive sponsorship. But like everything in a company, "it takes a
village". Customer experience management is a team sport, a way of
life, an ongoing journey of excellence within the context of valuing
customers' well-being as the enabler of well-being in all other areas.
Choice on Where to Play
Informed decisions require analysis of what's going on in the business
relative to what's important to customers, and capabilities /
achievements that both customers and executives want to have in
place in the future. Analysis of comments from customers and
employees, in conjunction with operational data, is key to creating a
shared understanding of the current landscape and making strategic
choices about customer experience.
Involvement among the entire C-team is an absolute must. Great
strides in customer experience excellence by one part of your
company can be undermined by well-intentioned disharmony caused
by another part. For example, in a human body, the pancreas is a
relatively tiny organ, yet ignoring or removing it can be fatal. Many
might advocate that shared vision can come later, but most
companies that are winning in the customer experience race created
that shared vision at the earliest possible moment.
"Where to play" refers to prioritization of opportunities and issues to take
you from current to desired state. Remember, we're talking about
strategy here. Opportunities and issues at stake are about doing the
whole job for your company's success. Choices about where to play in
CX have implications for corporate objectives, organizational structure,
employee trust and engagement, governance, communication,
projects and programs. Has your company made informed choices
about where to play in customer experience?
“So it is critical that all of those groups,
despite degrees of separation,
understand how what they do impacts
the customer. And the best way to start
that conversation is to get around the
table and develop a team-based CX
strategy.”
Programs versus Strategy
A credit union has been working with
Carol to put their CX management on
the right trajectory. “What they had
been undertaking was pretty typical:
front-line training to enable them to sell
more products and services. They had
some pretty good results when they
undertook it about 5 years ago, but
unsurprisingly, that tapered off.”
“When I started to talking to the firm,
they had ideas that they were going to
do a bunch of tactical things, and
were overwhelmed by the blizzard of
stuff: customer journey mapping,
training, customer councils, and so
forth. They had limited resources and
they knew they had to get back to
their roots of putting their customers at
the heart of what they did. They
wanted to move their people from
order-takers to inspiring trust among
customers.”
“We concluded that what they really
needed to do was to establish a
strategy. They understood they needed
to look holistically at what they were
doing, first of all, and secondly that it
could not be an annual budget type of
exercise, but longer term. That’s what
led us to develop a team-based CX
strategy.”
© Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page3 of 8
How to Win, to Maximize Long-term Value
A strategy specifies how you will know when you've won, and lays out
the plan for how to get there. Mutual value for the company and
customers in the long-term is the aim of CX in the first place.
Long-term value does not preclude immediate wins; it aims to achieve
systematic wins that do not erode, but rather, maximize value to all
over the course of the customer's relationship with the company and
beyond. Value is gained by customers in heightened capabilities and
minimized time, effort, worry, and costs. Value is gained by your
company through customers' strategic inputs, extended buying, and
word-of-mouth promotion, all of which may reduce your costs and
increase your revenue.
Difficulties Achieving Customer Experience Goals
Most of us are pursuing retention, loyalty, service excellence, and CX
differentiation. Let's explore the nature of these goals:
 Customer retention (duration of relationship) and loyalty (share
of budget, recommendations) are outcomes that cannot
magically occur through marketing campaigns or
enticements, except with short-term spikes.
 Service excellence would be much easier to achieve if routine
confusion externally and internally was prevented, freeing up
front-line employees to focus on value-add opportunities
rather than remedial issues.
 Customer experience differentiation would be more feasible if:
o Voice-of-the-customer methodology was designed to
help the company make necessary transformations.
o Customer intelligence integrated all sources of CX data
for a holistic picture of customers' plight.
o Everyone across the company had an insatiable curiosity
about customers and passion for innovating the customer
experience.
As the Forrester 2013 State of Customer Experience report discovered:
"Despite 90% of respondents saying that CX is a top strategic priority for
their firm, a shocking 86% said their companies don't actually expect to
get much value from it."
Strategy for CX management is lacking for most organizations,
according to numerous studies, and lack of strategy is a cited widely
by CX practitioners as a key obstacle to achieving business results. [1]
A close look at the most prevalent CX practices underscores this
dilemma: we're "putting the cart before the horse" with near-brute-
force on business results and by forgoing the essential building blocks
to sustainable customer experience ROI.
Team-Based
Customer Experience Strategy
“We started with all of the functional
leaders of all of the functions within the
credit union — all direct reports of the
senior management team — and that
was important because, in fact, they
actually run the place.” The team-
based strategy process brings together
people with different agendas, to
establish understanding and
agreement about what the goal is,
and then to identify the issues and
opportunities that the organization
faces. It’s a simplified approach similar
to SWOT (strengths, weaknesses,
opportunities, threats) that faces the
brutal facts as the issues are defined,
whether they’re self-imposed or
external.
“In order to create a strategy using the
team-based approach, you really do
have to make space for the
management team to think through
their business and go through what I
call constructive arguing and
debating, so that you really get an
understanding of one another’s
functional issues and opportunities
relating to delivering on the promise of
CX. We unpacked what it meant to
deliver on their mission statement. That
was inspiring and quite revealing to the
team assembled.”
The Silver Bullet
The credit union leadership grew up in
the business, and with very established
thinking and hierarchical roles, team-
based CX strategy was a completely
new approach. “The senior
management team gave their direct
reports free rein to develop this
strategy.” Afterward, Carol facilitated
the senior management team going
through the team-based strategy
process. “What’s interesting is that they
adopted virtually all of what their direct
reports had developed.”
© Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page4 of 8
Why the Cart is Before the Horse
Career path biases of CX practitioners, pet projects of executives,
ambitious purveyors of CX technologies, and eagerness to embrace
shiny silver bullets are some of the perpetrators of the gold-rush
strategy for CX business results.
Perhaps we manage CX strategy like playing Jenga. (Jenga is the
game with a stack of blocks where players take turns to remove one
and balance it on top.) The game is supposed to start with a robust
foundation, and in the quest to rise to new heights, holes are made to
re-allocate resources, weakening the structure until it topples over.
In managing CX, new heights are attempted by betting the farm on
shiny silver bullets such as loyalty programs, CRM, technologies, digital
marketing, content management, social media, and other customer
engagement methods. These endeavors are often referred to as a CX
management strategy, yet they lack the essential building blocks that
will logically win customers' hearts for the long-term.
We need to step back and take a look at logical cause-and-effect of
business and human behavior (externally and internally), with a holistic
viewpoint, in order to get on the right track toward our goals for
differentiation, excellence and financial rewards. We need a model
for CX strategy: one that shows the natural flow of building blocks from
point A (customer) to point Z (financials).
Customer Experience Management Success Factors
From the get-go, we're cutting corners with communication gaps
between managers of various CX processes. Although coordination
among those who manage different aspects of CX is not yet common,
the companies that do coordinate formally do have stronger business
results tied to CX, according to the Annual ClearAction Business-to-
Business Customer Experience Management Best Practices Study.
“What was fabulous is that they had
the purview of the bigger picture and
made sure that this strategy was
completely anchored in their overall
enterprise strategy, and THAT is the
silver bullet. They were able, in fact, to
adopt a customer-centric strategy as
the company’s strategy, complete with
all the financial objectives of the
organization over the 3-year planning
horizon. They presented this strategy to
the board, and that was the kick-start
of re-organizing to align their leadership
talents and functional accountabilities
around CX.”
Carol explained the importance of the
credit union’s alignment of leadership
talents and functional accountabilities:
“If you haven’t addressed the changes
that you need to undertake to put
customers at the heart of what you do,
you will continue to pit brother against
brother. It’s essential to uncover where
those process and policy and
jurisdictional problems exist.”
“I’ve seen completely polar opposite
objectives in the score cards of
different functional areas. No wonder
they don’t get along! If my job is to sell
as many widgets as humanly possible,
and your job is to keep the cost down
of supporting those widgets once
they’re sold, we’re never going to work
together harmoniously until we come
to an understanding about the drivers
of the issues that come post-sale. I think
that’s what’s so powerful about team-
based strategy, because we get
it ALL on the table.”
All managers participated in the
strategic planning forum with
opportunities to weigh-in on the
strategy, voice their concerns, and
reach a common understanding, and
ultimately common agreement with
the strategy.
© Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page5 of 8
In fact, correlation analyses indicate that some of the least common
practices are indeed the most lucrative. Lack of intention to mold the
company's processes, policies, and mindsets to build-in CX
excellence causes severe structural weaknesses in the quest to
achieve financial results.
Think about it: if those who manage different parts of CX across the
company don't talk regularly with one another, how can we expect to
excel in an omni-channel world (a seamless experience; reaching the
customers wherever they are)? How can we expect solid relationships
with customers (as implied by CRM and loyalty programs) if we aren't
fully managing the holistic customer experience?
Customer Experience Management Mindset
We start with a rickety foundation when we don't set the tone for
transforming processes, policies and mindsets before collecting
customer feedback or mapping customer journeys and touch-points,
or beginning any other aspect of CX management. A minority (only 5-
15%) of organizations seeks to transform business-as-usual to truly
customer-centric operations, according both to the Temkin Group's
2013 State of Voice of the Customer Programs study and to the
ClearAction study.
Most executives place greater emphasis on stock market pressures,
industry analysts' recommendations, internal politics, and
management's instincts than they place on customer inputs. This may
also be a reflection of the breadth of usable content from customer
surveys relative to what's needed to inform management's decision-
making.
The ClearAction study shows 40% of firms with executives that treat CX
management as a formal process, influencer of major decisions, and
competitive differentiator. The same number of firms report company-
wide deployment of CX strategy and/or customer-centricity (degree
that customers' welfare is at the center of the solution provider's
decision-making and actions).
Employee Engagement in Customer Experience Management
Other critical holes that make our CX management a lot like a game
of Jenga revolve around lack of widespread employee engagement
in managing their impact on CX excellence. There's a snowball effect
from the remotest corners of a company, as hand-offs and
deliverables successively impact the internal value-building chain until
customer-facing employees, and customers themselves, feel the brunt
of it all. Systemic resolution of root issues to prevent recurrence for all
customers is what will move the needle the most in CX business results.
Breakthrough Results
The CEO conducted road shows to
introduce the strategy to all of the
employees, with question-and-answer
sessions that were incredibly powerful.
The CEO said he’d never seen such a
level of engagement in his people.
Their recent employee opinion survey
shows a rise in the level of trust that
employees have in senior
management, along with higher
employee engagement, and a strong
element of hope in employees’
comments.
“They’ve heard this rhetoric before, but
they’ve never seen this level of senior
management behavior CONSISTENTLY
supporting and being open to
discussion and debate about putting
customers at the heart of the business.
Suddenly you’ve got an army that has
not only the wherewithal to follow the
leader, but has the BELIEF to follow the
leader. Why? Because they were
instrumental to the development of the
strategy. That’s unusual, but it is
endlessly do-able.”
For having the courage to introduce
this ground-breaking concept to the
senior management team, the
manager who started all of this at the
credit union has been promoted to
vice president. Congratulations to all
involved for navigating the corporate
wilderness to ensure the right trajectory
for customer experience excellence
business results.
FIND OUT MORE
ClearAction can facilitate the
development of your
customer experience strategy.
Contact Carol Borghesi directly at
OptimizeCX@ClearActionCX.com
or tel +1 778 966 9048
© Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page6 of 8
Don't be duped into lipstick-on-a-pig thinking; make sure the
substance (quality of product, service, experience) is there before
focusing on sizzle (customer engagement).
Cross-functional collaboration must become a way of life, breaking
down silos, minimizing customer pain and employee pain, and cleverly
creating value that causes customers to be naturally enthusiastic
about buying again, buying more, and telling everyone they know
how wonderful your company is. To do this, change management,
organizational learning, quality tools (e.g. six sigma/lean, Pareto,
fishbone analyses, etc.), and systems thinking are absolute musts in
every CX strategy.
Somehow, our piecemeal strategy attempts are expected to achieve
meaningful differences in financial performance. And when push
comes to shove, many of these pieces are vulnerable to scrapping or
skimping, weakening your strategy's capability to produce sustainable
results.
How to Get Enduring Customer Experience Business Results
Here are 6 truths:
1. First, revenue comes from customers. We are pretty good at
"tuning our radar" to what turns on/off our boss who has power
over our salary and career progress, so it makes sense to
likewise tune our radar to our ultimate boss: customers. This is
the Customer Voice building block for CX ROI.
2. Second, collation and interpretation of data picked up by our
radar becomes valuable intelligence, and if we can quantify
the value of our relationships, we're equipped with the
necessary knowledge and motivation to adjust our behavior
to what's needed for success with our boss. This is
the Customer Intelligence & Customer Lifetime Value building
block for CX ROI.
3. Third, dedication and creativity allow us to improve and
innovate ourselves and our situation so that the boss sees us as
indispensable to our collective success. This is the CX
Improvement & Innovation building block for CX ROI.
4. Fourth, keeping our boss' well-being at the center of our
decisions and actions gives us a secure backdrop for moving
things forward on-the-fly and for being in the right place at the
right time to make the most of the best opportunities. This is
the Customer-Centricty building block for CX ROI.
5. Fifth, it certainly makes sense to center our teams accordingly:
get everyone on the same page with regard to what makes
the boss tick and how their work impacts the boss' well-being
and our collective success, and to engage everyone in
CX ROI Building Blocks
To put the horse in front of the cart so your
CX efforts have a fighting chance of
making a strategic impact and delivering
ongoing business results, develop your CX
strategy with the essential building blocks.
And keep reminding everyone that all of
these building blocks must be in-play to
achieve sustainable growth (ROI).
C5 + I2 + E2
1. Customer voice
2. Customer experience strategy
3. Customer-centric culture
4. Customer intelligence
5. Customer lifetime value
6. Improvement of customer experience
7. Innovation of customer experience
8. Engaging internally
9. Engaging externally
The sequential aspect of CX
management is in the flow of the input-
action-output (A-B-C) equation. Listen
to customers (A), apply what they are
telling you within your work (B), and
deliver your brand promise (C).
The systemic aspect of CX
management is the concurrent
execution of that sequence at all
times. From the get-go, create
actionable intelligence from voice-of-
the-customer, engage employees
broadly in improving and innovating
their work in accordance with
customer intelligence, and brand
internally as intensely as you are
branding externally to convey your
promises and value.
Employ all the building blocks
simultaneously on a basic level to start
out, and gradually increase
sophistication of each building block —
just as you would do in guiding a child's
development or a tennis player's skill
level.
© Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page7 of 8
proactively managing their work for the best outcomes. This is
the Engaging Internally building block for CX ROI.
6. Sixth, with all these building-blocks in place, now you can feel
at ease to toot your own horn. Let your stakeholders know
about the great things you're capable of providing, and make
it compelling for them to help themselves through your
capabilities. This is the Engaging Externally building block for
CX ROI.
It is through these building blocks that sustainable retention and loyalty
are achieved. Like so many laws of nature, one cannot short-circuit this
process and expect lasting results. In fact, attempts to leapfrog any of
the building blocks will likely lead to inefficient resource use and
customer distrust, with suboptimal profitability and short-term revenue
growth,
Customer Experience Roadmap
Customer experience maturity happens only through a concerted
roadmap designed to guide your organization from its initial efforts to
its achievement of differentiated customer experience (CX) with
sustained return on investment. Plot out steps to take in order to
migrate internal mindsets and behaviors toward an acute awareness
of the customer experience that all of departments collectively
create.
A customer experience roadmap is powerful when you use it as a
conversation piece with your stakeholders. It engages your
stakeholders in taking ownership for the company's customer-centric
culture evolution, and in so doing, expands your army of change
agents.
The System is the Silver Bullet
Always think about the entire system.
That is the silver bullet for CX ROI. For
example, while you are setting up a
shared vision (CX strategy/culture), you
may:
 Collect existing customer
comments (customer voice) and
 Connect the comments to
operational data (customer
intelligence) and
 Prioritize the comments based on
customer revenue or cost
(customer lifetime value) and
 Engage some teams in resolving
the blaring issues (improvement)
and
 Inspire some teams in creativity
around the blaring opportunities
(innovation) and
 Share selected comments on your
intranet site (engaging internally)
and
 Adapt your customer
engagement to be sensitive to
the blaring issues/opportunities
(engaging externally).
These building-blocks are prerequisites
to customer retention and loyalty, and
accordingly, to lasting, strong business
results associated with customer
experience. Has your company
created a roadmap to nurture maturity
across the CX ROI building-blocks.
One of the beauties of this customer
experience maturity model is its
emphasis on getting the biggest bang
for the buck — and keeping those
bucks rolling in. That's what customer
experience ROI is about: investing
wisely to reap mutual increased value
for the company and customers.
© Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page8 of 8
Assess Your Customer Experience Strategy & Maturity
A sanity check of your game plan for CX explores whether it covers all
the essential building-blocks for CX ROI. These building-blocks work in
a flow, and in concert.
Stepping-stones within these building-blocks are recommended in the
ClearAction CX maturity assessment, on the basis of our research of CX
practices and many years in our personal careers in leading CX efforts
inside complex organizations, with 20-20 hindsight.
The stepping stones are prioritized by their typical impact on changes
that customers will notice and respond to positively. This framework
guides your deployment of the entire system simultaneously, with
gradual increases in sophistication of all components over time.
==================================
Avoid the tendency to label a program or technology a strategy!
Make sure you establish widespread shared vision and engagement
across your C-team for CX strategy. Align your corporate objectives,
organizational structure, employee trust and engagement,
governance, communication, and programs to achieve your shared
vision.
Notes:
[1] The State of Customer Experience Management 2013, Forrester Research.
[1] Annual ClearAction Business-to-Business Customer Experience Management
Best Practices Study, 2013.
Contact Us
ClearAction is a customer experience
optimization consulting firm. We improve
your capability to profitably improve
customers’ well-being. Our top priority is
to enable customers to love you!
We do this via company-wide alignment
to customer priorities and engagement
of all employees in improving &
innovating customer experience.
We specialize in action and
actionability for enduring ROI.
We are seasoned CX practitioners who
have driven cross-organizational
improvements in customer experience.
Our first-hand knowledge of your
challenges gives you the upper-hand
in achieving business results.
We can help you accelerate your profit
growth through customer experience
excellence in:
 CX strategy
 CX culture
 CX innovation
 CX ROI
 B2B CX
Tel + 1 408 687 9700 (GMT -8.0, Pacific)
OptimizeCX@ClearActionCX.com
MINI-ASSESSMENT
Test your company’s strategic intent
with this self-assessment. We will send
you a customized report with advice
toward stronger financial results.
http://clearactioncx.com/
customer-experience-enablement-
mini-assessment

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Customer Experience Strategy: Exploring Success Factors

  • 1. © Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page1 of 8 CUSTOMER EXPERIENCE STRATEGY EXPLORING THE SUCCESS FACTORS What is customer experience strategy? A set of tactics or a program is often labeled "strategy", but let's not be fooled by semantics. In Strategy: An Executive's Definition, an article by Booz Allen Hamilton, "strategy" is described as a shared definition among executives when they are creating, communicating, & implementing their choices on where to play and how to win, to maximize long-term value. Let's use this definition to examine customer experience strategy. Shared Definition A shared definition minimizes likelihood of resistance and maximizes potential for collaboration. A shared vision integrates viewpoints and clarifies WIIFM (what's in it for me) across functional areas. And just as your body works as an indivisible system, so does customer experience (CX) require your company to harmonize all functions. Is there a shared definition across executives of all functional areas in your company regarding customer experience? When CX is a determinant of corporate strategy, companies tend to have stronger business results, according to the ClearAction Business- to-Business Customer Experience Management Best Practices Study. A larger percentage of companies view CX as a subset of corporate strategy, or unrelated to it. However, among the companies that realize their whole existence is in thanks to good customer experiences, and who treat their corporate strategy accordingly, holistic approaches to CX management are more likely, and return on investment is higher. Creating, Communicating & Implementing Co-creation of strategy is instrumental to buy-in and ongoing support. Communicating your CX strategy has no limits, as constant awareness is critical for company-wide implementation. Without full implementation, you're leaving money on the table. Is there company- wide co-creation, communication, and implementation of your CX strategy? Case Study: Establishing a Customer Experience Strategy Wilderness experts will tell you that using a compass to find your way requires an accurate starting point: if you don’t get that part right, and start out a few degrees off, you can end up in a very different place than your intended. In a recent conversation with Carol Borghesi, former Senior Vice President of Client Experience and Customers First Culture at Canadian telecom provider TELUS, we discussed what it takes to navigate the corporate wilderness to ensure we’re on the right trajectory for customer experience (CX) return on investment. Disconnected Customer Experience Management & Financials “Conventional wisdom about how we run businesses leads us to an obsession with quick wins,” explained Carol. “There’s a complete disconnect between the scope of the problem and management’s desire to see results. The language that businesses speak is fluent finance. And it has been devilishly difficult to get credible data that shows the relationship between reported CX and financial outcomes.” “The most important things to understand are the lead and lag indicators, and what should be worked on at the root level versus the surface level, associated with three factors: CX, operational results, and the financials. Much of what creates customer experiences are the decisions and processes generated well ahead of the front line.”
  • 2. © Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page2 of 8 Shared enthusiasm is not the same as shared vision. The value of passion cannot be underestimated, but strong emotions are a double- edged sword when it comes to taking a group on a journey. Sharing a vision across a company means there are common definitions of the current situation, the desired situation, and how to bridge the gap. There's a lot more to gaining shared vision about who your customers are: what are they trying to achieve? Are different circumstances shaping their processes and expectations? What do you know about your customer’s world, in terms of pressures, challenges, frustrations and triumphs relating to their overall objectives in getting and using whatever you provide them? Informal comments by customers can be the best source of insight about who they are and what makes them tick. We often assume that "supportive executives" means shared vision and executive sponsorship. But like everything in a company, "it takes a village". Customer experience management is a team sport, a way of life, an ongoing journey of excellence within the context of valuing customers' well-being as the enabler of well-being in all other areas. Choice on Where to Play Informed decisions require analysis of what's going on in the business relative to what's important to customers, and capabilities / achievements that both customers and executives want to have in place in the future. Analysis of comments from customers and employees, in conjunction with operational data, is key to creating a shared understanding of the current landscape and making strategic choices about customer experience. Involvement among the entire C-team is an absolute must. Great strides in customer experience excellence by one part of your company can be undermined by well-intentioned disharmony caused by another part. For example, in a human body, the pancreas is a relatively tiny organ, yet ignoring or removing it can be fatal. Many might advocate that shared vision can come later, but most companies that are winning in the customer experience race created that shared vision at the earliest possible moment. "Where to play" refers to prioritization of opportunities and issues to take you from current to desired state. Remember, we're talking about strategy here. Opportunities and issues at stake are about doing the whole job for your company's success. Choices about where to play in CX have implications for corporate objectives, organizational structure, employee trust and engagement, governance, communication, projects and programs. Has your company made informed choices about where to play in customer experience? “So it is critical that all of those groups, despite degrees of separation, understand how what they do impacts the customer. And the best way to start that conversation is to get around the table and develop a team-based CX strategy.” Programs versus Strategy A credit union has been working with Carol to put their CX management on the right trajectory. “What they had been undertaking was pretty typical: front-line training to enable them to sell more products and services. They had some pretty good results when they undertook it about 5 years ago, but unsurprisingly, that tapered off.” “When I started to talking to the firm, they had ideas that they were going to do a bunch of tactical things, and were overwhelmed by the blizzard of stuff: customer journey mapping, training, customer councils, and so forth. They had limited resources and they knew they had to get back to their roots of putting their customers at the heart of what they did. They wanted to move their people from order-takers to inspiring trust among customers.” “We concluded that what they really needed to do was to establish a strategy. They understood they needed to look holistically at what they were doing, first of all, and secondly that it could not be an annual budget type of exercise, but longer term. That’s what led us to develop a team-based CX strategy.”
  • 3. © Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page3 of 8 How to Win, to Maximize Long-term Value A strategy specifies how you will know when you've won, and lays out the plan for how to get there. Mutual value for the company and customers in the long-term is the aim of CX in the first place. Long-term value does not preclude immediate wins; it aims to achieve systematic wins that do not erode, but rather, maximize value to all over the course of the customer's relationship with the company and beyond. Value is gained by customers in heightened capabilities and minimized time, effort, worry, and costs. Value is gained by your company through customers' strategic inputs, extended buying, and word-of-mouth promotion, all of which may reduce your costs and increase your revenue. Difficulties Achieving Customer Experience Goals Most of us are pursuing retention, loyalty, service excellence, and CX differentiation. Let's explore the nature of these goals:  Customer retention (duration of relationship) and loyalty (share of budget, recommendations) are outcomes that cannot magically occur through marketing campaigns or enticements, except with short-term spikes.  Service excellence would be much easier to achieve if routine confusion externally and internally was prevented, freeing up front-line employees to focus on value-add opportunities rather than remedial issues.  Customer experience differentiation would be more feasible if: o Voice-of-the-customer methodology was designed to help the company make necessary transformations. o Customer intelligence integrated all sources of CX data for a holistic picture of customers' plight. o Everyone across the company had an insatiable curiosity about customers and passion for innovating the customer experience. As the Forrester 2013 State of Customer Experience report discovered: "Despite 90% of respondents saying that CX is a top strategic priority for their firm, a shocking 86% said their companies don't actually expect to get much value from it." Strategy for CX management is lacking for most organizations, according to numerous studies, and lack of strategy is a cited widely by CX practitioners as a key obstacle to achieving business results. [1] A close look at the most prevalent CX practices underscores this dilemma: we're "putting the cart before the horse" with near-brute- force on business results and by forgoing the essential building blocks to sustainable customer experience ROI. Team-Based Customer Experience Strategy “We started with all of the functional leaders of all of the functions within the credit union — all direct reports of the senior management team — and that was important because, in fact, they actually run the place.” The team- based strategy process brings together people with different agendas, to establish understanding and agreement about what the goal is, and then to identify the issues and opportunities that the organization faces. It’s a simplified approach similar to SWOT (strengths, weaknesses, opportunities, threats) that faces the brutal facts as the issues are defined, whether they’re self-imposed or external. “In order to create a strategy using the team-based approach, you really do have to make space for the management team to think through their business and go through what I call constructive arguing and debating, so that you really get an understanding of one another’s functional issues and opportunities relating to delivering on the promise of CX. We unpacked what it meant to deliver on their mission statement. That was inspiring and quite revealing to the team assembled.” The Silver Bullet The credit union leadership grew up in the business, and with very established thinking and hierarchical roles, team- based CX strategy was a completely new approach. “The senior management team gave their direct reports free rein to develop this strategy.” Afterward, Carol facilitated the senior management team going through the team-based strategy process. “What’s interesting is that they adopted virtually all of what their direct reports had developed.”
  • 4. © Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page4 of 8 Why the Cart is Before the Horse Career path biases of CX practitioners, pet projects of executives, ambitious purveyors of CX technologies, and eagerness to embrace shiny silver bullets are some of the perpetrators of the gold-rush strategy for CX business results. Perhaps we manage CX strategy like playing Jenga. (Jenga is the game with a stack of blocks where players take turns to remove one and balance it on top.) The game is supposed to start with a robust foundation, and in the quest to rise to new heights, holes are made to re-allocate resources, weakening the structure until it topples over. In managing CX, new heights are attempted by betting the farm on shiny silver bullets such as loyalty programs, CRM, technologies, digital marketing, content management, social media, and other customer engagement methods. These endeavors are often referred to as a CX management strategy, yet they lack the essential building blocks that will logically win customers' hearts for the long-term. We need to step back and take a look at logical cause-and-effect of business and human behavior (externally and internally), with a holistic viewpoint, in order to get on the right track toward our goals for differentiation, excellence and financial rewards. We need a model for CX strategy: one that shows the natural flow of building blocks from point A (customer) to point Z (financials). Customer Experience Management Success Factors From the get-go, we're cutting corners with communication gaps between managers of various CX processes. Although coordination among those who manage different aspects of CX is not yet common, the companies that do coordinate formally do have stronger business results tied to CX, according to the Annual ClearAction Business-to- Business Customer Experience Management Best Practices Study. “What was fabulous is that they had the purview of the bigger picture and made sure that this strategy was completely anchored in their overall enterprise strategy, and THAT is the silver bullet. They were able, in fact, to adopt a customer-centric strategy as the company’s strategy, complete with all the financial objectives of the organization over the 3-year planning horizon. They presented this strategy to the board, and that was the kick-start of re-organizing to align their leadership talents and functional accountabilities around CX.” Carol explained the importance of the credit union’s alignment of leadership talents and functional accountabilities: “If you haven’t addressed the changes that you need to undertake to put customers at the heart of what you do, you will continue to pit brother against brother. It’s essential to uncover where those process and policy and jurisdictional problems exist.” “I’ve seen completely polar opposite objectives in the score cards of different functional areas. No wonder they don’t get along! If my job is to sell as many widgets as humanly possible, and your job is to keep the cost down of supporting those widgets once they’re sold, we’re never going to work together harmoniously until we come to an understanding about the drivers of the issues that come post-sale. I think that’s what’s so powerful about team- based strategy, because we get it ALL on the table.” All managers participated in the strategic planning forum with opportunities to weigh-in on the strategy, voice their concerns, and reach a common understanding, and ultimately common agreement with the strategy.
  • 5. © Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page5 of 8 In fact, correlation analyses indicate that some of the least common practices are indeed the most lucrative. Lack of intention to mold the company's processes, policies, and mindsets to build-in CX excellence causes severe structural weaknesses in the quest to achieve financial results. Think about it: if those who manage different parts of CX across the company don't talk regularly with one another, how can we expect to excel in an omni-channel world (a seamless experience; reaching the customers wherever they are)? How can we expect solid relationships with customers (as implied by CRM and loyalty programs) if we aren't fully managing the holistic customer experience? Customer Experience Management Mindset We start with a rickety foundation when we don't set the tone for transforming processes, policies and mindsets before collecting customer feedback or mapping customer journeys and touch-points, or beginning any other aspect of CX management. A minority (only 5- 15%) of organizations seeks to transform business-as-usual to truly customer-centric operations, according both to the Temkin Group's 2013 State of Voice of the Customer Programs study and to the ClearAction study. Most executives place greater emphasis on stock market pressures, industry analysts' recommendations, internal politics, and management's instincts than they place on customer inputs. This may also be a reflection of the breadth of usable content from customer surveys relative to what's needed to inform management's decision- making. The ClearAction study shows 40% of firms with executives that treat CX management as a formal process, influencer of major decisions, and competitive differentiator. The same number of firms report company- wide deployment of CX strategy and/or customer-centricity (degree that customers' welfare is at the center of the solution provider's decision-making and actions). Employee Engagement in Customer Experience Management Other critical holes that make our CX management a lot like a game of Jenga revolve around lack of widespread employee engagement in managing their impact on CX excellence. There's a snowball effect from the remotest corners of a company, as hand-offs and deliverables successively impact the internal value-building chain until customer-facing employees, and customers themselves, feel the brunt of it all. Systemic resolution of root issues to prevent recurrence for all customers is what will move the needle the most in CX business results. Breakthrough Results The CEO conducted road shows to introduce the strategy to all of the employees, with question-and-answer sessions that were incredibly powerful. The CEO said he’d never seen such a level of engagement in his people. Their recent employee opinion survey shows a rise in the level of trust that employees have in senior management, along with higher employee engagement, and a strong element of hope in employees’ comments. “They’ve heard this rhetoric before, but they’ve never seen this level of senior management behavior CONSISTENTLY supporting and being open to discussion and debate about putting customers at the heart of the business. Suddenly you’ve got an army that has not only the wherewithal to follow the leader, but has the BELIEF to follow the leader. Why? Because they were instrumental to the development of the strategy. That’s unusual, but it is endlessly do-able.” For having the courage to introduce this ground-breaking concept to the senior management team, the manager who started all of this at the credit union has been promoted to vice president. Congratulations to all involved for navigating the corporate wilderness to ensure the right trajectory for customer experience excellence business results. FIND OUT MORE ClearAction can facilitate the development of your customer experience strategy. Contact Carol Borghesi directly at OptimizeCX@ClearActionCX.com or tel +1 778 966 9048
  • 6. © Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page6 of 8 Don't be duped into lipstick-on-a-pig thinking; make sure the substance (quality of product, service, experience) is there before focusing on sizzle (customer engagement). Cross-functional collaboration must become a way of life, breaking down silos, minimizing customer pain and employee pain, and cleverly creating value that causes customers to be naturally enthusiastic about buying again, buying more, and telling everyone they know how wonderful your company is. To do this, change management, organizational learning, quality tools (e.g. six sigma/lean, Pareto, fishbone analyses, etc.), and systems thinking are absolute musts in every CX strategy. Somehow, our piecemeal strategy attempts are expected to achieve meaningful differences in financial performance. And when push comes to shove, many of these pieces are vulnerable to scrapping or skimping, weakening your strategy's capability to produce sustainable results. How to Get Enduring Customer Experience Business Results Here are 6 truths: 1. First, revenue comes from customers. We are pretty good at "tuning our radar" to what turns on/off our boss who has power over our salary and career progress, so it makes sense to likewise tune our radar to our ultimate boss: customers. This is the Customer Voice building block for CX ROI. 2. Second, collation and interpretation of data picked up by our radar becomes valuable intelligence, and if we can quantify the value of our relationships, we're equipped with the necessary knowledge and motivation to adjust our behavior to what's needed for success with our boss. This is the Customer Intelligence & Customer Lifetime Value building block for CX ROI. 3. Third, dedication and creativity allow us to improve and innovate ourselves and our situation so that the boss sees us as indispensable to our collective success. This is the CX Improvement & Innovation building block for CX ROI. 4. Fourth, keeping our boss' well-being at the center of our decisions and actions gives us a secure backdrop for moving things forward on-the-fly and for being in the right place at the right time to make the most of the best opportunities. This is the Customer-Centricty building block for CX ROI. 5. Fifth, it certainly makes sense to center our teams accordingly: get everyone on the same page with regard to what makes the boss tick and how their work impacts the boss' well-being and our collective success, and to engage everyone in CX ROI Building Blocks To put the horse in front of the cart so your CX efforts have a fighting chance of making a strategic impact and delivering ongoing business results, develop your CX strategy with the essential building blocks. And keep reminding everyone that all of these building blocks must be in-play to achieve sustainable growth (ROI). C5 + I2 + E2 1. Customer voice 2. Customer experience strategy 3. Customer-centric culture 4. Customer intelligence 5. Customer lifetime value 6. Improvement of customer experience 7. Innovation of customer experience 8. Engaging internally 9. Engaging externally The sequential aspect of CX management is in the flow of the input- action-output (A-B-C) equation. Listen to customers (A), apply what they are telling you within your work (B), and deliver your brand promise (C). The systemic aspect of CX management is the concurrent execution of that sequence at all times. From the get-go, create actionable intelligence from voice-of- the-customer, engage employees broadly in improving and innovating their work in accordance with customer intelligence, and brand internally as intensely as you are branding externally to convey your promises and value. Employ all the building blocks simultaneously on a basic level to start out, and gradually increase sophistication of each building block — just as you would do in guiding a child's development or a tennis player's skill level.
  • 7. © Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page7 of 8 proactively managing their work for the best outcomes. This is the Engaging Internally building block for CX ROI. 6. Sixth, with all these building-blocks in place, now you can feel at ease to toot your own horn. Let your stakeholders know about the great things you're capable of providing, and make it compelling for them to help themselves through your capabilities. This is the Engaging Externally building block for CX ROI. It is through these building blocks that sustainable retention and loyalty are achieved. Like so many laws of nature, one cannot short-circuit this process and expect lasting results. In fact, attempts to leapfrog any of the building blocks will likely lead to inefficient resource use and customer distrust, with suboptimal profitability and short-term revenue growth, Customer Experience Roadmap Customer experience maturity happens only through a concerted roadmap designed to guide your organization from its initial efforts to its achievement of differentiated customer experience (CX) with sustained return on investment. Plot out steps to take in order to migrate internal mindsets and behaviors toward an acute awareness of the customer experience that all of departments collectively create. A customer experience roadmap is powerful when you use it as a conversation piece with your stakeholders. It engages your stakeholders in taking ownership for the company's customer-centric culture evolution, and in so doing, expands your army of change agents. The System is the Silver Bullet Always think about the entire system. That is the silver bullet for CX ROI. For example, while you are setting up a shared vision (CX strategy/culture), you may:  Collect existing customer comments (customer voice) and  Connect the comments to operational data (customer intelligence) and  Prioritize the comments based on customer revenue or cost (customer lifetime value) and  Engage some teams in resolving the blaring issues (improvement) and  Inspire some teams in creativity around the blaring opportunities (innovation) and  Share selected comments on your intranet site (engaging internally) and  Adapt your customer engagement to be sensitive to the blaring issues/opportunities (engaging externally). These building-blocks are prerequisites to customer retention and loyalty, and accordingly, to lasting, strong business results associated with customer experience. Has your company created a roadmap to nurture maturity across the CX ROI building-blocks. One of the beauties of this customer experience maturity model is its emphasis on getting the biggest bang for the buck — and keeping those bucks rolling in. That's what customer experience ROI is about: investing wisely to reap mutual increased value for the company and customers.
  • 8. © Copyright 2014 ClearAction LLC. All rights reserved. OptiizeCX@ClearActionCX.com +1 408 687 9700 Page8 of 8 Assess Your Customer Experience Strategy & Maturity A sanity check of your game plan for CX explores whether it covers all the essential building-blocks for CX ROI. These building-blocks work in a flow, and in concert. Stepping-stones within these building-blocks are recommended in the ClearAction CX maturity assessment, on the basis of our research of CX practices and many years in our personal careers in leading CX efforts inside complex organizations, with 20-20 hindsight. The stepping stones are prioritized by their typical impact on changes that customers will notice and respond to positively. This framework guides your deployment of the entire system simultaneously, with gradual increases in sophistication of all components over time. ================================== Avoid the tendency to label a program or technology a strategy! Make sure you establish widespread shared vision and engagement across your C-team for CX strategy. Align your corporate objectives, organizational structure, employee trust and engagement, governance, communication, and programs to achieve your shared vision. Notes: [1] The State of Customer Experience Management 2013, Forrester Research. [1] Annual ClearAction Business-to-Business Customer Experience Management Best Practices Study, 2013. Contact Us ClearAction is a customer experience optimization consulting firm. We improve your capability to profitably improve customers’ well-being. Our top priority is to enable customers to love you! We do this via company-wide alignment to customer priorities and engagement of all employees in improving & innovating customer experience. We specialize in action and actionability for enduring ROI. We are seasoned CX practitioners who have driven cross-organizational improvements in customer experience. Our first-hand knowledge of your challenges gives you the upper-hand in achieving business results. We can help you accelerate your profit growth through customer experience excellence in:  CX strategy  CX culture  CX innovation  CX ROI  B2B CX Tel + 1 408 687 9700 (GMT -8.0, Pacific) OptimizeCX@ClearActionCX.com MINI-ASSESSMENT Test your company’s strategic intent with this self-assessment. We will send you a customized report with advice toward stronger financial results. http://clearactioncx.com/ customer-experience-enablement- mini-assessment