Customer experience: the next frontier How to transform your business to go beyond great customer service An Accenture point of view Executive summary As you read this, customers are interacting with your company across different channels and multiple touch points. High-performance businesses focus strongly on this customer experience as a source of competitive advantage. A consistent customer experience leads to happy customers, increased sales and a powerful brand. For many companies, keeping pace with rising customer expectations feels like a never-ending race. Rapid technology advancements and fragmented customer touch points make it harder to establish a unified relationship with consumers. These technological advances, especially social media, also make it much easier for unsatisfied customers to share their poor service experiences with friends, family and the world. 2 Many Australian companies have made significant investments in customer service and customer experience delivery in the past decade, with some notable successes, but overall it is still a challenge. Powerful and connected customers and new technologies require a new wave of investment in customer experience. The unleashed power of analytics and data can enable companies to deliver much more advanced and granular customer experience. This point of view provides a framework to help management teams transform their business to successfully compete on an outstanding customer experience, ultimately connecting their customers on an emotional level. Content Executive summary 2 Introduction 4 A snapshot of the Australian customer experience 6 Framework for an outstanding customer experience 8 Customer-centric strategy Customer experience blueprint Customer-centric operating model Customer experience execution Analytics Customer value and emotional bond Unlocking the value and getting started 15 About the global consumer research study 16 About Accenture 16 3 Introduction 4 Australian businesses have invested billions of dollars over the past decade to serve their customers better. Is it working? The large supermarket and department store chains have been in a race to refurbish stores and develop their loyalty programs. An airline recently introduced a high-tech checkin facility that allowed frequent travellers to literally sweep through the departure lounge. Banks have rolled out new channels such as mobile banking to increase convenience for customers, but are also enhancing the role of local branch managers in delivering more personalised service. Many companies have elevated customer experience to the executive level, creating positions such as chief customer officer or director of customer insight. So, are Australian consumers receiving a better customer experience? Not really. Accenture recently conducted a consumer trends survey of 5,841 people across 17 countries, including 375 from Australia. This study identified 11 key customer experience factors. It showed that between 2009 and 2010, customer satisfaction did not increase for any of these customer experience factors – in fact, it dropped in four of them. It is incredibly difficult for a business to define an outstanding customer experience – and even harder to reorganise itself to provide it. One reason is that customer expectations are always changing: today’s outstanding service is tomorrow’s satisfactory. Another reason is the growing number of ways businesses interact with customers. It is challenging enough to define and execute a great customer experience in one channel, let alone synchronising experiences across stores, field forces, the web, social media, contact centres and third-party agents. This point of view provides a snapshot of the current customer experience in Australia and a framework to help management teams transform and organise their business to compete successfully on outstanding customer experience. This framework includes the elements of a customer-centric strategy, how to develop a customer experience blueprint and execute a customer-centric operating model. Myths about the customer experience Myth Fact It is not tangible. There are already frameworks and methodologies available to break down the customer experience into a set of required activities. In addition, there is a direct link between customer experience and business success. It can’t be measured. Businesses can use sophisticated tools and dashboards to measure the customer experience holistically. Powerful social media networks foster more direct and real-time customer feedback which can be leveraged through e.g. sentiment analysis. It is a one-off exercise. As expectations are permanently rising and technologies evolving, companies must regularly revisit strategy, design and execution. It is not scientific. Decisions do not have to be based on gut feeling; they can be underpinned by analytical results. It only improves the topline. Enhancing the customer experience does require investments, but these are compensated through the reduced cost to serve and cost to sell achieved by using new and more efficient channels, hence improving the bottom-line. In addition, businesses can reduce acquisition costs by establishing customer advocates and positive word of mouth. 5 A snapshot of the Australian customer experience 6 Are Australian consumers difficult to please or are Australian businesses hopeless at serving their customers? In Accenture’s recent global consumer study1 , one-third of respondents said their expectations when interacting with retailers and service providers had increased over the past year. Nearly 50 percent said their expectations had increased over the past five years. Consumers’ expectations had increased most in relation to the ease in which they could interact with providers. Based on the study only nine percent of Australian consumers who participated in the survey said they were not at all satisfied with their product or service providers, while two-thirds said they were extremely satisfied. So, it is clear that Australian businesses are not hopeless at serving their customers. However, even satisfied customers are not automatically loyal: only 22 percent of respondents said they were loyal to their service providers. In addition, Australian consumers have shown an appetite for new offers, such as the strong growth in overseas ecommerce and uptake of recent retail entrants such as Costco, Groupon and Zara. Another striking result out of the study was the increased expectations of service providers’ knowledge about their own products and services (see Figure 1). Customers said online reviews and recommendations were often better informed than staff at the point of sale. Where is the customer experience breaking down? Time is a crucial factor for many customers. They are frustrated at how long it takes to be served and to resolve issues or problems. Another major driver of poor satisfaction is the limited knowledge service staff have of the consumers’ transaction history and personal details – especially when this is information they have already provided. Consumers are also frustrated by having to speak to multiple people when dealing with an inquiry. In fact, many Australians would prefer the ability to resolve issues without having to speak to staff at all. However, only one-third were satisfied with their current ability to do so. Emerging customer behaviour Self-directed customers place increased importance on: Australians love to shop online and on their mobile devices: 76 percent of survey respondents said online retail channels improved their overall customer experience. However, Australian companies have not, as a rule, learned to serve customers better using online and automated channels. Almost half of respondents said online technologies had not increased their customer service experience. What is more, Australians are talking back: The study shows that 32 percent said they regularly posted comments about the products, services or companies they dealt with on social media sites, blogs or bulletin boards. And these comments influence the behaviour of others. More than half of respondents said they used social media for information about purchasing decisions. By contrast, only one-fifth used traditional advertising as a decision source. In short, Australian companies haven’t worked out how to continuously improve the customer experience. They have made efforts in the right direction, but they need to consider a range of new methods and technologies. Looking ahead there are challenges and opportunities – the winners of the new social media and multi-channel world will drive investment decisions to boost signature experience. • Value for money • Simple, unbundled products, which are transparent and easy to compare • Multiple access points • Direct self-service channels • Responsive and personalised customer service Figure 1: Negative customer experiences in Australia and their impact on purchasing intentions Dealing with employees who are not knowledgeable Dealing with employees who do not acknowledge my specific needs and preferences 79% 51% Having to spend a lot of time before being able to purchase a product or subscribe to a service 66% 39% Unable to understand the information provided by companies 64% 37% Unable to find information without speaking to a sales agent 59% 31% 57% Unable to access information or buy a product/service using multiple channels of my choice 32% Receiving unsolicited advertising at home for products & services via direct mail or telemarketing Exposed to news that damages the image of a company from which I want to buy products or services 79% 53% 34% 18% 53% 31% Proportion of respondents who found these experiences frustrating or extremely frustrating Proportion of respondents who would not consider buying from a supplier as a result of these experiences 1. Accenture Global Consumer Research Study, 2010, Executive Summary: http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_2010_ Global_Consumer_Survey_Executive_Summary_v4.pdf 7 Framework for an outstanding customer experience 8 Customer experience defined Customer experience is the sum of memories and impressions formed by the series of interactions – real and virtual – with the brand, products, employees and all other touch points across all phases of the customer lifecycle. The Accenture Customer Experience Framework (see Figure 2) brings together all the components a business needs for a successful customer experience transformation. Most key elements of the corporate strategy have an impact on customer interactions. As a result, it is essential to put the customer at the centre and align the components around it. This leads to a customer-centric strategy that reflects and aligns with the overall corporate view. Subsequently the framework outlines the key activities to develop a customer experience blueprint as a pre-cursor to designing a customercentric operating model, which is the key pillar of the transformation. These activities in sum set the foundation for consistent and repeatable customer experience execution. Completing this phase, a business starts on the next iteration of the cycle, where it can adjust to changes in technologies, competitive landscape, business strategies and customer expectations. Analytical capabilities support the entire transformation and enable companies to gain visibility, insight and foresight across their business activities. Bringing all this together, companies will move towards creating higher customer value and ultimately, emotional bond. Figure 2: The Accenture Customer Experience Framework - targeting customer value and emotional bond Corporate Strategy • Balanced scorecard An a tegy Stra ics lyt • Customer experience measurement • Market analysis and competitive landscape Cu sto me tric en r-C • Employee training and coaching Cus tom er E • Journey and change management n cutio Exe e c en eri xp ics lyt An a • Governance and program management Customer Value • Target customer segments • Voice of the customer • Customer relevance and value proposition • Capability diagnostic Emotional Bond • Transformation roadmap and business case de c ep rin t t ri ti A Blu • Employee experience, talent and culture ly na ce • Metrics and performance management • Current state and gap analysis cs • Enabling technologies ics l yt A na n Ce o e rM o m n al C u st io rat Ope • Aligned Processes l C ust o r me Ex ri pe en • Loyalty drivers and signature experience • Detailed target state experience • Multichannel treatments • Economics and case for change 9 Customer-centric strategy The battle for customers is on and having a competitive differentiator is the key to success. As a starting point, companies need to identify potential business opportunities – and consider how their offers are different from their competitors’. This should include both local and international markets, recognising customers’ increasing use of online channels to buy products and services from overseas. Companies should embrace analytical tools to gain deeper insights into customers’ needs and the value of their defined target customer segments. They can supplement this knowledge with realtime analysis of consumer sentiment from social media sites and community discussions. Having identified customer segments and needs, companies need to consider how to package value dimensions such as access, price, experience, product and service to provide a differentiated value proposition for each segment. It can be challenging to decide which customer segments and needs to focus on. Many companies have a high-level perspective of what their value propositions should be, but cannot consistently translate this at the interaction level. Conducting a capability assessment allows companies to better understand their abilities and the challenges they face in each critical customer dimension. This helps to identify major pain points and key opportunities for improvement. employees in their efforts to provide more tailored offers and services to various customer segments resulted in measurable business improvements. Case study: Best Buy2 A customer insight program helped multinational electronics retailer Best Buy identify its most profitable customer group. The company traced this group’s buying patterns and the lifestyle traits that motivated its spending on certain items. Thanks to these insights, the retailer realised it could reduce its product range, since its customers really wanted fewer items, more knowledgeable sales support and more packaged solutions, especially for complex purchases. Supporting 2. See http://www.accenture.com/us-en/Pages/success-best-buy-supply-chain-strategy-summary.aspx and http://www.accenture.com/us-en/pages/ success-best-buy-customer-centricity-summary.aspx 10 Customer experience blueprint Analysing a business’s current customer experience and comparing it with its desired state provides a baseline and identifies gaps. However, understanding the current state is not always helpful in achieving the desired state. Indeed, some current capabilities might not influence the customer experience at all. To gain accurate and practical insights into each customer’s behaviour and preferences, companies need a complete view of each customer’s interactions throughout the customer lifecycle. They should consider the ‘macro journey’, for example starting when customers enter the point of sale until making the first call, instead of focusing only on the sales moment. It is vital to develop a blueprint with a clear and very detailed definition of the experience companies want to consistently deliver to customers in each segment. These descriptions should incorporate how the customer should feel in a macro journey and how the sales, marketing and service teams support this journey. Companies should aim to develop a relationship where customers identify with the organisation on an emotional level, being strong advocates or even fans. The buying experience is being reinvented as customers shift from traditional points of sale, such as branches and shops, to multi-channel information gathering through blogs and social media, and connected cross-channel shopping. Recognising this shift, companies should deliver a seamless transition between channels with a centralised record of the customer’s past interactions. This avoids the customer having to repeat information. Before they start detailed planning of customer experience strategies, companies should closely examine return on investment and the case for change. Piloting a small portion of the change can help determine and quantify the benefits of a broader transformation. Case study: BMW, UK 3 The premium car manufacturer BMW operates in a world of high value, infrequent purchases with few opportunities to engage with the customer – therefore making the right impression and exceeding expectations becomes crucial. BMW recognised that their customers’ experience of the organisation spanned many different touch points, from advertising to the dealership customer service teams to the product itself. BMW designed and mapped those journeys, identifying all the important moments of truth – with positive or negative effect. Those insights were used to drive change within the business: Investment was focused on improving underperforming elements of this journey and exploring ways to outperform expectations on the touch points with the most potential impact on loyalty and advocacy. Customer experience priorities were built into the contractual standards with the channel (dealers) and the desired target state was developed into a ‘curriculum’ for training into the organisation. 3. BMW – Embedding the customer experience throughout the organisation – in: “The Future for Marketing Capability”, The Chartered Institute of Marketing and Accenture, 2010 11 Customer-centric operating model processes to ensure employees have incentives to change their behaviour to deliver the target customer experience. Having a clear understanding of the experience companies would like to offer customers for each interaction is a vital first step. Nevertheless, it is worth little without rigorous processes to support delivering those experiences. This becomes challenging for companies organised in product or channel silos as they attempt to provide a consistent customer experience across channels. They must review, restructure and in some cases completely redesign their processes. Before embarking on the execution phase of any customer experience transformation, an organisation should create a detailed business case which includes investment, expected financial and nonfinancial benefits and return on investment. This process makes it easier to prioritise tasks and to identify key decision points for goor-no-go decisions. To an extent, this relies on having technologies that support and enable every electronic interaction with the customer, such as through a website or interactive voice response system, and enhance the in-person experience at the point of sale, either in physical stores or contact centres. Beyond processes and technologies, customer experience is most of the time delivered by real people. This makes employee empowerment, happiness and motivation paramount. Companies will need to determine if their employees have the required talent and if the organisation has the right culture to support their target customer experience. They should also put in place key performance indicators and workforce performance Case study: Nordstrom4 United States-based retailer Nordstrom was named as delivering the best customer experience for the ‘exclusive retailer’ category in the most recent Luxury Customer Experience Index survey (LCEI) published by the New York-based Luxury Institute. Nordstrom launched a new website in 2010 including a ‘conversation’ tab which guided visitors to explore various lifestyles through real people’s opinions and experiences. Nordstrom recently installed wireless networks in its 187 retail stores in 28 states. By late 2011, the company aims to equip its employees with handheld mobile devices. These would allow customers in dressing rooms to text or call employees to ask for a different sized clothing item, for example. Common reasons businesses fail in customer experience execution •Program is not driven at C-level – it is not enough just to have executive support •Missing or limited focus on the employee experience •No comprehensive program or change management •No proper transition from project mode to business as usual •Absent or limited governance – for example, not having a Chief Customer Officer or customer experience council •Inability to identify return on investment or visualise benefits •People ‘don’t mean it’ – proposition and delivery are not in sync and customers will notice it or at least feel it. 4. See http://www.retailcustomerexperience.com/blog/4954/Nordstrom-Integrates-Social-Media-on-New-Web-Site and http://www.businessnewsdaily. com/customers-to-shape-future-of-online-shopping-nordstrom-president-says-0977/ 12 Customer experience execution Numerous customer experience programs fail in the execution phase. This is the case even if they have defined the correct strategy, target state and operating model. Again, people are essential. The transformation needs to be driven by C-level customer experience champions. Having a designated governance and program management function helps to keep the project on track and ensure the execution delivers benefits in line with expectations. In addition, the transition from a project mode to business-as-usual needs a permanent working governance, such as by establishing the position of a Chief Customer Officer or a customer experience council. This executive should also chair a customer steering committee with strong cross-functional participation, which oversees all initiatives that impact the customer. Customer experience transformation causes significant change for customers and employees. Company leadership needs to execute and prioritise change management strategies to ensure a smooth evolution to the target customer experience. This will require coaching employees to ensure they consistently deliver the target customer experience. In addition, companies must invest time carefully, creating an engagement and communications plan to manage the change across their organisation and to their customers. Setting up a balanced scorecard that covers people, processes, customers and finance will enable the business to holistically manage the transformation and continuously improve into the future. Once a business has defined and executed the target customer experience, it must continually revise its tracking of customer interactions. Traditional measures such as customer satisfaction and loyalty are only a part of the truth. Executives and managers must track the complete customer interaction chain with dashboards that provide not only lagging (e.g. customer satisfaction, net promoter score) but also leading (e.g. employee feeling of empowerment, on-time delivery) indicators. Case study: Apple5 ”Apple has led the market for the past few years as one of the most innovative, most loved, and most powerful companies and brands in the world." according to stock market opinion and analysis website Seeking Alpha. One of the secrets is Apple’s 326 store empire – most of them architectural masterpieces and merely the visible manifestation of Apple’s customer experience, projecting a carefree and casual atmosphere. By intensive control of how employees interact with customers, scripted training for on-site tech support and consideration of every store detail down to the pre-loaded photos and music on demo devices, Apple does not please customers, Apple delights them. The fundamental sales philosophy is not to sell, but rather to help customers solve problems. "Your job is to understand all of your customers' needs – some of which they may not even realize they have," one training manual says. To that end, employees receive no sales commissions and have no sales quotas. 5. See http://seekingalpha.com/article/275887-apple-must-hold-or-look-out-below and Wall Street Journal “Secrets From Apple's Genius Bar: Full Loyalty, No Negativity”, http://online.wsj.com/article/SB10001424052702304563104576364071955678908.html 13 Analytics Underpinning every stage of the customer experience journey described above is the extensive use of analytical capabilities. Using analytics will lead to better business decisions, and give management real-time reporting, forecasting, scenario modelling and optimisation capabilities. It also supports the entire marketing, sales and service cycle to e.g. launch realtime campaigns, leverage event-based triggered marketing or define activities down to a segment of one-to-one. Predictive analytics can provide insights such as which customers are about to leave, which would most likely respond to up-selling and how best to treat potential and existing customers. It enables companies to draw fact-based conclusions for marketing, sales, finances and other areas such as workforce planning, supply chain, et al. Customer value and emotional bond Delivering a differentiated customer experience yields tangible business benefits such as profitable growth and increasing customer value. Organisations in highly competitive industries can succeed by identifying relevant customer-value dimensions and relentlessly focusing on connecting to the wants and needs that really matter to individual customers. When businesses satisfy these needs, customers identify with the organisation on an emotional level, creating a bond that transcends traditional competition dynamics. It makes customers more forgiving and less likely to complain the next time their experience does not match their increased expectations. Even more, it gives companies a second chance and more time to correct and sometimes the opportunity to be one step ahead. The next frontier of customer experience The following areas are gaining momentum in successful customer experience delivery: •Using social media and its positive multiplication effect to actively influence customer behaviour •Delivering true multi-channel experience across the whole customer lifecycle – enabling seamless switching of channels •Using macro journeys instead of single moments to define end-to-end experiences •Creating a winning employee experience because all customer experiences are delivered by people •Using holistic metrics and scorecards to measure beyond customer satisfaction to leading indicators •Building analytics capabilities to apply scientific rigour to the customer experience transformation and to support insight-driven business decisions. 14 Unlocking the value and getting started Australian organisations can unlock significant value by transforming their customers’ experience. One company Accenture worked with on the customer experience journey increased its acquisition rate by five percent, while reducing its customer attrition rate by 10 percent. At the same time, it decreased its cost to serve by 25 percent. Australian companies clearly want to get the customer experience right and are investing time and money to do so. To succeed, they must follow a structured path to define the strategy and build the organisational, process, technology and people capabilities required to deliver it. For those who have not yet made the move, as much as for those who have found their efforts lacking the impact they were expecting, the prospect of taking customer experience to the next level can be daunting. Accenture’s experience working with high-performance companies suggests the following six factors have been critical to their success: Key success factor Impact on approach Satisfied customers happen by design, not by accident Systematically define the appropriate experience for each customer interaction and operationalise it consistently across the organisation. Know what matters to your customers Rigorously seek the voice of the customer and triangulate the results to understand what drives satisfaction. Don’t assume, ask. Understand the moments of truth and associated macro journeys Think about the customer’s lifecycle with a company or product: what are the interactions and little experience voyages that could make or break the relationship? Evolve with your customers, and innovate Study other industries your customers interact with. Often customers set their expectations outside your industry. It is a science and an art Derive strategies by analysing customer values and competitor performance – and achieve brand engagement and emotional loyalty. Make it real, quickly! Embed the voice of the customer into your organisation. This is not a oneoff exercise; start small with selected measures targeting the most relevant touch points. 15 About the global consumer research study About Accenture Management Consulting About Customer Relationship Management Accenture conducted an online survey of 5,841 consumers in 17 countries in Q4 2010. The survey asked respondents to evaluate their customer experience in four industry sectors from a choice of 10. The survey included 375 Australian consumers. Accenture is a leading provider of management consulting services worldwide. Drawing on the extensive experience of its 15,000 management consultants globally, Accenture Management Consulting helps clients move from issue to outcome, with pace, certainty and strategic agility. We enable companies and governments to achieve high performance by combining broad and deep industry and functional offerings and capabilities across seven service lines: Customer Relationship Management, Finance & Performance Management, Process & Innovation Performance, Risk Management, Talent & Organisation Performance, Strategy, and Supply Chain Management. Accenture’s Customer Relationship Management (CRM) service line helps organisations achieve high performance by transforming their marketing, sales and customer service functions to support accelerated growth, increased profitability and greater operating efficiency. Our research, insight and innovation, global reach and delivery experience have made us a worldwide leader, serving thousands of clients every year, including most Fortune® 100 companies, across virtually all industries. Disclaimer About Accenture This point of view is intended as a general guide and not as a substitute for detailed advice. Neither should it be taken as providing technical or other professional advice on any of the topics covered. So far as Accenture is aware the information it contains is correct and accurate but no responsibility is accepted for any inaccuracy and error or any action taken in reliance on this publication. This publication contains Accenture copyrighted material and no part of it can be copied or otherwise disseminated with Accenture’s prior written consent in each case. Accenture is a global management consulting, technology services and outsourcing company, with approximately 223,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.6 billion for the fiscal year ended 31 August 2010. Its home page is www.accenture.com. Contacts Philippe Konfino Managing Director CRM, Asia Pacific [email protected] Melissa E. Waldron CRM Lead, Australia & New Zealand [email protected] Copyright © 2011 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. ACC11-0683/11-3104_lc