Avoiding the seven deadly sins
of customer-experience transformations
Efforts
to improve the customer experience can deliver tremendous value, but
temptations that can undo good intentions lurk in any change program. Resist
seven common missteps.
Many businesses are coming to understand that, increasingly, how an
organization delivers for its customers is as important as what product or
service it provides. But for companies looking to make the customer experience
a strategic priority, adopting a customer-centric mind-set can be a struggle.
Like many change programs, customer-experience transformations often fail to
meet expectations. That’s not surprising: they require employees to change
their mind-sets and behaviors, and an organization to make cultural changes and
rewire itself across functions, with the customer’s needs and wants—rather than
traditional organizational boundaries—in mind.
Our work with organizations of all types
has enabled us to study the differences between successful and failed
customer-experience transformations. Over the years, we have distilled seven
sometimes fatal mistakes—the “seven deadly sins”—which can take a number of
forms: lapses in vision, misguided investments, and design errors, for example.
Understanding how to recognize and avoid them can dramatically improve the
likelihood that your organization will reap the benefits of a customer-centric
transformation.
1.
Myopia
Many managers enter a transformation with
no real vision for the organization’s future state. Instead, they have a
general desire to improve the customer experience and rush into action very
quickly, before defining a more specific vision. Targets are often vague,
devoid of aspiration, and lacking in specificity—a reflection of an underlying
fear of failure. Managers communicate broad, operationally anchored goals and
praise marginal results instead of inspiring a powerful vision for the future.
Leaders may also prioritize the wrong areas of focus, wasting time setting
targets for parts of the customer journey that don’t have a real impact.
Great organizations instead spend significant
time up front to define a clear, compelling, personal, and ambitious
aspiration, which doesn’t necessarily involve becoming a customer-experience
leader. Depending on the context, it may make sense for a company to aim at
having a best-in-class customer experience or to improve the baseline but not
invest in a full transformation.
A leading travel company, for example,
spent the first two months of its transformation defining a five-year vision
for improving the customer experience. It worked methodically, customer journey
by customer journey, to define goals—not only operational-performance metrics
but also how the organization wanted its customers to feel. A road map, posted
prominently around headquarters and in frontline locations, displayed the
aspiration for individual journeys. (One senior manager told us that viewing
the road map “helps me remember what we’re trying to do here.”) Senior leaders
were often found bringing their future-state vision to the attention of staff
passing by. The call to action inspired by the forward-looking vision touched
employees from the C-suite to the front line. The vision was ambitious, but
management had concluded that an inspiring look into the future was necessary
to make sure the transformation launched successfully.
Some organizations have an even more
detailed focus: on specific kinds of customers whose experience they wish to
improve in order to set aspirations and change operations, mind-sets, and
behavior.
To direct the energies and commitment of
employees, for example, the US Department of State’s Passport Services
Directorate (responsible for issuing and renewing passports) informally adopted
a concrete, concise, and personal mantra of “no missed trips” for passport
applications. The effort has mobilized the workforce and shown it how
individual activity connects to broader goals and purposes. The large German
insurer Allianz set a bold vision to achieve true customer centricity
throughout the organization in order to bring together otherwise disparate
business units. The vision can be bold and long term, but for employees to
embrace it requires that it be understandable, meaningful, and relevant.
2.
Indifference
Many a customer-experience transformation
fails because it doesn’t become a top-three priority for the CEO or the top
team. Without their support, securing cross-functional alignment is difficult,
and transformations lose momentum when internal resistance or apathy
materializes.
The odds for success improve when engaged
leaders role-model the new behavior and ensure integration across internal
silos. One HR-management company faced nontraditional competitors entering its
market. Research showed that customers sought more personalized solutions
outside the current offering. Leadership therefore decided to differentiate the
business by focusing on the customer experience, setting bold goals to improve
it while raising employee morale and reducing the company’s cost to serve (a
critical step given growing pressure on pricing). As a signal of alignment, the
CEO pulled an emerging leader out of a continuous-improvement role and visibly
elevated her into a new customer-experience one. A cross-functional mandate and
top-level support helped the organization to increase its productivity by 40
percent, raise its market share, and improve employee satisfaction through
empowerment and coaching.
In the United Kingdom’s tax department—Her
Majesty’s Revenue and Customs (HMRC)—leaders indicated a renewed focus on the
customer by acting quickly to rename job titles and role descriptions: the
director general, business tax, became the director general, customer strategy
and tax design, while the director general, enforcement and compliance, became
the director general, customer compliance. Leaders are focusing on improving
customer experience and in parallel are redesigning the organization’s physical
footprint to match a new channel strategy.
3.
Worthlessness
Many organizations launch programs to
transform the customer experience with no sense of what a better one will be
worth and therefore no way to judge potential initiatives. Leaders of such a
transformation will find it hard to secure sufficient resources for needed
investments if they don’t have evidence that their efforts will generate
business value. More than ever, gimlet-eyed chief financial officers demand a
business case for even the smallest changes. And if the CFO isn’t on board,
your transformation effort will probably come to a halt. Building the link to
value is possible, before any action has been taken, by using customer research
and operational data to link satisfaction with the customer experience to
outcomes of financial interest, such as loyalty, customer churn, and revenue.
This analysis will provide the foundation to know what each point of satisfaction
is worth.
One telecom provider directly linked
customer satisfaction with customer churn by establishing a link between a
likelihood to cancel Wi-Fi service and customer-satisfaction scores: satisfied
customers were three to four times less likely to churn1than
unsatisfied ones. However, the company also learned that it would have only a
limited benefit from pleasing already-satisfied customers, so it focused on
reducing the dissatisfaction of those with lower scores. A
public-transportation company established a link between the customer
experience and revenue growth: it found that satisfied customers were more than
twice as likely as dissatisfied customers to increase shipping volumes. Mission-driven
organizations, including governments, can also benefit from
creating a better customer experience, as improvements in mission outcomes,
employee engagement, financial outcomes, and societal benefits (like trust in
government) show.
Once a link to value is established, a
leadership team needs to understand where it is worthwhile to expend
effort—what actually matters to customers and can drive value. Building a
business case for improving the customer experience is a challenge.
4.
Heedlessness
Many customer-experience transformations
begin with the top team’s assumptions about what matters. Are these leaders
overly weighing the voices of a few dissatisfied, highly vocal customers who
are “squeaky wheels,” or are they seeing the world through their own experience
as customers? Some organizations set out to “boil the ocean,” transforming all
parts of the business at once. They therefore spend significant time and money
on things that, in the end, don’t matter to customers.
Others approach customer-experience
transformations as an operational problem. Instead of viewing the experience
through the customer’s eyes, these executives want to learn which “pain points”
exist now and whether they reside at particular customer touchpoints, such as a
call center or a point of sale. Even surveys and other traditional ways to
generate meaningful insights can come up short—many customers can’t articulate
what is most important to them and often answer questions inconsistently.
Successful transformations therefore tend
to start with a rigorous attempt to identify those things that matter most to
customers. Such efforts establish a clear understanding of where improvements
in the customer experience can create value across the organization—financial
returns, operational efficiencies, and improved employee engagement and
outcomes. Our research shows that two factors stand out in understanding what
matters to customers:
1. Measuring customer journeys instead of touchpoints. Cross-industry research has demonstrated that
journeys—or the customer’s end-to-end experience of buying a product or
service—tend to predict overall satisfaction much more accurately than customer
satisfaction with individual
touchpoints. In fact, the end-to-end customer-experience
metric predicts overall satisfaction and willingness to recommend twice as
accurately as touchpoints do.
2. Using
imputed importance to analyze survey responses. While
it might seem logical to ask customers directly what matters to them, we find
that imputed importance predicts overall satisfaction much more accurately. To
define what matters in this way, organizations first analyze which journeys are
most important for overall satisfaction and which elements of those journeys
(such as courtesy or speed of service) predict overall satisfaction best. Then,
within a journey, techniques like Johnson relative weights2and other
regression analyses can identify the areas most likely to improve overall
satisfaction.
These methods allow companies to take a
targeted, hypothesis-driven approach to a customer-experience transformation.
They can then determine what matters overall by combining imputed importance,
the number of customers touched, the priority level of the customer segments
involved, and alignment with broader strategic objectives. It is critical to
couple these statistical techniques with ethnographic research to build a
fuller picture of “what matters,” especially in settings where statistical
techniques may come up short.
From our research we see that the customer
journeys that matter vary notably across frequent and infrequent travelers.
Items such as “travel inspiration”—such as destination and flight searches as
part of pre-trip planning—and the arrival process matter more to frequent
travelers.3By
contrast, the way some airlines perform on boarding and inflight service
matters more to infrequent ones, who in general are less satisfied.
5.
Imbalance
Sometimes, customer-experience
transformations collapse even when executives have correctly determined what
matters to customers, defined a good target, articulated a clear link to value,
and provided strong support. In these cases, the culprit is often a loss of
momentum from a project’s failure to have an impact in the short term.
Many leaders focus on long-term changes or
holistic service redesigns and don’t expect any financial impact from them for
two to three years. Employees may become frustrated during this period and
disengage, while customers may decide to take their business elsewhere.
Moreover, leaders may focus exclusively on the top-line impact—revenue from
increased loyalty and reduced churn—to the detriment of equally powerful cost
levers, including cost to serve. Great customer-experience transformations
include a balanced portfolio of initiatives (long and short term, revenues and
costs) to show success early, sustain momentum, and learn over time.
One major US airport,
pursuing a multiyear passenger-experience redesign,
paid attention specifically to quick wins. One example was to get rid of the
moving sidewalks—the customer-experience diagnostic exercise revealed that they
were used primarily by employees and were not particularly important to
passengers. The maintenance and operational teams jumped at the chance to
remove the moving sidewalks, which were expensive to maintain and required
frequent attention. Similarly, the merchandising and retail leaders saw a
potential for increased sales in having more passengers walking alongside
storefronts.
Removing the moving sidewalks turned out
to be a quick change that eliminated costs and increased revenues, building
support for the transformation and generating money for reinvestment elsewhere
in the program. What’s more, a survey of customers found that what they wanted
most was not a dramatic service redesign but consistently clean bathrooms. The
airport could work to overdeliver on this preference and rapidly improve
customer satisfaction. As a result of the overall portfolio of initiatives, the
airport jumped from 11th to 5th place in US airport customer-experience
rankings—the biggest one-year jump of any airport.
6.
‘Fractionalism’
A lot of managers think about the customer
experience very narrowly, focusing only on individual issues and forgetting
about the overall system for delivering value. Some excel at designing specific
kinds of interactions with customers but ignore the fuller experience, both
before and after purchase. Others forget to look at operations through the
customer’s eyes. Many build measurement systems and focus only on reporting and
tracking, underestimating the importance of the internal cultural changes
needed to achieve and sustain a new approach. The belief that top-down
management, supported by measurement alone, will improve the customer
experience is a common mistake of these transformations.
Our research shows that up to 70 percent
of all organizational-change efforts don’t meet expectations, because of
resistance from managers or other employees.4We
believe that successful cultural change relies on four factors. To be sure, one
of them is formal measurement and performance systems. But employee
involvement, role modeling from leaders, and clear explanations of why change
is necessary are important, too. Great transformations work across all four at
once and spend as much time on the “soft stuff” of culture change and
communication as on the “hard stuff” of performance management.
A leading pay-TV provider, for example,
doubled its net promoter score (NPS) and achieved a number-one industry ranking
through a holistic approach to change, focusing relentlessly on culture. With
20 million customers in the United States, the company faced intensifying
competition from traditional and nontraditional players, in an industry with
negative NPS. Leadership made it a strategic priority to break out of the
industry’s patterns and use the customer experience to differentiate the
company. By pursuing a comprehensive change program, these leaders enthroned
the voice of the customer across the organization.
First, the company built an analytics
capability to understand what matters to customers and empowered the front line
through lean management and continuous-improvement training. Teams of employees
redesigned multiple end-to-end customer journeys, becoming change agents and
trainers for other members of the staff and helping to develop an ongoing improvement
system, including a test and learn lab. Overall, the company not only improved
the customer experience dramatically but also reduced call volumes by 12
million calls and customer escalations by 20 percent, with significant cost
effects.
7.
Orthodoxy
Leaders seeking to transform the customer
experience may look only to traditional or even outdated techniques, without
understanding the power of cutting-edge design and digital capabilities. When
companies fail to consider opportunities from design thinking—shorthand for a
problem-solving process that includes several components—they may not succeed
in transforming identified customer pain points, in particular, by learning
from other experiences and industries. And without digitization, leading companies
may lose value because they do not pursue automation vigorously or make their
processes sufficiently seamless.
Great organizations apply the tools of
human-centered design to create distinctive customer experiences and separate
themselves from the pack. Companies can apply these tools equally across
product, service, and digital experiences. From call-center scripts to the
replacement of printer ink, great customer experiences build loyalty, which
drives growth and generates competitive advantages.
For starters, it’s necessary to really
understand customers and their needs, to infuse that sense of empathy into the
entire organization, and learn how to use it in decision making. A prototyping
mentality helps your company iterate toward success by testing and learning
with real customers. The company must work toward final products, services, and
experiences that delight them—not only through aesthetics but also through
other end-customer values, such as speed, simplicity, or connection to other
experiences. Design thinking reflects insights from behavioral psychology,
which can help to improve the customer experience with small tweaks to journeys
and touchpoints.
The best-in-class use of digital
technology includes the end-to-end reimagining of what really does and does not
require human interaction, as well as building predictive, anticipatory, and
seamless customer interactions. A top property-and-casualty insurance carrier,
for example, wanted to improve the way customers experienced its claims
process, to make the most of its adjusters’ time, and to reduce the number of
calls to service centers. The insurer used a customer-centric, design-thinking
approach to redo its digital claims process:
·
Predictive analytics segmented customers and enabled digital tools
and call-center agents to base the personalization of services on personality
characteristics and preferences.
·
A redesigned claims tracker kept customers informed of the current
state of their claims while proactively providing information on what would
happen next.
·
A simple, rapid feedback interface enabled customers to let the
insurer know, at all times, how they were feeling about the process so the
company could quickly address issues along the way.
By analyzing the interactions throughout
the service ecosystem—that is, by taking a holistic journey approach—the
insurer created a seamless digital experience out of what had previously been a
disconnected mix of off- and online interactions.
To redesign the customer-facing security
experience, a public-safety agency of the US federal government took a
proactive approach to building empathy, paired with a traditional hard analysis
of the effectiveness of its security systems. Its empathy-building activities
included conducting a series of focus groups with core customer segments to
understand their wants and needs, multiple site visits to experience the
process first hand, and interviews with line employees to gather feedback and
take suggestions for improvement. Once a new process had been designed using
the lenses of empathy, effectiveness, and efficiency, the agency built
prototypes to test the design with real customers and to bring stakeholders
into the process, solicit feedback, and make updates in real time.
The opportunities in transforming customer
experience—higher profits, more loyal customers, more engaged employees—are
numerous. Knowing and resisting the temptations that will lead a change program
astray is a good place to start.
By Ewan Duncan, Kevin Neher, and Sarah Tucker-Ray
http://www.mckinsey.com/business-functions/operations/our-insights/avoiding-the-seven-deadly-sins-of-customer-experience-transformations?cid=other-eml-alt-mip-mck-oth-1704&hlkid=f80d8d5d470c4a7ebe07652ecc03de85&hctky=1627601&hdpid=1935d8c8-f466-4ef5-af0d-9ae13b67be3e
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