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Posts Tagged ‘customer experience management’

The five big questions for all online retailers and how to answer them.

Those questions are:

  • How satisfied are my customers with their total web site, delivery and after sales service experience?
  • What is our customers’ reaction to their experience and how will it affect future sales?
  • Do I know where our processes let us down with our customers?
  • How much better or worse is our competitors’ customer experience?
  • Who is the best in class and what makes them so?

These questions were defined during the research phase of a major new initiative for the UK’s eRetailers I have been working on and which has just been announced called the Index of Customer Experience.

This new annual programme is aimed at helping online retailers increase sales and reduce costs while boosting consumer confidence.  ICE tests, measures and quantifies the customer experience right through the purchase cycle: from log on through delivery and on to after sales service.

As all our research subjects acknowledged one of the key differentiators  in the online retailing world now is customer experience.  Positive experiences engender loyalty and recommendation; poor ones can ruin a brand’s reputation and lose you some market share at the speed of light in the world of social media. But the experience is governed by more than just the web site, it is also affected by the delivery process and any subsequent service inquiries the customer may have.

As an independent customer intelligence and opinion based research programme, ICE 2010 will produce actionable feedback to help eRetailers improve sales and competitive differentiation while also reducing cost.  It will help them understand how that experience affects the customers’ likelihood to repurchase and/or recommend your brand to friends.  It will allow them to benchmark themselves consistently and fairly against their sector. 

And, through an extensive award and promotion campaign, the ICE and its badge of honour will also heighten staff engagement and, I believe, will increase consumer confidence in online retailing.

I am particularly pleased that this initiative is being fully endorsed and backed by the online retail industry’s association, the IMRG.  Managing director, David Smith said: “This bold and original initiative supports our aims of helping individual performers raise their game and also boosting consumer confidence in online retailing. In future the customer experience will be the key factor in winning and keeping customers. ICE provides a unique and consistent measure to help businesses manage and develop their own customers’ experience.”

The programme is also endorsed by the Institute of Customer Service.  Its chief executive Jo Causon said: ‘The Institute of Customer Service is pleased to support this initiative which alongside our own UK Customer Satisfaction Index brings a further customer-centred focus on how organisations are performing in customer service delivery and importantly helps identify which parts of their delivery needs to improve.”

eRetailers are going to have to substantially raise their game and to do that they need to understand what the customer experiences not just what they offer to the customer.  And I believe ICE can help them do that and I’m looking forward to making it happen.

How do we calculate the result of poor customer service?

January 19, 2010 1 comment

Poor customer service is costing businesses £3.4bn each year concluded a recent study by Merlin Stone  for Oxford Brookes University. My first reaction was this is just stating the ‘bleedin’ obvious’ and why was money spent on it.

Of course, all I was seeing was the press release and so there is probably a lot more weight to this – especially if Merlin Stone is behind it. I have followed his thinking on service for over a decade and it could never be described as lightweight. And I am sure the sponsor wanted some facts particularly around the amount of money involved/lost to poor service to help them shift product. Interestingly there was another report at the back end of last that put the cost of poor service at £15bn to UK businesses  – anyway the fact remains that we all know instinctively that poor service costs businesses and the numbers are little more than guess work.

My more considered second thought was that the process of trying to simplify the ‘poor service equals lost business’ equation down to that single number means much of the detail is lost as to how one gets to that point.  Understanding that calculation is important in running a service business (is there any other kind?).  The difficult bit is knowing what aspects of poor service affect the customer’s buying habits and how big their direct and indirect effects are. There are plenty of supposedly “poor” service companies doing well (sorry to mention Ryanair again) and “good” service companies struggling eg British Airways.

As an aside here do we mean customer experience rather than customer service

There is a slight problem with supposedly instinctive understanding. How do we know God exists? Because the evidence is all around us. Faith works for believers but not for bean counters so the effect of good service needs to be calculated. Otherwise we could be spending millions on services the customer doesn’t care about or is going to leave us anyway or nothing at all because the manager can not justify it to the CFO.

Someone, somewhere, will have done a formula for the effects of service on sales and profit (what about share value or market share?). It will have a number of variables in it – the customer demographic, their spend, the market, your strategy/goals, the competitive landscape, the regulatory landscape, your brand and so on. Sadly it means the calculation is always going to be a very individual one for each business.

These sorts of research surveys are really only there to get people thinking about the impact of poor service and to get publicity for the participants, so don’t place too much faith in them.

Why is customer experience more important than service?

November 23, 2009 Leave a comment

Some recent research indicated that the customer experience is now a more important competitive differentiator than customer service.  I twittered this and got an interesting response from Nigel Dean that raised the question: “Surely Service is a massive part of the customer’s experience? Can the experience be good if the service isn’t?” 

Admittedly I have found it hard to think of an example of when a customer experience would be considered good when the service wasn’t but, on the other hand, quite often the customer experience can be poor even when the service is good.  Essentially service is one contributing factor to the customer experience but it is wrapped up in many other factors many of which are not directly in the control of the provider.

Consider the interaction with the customer. On one side the provider presents things to the customer: quality, a brand, trained staff, service and so on.   They provide these things in the hope – even the strong belief – that they will delight the customer. On the other side of the deal the customer takes away an experience. 

But this means the focus of the service provider is on what they provide and not on what the customer actually sees, feels, touches and emotes about.  These reactions constitute the customer experience and they are the factors that will affect the result or outcome of the experience.

Understanding the customer experience is an exercise in empathy.  What is their emotional point when they first deal with you? Are they angry, desperate, indifferent etc?  These are emotions generated before contact and quite often be less than rational.  What does the customer expect from your brand? I expect different things  from a Ramsay restaurant than my local greasy spoon where frankly the service is often better but my experience at Chez Ramsay is better.     

How did they react to your way of doing business – remember, it may not be theirs. Was their issue resolved, be it service or purchase?   Did they get value for money? 

And finally how was the transaction loop closed – what was their emotional reaction to what happened?  What was the outcome of those reactions? Will they promote you or be a detractor? In the age of social networking the voice of the customer travels at the speed of light through a network of millions so this is crucial.  Do their peers think the experience/outcome was cool? (Peer pressure is a surprisingly powerful motivating force from kids with the latest gadget to business people and their BMWs?)

For a time there was a philosophy around called Customer Relationship Management (CRM) that attempted to round up this ‘experience issue’ but it suffered from two flaws.  It suggests you can control the relationship with the customer – the customer is now in control.  And the second problem is that CRM is about making managers look inwards at how they do things:  structure,  technology, processes etc and not at the customers’ experiences.  Having said that, CRM software tools are great at collecting massive amounts of raw data and we are now seeing some clever analytical tools work that data to give tremendous insight into customer activity and behaviour.  There is a caveat there, of course, that previous behaviour is no guarantee of future behaviour.

One other route to understanding the customer experience is to carry out a customer satisfaction survey but that will give you a figure for “how much” – it does not give any real insight into “why?” or “what was the outcome?” which are much more important if you are to keep doing the right things and put right the bad.

There are some real experts in this area – not just an old hack blithering on – and the one I would recommend is Colin Shaw at Beyond Philosophy.