Customer Experience Management Executive Summary · 4. 2,106 companies have been identified as being active in customer experience management from around the world. This equates to

© 2011 Beyond Philosophy 1

Customer Experience Management Executive Summary

Global Customer Experience Management Survey 2011

Steven Walden Senior Head of Research and Consulting Beyond Philosophy

180 Piccadilly London UK W1J 9HG T: +44 (0) 207 917 1717 F: +44 (0) 207 439 0262

1360 Center Drive, Suite 110 Atlanta, Georgia 30338 USA T: +1 (770) 206-5280 F: +1 (770) 206-5289

www.beyondphilosophy.com


Abstract Between May and July 2011, Beyond Philosophy undertook a comprehensive review of

the state of the global market for customer experience management (CEM). This was

based on a sample of 8,000 customer experience (CE) executives from 239 countries

and regions of the world, as well as in-depth interviews of 53 leading authorities on

customer experience from all continents.

A webinar outlining the results can be found at:

http://www.beyondphilosophy.com/thought-leadership/webinars/customer-

experience-strategies-innovation-and-best-practices-around-worl

http://www.beyondphilosophy.com/thought-leadership/webinars/customer-experience-strategies-innovation-and-best-practices-around-worl

http://www.beyondphilosophy.com/thought-leadership/webinars/customer-experience-strategies-innovation-and-best-practices-around-worl


Contents Abstract 2

1.0 Methodology 5

1.1 Quantitative 5

1.2 Qualitative 5

1.3 Sample 6

2.0 Insights 9

2.1 What is the Background of Customer Experience Leaders 9

2.2 How is Customer Experience Defined 9

2.3 What is the Level of Adoption of Customer Experience Management Around the

World?

9

2.4 Can you Provide a Model of Adoption? Maturity Index 10

2.5 What is the Level of Adoption of Customer Experience Management by Company,

Sector and Level of Maturity?

12

2.6 What are the Drivers to Growth in CE? 12

2.7 What are the Challenges to Growth in CE? 14

2.8 What is the Most Admired Firm in Customer Experience? 15

3.0 Management Implications 16

3.1 What are the Five Major Risks? 16

3.2 What is the Strategy to Manage These Risks? 16

3.3 What are the Five Major Drivers? 18

3.4 A Final View 19

Contacts 21


Figures and Tables

Table 1: Distribution of the 53 in-depth interviews including by title 6

Table 2: Summary distribution of the 53 in-depth interviews by regional percentage 7

Figure 1: Distribution of the 53 in-depth interviews by sector 8

Figure 2: Distribution of 53 expert Interviews by industry 8

Figure 3: The Seven-Stage Maturity Model 10

Figure 4: The acquisition, relationship, retention stages 11

Figure 5: Key areas of a CE implementation

17


1.0 Methodology

1.1 Quantitative

Beyond Philosophy undertook an analysis of 8,000 customer experience executives.

These executives were sourced from a country-by-country LinkedIn search; comprising

in-depth analysis of 239 countries and regions (i.e., the globe as defined by LinkedIn and

Google drop down country/region search list).

To qualify for inclusion, the LinkedIn respondents had to have ‘customer experience’ in

their ‘current’ job title: note that as a networking tool and to maximize coverage of

possible LinkedIn contacts, all main customer experience groups were joined. Likewise

the search was conducted from a well networked customer experience consulting group

(LinkedIn contacts were not used for marketing purposes, purely as a means of

research).

In addition, Beyond Philosophy conducted a Google search for firms that apply customer

experience across each of the 239 country and region web pages. In this search,

Beyond Philosophy set specific criteria for acceptance as a CE-focused firm. Companies

had to have an active presence in customer experience ‘within the last year’ and ‘within

the country pages.’ This was to avoid the presence of non-active firms that engaged in

customer experience more than one year ago.

2,106 companies were identified as active in customer experience management

from around the world. This equates to an average of approximately four CE

executives per company.

1.2 Qualitative

From the quantitative database, Beyond Philosophy sourced 53 experts to conduct an

in-depth interview on customer experience. Experts had to have either overall line

responsibility for managing customer experience on-the-ground (lead PM) or be at CxO

level (i.e., director or VP of customer experience). In addition, CE experts were sourced


(i.e., individuals who had deep regional or vertical understanding of CE and were

recognised experts in customer experience).

All in-depth interviews were conducted by phone, excluding one interview that involved a

face-to-face meeting. Interviews typically lasted 20-25 minutes.

1.3 Sample Beyond Philosophy interviewed 53 experts from around the world. These were

distributed by job title (see table 1) and by region (see table 2).

Table 1: Distribution of the 53 in-depth interviews including by title

Source: 53 CE professionals

Region Country Number Percent CE Expert CxO Lead PM

NAM USA 8 15% 1 7

NAM Canada 2 4% 1 1

CARIB Bahamas 1 2% 1

SAM Brazil 2 4% 2

SAM Peru 1 2% 1

EUW UK 9 17% 1 6 2

EUW Netherlands 1 2% 1

EUW France 1 2% 1

EUW Portugal 1 2% 1

EUW Switzerland 1 2% 1

EUW Belgium 1 2% 1

EUE Poland 1 2% 1

RUS Russia 3 6% 3

RUS Azerbaijan 1 2% 1

ME Saudi Arabia 3 6% 2 1

ME UEA 1 2% 1

ME Turkey 1 2% 1

AFR Nigeria 2 4% 1 1

AFR Kenya 1 2% 1

AFR South Africa 1 2% 1

IND India 3 6% 2 1

SEA Singapore 2 4% 1 1

SEA Indonesia 1 2% 1

CHI China 2 4% 1 1

AUST Australia 2 4% 1 1

AUST New Zealand 1 2% 1

Total 53 16 25 12

Total% 100% 30% 47% 23%


Note: Experts can be general all round or by specific industry

Table 2: Summary distribution of the 53 in-depth interviews by regional percentage


Note: NAM (North America): CARIB (Caribbean); SAM (South America); EUW (Western Europe); EUE

(Eastern Europe); RUS (Russia); ME (Middle East); AFR (Africa); IND (India); SEA (South-East Asia); CHI

(China); AUS (Australia).

The two tables above demonstrate the broad spread of interviews geographically. All

continents were represented in the sample to ensure its global exposure. This dispersal

is disclosed in figure 1:

Region Total%

EUW 26%

NAM 19%

ME 9%

RUS 8%

AFR 8%

SAM 6%

IND 6%

SEA 6%

AUS 6%

CHI 4%

CARIB 2%

EUE 2%

Total 100%


Figure 1: Distribution of the 53 in-depth interviews by sector


Figure 2: Distribution of 53 expert interviews by industry


Banking, 19%

Insurance, 9%

Telcommunications, 23%

Outsourcing, 2%Manufacturing, 6%

Retail, 6%

Car, 6%Utilities, 2%

Construction, 2%

Charity, 2%

Logistics, 2%

Healthcare, 2%

Oil, 2%

Experts , 19%


Figure 2 shows the industrial distribution of interviewees: these are focused on banking

and telecommunications. However, a broad cross-section of other industries was chosen

alongside CE experts.

2.0 Insights

2.1 What is the Background of Customer Experience Leaders?

1. 78 percent of VPs and directors of customer experience have no background in

customer experience management. The top previous roles are operational

management and customer service (N=136).

2.2 How is Customer Experience Defined?

2. Overall, 60 percent of respondents give a touch point definition of customer

experience while 28 percent define CE through customer research programs. The

third-highest is a definition that includes reference to emotional engagement. In

general, while there is consensus, there are some key differences, such as the

greater focus on internal company process and mindset change among CxOs and

the customer research bias of lead PMs (project managers).

2.3 What is the Level of Adoption of Customer Experience Management Around

the World?

3. At least in the use of the term, customer experience is a global phenomenon.

4. 2,106 companies have been identified as being active in customer experience

management from around the world. This equates to an average of approximately

four CE executives per company.

5. Regionally, 58 percent of CE-active companies come from two regions: North

America and Western Europe. 42 percent are active outside these regions with the

next most important region being Australasia (Australia and New Zealand) at seven

percent.

6. Some countries have an unexpectedly large number of CE companies. These

countries are India, Singapore, Australia and New Zealand.


7. Customer experience language exists even in countries with lower levels of

economic development such as Bhutan, Fiji and Afghanistan – this reflects its spread

through MnCs (multinational companies), telecommunications, and through a

process of copying best practice from ‘the West.’

2.4 Can you Provide a Model of Adoption? Maturity Index?

8. Globally, countries and regions can be divided into seven states of maturity: high;

high-mid; mid; mid-low; low; very low and no presence.

Figure 3: The 7-Stage Maturity Model

9. A noticeable feature of development is an expected ‘telescoping’ (i.e., timeframes to

maturity are less than they were in the mature countries).

10. The Maturity Index is underpinned by a three-stage model of development from a

customer acquisition focus, thorough to relationship and then retention. Key

movements are currently being seen from acquisition to relationship in several mid-

to low-tier countries that are undergoing changing customer expectations with a

burgeoning middle class exposed to western styles of service as well as cross-

vertical expansion prospects in the B2B market.


Figure 4: The acquisition, relationship, retention stages

11. There is a large base of ‘nascent’ countries (i.e., those at the tipping point to high

growth – this is the mid-low mature zone and represents countries, such as South

Africa, Brazil, China and India as well as key countries in the mid-mature zone, such

as Turkey and the United Arab Emirates). These represent the best opportunities for

growth in the next five years.

12. Other countries to watch are Australia and New Zealand that have a firm platform of

awareness of CEM.

13. The most mature zones still reflect and Anglo-Saxon cultural foundation: UK, USA,

Canada and Singapore.


14. Customer experience is spreading out from its Anglo-Saxon-centric base, but still

remains most mature within this culture and cultures that have a strong English-

speaking background (this is not a function of the research method as there are

strongly growing areas such as Brazil, China and Turkey).

15. Customer experience is a function of levels of comparative economic development

and cultural acceptance (e.g. service cultures form a basis for an experience focus).

16. High-mature does not mean high adoption, as can be seen by the number of

companies covered as ‘actives.’ Indeed, adoption appears to be quite low.

17. Key trends in terms of future CE developments are exhibited at the high-mature end.

18. Other less mature countries tend to be “me too” followers in terms of

implementations and understanding of customer experience.

2.5 What is the Level of Adoption of Customer Experience Management by

Company, Sector and Level of Maturity?

19. Globally, more than 60 percent of companies that have adopted CE are in four

sectors: telecommunication, banking, retail and IT and services. There are also

significant sectors in insurance, motor and airlines.

20. The 10 most active global firms in customer experience are, respectively: HP; HSBC;

Vodafone/ Vodacom; GAP; American Express; Dell; Citibank; Best Buy; Sprint

Nextel and AT&T.

21. In addition, a number of key players ex UK and USA are in-country dominant and

becoming increasingly important (e.g. Telstra and Turkcell).

22. In telecommunications, there are a number of pivotal regional CE players such as

LIME in the Caribbean, MTN and Airtel in Africa.

23. In banking, there are a number of pivotal regional CE players such as Standard Bank

in Africa, Standard Chartered in Asia.

24. Several key investments in customer experience are noted from aviation (Boeing and

Delta (http://news.delta.com/index.php?s=43&item=870).

25. 41 percent of interviewees state competitive intensity in customer experience as

strong; 43 percent state it as moderate and 16 percent as weak.

26. Management consultancies and research houses have been active in promoting

CEM alongside the multinational corporations and brand promotion from leading

HQs.

http://news.delta.com/index.php?s=43&item=870


2.6 What are the Drivers to Growth in CE?

27. In total, 65 percent of respondents stated that customer experience was a key

strategy for their companies (i.e., score of seven out of seven on importance). Only

14 percent stated it as less than four out of seven in terms of importance.

28. There is a clear pattern of support for continuing growth of customer experience in

banking and telecommunications. The other industry sectors do not exhibit a decline

in growth, but more a ‘stay the same’ investment level.

29. 73.5 percent of interviewees expect increasing investment within their firms at an

average rate of 15 percent over the next year; 24.5 percent expect investment to be

maintained and two percent expect a fall.

30. The top driver to growth in CE remains the importance of differentiating under

conditions of commoditization. However, this is not the only reason; second in the list

are financial considerations around loyalty, retention and churn (i.e., to defensively

prevent customers from leaving). Second equal is a new and key driver: the rising

trend of customer empowerment, as customers have raised their expectations

through rising incomes and awareness of service quality gained via social media and

travel overseas. Of the customer empowerment drivers 38 percent of respondents

mention specifically the growing importance of social media: interestingly, in

countries like Peru, Brazil and Turkey, this is seen as essential – in effect, these mid-

to low-tier mature countries are leapfrogging a technology.

31. Rates of growth are lower in B2B industries and those with a traditionally lower

customer service baseline.

32. There is a certain nervousness in stated investments (i.e., slight in current projects,

bi-model growth in some banks, matched by cutting costs in others).

33. Companies are seeking to invest in the high-mature segment within ‘stabilization’

projects (e.g. IT systems, joining up systems to improve information flow, HR and

training). Some international projects are deemed high investment, apportioned to

HQ, but in fact are driven to expand in high-low mature countries.

34. Companies are seeking to invest in the other segments within ‘growth and

optimization’ projects (e.g. projects to establish customer experience or projects to

train in CE). Some of these are kick started by international branding projects out of

HQ or through government regulation.


35. The general view is that these growth rates will be apparent in the third of

businesses that are interested in customer experience. There will be no change in

terms of ‘interested industries.’

36. The industry that spends the most is the telecommunications industry – although this

is by dint of its size in the first place. This is based on the CE investment views of the

53 experts and the degree of networked arrangements these industries hold (i.e., the

degree of ‘brand’ and ‘mission’ spread from HQ to other countries). To some degree,

this is also symptomatic of a large software push which, to a large extent, has been

branded as part of corporate CEM initiatives.

2.7 What are the Challenges to Growth in CE?

37. The main challenge to customer experience is quite simply whether it is an

operational priority: faced with a cost-cutting agenda, legacy metrics and a sales

focus, CE risks falling by the wayside. This is a problem when the returns on

experience are couched in the long-term through increased customer loyalty, and

experience adjustments are perceived as cost-intensive or difficult. In short, setting

an agenda around fundamental change risks losing executive support.

38. Based on the 53 interviews (103 implementations or circa two implementations per

interviewee) the main areas of activity were focused on IT and software

implementations followed by training and customer research.

39. There is a serious disconnect between appreciating the importance of emotion and

how it is actually measured and therefore understood. The majority of interviewees

only undertook qualitative measurement through focus groups, sentiment analysis,

verbatim analysis and journey mapping approaches or critical incident type

techniques. The situation quantitatively is even worse, respondents not adapting

current measures and just using customer satisfaction or loyalty indicators (NPS,

TRIM) as proxies for emotion. Some avoided the issue as too difficult or of

importance only as an outcome of other measures.

40. In total, 65 percent of respondents have heard of NPS and know an organization

(whether their own or another in their country) that uses it. 35 percent are not aware

of it, or are aware of it but do not use it/believe it should be used.

41. Interestingly, of those organizations that use NPS, there is some conflict starting to

develop in its application.


42. The one question interviewees wanted answering about customer experience

comprised: how to implement CE and how to demonstrate a link to financial return.

2.8 What is the Most Admired Firm in Customer Experience?

43. Apple was the most admired CE firm.

44. Organizations not well-recognized globally but admired regionally include Brabesco

Bank, Ludique et Badin and Natura (Brazil); Berlin Airlines (Germany); Shoppers

Stop and Jet Airways (India) and Turkcell (Turkey); and companies in the UK and

USA such as Screwfix Direct, Bank West, Metro Bank and Denny Marie.


3.0 Management Implications

3.1 What are the Five Major Risks?

1. Risk 1: Use of the term as a rebrand for current operations - Customer

experience is a well-used term as demonstrated by the global spread of

executives with CE in their titles. However, there is a disparity between use of the

term and the actual implementation of a CE program.

2. Risk 2: Misappropriation of the term for vendor sales - Another risk is the active

misappropriation of the term ‘customer experience’ by some vendors as a front

for rebranding CRM as CEM in order to sell more solutions.

3. Risk 3: Failure to take account of the customer’s emotional viewpoint (e.g., in

ROI) - Customer experience tends to follow a touch point definition. This is quite

a defensive position to take.

4. Risk 4: Limitation in its adoption - Beyond Philosophy concludes that the term

customer experience has achieved global acceptance. However, this acceptance

is limited to a few key verticals: telecommunications, banking, retail and several

of the smaller sectors with increasing adoption in aviation, motor and insurance.

5. Risk 5: Timeframe to execute - One of the major problems with CE is that it

depends on the long-term. Its economic basis around loyalty is all about long-

term return, its advantages in terms of being more customer-centric also require

levels of corporate transformation that take years to realize.

3.2 What is the Strategy to Manage These Risks?

6. To avoid the risks companies have to realize that at its heart customer

experience is an organizational strategy based upon a holistic approach to the

customer using emotion as a key differentiator. This means embedding from the

very start the message that this is a transformational approach, not just one

based on tinkering with the IT infrastructure, adapting call centers or measuring

numerous touch points. These may be part of a solution but they are not CE.


Figure 5: Key areas of a CE implementation

Understanding CE – get leadership buy-in and understanding as to what exactly

customer experience is.

Setting the Strategy – define where your organization is in terms of the

customer experience, your organization’s understanding of the customer journey

from an emotional perspective, and the emotions that drive and destroy value.

Build out a case study based on ROI and how CE will reach your corporate

objectives, usually toward competitive differentiation. Develop a roadmap to

change.

Engage the Organization – start to train the organization in the principles of

customer experience and design in the organizational foundations to support it

long-term (e.g. governance).

Embed the CE Culture – focus on cultural alignment within the organization

through training, recruitment, embedding CE in the employee experience and

leadership buy-in and support.


Process Improvement - only after the company has started to ‘get it’ should you

move to process improvement. Clearly with time lags, some IT system can be

planned in, but the stage of cultural engagement should be in place prior to

delivery of a new CE process infrastructure, for without employee support no

system emplacement will succeed.

Redesign Experiences - finally, pilot implementations of specific customer

initiatives within the first 12 months to ensure proof-of-concept and the

perception that change at the customer level is happening (i.e., we are starting to

see how we can get a return). Use emotion journey maps and emotional

measurement to assist in the redesign, but critically ensure creative execution.

3.3 What are the Five Major Drivers?

7. Major Driver 1: Increasing need to respond to customer empowerment -

Customer experience management used to be driven mainly by concerns over

commoditization: CE, in effect, being used as a means to differentiation.

However, a new key driver - customer empowerment - has come to the fore

globally. This makes CE a necessity rather than an option:

a. The 10 customer empowerment drivers are: social media; fast society;

burgeoning middle class; development of high-value segments; demand

for international brands; deregulation of markets; increased travel;

regulation in favor of the customer; cultural sensitivity and web aggregator

sites.

8. Major Driver 2: Increasing need to manage organizational complexity - Customer

experience management is mainly, but not exclusively, a phenomenon of

multinational corporations. Faced with a proliferation of multiple channels,

increasing complexity in terms of IT infrastructure, and expansion into new

territories, the current siloed structure of organizations is facing breakdown. With

marketing focused on the four Ps, customer service focused on service delivery

and IT focused on web infrastructure, there is a problem of control and

communication. This failure leads to breakage points.

9. Major Driver 3: Increasing awareness of the importance of emotion and how this

translates into loyalty gains - The way of operating marketing has changed from


one focused on the four Ps to one that increasingly looks at emotion as a

platform for differentiation. In part, this is driven by the commoditization

challenge, but also by the evidence from neuroscience and advanced research,

that emotions drive behavior.

10. Major Driver 4: Move from product based to service based organizations - In

general, the focus of CE is on verticals with a high customer-facing base. These

are industries that would have used the term customer service but now use

customer experience instead. Less apparent has been the B2B industries.

However, as many product based organizations face margin collapse with

commoditization, so they will look to CE as a means to target and develop new

service-related propositions. Here, the ability to manage relationships will be

uppermost as the space for differentiation along product lines declines. This is a

trend focused on new wave customer experience verticals in the B2B space (e.g.

manufacturing, logistics and construction, and as current B2C providers integrate

CE into their supply chains).

11. Major Driver 5: Web experience- The focus on Web enablement is allowing

companies in less mature regions to leapfrog a technology and play on a more

even playing field with the more mature countries. Indeed, in some cases the

Web experience is deemed of greater importance (e.g. Brazil).

3.4 A Final View

12. Growth in CE is intimately linked to organizational consciousness of the

customer. This is why some sectors such as telecoms ‘get it’ - there is nowhere

to hide - while others, often in B2B, are behind the curve. With increasing push

from regulation and pull from commoditization, Beyond Philosophy sees an

increasing number of firms becoming conscious of the need to organize

themselves toward the customer.

13. In the current market, those sectors coming from a low base (such as

manufacturing); facing fast innovation (such as e-tail) and regulatory push (such

as healthcare) will experience the highest growth. However, there is a

comprehensive need, even in the first generation, to reconsider what customer

experience is (i.e., are you really doing it?).


14. It is no good taking a defensive position around measuring touch points or

rebranding service and research. Organizations need to ensure they ‘truly’

consider the meaning of customer experience based on its founding notions of

organizational redesign and an emotional commitment to loyalty.

15. It seems for now CE is standing at a crossroads between success and failure.

The message should be ‘rejuvenate or die.’

16. Companies that have emotions inside understand the customer experience far

better than those that assume customers are always rational. With an emotional

understanding, firms are better able to control complexity through customer

action, rather than more controlling measurements.


Contacts

For more information on this report or for information about customer experience

in general, please contact:

Steven Walden

Senior Head of Research and Consulting

Beyond Philosophy

Tel: 0207 917 1717

Mobile: 07809 836649

Email: [email protected]

mailto:[email protected]

Documents

Customer Experience Management Executive Summary · 4. 2,106 companies have been identified as being active in customer experience management from around the world. This equates to