The Importance of Customer Experience and How Organizations Can Benchmark Themselves Page 1CATALYST RESEARCH REPORT

The Importance of Customer Experience and How Organizations

Can Benchmark Themselves

BY: DAN BECA | DIRECTOR OF MARKETING TECHNOLOGY

The Importance of Customer Experience and How Organizations Can Benchmark Themselves Page 2

TABLE OF CONTENTSExecutive Summary....................................................................................................................................3

Introduction...............................................................................................................................................3

Methodology..............................................................................................................................................3

Matrix Approach..........................................................................................................................................3

Matrix 1.........................................................................................................................................................4

Measurement...............................................................................................................................................4

Key Issues..................................................................................................................................................5

The Importance of Customer Experience...................................................................................................5

Commoditized Products and Services......................................................................................................5

Customer Lifetime Value............................................................................................................................5

Components of Customer Experience........................................................................................................5

Customer Journey.......................................................................................................................................5

Data...............................................................................................................................................................6

Organization.................................................................................................................................................6

Automation...................................................................................................................................................6

Measurement of Customer Experience......................................................................................................7

Qualitative.....................................................................................................................................................7

Quantitative..................................................................................................................................................7

Failures of Customer Experience...............................................................................................................7

Customer-Facing Failures...........................................................................................................................7

Organizational Failures................................................................................................................................8

Measurement.............................................................................................................................................8

Conclusion..................................................................................................................................................9

About the Author.......................................................................................................................................10

About Catalyst..........................................................................................................................................10

Appendix..................................................................................................................................................11

References..................................................................................................................................................11

Matrix..........................................................................................................................................................12

How to Contact Us....................................................................................................................................12

The Importance of Customer Experience and How Organizations Can Benchmark Themselves Page 3

EXECUTIVE SUMMARY

This paper explores why customer experience is vital to companies in today’s economy. It will take a deep dive into the key areas that define a great customer experience and provide a measurement framework to help organizations keep track of how they measure up against competitors and the industry. INTRODUCTION

In today’s business environment, the combination of technology, education and globalization has allowed companies to produce very high-quality products. But as technology advances and is made available to more people, the ability to differentiate products has become less and less feasible. The same can be said about the services provided by companies. Both products and services have continued to become commoditized, and because they are not differentiators on their own, the customer experience needs to be what sets each company apart.

“Customer experience has been defined as the quality of events that accounts for anticipation, emotional involvement, a uniqueness that makes the aforementioned stand out from the ordinary, and reaches some form of completion” (Ab Hamid, 2013).

This paper will explore the different areas of customer experience and attempt to provide a scorecard that companies can use to gauge how they are doing against the industry or their competitors.

METHODOLOGY

MATRIX APPROACH

This paper was written using a research matrix to quickly understand the importance of customer experience, as well as the key issues that a company needs to focus on in order to improve its customer experience. Scholarly articles were chosen for the research. As each article was analyzed, key issues were added to the matrix. All new articles were analyzed to see whether they contained topics already identified. When an article introduced new issues, previous articles were reviewed to see whether those issues were mentioned. This led to a significant number of topics.

When looking across all the various articles about customer experience, they tended to fall into four larger categories: 1. Overall importance: Why we need customer experience

Companies need a way to measure how their customer experience stacks up against competitors and their industry.

The Importance of Customer Experience and How Organizations Can Benchmark Themselves Page 4

2. Components: Areas a company needs to look at to understand whether it’s creating a successful customer experience

3. Measurement: How an organization can obtain data to understand what its customers want and whether the organization is delivering it

4. Failure: Where customer experience can go bad

Those four larger categories were broken down into ten key areas that will be further explored throughout this paper.

MATRIX 1

Figure 1: Matrix 1 (larger version is available in the Appendix)

MEASUREMENT

In addition to the matrix that was developed from researching customer experience articles, a section was developed about measurement. The measurement section provides a model for how organizations can score themselves and benchmark how they are doing against specific competitors as well as its industry as a whole. This will be accomplished by using a scorecard to rank several areas (key customer experience issues) and then charting those scores using a radar graph. This gives the business a quick visual of how it stacks up against the competition.

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KEY ISSUES

There were several key issues revealed through the research. Four main areas rose to the top:

1. Importance of customer experience

2. Components of customer experience

3. Measurement of customer experience

4. Failures of customer experience

THE IMPORTANCE OF CUSTOMER EXPERIENCE

COMMODITIZED PRODUCTS AND SERVICES

In an ever-changing global economy, over time we’ve shifted from product to services as the biggest differentiating factor in the decision to purchase. However, both are now being commoditized, and companies are left to find other ways to differentiate. Companies must now work on creating a best-in-class customer experience to continue to attract new customers and retain their existing ones. Using segmentation to group like customers, along with personalized customer information, companies can start to tailor the customers’ experiences to groups as well as individual customers. CUSTOMER LIFETIME VALUE

Hand in hand with acquiring new customers and retaining existing customers is the concept of customer lifetime value. Companies cannot cater to every single one of their customers, but they must focus on their best customers when crafting experiences for them. It’s the classic 80-20 rule: 80 percent of your revenue will come from 20 percent of your customers. Identifying those customers through modeling a customer lifetime value can help you determine where your organization should focus as you begin to cultivate your customer experience. Creating a customer experience that enhances your organization’s perceived value ultimately leads to more engaged customers who will likely be advocates of the business and help spread the word to their friends and family.

COMPONENTS OF CUSTOMER EXPERIENCE

CUSTOMER JOURNEY

Understanding the customer journey is a key step in crafting a great customer experience. Journey mapping is the process of mapping out all the customers’ touch points during the different stages of purchase and understanding what they are thinking, feeling and doing at each of those stages. This process is also sometimes referred to as customer

As products and services continue to be commoditized, customer experience is increasingly used by companies to differentiate their offerings.

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experience mapping. Journey mapping can be used to bring people from different areas of the organization together to get a holistic view of customers as they interact with your brand (Fichter, n.d.). This process also helps create consistency across all the various channels that the customer is using.

DATA

Knowing what your customers are thinking, feeling and doing at each stage of their customer journey is one part of the battle. Another big component is data. What data have you gathered about your customers? Is it in a centralized place that’s easily accessible across all channels and by all members of your organization? Many organizations today make use of a customer relationship marketing (CRM) database. This is a centralized place for all customer data to be housed and accessed. Companies can get a view of all their customers’ behavior, transactions, communication and engagement by looking at the data in a CRM database. This data is critical for segmenting your customers and personalizing their customer experience.

ORGANIZATION

As customer experience has grown in popularity as a differentiator, organizations have had to evolve and change their businesses over time. None are perfect at becoming a customer-centric company focused on the customer experience. Bruce Temkin, in an article from 2014 titled “Customer Experience Management Is on the Road to Maturity,” claims that there are six stages of customer experience maturity: ignore, explore, mobilize, operationalize, align, and embed (Temkin, 2014). He further states that over 75 percent of companies (at the time of writing) are in the bottom three stages. Companies can change that and mature over time, but there are obstacles — some more difficult to overcome than others. Investment costs present a big challenge for companies to have the necessary systems in place to deliver on the data needs of a successful customer experience. There may also be challenges in aligning staff more appropriately to focus on the customer first, instead of their products or services.

AUTOMATION

As organizations move toward the upper end of the scale for customer experience maturity and approach the operationalize, align and embed stages, they can use automation to help deliver a great customer experience. After an organization learns where and when it interacts with customers based on its customer journey mapping and it has the data in place to segment and personalize customer experiences, it has the building blocks in place to support automation. Automation can take place by setting up business rules to account for every customer interaction.

Via Bruce Temkin’s “Customer Experience Management Is on the Road to Maturity.”

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Ultimately, this will not only enhance the customer experience, but also reduce support costs to maintain that experience.

MEASUREMENT OF CUSTOMER EXPERIENCE

On the way to becoming a world-class customer experience organization, there are a few different ways to gather data about your customers, and that data can be used to measure how well you’re doing. There are two types of data you can collect: qualitative and quantitative. Both can help you understand what you are doing well and where your customer experience is lacking.

QUALITATIVE

There are many ways to get qualitative data from your customers. This data is the anecdotal information that can’t be measured by simply looking into the transactional data from customer purchases. It is obtained by talking to customers (and prospects). It can be obtained via focus groups — either in person or online, or gathered through interviews with customers, or even what customers are saying about your brand and products on social media. Often this data will give you a sense of customer satisfaction and better understanding of what your customers are thinking, feeling and doing during each interaction with your brand.

QUANTITATIVE

Quantitative data is the complement to qualitative data. It’s the historical truth about your customers’ purchase history, who your best customers are based on the revenue they are generating and how engaged they are with your marketing communications (email data, web analytics, response to offline communications, etc.). This data can be used to model your best customers and help you ascertain whether you’re growing the customer value through improvements to your customer experience program.

FAILURES OF CUSTOMER EXPERIENCE

CUSTOMER-FACING FAILURES

There are some common failures that can have a negative effect on the customer experience. One failure: not being integrated across channels. If a customer is interacting with your brand in many different channels (which is the norm today), there’s risk that you aren’t being consistent across those channels. An example: you send an email to customers alerting them to a sale, but the sale is only available in-store, not online.

Both qualitative and quantitative data can help you understand where your customer experience is lacking.

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ORGANIZATIONAL FAILURES

Another common failure: how customer research data is used within the organization. Often this data is acquired by one department but not shared with other departments that could utilize it (Lamont, n.d.). This is a key sign that an organization is still at one of the early stages of customer experience maturity.

MEASUREMENT

A scorecard can be a great way to help an organization measure how well it is doing at delivering a great customer experience. By evaluating its performance on the key issues outlined in this paper, an organization can get a quick read on where it needs to improve. Using the table below, we can rank companies on a scale of 1-10 and then plot a visual representation with a radar graph, which can be used to chart progress over time or benchmark against competitors or industry standards.

Key Issues Description

Customer JourneyDoes the company have a solid grasp of the customer journey? Is it mapped out and visible to all areas of the company?

DataDoes the company have sufficient data available to it about its customers? Is it in one central, accessible location, or is it stored in disparate systems that are not readily available?

AutomationIs the company employing automation to help drive the customer experience? Are marketing communications automated, or is most of the interaction with customers manually deployed?

Organization Is the organization customer-focused or is it product- and service-focused? Does the structure of the organization support the customer experience or detract from it?

Qualitative Has the company ever done focus groups with customers? Does it know what its customers are thinking, feeling and doing at each stage of the buying cycle?

Quantitative Does the company have historical data on customer behavior? Has it developed a customer lifetime value model?

Customer Journey

Data Automation Organization Qualitative Quantitative

Company A 9 3 4 2 5 5

Competitor 5 5 5 5 5 5

Industry 7 8 5 4 4 2

EXAMPLE:

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0

1

2

3

4

5

6

7

8

9CustomerJourney

Data

Automation

Organization

Qualitative

Quantitative

CompanyACustomerExperiencePerformance

CompanyA Competitor Industry

CONCLUSION

Although the ability for companies to differentiate themselves through products or services alone has faded, it is possible to succeed with customers by creating a great customer experience. Organizations must strive to cultivate a great customer experience or risk being put out of business by a company that offers a better customer experience. By paying close attention to these six key areas, organizations can make sure that they are on the path to customer experience success:

• Customer Journey

• Data Centricity

• Automation

• Organizational Maturity

• Qualitative Data

• Quantitative Data

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800.836.7720 | www.catalystinc.com | info@catalystinc.com Facebook Twitter LinkedIn © 2016 Catalyst

ABOUT THE AUTHOR

DAN BECAdbeca@catalystinc.com

Dan creates holistic, customer-centric, omnichannel marketingsolutions that are focused on growing revenue and reducingcosts. As the director of marketing technology for Catalyst,Dan develops digital and web strategies that include databasedesign, email, search, and mobile marketing. He holds a BS ininformation technology from Rochester Institute of Technologyand is currently studying for his MBA.

ABOUT CATALYST

Catalyst (www.catalystinc.com) helps marketers develop more profitable customer relationships through better acquisition, retention, upsell, cross-sell, and experience design.

We take the guesswork out of marketing decisions by combining ourintellectual curiosity and inquisitiveness with hard-core analytics andmeasurement. We call it Science + Soul.

Headquartered in Rochester, NY, our clients include AAA, ACI Worldwide, American Family Insurance, Embrace Home Loans, Heraeus Kulzer, Kodak Alaris, Kroger, Preferred Mutual, Rise Broadband, TTI Floor Care North America, University of Rochester, Valvoline, and Xeikon, among others.

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APPENDIXREFERENCES

Ab Hamid, Noor Raihan, and Romiza Md Akhir. “Beyond Technology-Based Customer Relationship Management.” Research in Business Economics Journal (2013).

Chahal, H. and Dutta, K. “Measurement and impact of customer experience in banking sector.” Vol. 42(1). Decision, 2015. pp. 57-70.

Chidley, J. and Pritchard, N. “Drivers for creating value and enhancing customer experience through people.” Vol. 48(6). Industrial and Commercial Training, 2014. p. 293.

“Customer Experience Management Market 2014-2019 Research and Forecast Report.” PR Newswire, 9 September 2014.

Feinberg, E. “Measuring Mobile Customer Experience Satisfaction: ABC Case Study Offers View into How it Can Be Done.” Vol. 31(6). Customer, 2013. pp. 16-17.

Fichter, D. and Wisniewski, J. “Customer Journey Mapping.” Vol. 39(4). Online Searcher, n.d. pp. 74-76.

Flodin, M. and Norton, D. “Customer Experience Blueprint Drives B2B.” Vol. 15(11). Customer Relationship Management, 2011. p. 38.

Johnston, R. and Kong, X. “The customer experience: a road-map for improvement.” Vol. 21(1). Managing Service Quality, 2011. pp. 5-24.

Kosiba, R., PHD. “Customer Experience, Trends, and Staff Planning.” Vol. 31(9). p. 37. Customer, 2013.

Lamont, J. “Creating a cohesive customer experience.” KM World (n.d.): pp. 8-9.

Lemke, F., Clark, M. and Wilson, H. “Customer experience quality: an exploration in business and consumer contexts using repertory grid technique.” Vol. 39(6). Academy of Marketing Science Journal, 2011. pp. 846-869.

“Middle East E-Commerce Organizations Need Multi-Channel Customer Experience Model to Build Customer Loyalty and Grow Business.” UAE Government News, 2013.

Paquin, A. “Mapping the Customer Journey.” Vol. 31(6). Customer, 2013. pp. 22-23.

Popa, V. and Barna, M. “Customer and shopper experience management.” Vol. 4(2). Valahian Journal of Economic Studies, 2013. pp. 81-88.

Temkin, B. “Customer Experience Management Is on the Road to Maturity.” Vol. 18(8). 2014. p. 10.

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