Saturday, December 29, 2012

The Customer Experience Race Is Out of the Blocks

My good friend Andrew Spanyi has been a faithful and supportive reader and asked if he could share some of his "views" from the bridge. He permitted me to reprint the following column for your review and reaction. Andrew is a senior consultant at the Cutter Consortium.

The title of a recent article in The Economist reads, " Companies Hope That "Chief Customer Officers" Will Provide Better Service. Yeah, Right." The article reports not only that some firms have started appointing chief customer officers (CCOs) to serve the customer more attentively, but that some of these CCOs have many assistants, such as a "vice president of customers-for-life" (Salesforce.com), or a "vice president of customer advocacy"(NetApp), and even a "director of customer listening" (Cisco). Add this to the slate of "vice presidents, customer experience" at companies such as Fidelity, Intuit, Healthy Directions, and others. It's pretty clear that the race is on.

While such appointments of key executives to take charge of assessing customer experience are certainly a step in the right direction, there are grounds for a healthy dose of skepticism. Even though the idea that the primary purpose of business is to create and retain customers goes all the way back to Peter Drucker's 1954 book The Practice of Management , many organizations have struggled in shifting management attention from traditional financial metrics to the critical few measures that really matter to customers. And it's not just about metrics; fundamental changes in culture are also needed for optimum results. So, action has lagged rhetoric.

The first step in viewing the business from the customer's point of view involves measuring and monitoring the firm's performance in terms of delivering what customers really want. What customers really want are the following:
  1. On-time delivery (ideally when customers asked for it, or at least when it was promised to be delivered)
  2. Accuracy (the exact items/services they ordered)
  3. Completeness (no back orders or call backs)
  4. Responsiveness to inquiries (first time right)
  5. An accurate invoice
  6. Value for money
  7. Flawless service/support (both during and after product/service delivery)
A tight collaboration between business and IT is needed to make any progress in automating the collection of critical-to-customer metrics. That's easier said than done. A surprising number of companies continue to monitor metrics such as when orders are shipped as opposed to when these are received, the average time needed to respond to a customer inquiry as opposed to the frequency with which customer inquiries are resolved correctly the first time, and so on. Even when the right metrics are monitored, they often don't make it to the scoreboard that the senior leadership team (SLT) monitors and are buried deep in the bowels of an analytical group. Further, an end-to-end process-based view is needed to find the root cause when performance dips below a certain level and this view of business is frequently missing, or at least not transparent, at the SLT level.

While some progress has been made in the area of customer-centric measurement, largely due to an increasing emphasis on Big Data and process analytics, it is not yet clear whether this will have sufficient impact to shift management attention to a more customer-centric and systemic view of business. Organizational culture is sometimes tagged as the culprit. Yet, culture is dependent on what the organization measures, manages, and rewards. To shift culture requires not only attention to customer-focused metrics, but also on models, governance, and reward systems, as summarized below:
  • Model: The use of simple, visually compelling schematics of a high-level process-based view of the business and a one-page schematic for at least each customer-touching process is needed to maintain a focus on performing for customers and the need for cross-departmental collaboration.
  • Governance: Given the development of the right models and metrics, establishing a process-based governance framework to emphasize value creation is necessary to embed a new way of "how we do things around here."
  • Reward systems: This involves aligning reward and recognition systems to acknowledge the efforts of individuals and teams that enable performance for customers.
How is your organization doing in these areas? I welcome your comments about this Advisor and encourage you to send your insights to me at aspanyi@cutter.com



Captain Joe

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