Leadership Required: Why the CEO needs to lead strategic recognition

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Reinforcing behaviors that create exceptional customer experiences

This is my second in a series of posts focused on the essential role the CEO plays in both employee and customer experience initiatives.

You already know that when employees consistently deliver great customer experiences, you’ll not only create and retain more loyal customers, odds are you’re going to keep your star employees as well. But how do you engage team members to deliver on your vision and ensure the desired brand experience is lived every day? Through strategic recognition.

The CEO’s role in experience management is to drive consistency, to ensure employees at every level understand their role in delivering the customer experience (whether they’re on the front-line or in a supporting role), and to reinforce the very behaviors that differentiate the organization from its competitors.

A CEO can leverage strategic recognition to:

  • align employee attitudes and behaviors with company values
  • engage individuals to consistently share, recognize, and repeat best practices that impact business results,
  • create learning opportunities through storytelling that helps to replicate high-performing employee behavior and supports the company’s business strategy.

How is this done?

#1. Create a culture of accountability.
Design the customer experience by defining non-negotiable behaviors at specific touchpoints. Make sure employees can perform these behaviors and understand their role in the customer experience. Hold them accountable for delivering the desired experience, and hold managers accountable for making sure best practices are captured and shared.

#2. Recognize and socialize success stories.
Recognize employees for doing their job well, going above and beyond, and especially when they deliver experiences that significantly impact bottom-line results. There are numerous platforms that automate this process (including ours), but technology alone will never replace the power of receiving a phone call, email, hand-written note, or face-to-face thank you from the CEO.

While it’s nearly impossible to do this with all employees, when CEOs give their personal attention to a job well done, employee pride skyrockets. And it’s not all up to you dear CEO, your managers need to consistently recognize their direct reports and encourage peer-to-peer recognition throughout the organization.

#3. Link employee performance to customer experience feedback.
Gaining customer feedback is critical to your business strategy so be sure you’re sharing that feedback with employees on a regular basis. Engaging your workforce to understand both strengths and challenges will help create a stronger, more productive customer-centric culture that’s laser focused on living the brand.

CEO’s that make a conscious effort to integrate these habits and lead by example are better positioned to grow and maintain market share, attract and retain right-fit talent, increase customer loyalty and, that ever-so-magical word, profit.

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Leadership Required: Why the CEO needs to drive communication and culture change to improve customer experience.

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All employee engagement and customer loyalty initiatives are not created equal. What makes the best initiatives successful?

The CEO.

A CEO-driven initiative is ultimately more effective than one led only by middle-management, because leadership truly has the power to drive culture transformation and ensure brand alignment with the company’s vision and goals.
A CEO can:

  • align and engage an organization with the brand,
  • set expectations and be an example for all to follow,
  • help eliminate silos through greater collaboration,
  • create a culture of accountability for delivering consistently positive employee and customer experiences.

I recently sat down with Bob Doyle, CEO (and Brand Integrity client) who really gets it. In the last year, he’s implemented a successful experience management initiative that has “improved both customer and employee retention rates, paying for itself many times over.”

Here’s what he had to say about culture transformation and why communication needs to start at the top:

“In order to be consistent, the message needs to start at the top and it must be delivered with passion. If you rely only on middle-management to deliver the message, you’ll get different interpretations of what the message should be. Of course you want your managers to believe, support, and participate in the delivery, but ask four people to communicate something for you, and you’ll get four different stories. So leadership needs to be personally involved to drive the message and ensure it’s communicated consistently and effectively.”

Creating Customers for Life

In order to create loyal customers, a company needs to deliver a great experience, or rather, they need their employees to deliver a great experience. Employees are your greatest marketing advantage. They distinguish your company in a way that helps customers experience the why and how you’re unique from the competition.

So what’s a CEO to do?

The CEO’s role must be one of brand champion. This role will help ensure that the company’s brand strategy is implemented, instead of becoming just another “thing” that everyone should do. Here are three things leaders can start to do today to ensure greater success:

#1. Be visible.
Employees need to see you (literally) leading the effort, they need to know that you truly believe in its value and its impact. Get out and develop relationships with your employees. This also allows you the valuable opportunity to hear what’s really going on from those that directly interact with your customers.

#2. Give feedback regularly.
Recognize employees often with specific feedback on what they did well. Help them connect to the purpose and how their individual efforts fit in with the big picture. Giving their work greater meaning helps them realize they’re working for a company they can be proud of. The CEO can drive a company culture that affects each of these.

#3. Demonstrate quick wins.
Make it a point to regularly update employees on progress. Show them how their feedback led to actionable improvements in process, employee, and customer experiences. You have to walk the talk and show you’re prepared to make changes that improve the experience. Once your employees realize their input is valued, they’ll open up more and be more motivated to follow your example.

In summary, engage employees to deliver the desired brand experience every day, and you’ll be better positioned to retain them. When those good employees deliver consistently great customer experiences, you’ll create and retain more loyal customers.

In the end, it’s all about people—retaining the right people, and empowering them to help differentiate your company from the competition. The right people keep you in business and grow your profitability.

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Warning: Do Not Attempt to Measure Transaction-based Customer Loyalty

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I have come across a few cases of organizations attempting to measure customer loyalty in transactional (event-based) CEM programs. As you would expect, all of them utilize the “Likelihood to Recommend” question, specifically “How likely is it that you would recommend Company XYZ to a friend or colleague?”

Let’s try to understand what is going on in this case and what the potential risks might be.

Although there is a considerable amount of research devoted to the concept of customer loyalty, this is what it comes down to: Customer loyalty exists when a company can retain their customers long enough to retaliate against competitive offerings before the customer “jumps ship”, improve product/service features, correct errors and resolve outstanding issues. Loyal customers will give you a second (and potentially a third) chance, risking the costs of doing so by trusting that your company will deliver. A “just satisfied” customer won’t.

By definition, loyal customers are more passionate about your organization and its products and services and, as a result, they tend to talk more about it. Spreading the news via word of mouth, to some extent, as a natural extension of your marketing/advertising campaigns.

Research goes on to show that customer loyalty is the result of the sum of a customer’s experiences (the branded experience), formed over the long term of his or her engagement with your organization. In simple words, companies cannot build true customer loyalty if they perform well (or even excite their customers) in a single transaction. They will need to excite their customers over and over again as they engage in repeat business transactions. Over time, a consistent, customer experience will result in higher customer tolerance to occasional errors, and/or falling behind the competition in terms of features, price or both.

Said another way, a sign of a strong brand is customer forgiveness.

Accordingly, when an organization decides to measure the level of loyalty in its client base, it would make sense to obtain feedback from customers who have been engaged in business repeatedly, not just one time. Depending on the nature of your business and industry, this could mean reaching out to customers who have been around for a period of time, long enough at least to allow for multiple business transactions, often 6-12 months or longer. Obtaining feedback from these customers would represent a more trustworthy indicator of customer loyalty.

Upon the completion of the CEM program, you can safely argue that Customer XYZ is loyal because he has engaged in, for instance, seven business interactions over the course of the past twelve months and, as a result of the sum of the his experiences, he gave a “likelihood to recommend” rating of 9/10. You can trust that Customer XYZ will excuse an occasional error in your product or outage in your service so that when a competitor pops up with a more attractive value proposition, he will stick with you for a reasonable amount of time, at least enough to give you the opportunity to respond with an offer of your own.

On the other hand, attempting to measure customer loyalty based on a single business transaction will almost certainly generate very high variation of results, which will ultimately lead to inaccurate and untrustworthy feedback. When asking a customer to rate his or her likelihood to recommend your company based on a single transaction, you tie this answer, and thus your customer loyalty rating, to that transaction. This contradicts the very nature of the customer loyalty concept altogether. Let’s assume the very first transaction went well. Customer feedback will point to a very high likelihood to recommend, which will lead you to perceive the specific customer as loyal. Now, let’s assume the second transaction did not go as expected. Customer feedback will point to low likelihood to recommend, which will lead you to perceive the same customer as not loyal. So, at the end of the day, should you count this customer as loyal or not? High recommend rating variation will ultimately prevent you from being able to trust customer feedback and incorporate it to strategic decisions.

To summarize, customers become loyal over the course of multiple business transactions with your organization, not based on a single interaction. Organizations build customer loyalty over the course of many months, or even years. Asking the recommend question, which has been designed to capture customer loyalty, in transactional programs does not generate trustworthy results because it ties a single transaction to a metric inherently based on multiple transactions.

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CEM Assessment Designs: Multiple vs. Single Touchpoints

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In measuring and managing transaction or interaction-based customer experiences, organizations are often presented with the dilemma of either gathering feedback on multiple experience touchpoints or focusing on a single touchpoint. For example, let’s assume that a national airline operator decides to obtain feedback on the experience their customers have, which typically includes:

1.    Reservation
2.    Check in (online or offline)
3.    Gating (waiting to board)
4.    Boarding
5.    In-flight experience
6.    Deplaning
7.    Luggage pick-up

Ideally, the airline  would want to obtain experience measurements regarding all of the above. Doing so will give the airline the opportunity to identify strengths and weaknesses across the board and follow up with customers accordingly. However, obtaining feedback on seven different experience touchpoints will almost certainly require a lengthy assessment. Assuming that each experience touchpoint could include up to five or more satisfaction drivers, the assessment could end up being a grid of approximately 40 questions, if we include overall satisfaction/loyalty questions and a few qualifiers. Assigning an average of 5-7 seconds to answering each question, the airline would end up with a survey that is pushing four minutes to complete. Adding to that the time required to read the survey invitation, follow the links, and leave comments, participants could either drop out of the survey when they realize how long it is or provide inaccurate feedback as a result of “respondent fatigue,” a direct result of survey length. The second case is actually the most severe because it tricks the surveyor into believing that he/she has collected a lot of information, resulting not simply in low “feedback completeness,” but in inaccurate and untrustworthy findings.

One solution to this dilemma involves breaking down the integrated experience touchpoint assessment, which includes all of the experience touchpoints, into seven individual single-experience touchpoint assessments, one for each experience touchpoint. Instituting qualification (or no-send) sampling rules prevents the same customer from participating in more than one assessment. In our case of the airline, Customer A would only be invited to provide feedback on her reservation process, while Customer B would only participate in the assessment related to his check-in experience. These assessments can be about 5-questions-long, guaranteeing completion in under a minute, a much more inviting and participant-friendly proposition than a 4-minute-long assessment. Although the same customer might qualify to participate in all seven assessments, qualification rules prevent this from happening and ensure that customers are not over-surveyed.

The single-touchpoint solution does not come without drawbacks, some of which are indeed significant. The most important one, as you may have already guessed, is low feedback completeness, which is the inability of the assessment to obtain customer experience measurements across the entire customer corridor (all seven touchpoints) from the same individual. Using our example above, the assessment would fail to learn that Customer A faced significant difficulties during her check-in process, the touchpoint covered in assessment that Customer B took, simply because she was invited to provide feedback only about the reservation process. Although there are methods to minimize the impact of this limitation, it is, admittedly,  an important drawback.

To conclude, in designing transactional CEM program assessments, organizations will need to decide between integrated touchpoint and single-touchpoint assessment designs. Ultimately, this choice comes down to data completeness (integrated touchpoint) versus data trustworthiness (single-touchpoint).

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Customer Experience Management: The Challenge of Measuring vs. Managing

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State-of-the-art Customer Experience Management (CEM) programs combine two core components, each trying to achieve different goals: a) Experience measurement, and b) Experience management. The measurement part attempts to collect customer feedback and inform decisions focusing on improving weak areas (or touchpoints) of the customer experience, ultimately leading to increased customer retention and advocacy. The management part attempts to utilize the opportunity the program itself presents to re-establish the relationship with customers, resolve pending issues, and explore direct ways to drive referrals. By nature, these two goals are different.

The measurement part of the program usually requires large and representative sample sizes in order to confidently generate customer experience insights. Especially in the case of Overall CEM programs (a.k.a. “Relationship” programs) the ability to extrapolate insights to the entire customer base is rightly treated as one of the most important objectives. Besides, leadership teams won’t trust insights that are not “confident,” meaning  that the number of valid complete responses is not sizeable enough to support decisions that will apply to the overall customer population or high-impact sub-segments. However, large-size samples undermine the company’s ability to effectively follow up with the majority of respondents, both satisfied and dissatisfied, and fulfill the second function of the equation that points to resolving customer issues and driving referrals.

Ultimately, the solution to this challenge is based on a single keyword: balance. Vendors and clients need to work together to prioritize the objectives of the program and, at the end of the day, identify the mix of measurement and management that will define the program and determine its ultimate outcome according to the specific needs at hand. Although one cannot determine the golden mean between the two goals, I can confidently say that “all or nothing” won’t work well in this case. Completely taking either component out of the mix will severely limit the scope of the program and risk its bottom line success. For instance, complete focus on measurement could, if designed correctly, generate sufficient strategic insights to improve experiences but, at the same time, its inability to drive immediate action will definitely leave customers wanting more, something that can easily back fire. On the other hand, complete focus on management will almost certainly lead to short-sighted solutions, addressing current customer issues and generating referrals while risking the loss of the big picture, strategic experience improvements needed for long-term success.

In finding the right balance, organizations have two different tools: a) Sampling strategy, and b) Follow-up strategy. Sampling strategy determines how many customers to include in the program and how to select them. Instead of including every single customer, companies have the option to select a representative sub-sample that could generate confident insights without undermining the organizations ability to effectively follow up with respondents and address their needs and/or utilize them to generate referrals. Representation is only one way to define sub-segments. Any type of segmentation attribute such as demographics, psychographics, and retention-based or advocacy-based attributes can be used to define sub-segments. The follow-up strategy, on the other hand, determines the plan according to which the organization will follow up with respondents. This strategy does not require following up with ALL customers. For instance, severe detractors (respondents who provide a rating of 2 or below on a scale ranging from 0 to 10) are considered high-risk and require special attention. According to general industry guidelines, they should be contacted within 48 – 72 hours, depending on the nature of the industry and the severity of the issue at hand. Less dissatisfied customers (respondents who provide a rating of 3-6, on the same scale) still require attention, but the follow-up requirements are relatively more relaxed. Although customers in this segment should be contacted back as well, they have higher tolerance, which means a callback one week later could still suffice. This, again, is based on vertical and the nature of the program.

To conclude, implementing a Customer Experience Management program requires companies to find the balance between obtaining confident measurements and effectively following up with customers. Entirely focusing on either goal while neglecting the other will definitely undermine the outcome of the program. In finding the right balance, organizations need to combine sampling and follow-up strategies to ensure that the sample is large enough to support strategic experience improvements and small enough to enable effective follow-ups to resolve issues and generate referrals.

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