Customer Experience

February 10, 2020

CX Strategy (7) – Measurement and improvement systems – Part 2 – CSAT / Customer Satisfaction

Maurice FitzGerald / Blog, Customer Satisfaction / CSAT, Customer Experience, Customer Satisfaction, Surveys /

When you are asked to rate your ‘overall satisfaction’ with something, you have entered the Customer Satisfaction rating system. The most common way of doing this is to ask you to rate satisfaction on a scale from 1 to 5, where 5 means ‘extremely satisfied’. There is a minor challenge in the rating scale, as with all scales that do not contain a zero. A small proportion of the respondents will believe that 1 is the best rating, rather than 5. After all, you want to be number one, don’t you? At the level of your overall brand, the satisfaction metric does not predict revenue as well as the ‘willingness to recommend’ metric used in the Net Promoter System. At least, that is the case for most, but not all industries. In that context, it is worth noting that Enterprise Rent-A-Car is used as an example in The Ultimate Question 2.0, and they discovered that overall satisfaction was a better predictor than willingness to recommend. In general, for surveys about telephone, web and chat support, the Customer Effort Score (to be covered soon in another article) is a better revenue predictor.

“Top box” satisfaction

A common method of communicating results is to talk in terms of ‘top box’ satisfaction or “top-three box”, for example. This means arbitrarily deciding that people who give you the top score, or the top two or three scores on a five-point scale are ’satisfied’. I have not been able to find studies of differences in customer behavior between the different categories or groupings. However, based on Net Promoter System studies, it seems unrealistic to suggest that someone who gives you a 3 is actually satisfied. The NPS research would suggest that someone who gives you a 5 is likely to recommend your product or service, and someone who gives you a four does not care much either way. A three would already be a sign of negative views. Note that some companies use seven-point scales.

The principal communication challenge

The lack of a single standard customer satisfaction scale and definition causes communication issues. It is quite easy to find companies that say “92% of our customers are satisfied.” What does that mean? On a five-point scale, which of the five are they counting to get to 92%. Since there is no single definition, anyone explaining the metric has to explain where it comes from, and risks losing time in an argument with someone in the audience who measures it a different way.

CSAT is a metric, not a system

While CSAT is probably the most common satisfaction metric, it is not a system. It is entirely up to you to work out what the number means, what customers actually want you to improve, and how you should go about it.

Composite satisfaction metrics

Some companies use the term ‘customer satisfaction score’ or CSAT, and actually use a different method of calculating it. Predicting customer loyalty, meaning the desire of customers to keep on buying from you, can of course different forms. The more sophisticated satisfaction surveys also include several questions that are not about satisfaction. The most common questions ask customer to use the same type of rating scale to answer questions such as “This company has earned my loyalty”, “How likely are you to repurchase?”, “This company is a leader in its field”, “How likely are you to recommend this company or product to a colleague?” and so on. Several metrics can then be aggregated to form a satisfaction index. Where this is done well and with representative customer samples, it can be an excellent revenue predictor. I will cover some composite metrics in an article proprietary measurement systems.

Lists of things to rate

Satisfaction surveys usually ask you to rate a list of things. The list can be very long. For years, I participated in a survey panel that covers the travel industry. I have received surveys that only have satisfaction rating scales and took more than half an hour to complete. The main problems with lists of things to rate are:

It is your list, not the customers’ list. Most commonly, these lists are set up by the way your organization is structured. You want to get some sort of feedback for everyone. This may not correspond to what the customer wants to tell you about. Notably, if a competitor does something that you do not, only asking about what you currently do will prevent the customer giving you that feedback.
It creates the illusion that each of the factors you ask about is equally important. It is particularly difficult to undo this subliminal message. Imagine you have 50 things that you ask customers to rate. Imagine further that seven of them have the worst rating possible. Once these ‘red’ items are visible, you will be forced to turn them around, even if they have no importance whatsoever.

Conclusion

The lack of a standard definition of what we mean by ‘Customer Satisfaction’ causes major communication challenges and is the principal argument against using CSAT. However, no matter how you define the metric, its trends relative to the trends of your competitors are still meaningful. If you can find a reliable way of finding out why such trends are happening, you may well have something useful.

As always, I have opinions, usually based on fact. That does not make me correct. Please feel free to comment below.

Next time: Customer Effort Score

As is often the case, the above is an edited version of a chapter in one of our books; in this case Customer Experience Strategy – Design and Implementation.All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

January 24, 2020

CX Strategy (6) Measurement and improvement systems – Part 1 – Smiley Buttons

Maurice FitzGerald / Blog, Customer experience / Customer Experience, Smiley Buttons, Surveys /

There are quite a number of customer experience measurement and improvement systems in use around the world. They are not all equal. This post is the first in a series that covers some of the most common ones. Some consulting companies offer proprietary systems, and I will cover their main measurement principle. There are wide variations in approach for these proprietary systems, but all have one common feature.

The systems I will cover in the series are:

Smiley buttons
Customer Satisfaction / CSAT
Customer Effort Score
Net Promoter System
Wallet Allocation Rule
Consultant-provided proprietary systems
Journey Mapping

Smiley Buttons

Smiley buttons are gaining popularity in consumer businesses and have only marginal potential in B2B situations. HappyOrNot and Agoraopinion are examples of companies who provide low-tech solutions in this area. Changi airport in Singapore has a more high-tech version. The general principle is that you tap on one of three or four emoticons to show how happy you were with an experience you just had. The first time I ran across it was in Heathrow airport, just after the immigration counters. They also have them just after security as you leave. If you are just looking for a number to track, this seems like a simple way. The challenge with the low-tech approach is that you have no idea why people are pushing a particular button so cannot use the input to drive improvements. The weirdest place I have seen such buttons was at the passport control desks in Beijing airport. Theoretically, you are supposed to push a button while the immigration officer is looking at your passport. Really? Can he/she see you push the red button and what are the consequences? You can see a typical button layout in the image at the top of this article.

In my local Media Markt

The HappyOrNot buttons have been installed in my local Media Markt electrical goods and media store in Geneva. They have been positioned just behind the checkout desk, facing the cashier. “Please rate our service today,” The first time the buttons were there, my wife and I had had difficulty being served when buying an electric kettle. Were the buttons there for us to rate the service in the whole store, or just the check-out, which was efficient? The lady at the checkout desk did not know what was being done with the feedback. Once again, there was no way of indicating what we were happy or unhappy about, so no conceivable action could be taken by Media Markt.

Extracting value without providing any

I was in our Cambridge UK office one day when a US visitor arrived. She was only too pleased to tell me she had seen the smiley buttons just after immigration at Heathrow. I asked her whether there was any indication anywhere of the number of people who pushed each button, what they had learned, or what they were doing with the feedback. The buttons have been there more than six years now. As in all other situations where I have seen the smiley buttons, there was no feedback loop. They seem to be extracting value by having you push buttons, but are not providing any value back. There are plenty of people and companies who are not actually serious about improvements and just want a number. This seems like an excellent way to do just that.

Lest the above be perceived as excessively negative, note that HappyOrNot list some major companies as clients, including McDonalds, Microsoft, Lego, eBay and American Express. The references on their site indicate some happy clients.

Emerging high-tech solution

When I last went through Singapore’s Changi airport, I came across a somewhat better smiley system in the rest rooms and elsewhere. A touchscreen asks you to “Please rate our toilet” and gives five choices. If you choose Poor or Very Poor, you are taken to a second screen asking why and giving a choice among eight reasons, including the smell or lack of toilet paper. My Swiss half was worried about touching a touch screen that may just have been touched by someone who had not washed their hands, though the screen was marked “This screen is sanitized regularly.” There did not seem to be any way to explain positive feedback, and there was no explanation about improvements that had been made from past feedback. A similar system using screens and software from Dr. Voxx is in Brisbane airport, or at least was two years ago.

Relevance to B2B

There are very few B2B situations where you could ask your customer to push a physical button. The system could be used by government administrators that require you to go to their service counters to register your company or for other simple transactions. While you could clearly use smileys as your scoring interface for a web-based survey, this crosses the line into more conventional measurement systems. There is no real difference between asking a customer on your website to give you a score on a rating scale or on a smiley scale.

Conclusion

I can see the low-tech method as useful in a single situation, and this is A/B testing, where you are interested in finding out which of two things a customer prefers, and don’t care why. For situations that require deeper insights, the low-tech system provides no way of finding out why customers provide specific feedback, and therefore has no conceivable use as an improvement system. If you only want to measure a score, but use other data sources to act on that score, it may fit your needs. The high-tech screens are an improvement and show promise.

Next time: Customer Satisfaction / CSAT

December 31, 2019

CX Strategy (5): Start with a Situation Analysis

Maurice FitzGerald / Blog, Customer experience, Strategy / Customer Experience, strategy /

Whether in business, the military, government or indeed non-profit organizations, the the first step in generating a strategy is a comprehensive analysis of your current situation. This is primarily focused on what is happening outside your company. For most companies, it should cover the six areas below and lead to deep strategic insights. ‘Insight’ is a powerful word. Done correctly, you will understand the environment better and more quickly than your competitors, and make superior investment choices.

Set up the analysis

Ideally you will run the situation analysis in parallel in each of the six areas. I suggest using small teams of people from different businesses or functions. In a small company, a single person could do each one. The most important rule is that you can only get new answers by asking new questions. If you ask and answer better questions than those your competitors are asking, you will win.

People who implement must do the planning

A fundamental rule of any successful project is that the people who will have to implement the new strategy should also do the planning. This means that the people who represent each relevant part of your company should do so with the full authority, delegation and agreement of the person leading that entity. If you do not take this approach, critical stakeholders will reject the results of the analysis and you will be unable to implement.

Let’s consider each of the six areas in a little more detail. I have used the development of a customer experience strategy as an example. The principles and analysis areas apply to all businesses. I have included just a few questions for each area below. I will supply a more comprehensive list if your feedback to this article suggests it would be useful.

Customers

This team asks and answers questions about what customer experience expectations your customers have had up to now and how you expect them to change in the future. Here are some sample questions that may help get you started:

What experiences do your traditional end-customers want at the most important customer journey points? How reliable is your evidence for this?
How and why are the expectations of your traditional customers changing over time?
Are there useful ways you could segment customers and provide differentiated experiences to each segment? Should all customers of all sizes and from all industries be treated exactly the same or should you tailor a specific experience for each?
Do you have any information on how your traditional customers consider their experiences with you compared to what they experience with competitors?

At least half the day-to-day work of most customer experience teams is about listening to customers and partners, then summarizing what they want you to improve. This means that much of the necessary situation analysis information is directly expected from, and controlled by the customer experience leader. Naturally, in small companies, there is no single central reference point, except perhaps the owner or CEO.

Partners

The majority of companies have partners for at least some of their business. The three main categories of partners available to most businesses are resellers, implementation partners, and subcontractors. While you may have some partners who do not work with anyone else, it is more likely that you compete for their attention. Here are some possible questions that may help you to get started with the partner analysis:

What are the critical touchpoints for your resellers, implementation partners and subcontractors? How have these been changing over time? Are these three categories useful, or is there a better way to segment your partners from a partner experience perspective?
Should the top few partners, in terms of revenue generation, be treated differently from the rest?
How does your partners’ experience with your company compare to that with your traditional and emerging competitors?
Who are your potential new partners, and why?

Competitors

There are two main categories of competitors: traditional and emerging. The emerging category includes companies you do not know about yet, but who may be about to take over your market. There are industries such as steel manufacturing where barriers to entry are high, and you are unlikely to be surprised. There are also low-barrier industries such as software, and pure import-export businesses. Here are some questions that may help analyze the competition:

Do you have competitive benchmark survey data that lets you understand where your competitors provide a superior experience and the situations or touchpoints where you lead. If so, how do you compare with traditional competitors and are new competitors emerging with differentiated customer experience?
How have competitors’ customer experience strategy and results changed over time? What investments have they been making in people and systems? (Going to their website to look at their list of job openings may help with this.)

Customer experience industry trends

All industries change over time. Customer experience itself has been changing, from at least two perspectives. First, the products and service offerings that help companies to provide better customer and partner experience change over time. Second, there are industry-specific customer-experience changes. For example, ‘Customer Success Teams’ have been implemented by most large software vendors over the last five years or so. These teams help customers to install and understand software, free of charge. Here are some questions that should help this part of the analysis:

What is happening in the customer experience industry? What ways of listening to customers are most popular? What new improvement processes and technologies are emerging?
What is the impact of social media on customer perception of your products and services? Do you know what is being said about you on social media, and does it matter?

External environment

These questions are about the environment in which your company, your competitors and your customers live. It includes government regulation and general concerns and hopes of the people in countries where you operate. You may find these questions useful:

How does government regulation affect the way you want to go about measuring and improving customer experience?
What current and emerging rules about data privacy affect your current and potential survey processes?
Do you know what surveys are being run in your company and whether they respect relevant laws?

Internal realities

While the first five areas are all about what is happening outside your company, you are unlikely to be able to sell and implement every conceivable idea within your company. These questions may help establish what you can achieve:

What is the state of executive sponsorship for your current efforts?
How likely are you to be to get any additional funding and people you may need to implement?
What can you do to prove the value of your work?
How can you secure enduring sponsorship for your work; sponsorship that will survive leadership changes?

Insights

The result of the situation analysis in each area should be a short list of insights. Each team should aim to have one to three insights and potential initiatives ready to explain and propose at the end of the analysis cycle. If a team has more than three ‘top priorities’, they have probably not put enough thought into it. As French philosopher René Descartes said when writing a letter to a friend (and this is often mis-attributed to Mark Twain), “Please excuse me for writing such a long letter. If I had had more time, I would have written a shorter one.”

Useful insights often take the form of “so therefore…” statements. “We looked at the industry benchmark data from Temkin Group and saw that Acme is outperforming us in this area. We believe we are stronger than Acme here, so therefore here is what we need to do…”

The quality of your insights depends on the quality of your questions

The quality of your insights depends on the completeness of the questions you ask. If you do not ask questions in a critical area, your strategy will be defective. A good question to add in each working session is “What questions have we forgotten to ask?” Before looking at customer research results on a particular topic, you can reduce bias by asking what factors could matter for a decision. It will then be easier to spot things that may be missing from the research. It is even better to do this before you decide what to research. If you have a customer advisory board or simply a set of friendly customers, you may like to ask them the same question.

Conclusion

Situation analysis is quite easy to communicate and understand. It takes about six weeks to do it in depth in a medium to large company. The process described here has been adapted from the one Willie Pietersen describes in his book Strategic Learning. If you like this sort of article, be sure to sign up for our newsletter here.

Next time

The next article will be the first of a set on various different measurement and improvement systems. (There is no single universal system that works for everything all the time.)

November 28, 2019

#105 – Experia Summit, Tesla experience so far, Reichheld, Bain

Maurice FitzGerald / Customer Satisfaction, Newsletter, NPS, Strategic initiatives, Strategy / Customer Experience, Customer Satisfaction, Net Promoter System, Owen CX, research, strategy /

Welcome to the 105th Customer Strategy newsletter. The five topics this week are:

My participation in the Experia (virtual) summit
First thoughts on the Tesla experience
Latest blog posts – First articles in new series on CX strategy
Notable items from other sites – Fred Reichheld on Signal NPS, Bain on Banking
Looking forward

My participation in the Experia (virtual) summit

Annette Franz and Joakim Thörn have lined up 35 well-known customer experience speakers for the first Experia Summit. It is an online event that will be held over five days, from December 9th to December 13th. We speakers are pre-recording our sessions and there will be live Q&A segments as well. I have to say the lineup is impressive, as is the list of topics. I look forward to watching other speakers’ sessions too. I have already recorded my own presentation. It’s a variation on a theme many of you will already know.

The full lineup and content summary are visible on this page. I encourage you to sign up for your free pass to the event.

Early thoughts on the Tesla experience

After almost seven years and a hundred thousand happy kilometers with a fancy car (that shall remain nameless) I decided to go for something very different. As I often say, there are two ways to win in business: be better, or be different. Tesla has chosen to down the ‘different’ route. Very different. The experience starts in a way that is unlike any other car manufacturer’s sales method. Just go to their website, choose from a very short list of options, and pay $2000 with your credit card. (OK, this is the Swiss process. Yours may differ a little, but only a little.) We also went on a test drive in central Geneva where the sales person put the car on full autopilot in the center of the city in traffic. Nerve-racking, Anyway, so far, so good.

Delivery promises are somewhat vague and we got an email with a date that was a few weeks earlier than we expected. This is where the experience started to be less good. Our sometimes-friend Elon Musk has apparently decided that the delivery itself should be done at the lowest conceivable cost. There are two delivery centers in the entire country. And the Geneva one is absolutely not signposted. The only Tesla sign you see is for a small showroom quite close to the delivery center. There is absolutely no indication of where you should park. We drove twice around a large industrial building before working out that a door marked ‘deliveries’ with absolutely no nearby parking spaces must be the place. Inside the building was simply a large warehouse of new Model 3s, almost all grey, being prepared for their new owners. Apparently a batch of red and blue ones were due the following week.

OK, so the delivery environment was not nice, and the warehouse was quite cold. A salesperson usually based in Bern was in training for the day and ours was his third-ever delivery. He did just about OK. We were able to drive off less than an hour after arriving. From that point on, I can only say that the experience has been amazing. The car is at least as much about software as about hardware. And some of the software is very entertaining indeed. There were certainly some coders with time on their hands, and the ‘Easter Eggs’ are fun. At the moment I have sleigh bells jingling when I use the turn indicators. The car has its own Spötify Premium account, which is nice. The main thing to watch out for around here is that the car is somewhat dangerous around cyclists, since it is almost totally silent, and lots of people cycle around here.

Fun stuff, despite the rather negative delivery experience. I will let you know how the overall experience develops over the coming months.

Our latest blog posts

The posts on this list are the first four in what should be a long series on how to develop and implement a customer experience strategy. Older posts are still available on the blog page.

	CX Strategy (4) – The dangers of ‘What you see is all there is’ While I don’t mention this in the article, Plato had an allegory about someone who had only experienced in life in a cave. My main points are about data and the dangers of thinking that the information you have is all that exists.
	CX Strategy (3) – You need a strategy According to an old saying, if you don’t know where you can start off in any direction. Unfortunately, companies do not have unlimited resources. This article covers the basics of why you therefore need a strategy.
	CX Strategy (2) – What makes B2B different? Businesses that sell to other busiensses differ from those that sell to consumers in a number of critically important ways. This article covers the main points in a way that I hope is clear. To start with, all customers are not created equal…
	CX Strategy (1) – First in a series about how to develop and implement a customer experience strategy Welcome to the first article in my series on how to develop and implement a customer experience strategy. This series is about building and implementing a customer experience strategy in a B2B environment.

Notable customer experience items from other sites

Fred Reichheld – NPS: It’s not about the score

Fred’s The One Number You Need to Grow article in the Harvard Business Review set the stage for his work with Satmetrix and his colleagues at Bain to create the Net Promoter Score and system. Now that we have 16 years of experience with all of this, it is refreshing to see Fred yet again pointing out, essentially, that one number is absolutely not all you need to be able to grow. Indeed, NPS research has never just had a single number. It started with the Why question too, adding the ‘What could we do better?’ more recently.

It seems obvious that your main customer experience progress indicator (such as NPS) should be a primary metric you should use to manage your company and measure your people. In my view this is obvious… but wrong in most cases. My reasoning is simple. CX metrics tend to be available relatively rarely. They may be the result of a single annual customer survey, for example. It then become tempting to use numbers that are available more frequently but only cover part of the customer journey. Call center metrics are a good example.

I believe you should run your company on a day-to-day basis using exclusively operational and financial metrics that are available a daily, or close to a daily basis. Customer Experience measurements can and should be used to periodically check that you are measuring the correct things. Fred’s new article introduces his views about the tie into operational metrics. He calls it Signal NPS. It’s well worth reading here.

Bain – As Retail Banks Leak Value, Here’s How They Can Stop It

Extensive thoughts from Gerard du Toit, Katrina Cuthell and Stanford Swinton about competition and customer experience in the modern banking industry. Their focus is largely on the impact of new digital-only banks on the traditional banks we all know and sometimes love.

I have to say that I have often noticed that the different departments in the various banks I have experienced over the years seem to operate entirely independently of each other. This makes people like me feel they can and should consider all banks when the time comes to use a new financial service of some sort. I feel strong loyalty to my mortgage provider for my mortgage, but not for anything else. My attitude, and that of people who think like me, make market entry easy for new players who have a simplified digital-only approach.

The Bain article is here.

Looking forward

I am happy to say that our October and November book sales continued the trend we have seen for the last six months: each new month’s sales number is better than the corresponding number for either of the last two years. Thank you.

And, as expected, I am having fun with my new projects with Owen CX Group. I will be able to provide full details reasonably soon but the work is quite hush-hush at the moment.

Here are links to all of our books on Amazon.com. Kindle versions are available in all stores. Print versions may not be available from Amazon websites that are dedicated to some smaller countries. You can also find the books, or at least order them in many bookstores. If you have already read any of our books, please write reviews on Amazon.

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Color edition)

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Black & White edition)

Please share this newsletter with your friends and colleagues and encourage them to sign up for it here. I have put links to past newsletters on the subscription page. Finally, please feel free to change or cancel your subscription using the link below.

You can also email me, Maurice FitzGerald, at mfg@customerstrategy.net.

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November 27, 2019

CX Strategy (4) – The dangers of ‘What you see is all there is’

Maurice FitzGerald / Behavioral economics, Blog, Customer experience, Customer Satisfaction, Strategy / B2B, Customer Experience, CX, strategy /

Welcome to the fourth article in my series on how to develop and implement a customer experience strategy. You can find the previous articles in the series here.

Before going into each step of the strategy development process, here is a special word about the data you use as a basis for your decisions. You must not assume that everything you have is everything you need to have

The danger of WYSIATI

Nobel-winner Daniel Kahneman introduced the concept of What you see is all there is (WYSIATI) in his book Thinking, Fast and Slow. The concept is that we tend to make our decisions based on woefully incomplete evidence, believing that what we currently know is all there is to know. To use a Food Babe-type example (www.foodbabe.com), “The number of cancer diagnoses has multiplied by 20 in the last hundred years. Our diet has changed totally in that time. To cure cancer, we just need to change our diet back to what it used to be.” Just so you don’t think I am picking on Food Babe (I am really), the following is equally illogical, “Life expectancy has increased by more than 20 years over the last hundred years. Our diet has changed totally in that time. Our diet is entirely responsible for the increase in longevity.”

In the world of customer experience, the symptoms are easy to recognize, once you understand the concept. A senior executive who has never met a customer finally speaks to one. He / she returns to the office and behaves as though that one customer is representative of all customers. “The customer kept going on about the color of the timer buttons on our new microwave oven. It is really a serious problem. Send two people over to the customer right away to understand the issue better. This is our top priority. Cancel whatever your people are working on until this is resolved.”

Another common WYSIATI statement you will come across is “Everyone knows that employee happiness is the most important factor in customer happiness.” In a later article, you will see that employee happiness does not have much impact on customer satisfaction in most businesses.

I receive a lot of emails that include advice on various customer experience topics. I remember one from Boomerang that provided 7 tips for getting more responses to your emails (with data) . While the tips are good, it would be a mistake to believe that these are the only seven things that matter. The study was limited in scope and did not cover things like personalization of the emails and the subject lines, for example.

Updating the elephant metaphor

You may have seen another way of representing WYSIATI. It uses the metaphor of a group of blindfolded people who try to identify what they are looking at by touching just one part of an elephant. The metaphor is helpful, but does not go as far as WYSIATI in terms of explaining the consequences of such limited beliefs. The drawing at the top of this article uses more modern Virtual Reality technology and may help you to visualize how dramatic the effect can be. If you believe that what you see is all there is, you are not living in the real world, even when the zombie apocalypse is actually happening.

Next time

The next article will be a lengthy one on a critical strategy development topic: Understanding your current situation.

November 11, 2019

CX Strategy (3) – You need a strategy

Maurice FitzGerald / Blog, Customer experience, Customer Satisfaction, Strategy / B2B, Customer Experience, CX, strategy /

Welcome to the third article in my series on how to develop and implement a customer experience strategy. You can find the previous articles in the series here.

Why bother with strategy?

The reason you need a strategy is simple: you do not have unlimited resources and never will. The word comes from the Greek strategos and means ‘generalship’. Its origin is in how to deploy your scarce troops, equipment and diplomatic resources to win battles and wars. It is all about defeating the enemy. No general ever won a battle by saying, “I don’t care where the enemy is, or what they are doing. I am going to line up my army three deep all across this open battlefield. I don’t care what weapons my army has nor how they compare to those of the enemy. I don’t care about the weather today or tomorrow. I don’t care what my allies are doing. I have given my troops their top 20 priorities. We will just walk slowly forwards and I am sure we will win.” Sounds ridiculous? It should. Unfortunately, this is what most companies’ customer experience strategies look like.

Your enemies are outside your company

In business, your enemies are your competitors. The purpose of any customer experience strategy should be to do things differently or better than your competitors so you can win. The strategy should be articulated in terms of three to five priorities or initiatives that are easy to remember and make the biggest difference. The number of priorities is important. George A. Miller of Harvard published The Magic Number is 7, plus or minus 2 way back in 1955, suggesting that most people find it reasonably easy to remember about seven things. I find that teams in modern businesses cannot spontaneously remember more than five priorities. Think about this in terms of being able to list your priorities on the fingers of one hand.

Quick start

If you are just starting and don’t have a strategy, here is how to go about generating one quickly. What follows is adapted from Willie Pietersen’s book Reinventing Strategy and his lectures that I attended at Columbia Business School. I have used and improved the methodology for many years.

There are five steps and the following chapters cover them in detail:

Situation analysis: understand what is going on and what will change.
Make your strategic choices.
Secure the necessary sponsorship and investments.
Implement and experiment.
Start again.

What follows below are some things I have learned about the nature of strategy.

Resource limitations

As Pietersen explains, chess would not be an interesting game if you had unlimited resources. “Ah, you took my queen? Never mind, I have plenty more queens.” The whole process is about using your resources as efficiently as you possibly can. Translating this to customer experience, statements like “We need to exceed customer expectations in every interaction they have with us” are both wasteful and unachievable. You don’t have unlimited resources. You should not bother trying to exceed expectations on things that don’t matter. Most customer touchpoints don’t matter. It takes work to find out which ones do, and which ones can give you a competitive advantage. What matters for you will differ from what matters for your competitors. There are no universal answers.

The concept of hygiene factors

There are plenty of areas of customer interaction that are what I call ‘hygiene factors’. The old explanation is to think about them like taking a shower. Nobody will thank you for taking a shower but everyone will notice if you don’t do so for a long time. What this means is that there are things that just have to be ‘good enough’, but making them better will be a bad investment. Remedial phone support is an example. You need to be good enough at answering the phone and solving customer problems. Creating the capability to talk to them about past problems, or their birthdays and favorite sports teams does not add any relevant value. Similarly, delivering a product when a customer expects it is a hygiene factor. Delivering it early may be counterproductive and not worth the effort.

Just as standards of human cleanliness have changed over time, hygiene factors are evolving too. Yesterday’s ‘wow!’ factor, like being on Twitter, may be today’s basic requirement.

Never combine strategy and planning

A note of caution: never combine strategy and planning in a single exercise. ‘Strategy and planning manager’ is a common corporate job title. It has been my title in the past. When you combine strategy and planning into a single job, only planning gets done. When you start to do your strategy work just before the budget submission is due, your working team members will quickly start to say, “Forget this… just give me the spreadsheet to fill in.” Strategy is a creative divergent process. By its nature, it is about doing things you are not currently doing. Planning is a convergent process. It takes what you want to do and creates order about doing it. Divergent and convergent thinking are diametrically opposed and should never be combined. Make sure you work on strategy at a time of year when planning deadlines are not creating pressures that will prevent you doing anything other than making minor adjustments to your current strategy.

Tactics can change, strategy should not

Once you have established a customer experience strategy, you must give it time to work. Just as marketing produces its results in the mid-term, the same is true of customer experience. This can be a challenging dynamic in businesses that are driven to produce results each quarter. Maintaining sponsorship for your work is both difficult and critical. Sponsorship is the subject of a section of this book. If you are creating a strategy where none exists, you will be under pressure to demonstrate results. The pressure is as much self-imposed as it is from other parts of your organization. The section on sponsorship includes advice on how to ensure your work continues in times of cost pressure, as well as times of growth.

You know you have a strategy when the screaming starts

Deciding what you will not do is just as important as deciding what you will do. Ensuring you have the necessary resources will probably involve stopping existing work and transferring people and budgets to new work. It is inevitable that the people currently doing that work will be upset about the choices. Plan on this, and only be satisfied that your strategy is clear when the pushback actually starts to happen.

Next time

The next article will be the first covering a relevant behavioral economics topic: What you see is all there is.

November 6, 2019

CX Strategy (2) – What makes B2B different?

Maurice FitzGerald / Blog, Customer experience, Customer Satisfaction, Strategy / B2B, Customer Experience, CX, strategy /

Welcome to the second article in my series on how to develop and implement a customer experience strategy.

This series is about customer experience in business-to-business (B2B) situations. Most of what you read elsewhere about customer experience is in the context of business-to-consumer and is not directly relevant. The reasons are the following:

In B2B, a single person is never responsible for all the client organization’s interactions with your company.
The difference in the relative financial importance of your largest and smallest customers is much greater than for B2C.
The people who use your products or services are usually not the ones who make the purchase decisions.
Your relationship with your customer requires more constant attention because multiple sales and support engagements are likely to be happening at the same time.
Relationships with individual people in the customer organization matter as much as relationships with positions on organization charts.
It takes time to know whether you are improving things.
Your customers want and need you to be successful.
Angry customers stay with you.

There are businesses that look like B2C but are actually B2B. Kentucky Fried Chicken (KFC) is an example, and so is General Motors. Most of their income comes from franchisees, not directly from consumers. Keeping franchise operators happy is more important to KFC than the views of the end customers. It is largely up to the franchise operators to keep the end customers happy.

No single person responsible for everything

When I shop at my local supermarket, I start by scanning my loyalty card and picking up my barcode scanner. I then scan each article as I put it into the caddy. I check out on my own and speak to nobody. The same happens when I buy something from Amazon. More commonly, my retail interactions involve a single person. If I buy a pair of shoes, it is possible that I won’t go back to that store for a year or two, no matter how happy I am with the shoes and the shopping experience. OK, if you want to be picky, a second person might have welcomed me to the store.

When a business buys from another business, things can be far more complex. Yes, a business can still buy Amazon Web Services and never interact with a human being. At the other extreme, a decision to no longer handle invoicing internally in a large company but to outsource it to another company can take two years. It can involve many different people, from the CFO to Procurement to labor unions at the customer end, from a sales person to an implementation project manager at the supplier end. And that is just to get to a decision. Implementation can be complex and involve a lot of different people. Management and organization changes can call the whole project into question and delay things significantly.

Differences in customer size matter

In most B2B situations, you have customers who matter more to you than others. There are two main reasons some may be special. The obvious one is revenue. A typical Pareto curve means that 20% of your customers may bring 80% of your revenue. The 20% need to be treated differently from the 80%. While you might like to think this is in the case in B2C, it has a different scale in B2B. There are very few B2C situations where a consumer is spending millions with one company. The second reason a customer may be special is that they are the pilot customer for a new product or service. You need them to be particularly happy with you, so they are willing to recommend the new product or service to others. (Of course, you should not expect a B2B customer to recommend your product to one of their competitors.) The Pareto chart below illustrates a typical B2B customer profile.

Users are not purchasers

Perhaps most importantly, the user of a product or service is rarely the one who signs the purchase order. If you are a catering company, you may bid to supply canteen / restaurant services to a large client. The people who eat the food are unlikely to be consulted in any way in the purchase decision. Unless your food is awful, they are also unlikely to be consulted at all about renewing the contract. Of course there are exceptions and end users can be decision-makers. A noteworthy example is software. Before the emergence of cloud computing, most decisions to purchase software required you to buy hardware. This meant that the central IT department could control everything. That has changed. An individual user can download a free trial version of some application and use it. It can spread to a department, if the department has a credit card, and then throughout a company, no matter what the CIO wants. That creates a specific customer experience dynamic which we will cover.

Constant attention required

The nature of large transactions and large projects means that some B2B customers require constant attention from your teams. The attention may be from different teams at different points in the implementation of a large project. Multiple sales, project and support engagements may be happening simultaneously.

Relationships with both positions and individuals matter

Large customer organizations are dynamic. Their structures can change, and people move from one position to another as they develop their careers. People you know at one customer can suddenly pop up at another. This has profound implications for research and improvement methods. For relationship surveys, it usually means that an overall score for a customer has no value. What matters is the state of each individual relationship, particularly with decision makers, decision influencers, and to an extent with the end users of your product or service. The same applies in the other direction. Customers need to be carefully prepared for a change in ‘their’ account manager, for example. This will be covered in detail in the section on relationship surveys. If your customer project takes a long time to implement, you can be reasonably certain they will change their organization and that this will have an impact on what you have to deliver. Plan on it.

It takes time to know whether you are improving things

If you run a supermarket and want to improve sales of something, you move the product to the head of an aisle. You learn about your success or failure right away. When selling to businesses, it takes much more time to know whether customer experience improvements are helping or hurting. For most types of B2B businesses, it will take 12 to 18 months before you know whether a change is giving you a competitive advantage. The reason is the typical purchase cycle. Customers will use a product or service for some time before needing to buy more. If you are working in a company that considers thinking two fiscal quarters ahead to be long-term planning, you may have difficulty retaining the funding for your efforts. A later article will cover methods for ensuring ongoing sponsorship for your work.

Your success matters to your customers

Most of your customers want you to be successful. Think about the procurement people, for example. In their ideal world, they want as many companies as possible – including yours – to compete to offer products and services at the lowest possible price. Others want to see as many different innovations as possible, believing that your innovation will be to their competitive advantage. If you have already sold them something, your continued financial survival is important to their belief you will be able to support and improve your product or service. While the same may be the case in consumer businesses, consumers are more likely to have short-term relationships with companies, not caring much if one goes out of business. The consumer’s livelihood is unlikely to depend on the survival of a company that does not employ them.

Angry customers may stay with you

Customer satisfaction is easy to understand in consumer businesses, less so when selling to companies. If the waiter in a restaurant treats you badly, most people (in the USA at least) still leave a tip and never go to the restaurant again. That is life in consumer land, apart from banks and cable TV companies that make it difficult for you to leave. Let’s suppose your company supplies restaurant services to corporations. Six months into a contract, a customer’s employee finds a worm in one of your salads. The customer gets angry. You devote large amounts of resources to fixing the issue so it never happens again.

One final thought – Sales differences are quite similar

Will Cannon has written an interesting article about the differences between B2B and B2C for sales teams in April 2020. He makes some points that are quite similar to those made here, and some new ones. As regular readers know, I consider the relationship with sales to be the most critical internal one a CX leader can have. Please have a look at Will’s article here.

Next time

The next article will be about why you need a strategy. Seems like a reasonable question.

November 4, 2019

CX Strategy (1) – First in a series about how to develop and implement a customer experience strategy

Maurice FitzGerald / Blog, Customer experience, Customer Satisfaction / Customer Experience, CX, strategy /

Welcome to the first article in my series on how to develop and implement a customer experience strategy.

This series is about building and implementing a customer experience strategy in a business-to-business environment and in what I call ‘the real world’. The real world is one where people behave like human beings, and not as traditional economists would have us believe. Human beings do not constantly try to optimize mid-term outcomes. We behave far less rationally, though still quite predictably. A great customer experience strategy combines scientific research, behavioral economics and the experience of others. In this series, I share mistakes I have made and things that I have found to be successful. Above all, I believe the series will save you a lot of time on your path to happier and more loyal customers.

What is customer experience?

In this context, customer experience is the overall impression your company creates with each of your clients. It is influenced by many factors, from the way your brand is perceived as socially and environmentally responsible, to what happens when someone complains about your product or service. From a practical perspective, it is about the ‘customer journey’. It starts with the way a customer becomes aware of your existence and continues through the cycle of comparison, purchase, implementation, use of the product or service, decision to renew or repurchase, and their decision to talk about you positively, negatively or not at all.

Main concepts

The main concepts that will be covered are:

A comprehensive methodology for developing, communicating and implementing a formal customer experience strategy. The system works well for medium to large enterprises and can be simplified for smaller businesses. At least some of it is applicable to entities that have non-paying customers, such as government departments. Some ideas on how to simplify the methodology for small companies are also covered.
A comparison of the main customer experience systems in use around the world, and a methodology for choosing between them. Each has been successful in its own way. There is no single correct answer that works for everyone.
A short article explores whether there is any evidence that employee happiness is a necessary condition for customer satisfaction. The research will surprise some readers.
Methods of ensuring you have the sponsorship required to succeed. Once you have a strategy, how can you be sure you will get and keep support for implementing it? What are the keys to keeping your management both interested and supportive of the ongoing investment?
Companies change constantly, from rebranding to mergers. How can they ensure customer loyalty through the inevitable transitions?
Since accurate customer feedback is critical to your efforts, there will be articles on the different types of customer research that can be used, how to design good surveys, and the most common mistakes people make when they implement their feedback systems.
The application of behavioral economics research to gain insights into customer behavior.
Examples of initiatives you may like to consider as you build your own strategy.

What is the scope of B2B?

For the purposes of this series, business-to-business refers to companies that sell products and services to other companies. Size does not matter much, though some techniques will probably not be appropriate for very small companies. My working assumption is that the client companies will be of all sizes, from small to very large. Strategy development will be faster for smaller companies with a small number of clients, though the methodology is independent of size.

What is strategy?

Strategy is about how you deploy your resources to win. You don’t have unlimited resources and can’t afford to do everything. This series will provide you with a system to determine what to do that will have the highest impact and how to implement it effectively.

A common but ineffective strategy is to “exceed customer expectations in all our interactions.” Nobody has the resources needed to do this despite the thousands of web and printed pages that say the opposite. The question is how you determine where doing the strict minimum is appropriate, and how you will gain market share by doing something exceptional. It is absolutely not random.

Difference between customer experience and quality

Quality also tends to be defined broadly. People use the term for a wide range of different purposes. An excellent sales team could be said to be of high quality. For the purposes of this series, ‘quality’ means product and service reliability; their ability to continue to function.

This is not about organization design

Organization design needs to be done after work design. While I will cover possible answers to the question of where a customer experience leader should report, it is not a major focus of this series. I do, however, cover innovative ideas about staffing and how to make customer experience work into an attractive people-development path in your organization.

Next time

The next article will be about what makes B2B different.

October 26, 2019

#104 – My new role, NPS book refreshed, Customer Gauge eBook, KPMG Nunwood, ACSI

Maurice FitzGerald / Customer Satisfaction, Newsletter, NPS, Strategic initiatives, Strategy / Customer Experience, Customer Satisfaction, Net Promoter System, Owen CX, research, strategy /

Welcome to the 104th Customer Strategy newsletter. The six topics this week are:

My new role – Editor in Chief – Owen CX
Our NPS book has been refreshed
CustomerGauge eBook on B2B CX and NPS includes a section with me
Latest blog posts – Deep series on NPS ends
Notable items from other sites – I disagree with KPMG Nunwood, ACSI Non-Durables report
Looking forward

My new role – Editor in Chief – Owen CX

As many of you will know, the Net Promoter Score and System trademarks are held by Fred Reichheld, Bain, and Satmetrix (now part of NICE). Richard Owen joined Satmetrix as CEO the same month Fred Reichheld published his HBR paper The One Number You Need To Grow. Bain and Satmetrix worked together on proving the relationship between NPS research responses and actual customer behavior, among many other things. They are co-holders of the trademark of the system, together with Fred Reichheld.

When NICE acquired Satmetrix in 2017, Richard decided not to stay with the new company. He founded a new company, Owen CX Group, focused on B2B customer experience. NICE Satmetrix decided they needed to completely refresh their Net Promoter training and subcontracted the work to Owen CX. The result is the new subscription-based Net Promoter Masterclass.

I first met Richard when I was a speaker at a major Satmetrix event in London a few years ago. (It was held inside the Chelsea Football Club stadium, which was really interesting, and must have been mentally challenging for Richard as a Liverpool native.) We sat together at dinner that evening and got along well.

One of his team called me about six weeks ago to ask me whether I would be interested in doing some freelance work for them, with a particular focus on a newsletter. We continued our discussion and I met Richard when he happened to be in Geneva for a customer visit. We followed this up with two workshops in London three weeks ago. The result is that I have now contracted with them to provide my services as ‘Editor in Chief’ for their content business on a part-time basis. The details should become quite obvious as our new offerings are launched over the coming months.

What this means is that I may not have the time to write as many of my own blogs and newsletters as in the past. I will give priority to the Owen CX work at least until the end of the year.

Our NPS book has been refreshed

The 37-article series on NPS based on our book chapters gave me the opportunity to refresh the content a little. I made a lot of small grammar improvements and updated some information that dated from 2017. If you have the Kindle version it will have been updated automatically. The updated paperback version has been live on Amazon for about a week now.

We are proud of our books and know that a lot of you like them too. As always, the best way you can help us to promote them is to post reviews on Amazon.

CustomerGauge – Advanced B2B strategies nobody talks about

CustomerGauge interviewed five people, including me, to create this free eBook. As their blurb says, “Looking to take your B2B customer experience program to the next level? Struggling to roll out a comprehensive CX plan your company can get behind? In our latest eBook, we asked some of the top CX experts and influencers to discuss how B2B companies they’ve worked with have revolutionized their customer experience.” I have copied the list of experts interviewed below and you can download the whole thing free of charge here.

Our latest blog posts

The posts on this list are the final episodes of my extensive and deep series about the Net Promoter System. Older posts are still available on the blog page.

	NPS (37) – Where do I start? – Conclusion and quiz – 37th and final article in a series on the Net Promoter System® This is the last one in my extensive series based on my interpretation and use of the Net Promoter System in a B2B environment. I provide a good starting point and a little bit of closing advice. Hope you have enjoyed the series.
	NPS (36) – Sustained Leadership Commitment – How to get and keep it – 36th article in a series on the Net Promoter System® This time the subject is a tricky one: how to get and keep leadership commitment to customer experience improvement work through good times and bad.
	NPS (35) – Sustained Leadership Commitment – Do you have it? – 35th article in a series on the Net Promoter System® Commitment of senior leaders to customer experience improvement efforts is critical. You may think you already have it, but do you really? Here are some simple checks you can make. I suspect you will be unpleasantly surprised.
	NPS (34) – Employee development opportunities – 34th article in a series on the Net Promoter System® Providing development opportunities to employees who work on customer experience is important. I cover this and how to make customer experience work an important development opportunity for people in other parts of your company too.
	NPS (33) – Why not ask your employees what your customers want? (ceNPS) – 33rd article in a series on the Net Promoter System® I want to introduce a new concept this time. I call it ceNPS and explain why your employees may have practical insights about improving customer experience in ways customers might not expect.
	NPS (32) – Employee Net Promoter Score (eNPS) – 32nd article in a series on the Net Promoter System® eNPS is a simple and practical way of getting employee input about your company and what they would like to see improved. Far simpler than other employee survey systems! Bain updated the methodology about two years ago and the new questions are covered here.
	NPS (31) – Does employee happiness matter? – 31st article in a series on the Net Promoter System® Welcome to the 31st article in my series on the Net Promoter Score and System. This time I dig into the question of the relationship between employee and customer satisfaction.…
	NPS (30) – Evaluating text analytics software – 30th article in a series on the Net Promoter System® This is by far the longest and deepest of the set. It includes an example from a business school student survey. Software is in constant evolution so the functionalities may have evolved. However, the comparison method is still valid today.

Notable customer experience items from other sites

KPMG Nunwood – B2B Customer Experience Report (I disagree strongly)

Some really interesting insights in this report from KPMG Nunwood. Yes, they are of course trying to sell us on their ‘six pillars’ methodology.

I have to say that there is a whole section of the report that is simply wrong. (Note that I am not saying “I disagree with this” or “I think there might possibly be an error.” It is just wrong.) It is the part that shows data that “proves” that the US is doing 8% better than the UK across all six pillars. They go on to show numbers for decision-makers, influencers, and end users across six industries. The US supposedly leads in all six. Not so.

The issue is simple. They have not corrected for the differing ways people from different cultures answer surveys. Here is a graph from our NPS book that shows that difference as measured by something like a hundred thousand double-blind benchmark data points over a number of years for all major B2B enterprise hardware suppliers (servers, storage and networking, mainly):

KPMG Nunwood suggest that the US has B2B customer satisfaction that is about 6% better than that in the UK for ‘Business technology’, which also includes software, PC clients, outsourcing and other items. I suggest that the results either show the opposite or show little or no difference.

OK, so one large section of the report is not correct. Bearing that in mind, the whole thing is indeed worth a read here.

ACSI – ACSI Nondurable Products Report 2018-2019 Download

The American Customer Satisfaction Industry people just published a great report on nondurable products covering all major industries that sell to US consumers. Guess what? Breweries ( = beer) come out on top. I suppose they asked customers at just the right time, and not the morning after 🙂 Unsurprisingly, ISPs and subscription television service providers finish joint last.

The download page is here.

Looking forward

I am happy to say that our books sales trend continues. September sales were also the best for the three Septembers the books have existed, and October is looking good too. Thank you.

As mentioned above, I am pretty deeply into my new projects with Owen CX and that will probably mean somewhat fewer blog posts and newsletters. Let’s see how that goes.

Here are links to all of our books on Amazon.com. Kindle versions are available in all stores. Print versions are available from the major stores only. And as of two weeks ago, you can find the books, or at least order them in many bookstores. If you have already read any of our books, please write reviews on Amazon.

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Color edition)

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Black & White edition)

You can also email me, Maurice FitzGerald, at mfg@customerstrategy.net.

To change your subscription, click here.

October 20, 2019

NPS (37) – Where do I start? – Conclusion and quiz – 37th and final article in a series on the Net Promoter System®

Maurice FitzGerald / Blog, Net Promoter System, NPS / Customer Experience, leadership commitment, Net Promoter System, NPS, strategy /

Welcome to the 37th article in my series on the Net Promoter Score and System. This is the last one in my extensive series based on my interpretation and use of the Bain Net Promoter System Framework.

You can read all of the prior articles in the NPS series on our blog page here.

Assessing your current state

You almost certainly have something in place today. Getting a free, basic, objective view of how good it is is not all that difficult. Take the free Bain assessment that you will find in the Resources menu on the www.netpromotersystem.com web page. It is hosted by Qualtrics, and you should answer at the level of an individual business in a large company with multiple businesses. When you take the survey, you receive a color-coded assessment of your progress in each of the five areas of the NPS framework. The summary below is a screen capture made while I completed an assessment for a client company. The assessment is updated from time to time so what you see may differ.

Conclusion

The Net Promoter System is simple in principle, and sophisticated in practice. Success requires all five elements of the framework to be implemented comprehensively and to be communicated clearly. As it is the most successful customer experience improvement system on the planet, a lot of advice is available. The quality is variable, and a substantial part of the advice comes from people who are trying to sell proprietary solutions. Advice suggesting NPS is not a good system tends to come from people selling an alternative.

I have used a lot of different systems over my career, and feel my views are unbiased. Yes, it is possible to come up with more complex metrics that are better revenue predictors. Yes, it is possible to come up with different improvement methodologies that are equivalent to the framework developed by Bain and used for this book. I believe the relative simplicity of both the metric and the framework make the Net Promoter System far easier to communicate, and therefore far easier to implement, than any other system I have seen. I hope the advice and experience I have shared here will accelerate your implementation journey.

Test your knowledge

Why not try my NPS true/false quiz? You can find it here and there is a link to the answers at the bottom of that page.

As is often the case, the above is an edited version of a chapter in one of our books; in this case Net Promoter – Implement the System All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

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