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Can technology create customer delight?

Bob Thompson at CustomerThink posed this question at his blog, asking 18 Customer Experience leaders (including yours truly) to comment on the topic.  It’s an interesting read.

My response was off-the-cuff, and less formal than a typical post:

Wow – that is a tough one. I agree with your research – it’s interactions with humans that create the greatest delight (or, for that matter, frustration!). Where technology seems to make the greatest impact is when it enables or improves the person-to-person relationship.

I’m “thinking out loud,” but it seems that most effective technology implementations either improve a human being’s access to data (e.g., a really good system at a hotel), or allows a transaction to occur more quickly by avoiding a person (self-service systems). There are some obvious exceptions, like Amazon, but most of those have been written to death.

Loyalty programs were considered a great example of this in their earlier days. But we’re starting to see that loyalty programs don’t build emotional loyalty – they just trap a consumer. In my interviews, consulting, etc., it always comes down to the human element. So I’m not sure that I’m a lot of help in what you’re hoping to accomplish!

I guess my POV is that technology allows your transactions to occur more easily and quickly for customers. This in itself does not enable delight, except that it frees up your staff to focus on the higher-leverage points, which does create delight.

In general, there seemed to be two paths of responses.  More service-oriented bloggers (such as Annette Franz Gleneicki, Bruce Tempkin and myself) focused on the ability of technology to enable delight – but primarily when partnered with a human being.  Others (such as Chip Bell and Leigh Durst) focused on products that delight through technology.

What are your thoughts?  What is the role of technology?  You can see the entire post here.

The #1 Tool to Engage Your Customers

Note:  This post was originally listed at Annette Franz’s blog at http://cxjourney.blogspot.com/.  If you aren’t subscribed to her blog, you really should consider it!

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You’ve gathered your customer insights and made the changes. Your website is streamlined and easy to use. Your add-on services are perfectly aligned with customer needs. You have invested in the finest training for your employees. Your IT upgrades ensure that your staff has up-to the-second information at their fingertips.

But somehow nothing is changing. Your sales are flat, and your customer experience scores are static. What’s wrong?

Tell me, how good are your line managers?

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The employee-customer interaction is where the magic happens in almost any service-based business. Whether renting a car, shopping for groceries or eating out, the customer-facing associate makes the difference between a ho-hum experience and one that brings you back for more. Read more

The Second Key to Creating a Great Customer-Inspired Experience: Engage the Entire Team on the Opportunity

Once you know what matters, the next step is to get everybody involved.

I have been speaking about this topic quite a bit lately, and one exercise I have is for participants to identify five recent projects or programs their company has developed to improve your customer experience. These could be new products, pricing changes, sales training programs – any new idea. Go ahead and do this, as well. Write down five new projects your company is implementing:

  1. ______________________________
  2. ______________________________
  3. ______________________________
  4. ______________________________
  5. ______________________________

Now that you have this list (you did do the exercise, didn’t you?), let’s look at your projects. Whether you work for a 50 or 50,000-person company, a good rule of thumb is that 90% of your company’s employees are individual contributors. So if your company is doing well at this key, 4-½ of these ideas should come from front-line employees. Brave readers: comment on how well you did!

Of the hundreds of attendees in my talks, how many had at least three ideas come from an individual contributor?

Four.

None came from a company of more than ten people. Only about half had even one idea come from a front-line employee.

We can do better. Companies pay consultants to tell them what to do, when they have dozens (or hundreds or thousands) of passionate employees who know far more about their customers. We need to do cast a wider net. Read more

The First Key to Creating a Great Customer-Inspired Experience

A customer-inspired experience is critical to growth. According to a Temkin Group analysis, a great customer experience increases likelihood to recommend by 19.5% and likelihood to repurchase by 18.4%. And the best way to get that inspiration is through those who talk to customers every day – your front-line employees. In this piece you will receive the first key of creating a great customer-inspired experience. Keys two and three will follow soon!

The First Key to Creating a Customer-Inspired Experience: Identify What Really Matters

This seems like a no-brainer. Companies know what matters to their customers, right?

In fact, many have it wrong. Leaders get so focused on their tangible capabilities that they no longer see through their customers’ eyes, and use their over-informed perspective to prioritize efforts. As a good example, I worked with a global fast food company to determine the best way to increase growth. This company was laser-focused on R&D – inventing the newest menu item to drive that bump in sales. They applied a very rational lens to their customer experience – if we provide good food fast and keep coming up with new items, we’ll grow.

This approach is so alluring that it is no surprise they succumbed to it. And sure enough, the company was rewarded with a spike in sales every time they came out with a new food item. So, like most companies focusing on next quarter’s results, they kept feeding the R&D beast. But despite these sales spikes, their same-restaurant sales continued to drop each year.

We identified a segment of customers who visited their restaurants more than any other. But even within this segment, we found huge discrepancies on monthly spending based on emotional engagement. Read more

Innovating Through Your Front-Line Staff Speech

I’ve been speaking quite a bit lately – four times in the last week and a half – so I haven’t been able to complete the second half of my blog post “Experiment Your Way to Growth.” But you can see me speak about it below.  I come on at 2:44 into it.

The second half should be out next week!

Drivers: the Secrets to Creating a Great Customer Experience

The Heart of the Matter

Typical Customer Experience Measurement Programs treat all customers as one homogenous group, rather than as unique segments. These programs need to analyze customers based on their value to the organization and analyze what drives the behavior of each segment. This white paper lays out a process for developing and analyzing these Customer Experience Drivers.

Introduction

Do you understand what motivates your best customers and sets them apart from the rest? For example, why do some customers:

  • Come to your restaurant every week, whereas others only when they have a coupon?
  • Call you first for consulting help, while others make you bid for the lowest price?
  • Require constant hand-holding, compared to others who are very inexpensive to maintain?

And how do you find more customers like the first group?

Simply said, some customers are engaged with your company, love your products and services, and trust you. These customers tend to be your most loyal and profitable. Others buy from you because you are convenient or have a good price. These are often expensive to serve and contribute less to your business’ bottom line. You need to learn what drives the former, to find more like them.

This is true for both B2B and B2C companies. In fact, because the order sizes are typically much larger, this is even more critical for B2B companies.

Without this understanding, product development and marketing become a best-guess effort. Driver Analysis is the process used to determine what motivates your best customers.  It extends your current NPS, Satisfaction, or Engagement studies to discover and measure these underlying motivations.

Driver Analysis is the practice of including motivations in your Customer Experience Measurement Program, then correlating these motivations with your customers’ Lifetime Value. This process separates those who purchase based on convenience or price from those truly profitable customers who view you differently, and then shows the motivations of each group.

For example, quick service restaurant customers selected the chain they visited the most. Within a restaurant’s most-frequent visitors, those who were “engaged” spent $8 a month more here than the average. What drove this engagement was not “the Quality of Food,” or “Speed of Service.” Instead, it was “the Warmth of the Greeting.” Similarly, Gallup found that B2B customers who rated their partners high on “Impacts my business” are stickier – they remain customers longer, and are more profitable. The specific drivers vary by company – even within an industry – but are critical to understand how to motivate customers to spend more with you.

Another reason to use drivers is to target efforts in your different delivery segments. Using the restaurant example above, imagine the situation where a general manager is told her store NPS or satisfaction score is low. While this is important to know, it does not tell her how to improve these scores. Drivers provide insight on where action is needed.

Similarly, drivers help B2B account teams know where to focus. Satisfaction or NPS helps evaluate the state of the relationship – drivers identify how to improve it.

So, how do you discover these drivers? See Figure 1 for an overview. The process starts with your staff, and then expands to your customers.

White Paper

This post continues in: Drivers – the Secret to a Great Customer Experience White Paper. Please download it to learn the entire end-to-end process!

Shopper Education: The Hidden Casualty of Price Wars

Introduction

How do shoppers learn what they need to know about new products? Traditionally, the retail associate provided this product wisdom, but slashes to labor budgets have left shoppers on their own, accelerating their move to online competitors.

The Harvard Business Review’s The Future of Shopping by Bain consultant Darrell Rigby is an outstanding article on the future of retail. Rigby shows the risk to brick and mortar retailers if they do not react to the growth of online shopping. He proposes a vision for omnichannel retailing – combining the impact of a physical store with the opportunities of online and mobile shopping. It is a terrific call to action, filled with great thinking. The original link requires a registration to HBR, but you can also access it here.

This article led me to consider one aspect only briefly referenced: the role of product and category information in the shopping experience, and how changes in retailing have removed the traditional source of information from the shopping experience.

Consider the evolution of brick-and-mortar retail as it experienced the growth of its online cousin. As Rigby recalls, in the early days of online shopping retailers built separate Internet organizations, dreaming of spinning them off for Internet riches. This separate reporting structure led to disconnects between the online and in-store experiences. With the crash of the DotCom bubble, companies eventually integrated the Internet with their brick and mortar stores.

Or did they?

Certainly, integration is better today than in the past. Shoppers can research whether a book is available at their local Barnes and Noble. They can order a product at Best Buy and pick it up 30 minutes later (Penney’s, on the other hand, has had issues). The Brick and Mortar experience has merged into the DotCom. But physical stores have not returned the favor.

To understand why this is important, we need to review the Price War between traditional retailers and Wal-Mart and online competitors, and how this war impacts the store experience.

The Price War

Much of retail lives in conflict with Wal-Mart and its Every Day Low Pricing. Costco and low-cost pure-play Internet competitors such as Amazon.com have only increased these pricing concerns. These are not trivial fears, as these competitors’ continued growth shows the impact of Every Day Low Pricing. But selling against low price is nothing new. Retailers can still win, even with this price disadvantage.

But retailers cannot match Wal-Mart on price without a complete revamp of their business model. The fastest way to Chapter 11 is to attempt to pair a high-service experience with the lowest price. The economics simply do not work. Unfortunately, many retailers are landing in this No Man’s Land, with Best Buy as Exhibit A.

Last February Best Buy floated moving to Every Day Low Pricing. At the same time, they made no effort to discontinue their sales-focused labor strategy (as opposed to the cheaper “Where is this product” labor approach at Wal-Mart and Costco, or no labor at Amazon). Neither did they end their use of promotions to drive sales. This disconnect creates higher labor costs than competitors like Wal-Mart, who already enjoy the advantage of traffic drivers such as groceries. It is a no-win game, and Best Buy’s recent results show what happens when you try to play in this No Man’s Land. Neither they nor their customers are winning.

The alternative is to embrace the shopper, equipping her with the information she needs to make a purchase, rather than leaving it up to her to do the research.

Consumer Education: The Loser in the Price War

Consider how high-consideration products were purchased before the Price Wars or the rise of the Internet. TV created awareness, leading consumers to talk it over with a few friends before going to the store. Shoppers reviewed the product packaging (P&G’s “First Moment of Truth”), then found a sales associate to learn more about the product and its alternatives. They either purchased it, went home to read Consumer Reports, or visited a competitor to talk with their sales associate for a second opinion. Overall, a fairly linear experience, and one on which the store associate had a huge impact on a shopper’s (and retailer’s) success.

That world no longer exists. As Google argues in Zero Moment of Truth, consumers are now much more likely to search for information or ratings before making a purchase. This is partly because the growth of the Internet and product rating sites makes it easier. But a contributing factor is that retailers forced consumers into this model.

The Price War caused retailers hoping to keep track with low-cost competitors to cut any cost possible. Labor was their biggest expense – so it was reduced substantially, with disastrous impact to the customer experience. While this Wall Street Journal article focuses on the checkout line, shoppers see the same results in the aisles: Retailers have cut labor for short-term gains, but with long-term consequences to the customer experience.

Remember Circuit City? They were once the consumer electronics leader, even being featured in the seminal Good to Great. They were a model company. Until they weren’t. What big decision accelerated their demise? They fired “3,400 of arguably the most successful sales people in the company” in a move to save costs. But this type of move was not unique to Circuit City – retail labor was seeing regular cuts across the board.

Unfortunately, now that this labor has been slashed, shoppers are expecting more education than ever before. They want to compare products and learn what others think. They once went to stores specifically to ask associates for this type of information. With no one to ask, consumers are finding it the only way possible – by turning to alternate methods, particularly the Smart Phone.

Imagine this scenario: Your shopper is at your store when she remembers she needs a new coffee maker. She looks for a sales associate to help narrow down your ten models, but you do not staff this aisle. She reads the packaging, but does not find enough comparable information to make an informed choice. She reviews the shelf tags, but its four bullet points only repeat what is on the packaging.

You have now left her with three choices:

  1. Make her best guess (if she’s wrong, expect a return – which is bad for both you and her);
  2. Go home, do some research, and buy one from you (or your competitor) next week;
  3. Use her Smart Phone to educate herself on the product and check out reviews.

What do we expect? Of course she uses her Smart Phone. And once she pulls it out, you have lost. Because why wouldn’t she pull up a competitor’s site while she’s at it? And if their pricing is better, she will order it from them – especially if she can pick it up on her way home.

The irony is, you as the retailer have all the information she needs to buy today. You have the ability to accelerate her purchase, sending her home with the perfect coffee maker today. For example, Target’s website offers 15 separate product details: product height, width, and even the surface treatment (matte!). It is easy to compare between models, and she can also read reviews (43 for the Mr. Coffee 12-Cup Programmable Coffeemaker – Black). But none of this is in your physical store – at least not conveniently. There may be a kiosk five aisles over – but she is not going to go look for it.

A 2011 study at an international retail chain found that “Insufficient Product Information” was a top driver of customer disengagement, resulting in significantly lower spend for consumers reporting this problem. Today’s shoppers expect more information – not only in consumer electronics, but also in:

  • Groceries (Is it healthy? Organic? Low fat?)
  • Appliances (Is it green? How much energy will I need to run it?)
  • Pet food (According to Google, 1/3 of pet food consumers search for information on these products)

In Zero Moment of Truth, Google reports that the average customer uses 10.7 sources of information before buying. How many of these are yours?

How has it come to this?

How is the store, where we traditionally learned about our product choices, now the place with the least information? It is almost as if we designed the experience to accelerate shoppers’ transition to online shopping.

Product Education is a missing sales driver

It is time for a customer experience do-over. How do you provide the information necessary to accelerate consumer purchases so shoppers buy from your store today, instead of your competitor’s website tomorrow? A quick review of some options:

Increasing labor is clearly one alternative. Retail associates can not only educate shoppers, but also close the sale and add in complimentary products. Best Buy found that for every 10th of a point it boosted employee engagement, its stores saw a $100,000 increase in operating income. While this is distinct from adding labor, it does show that effective associates improve financial results.

Apple is another example. Apple elected an anti-Wal-Mart retail model, refusing to compromise on staff talent or shopper information, and has been rewarded with sales-per-square-foot of $5,626 – easily the highest of any national retailer. I was at a competitor when Apple started their huge retail growth, and we studied them to improve how we educate shoppers. Unfortunately, we could not replicate their model: We had signs, they had people. And people always win.

Labor is the most expensive option, but it is also the most powerful. A 2009 study shows that 10% of all retail revenue was spent on employee wages. However, it also found that increases in labor at the chain they studied were correlated with increases in store profitability. Effective labor works.

But not any labor will do. Apple invests significant time and money into their training, teaching its sales associates a different sales philosophy: not to sell, but rather to help customers solve problems. The quality of your associate talent and management is what makes the difference.

You can also learn from Apple’s merchandising, particularly as it applies to shopper education. Apple supplements their labor with an innovative use of the iPad as a product information source. Each item at the Apple Store has an iPad placed right next to it with links to product information.

Or consider the digital price tag. Today’s paper tag is outdated – information is limited and static. Digital price tags offer the ability to provide updated and detailed product information, supplementing the traditional role of the associate.

The goal of this post is not to put out the all-inclusive guide on how to merchandise effectively, but instead to show how the Price War has impacted the customer experience, particularly regarding how customers research products and categories. Shoppers are leaving bricks-and-mortar retail now – and we are pushing them away. It is time to help them buy from us.

There is still time to react. You can fight the Internet at its own game, by bringing your online information to the shoppers in your stores. Better yet, unleash your killer app – your associates – in the battle. Fighting the Price War while simultaneously trying to engage customers is a losing battle. Select a path today, then invest whole-heartedly. Your customers will thank you.

How Clear Are Your Instructions?

Have you ever eaten a frozen lunch by Michelina’s? These are inexpensive meals for a quick lunch. To heat it, you open the lid and put it in the microwave. After it has run for 2-3 minutes, stir it and put it back in. But for how long? The cooking directions are on the bottom of the box! If you didn’t memorize the timing before you started, you’re now in the position of either guessing the length of time, or holding it above your head so you can read the directions.

How does this happen? Do Michelina’s employees not eat the food? Do they spend so much time with the meals that they have the directions memorized? Or have they made a deliberate decision to sacrifice the functionality in favor of the branding on the top of the box?

This reminds me of the Tropicana rebranding failure from a few years ago.  You can learn more about it here and here.

To summarize, Pepsi (the owner of Tropicana) released new packaging for Tropicana. It looked okay on a carton-by-carton basis. But what about when you saw it in the store? First, it looked like a store brand. Second, all the versions looked nearly identical. Notice how the original clearly says “No Pulp Original.” Color variations differentiated the varieties, making it easy to shop. Now, look at the new version. Pulp free is there – but you have to look for it. It takes more work than the original. In addition, whereas the original had the iconic orange with a straw in it, the new one looks like a store brand! Imagine 7 varieties of the new carton all lined up together. It makes the shopper work harder.

Just to showcase the issue, I’d love to measure how may Tropicana shoppers actually look for the brand name when they pick up their juice.  I’m certain a sizeable minority just look for the orange. But don’t take my word for it – take the consumers’. Sales dropped by 19% before Pepsi reversed the decision!

This is an interesting product branding discussion.

But how can we learn from this in developing our own customer experience?

Let’s examine how the Pepsi decision-makers shop for orange juice. Not the consumers – the people involved with developing the product. Pepsi has a pretty sweet deal for employee purchases. Pepsi provides heavily-discounted beverages for bulk purchase at the headquarters. Why would you ever shop at a grocery store when you could pick it up at work and save yourself a bundle in the process? You wouldn’t.

At first this program seems like a good idea, as it will get employees to drink more of their own products, and they can reinvest that knowledge back into the product development process. From an R&D perspective, that makes a lot of sense.

But this leads to the employees missing the shopping experience. I have no particular insight into the team that decided on the branding. They probably spent a lot of time in stores, and they probably mocked up a store display at headquarters. But did they deliberately put themselves in the customers’ shoes? All signs point to a definite “No.”

Let’s contrast this with Best Buy, where I do have some experience. Best Buy has both an online and a physical store experience. They offer employees a discount to they shop in the stores – but not when they shop online. Why not? Store employees (particularly those near the corporate campus!) would like nothing better than to get those corporate employees out of their stores. So why not send them all online for their purchases?

The answer revolves around customer experience. Best Buy knows that if they offer the discount for online purchases, a substantial number of employees will never go to their stores. As a result, they will never gain that insight that comes from searching through three stores to find that special power cable for their phone. Only by physically walking through the customer’s steps can you gain the insight needed to create a great customer experience. Best Buy knows this. Pepsi didn’t.

What are you doing to make sure that you have a deep understanding of your customer’s experience?

Seeing through your customers’ eyes

It’s not easy to think like a customer. In Made to Stick, the Heath Brothers talk about “The Curse of Knowledge.” We often know so much about a topic that we simply can’t understand the perspective of those who don’t know as much.

This is critical to keep in mind as you develop your customer experience. We get so accustomed to the way things are that it takes a very deliberate effort to step back and see it from a customer’s perspective.  Over-featured phones, sales-prevention processes and convulated forms are constant reminders of what happens when you design the experience from a company-centric eye.

The big challenge

Seeing things through the customer’s eye is clearly critical to developing a successful experience. The challenge is:  how do I do it?  And how do I get the rest of my company to think this way?

Retailers have a fairly easy to watch customers shop. But that doesn’t mean they necessarily do it.  In Why We Buy, Paco Underhill tells a story about working with Macy’s. While they were investigating a different part of the store, their cameras also picked up a tie rack on the race track, and they saw something amazing. Particularly on busy days, customers would browse for ties until somebody walked close behind them and accidentally brushed their backside as they went by – what Underhill called “butt brush.” Once customers (especially women) experienced butt brush they immediately abandoned shopping. Once the problem was spotted, the response was easy. Macy’s moved the tie rack and sales increased immediately!

But how many store associates walked by that tie rack every day? If you take the time, you will realize that there are dozens of ways to improve the customer experience right in front of you. But we’re often so busy running the business that we miss simple opportunities to improve our customer’s lives, and thus our results.

Retailers have no excuse for these types of problems. In the Lund’s example from my earlier post, how much effort does it take to walk a store and look for problems? But how often do we do it? Clearly, not often enough!

Going further

But this opportunity extends far beyond retail. Almost every service business has its own way of going “undercover customer.” While the watching cannot always be literal, customers share their experience in more ways than you might expect. Intuit developed its software by following people home to watch them install it, recording every misstep or issue along the way.  At a healthcare financial services provider we “watched” our customers by matching behavioral data with demographics to get a better understanding of who was opening accounts and how they saved or spent their dollars.  Clickstreams are another example – who is using your website, and how? Where do they come from, and where do they go next?  Use inductive reasoning to look for trends, and use these to improve your customer experience.

Watching customers helps you understand what they actually do, breaking your myths about your customers’ behavior.  Have you watched your customers today?