Customer Experience Improvement Momentum: Engaging Employees for Sustained Profitability

Momentum in customer retention and share of spending is vital to sustained market success. While strides have been made, customer-centricity tends to be an elusive aspiration. Universal challenges revolve around cross-functional and organization-wide cooperation and alignment. Principles of systems thinking, change management and organizational learning present valid solutions to address these challenges. Internal branding encompasses these principles to modify culture, processes and behaviors in accordance with desired outcomes of customer experience improvement initiatives.

In recent studies, 80% of firms aim to differentiate customer experience, although more than half cite lack of cooperation across organizations as a momentum inhibitor¹.  Customers report that the biggest source of relationship issues is overpromising and under-delivering, causing substantial distrust.  When asked what qualities best characterize a customer-centric company, customers reply:

- Organizational, operational and cultural alignment around customers, and
- Empowerment of employees to address and remedy customer problems.²

Indeed, 46% of senior marketers admit that high-profile negative customer experiences have compromised their brands.³

Hence, sustained profitability is at risk from lack of cross-organizational cooperation and alignment with customers, to empower employees for adequate resolution of customer problems and to maintain brand promise integrity.  Effective employee engagement is at the heart of these issues - including effective executive engagement.  Firms with high employee engagement levels have 12% higher customer advocacy, 18% higher productivity, and 12% higher profitability than bottom-quartile business units.⁴ 

Yet, high levels of employee engagement alone will not guarantee customer experience improvement.  Cause-and-effect has proven inconclusive between employee satisfaction or employee loyalty and customer loyalty or business results.  "The role of employees in building customer loyalty is far more complex than the myths imply. ... Employee satisfaction and employee loyalty are only two of a myriad of factors that ultimately affect the loyalty of customers, and loyalty can still be had in the absence of either of them." ⁵

Internal Branding is a Way of Life
Internal branding gets back to basics.  If execution is broken, examine the foundation rather than fill potholes.  Tendencies to focus on IT solutions, statistics, simplified metrics, customer acquisition, or isolated opportunities have over-shadowed the realities of people and processes and culture as the most important determinants of customer experience. 

After all, hassles and disappointments are the primary reasons customers leave a brand.  Distrust leads to 7% of customers no longer considering a brand for future purchases, 62% scaling back existing engagements, and 30% terminating the relationship.²  Distrust indicates misalignment of what is said and what is done, a symptom of an unhealthy culture that spills into the customer experience.

Internal branding is more than an ad campaign focused on customer-facing employees.  It's a multi-faceted cultural initiative to guide employees company-wide in managing their personal impact on customer experience.  Internal branding engages all executives and employees effectively in outside-in thinking and behaviors.  It differentiates primary motives and secondary motives as a basis for doing the right thing for the company's long-term well-being.

Motives & Shared Vision: 
To truly be customer-centric, a hierarchy of motives should be explicit.  All parties within a firm can continually reinforce an outside-in primary motive such as making it easier and nicer for customers to get and use solutions.  With a customer-centric primary motive firmly guiding thinking and behaviors, acknowledgement of largely self-serving secondary motives is appropriate:  up-sell, cross-sell, acquire customers, launch products, manage costs, and so forth.  As W. Edwards Deming said, "What everyone in a company does can be reduced to one of two functions:  to serve the customer or serve someone who does."

Shared vision tools to establish a customer-centric primary motive include customer personae, customer bill of rights, stories, games or a super-ordinate goal.  To make the vision actionable, link external and internal goals company-wide, and translate the vision into function- and role-specific behaviors and standards.  Consistent emphasis in simple ways is a defining factor in nurturing a customer-centric culture.

Systems Thinking: 
To revitalize people and processes and culture, a systems thinking approach offers sustainable solutions.  Every handoff may have a ripple effect on the customer or at least on the customer-facing employee.  In other words, frontline employees are only as effective as the rest of the organization enables them to be. 

Systems thinking is a holistic view of the components of an entity in the context of relationships with each other and with other entities, rather than in isolation.  Indeed, all of the studies cited earlier indicated that linkages are broken between:

-  Functions' and business units' goals.
-  Survey results and business results.
-  Multiple voice of the customer sources.
 - Data and actions.
-  Incentives and desired behaviors.
-  Views of what customers want.
-  Brand promise and what's delivered.

Change Management: 
Change management is exceptionally valuable in dynamic environments, aiding speedy adaptation to ever-changing competitive scenarios and customer expectations.  Broken CEM linkages, weak execution and employee engagement can be addressed through systems thinking, embodied in the seven change management phases:

1) Address the need for change.
2) Describe future state and timeline.
3) Assess gap between vision and current state.
4) Map transition from current to desired state.
5) Deploy the change.
6) Assess to stop, sustain or redirect.
7) Assure knowledge sharing.

Note that four major steps are necessary before deploying a change.  They're simple, yet often overlooked in practice.  Stakeholder management is the central principle for each phase.  Conflicts are anticipated and tools enable rapid resolution.  Stakeholder diagrams, matrices, continuums, questionnaires and other mechanisms are essential for planning and managing employee engagement, as well as customer engagement.

Organizational Learning: 
Employee engagement is a natural outcome of organizational learning principles:

1) Language - clearly spell out what's meant by CEM objectives and approaches to create common language and frames of reference.
2) Post-mortem - at setbacks, study what went wrong, as well as the assumptions that caused those actions.
3) Politics - when sharing best practices, shift focus on the lesson rather than a specific organization achievement.
4) Knowledge - capture knowledge of key personnel in online portals, training, service standards, and so forth.
5) Proliferate - facilitate adoption of know-how across the organization; create games or other means to engage employees.
6) Refine - scrutinize measures and models regularly to prevent misleading information.

Quality Tools.   Never underestimate the value of returning to basic universal tools.  Root cause analysis, fishbone diagrams, Pareto charts, critical path diagrams, force field analysis, matrix diagrams, and Gantt charts should be used in every functional area on an ongoing basis.  Broken CEM linkages will be much less likely if Quality tools are second nature to everyone.

Holistic Processes: 
Generally, a business process is deployed by several departments, creating a value chain of internal customers.  Timeliness and quality of handoffs throughout this internal value chain can snowball exponentially toward revenue-generating customers.  To be customer-centric rather than ethnocentric, employees throughout the organization need to be plugged into customer sentiment data streams.  Through meaningful dispositioning of customer feedback, each department can receive data that is pertinent to their stewardship. This sharpens understanding of their impact on customer experience, and ownership of customer experience improvement throughout the firm. 

Embrace Warning Signals.  Adoption of a mantra - such as Good news is no news, no news is bad news, bad news is good news - can make it easier for employees to accept customers' constructive feedback.  Treat customers' complaints and negative ratings in a concerted manner similar to an RMA (returned materials authorization) process.  Help departments take ownership for their specific impact on the customer experience by providing worksheets and reporting forms they can use to create and monitor action plans.  Motivate follow-through and ongoing momentum through management visibility, recognition programs, and incentives criteria. 

Internal Handoffs.   After characterizing each department's ultimate objectives by their impact on the external customer experience spectrum, customer-centricity can be further improved by emphasizing internal customer satisfaction and internal supplier quality.  For internal supplier quality, a process owner can communicate proactively with those who provide inputs to their process.  It's surprising how often this seemingly simple step is not enacted.  Effective handoffs typically result in smoother processes and fewer customer hassles.

A variety of approaches can reinforce customer-centricity among non-frontline employees:  adopt-a-customer, observe call center conversations, disposition call center logs, participate in email customer support, interview counterparts at customer company, shadow customer or front-line employees, or job rotation.

Actionable Metrics:  
To build momentum toward a shared vision, best intentions need to be bolstered with four basic principles that apply to any initiative, dashboard, metric or incentive

1) Connected - make sure the focus is on things with strong connections to overall objectives
2) Actionable - select strongly connected success measures that allow one to control outcomes
3) Predictive - emphasize actionable, connected metrics with strong cause-and-effect to objectives
4) Sustained - setup the right environment for predictive measures to keep producing strong results

One of the biggest metrics mistakes is random selection.  The best metrics start with the big picture:  We will know this is successful when we see X happen.  Like a waterfall, the overall goal is cascaded to each level of the program or organization, to identify successive contributions to the big-picture goal.  Metrics at the lowest layer of an initiative or organization have the highest actionability.  To identify actionable metrics, conduct root cause analysis by using the Five Why's technique or a Fishbone Diagram. 

Not all actionable metrics are predictive of big-picture goals.  Metrics relating to process inputs and in-process control points tend to be predictive.  The ability of a process to meet its objectives is often determined by resources, skills, stakeholder buy-in and cultural factors.  These are levers one might employ to improve the process inputs and process control points.  Dashboards and balanced scorecards are more effective when they include not only the big-picture metrics as process outcomes and consequences, but also the layers of in-process control points, inputs, and levers.

Balanced Incentives: 
In tying compensation - as well as non-monetary rewards - to customer experience improvement, common pitfalls stem from disconnects with the four basic principles of actionable metrics:  connected, actionable, predictive and sustained.

Scrutinize employees' perceived weightings of performance metrics.  It may be that the behaviors elicited by these perceptions are not the behaviors that management intended to motivate.  The key to successful incentives is to track things for which an employee can make adjustments before stakeholders (i.e. customers, investors, supervisors) see the results.  When it's possible make adjustments that will affect the outcome of stakeholders' care-abouts, then the focus is on something that's manageable, predictive, and connected to the big picture.

Some firms start by tying closed loop communication rates (not ratings) to rewards.  Next, leading indicators (predictive metrics) may be included in incentives.  If lagging indicators (big-picture metrics) are included, they should always be weighted less than the more actionable leading indicators.

It's quite common for metrics to be mis-used, mis-trusted and mis-managed. What gets measured gets done, so improper use of metrics can lead to unintended behaviors that may negate the expected value of having metrics in the first place. 

Improper use of metrics and incentives include:

• Unclear connection to big picture.
• Emphasis on process outcomes rather than in-process control points and inputs.
• Explicit or implicit penalization of poor performers, which leads to cooking the books.
• Linking compensation too heavily with lagging indicators, which leads to coaching customers on survey responses.

Proper use of metrics and incentives include:

• Emphasis on things each business unit can act on to improve their status.
• Focus on root causes, leading indicators, actionability, proliferating best practices, and positive behaviors and outcomes.
• Balance leading and lagging indicators to avoid sub-optimization.
• Double-check alignment with intended outcomes, from employees' viewpoint.

Self-Reporting Team Recognition:
Successful employee engagement trends mirror the Web 2.0 phenomenon of two-way conversations enabled by technology, with anyone, anywhere, anytime.  Typical recognition programs are one-way communication.  A two-way communication process taps into employee perspectives, as well as management viewpoints, about noteworthy achievements.  Self-reporting recognition strategies enable real-time documentation of initiative progress, allowing various management levels opportunities to provide constructive feedback to make the achievements even more significant and far-reaching.

When two-way conversation elements are integrated within a recognition strategy, employees can be energized to reach stretch goals and make initiatives successful.  Guidelines for self-reporting can reinforce the customer experience shared vision and primary motives, and raise standards accordingly for the way employees approach a challenge.  Upward and horizontal visibility foster organizational learning, change management and desirable cultural changes.  Self-reporting team recognition is an excellent tool for employee engagement and customer experience improvement momentum.

Summary
Management can nurture internal branding as a way of life through holistic processes, actionable metrics, balanced incentives, and self-reporting recognition.  These methodologies can pay excellent dividends in customer experience improvement momentum through superior employee engagement levels that heighten customer-centricity and prevent customer hassles.  As effective employee engagement increases, ownership of customer experience is adopted by employees organization-wide, leading to lower employee costs and higher customer profitability as sustainable differentiators. 

References:
¹Forrester Research, Obstacles to Customer Experience Success, February 2009
²CMO Council, Customer Affinity, July 2007
³CMO Council, Turning Customer Pain Into Competitive Gain, January 2009
⁴Gallup, Building Engagement in This Economic Crisis, February 2009
⁵Keiningham, Timothy et al, Loyalty Myths, 2005

For more information, contact lynn.hunsaker@ClearAction.biz, toll-free 1-877-CEM-ROI4; see the e-handbook Customer Experience Improvement Momentum at www.clearaction.biz/innovating.