The Customer Is Always Right

Ian Michaels, Senior Research Analyst of Aberdeen Group’s customer management group, reveals why customer experience is a key competitive differentiator in both good times and bad.

With an explosion of different marketing channels from social media and blogs to landing pages and email customers have numerous ways to interact with a brand and experience a more effective, intimate and personal customer experience. And while every firm claims to have it customers’ best interests at heart, for many this is just lip service. So what is the difference between companies that really ‘get’ customer experience means and those who don’t? Well, Michaels explains, the difference is in the performance. After completing surveys from hundreds of companies in the market and isolating the highest performing in metrics like revenue and return on investment, he has been looking at what those companies are doing differently.

“The big difference is how they market,” says Michaels. “All the companies that really get it use customer data to build actionable marketing campaigns that are personalized and are going down a path of building a relationship with their customers as opposed to sending out mass emails and juts delivering the same message to everyone in the hope that they get a one percent conversion – those companies just don’t get it yet. You need to think about the customer experience for end-users and you want to be personalized and relevant. There is no doubt that the definition of spam is changing and when I get an email that’s not relevant for me, it’s spam.”

Michaels goes on to explain about the emergence of social media monitoring, which is a technology that observes and records the perception of a brand or company in the mind of a consumer. It looks at the good and bad things that people are saying about the brand and takes a new look at the consumer through the eyes of social media. And as social media evolves it becomes increasingly important to use the channel to promote better loyalty and retention, after all you simply can’t avoid the power of social media but can you can leverage it to your advantage with the right customer experience in place, whether that is service in person or on the web.

“Think about when you’ve gone to a website where you didn’t necessarily buy anything, but you walked away and said ‘I had a good experience, that was a cool website, I liked it’. That promotes retention both directly and indirectly – if you had a bad experience you’re probably going to talk about it too and when they have bad customer service people talk. And now social media makes it so easy for people to just go online and talk about their experience,” explains Michaels.

Room for improvement
But despite social media having such a huge impact on a company or brand image, customer experience is yet to have a big influence on the way that companies are managing their marketing activities. Michaels believes that while the value of social media is there, organizations are yet to put in strategies or structured approaches in place to try and improve the customer experience. He says that it tends to be more siloed, and so the companies that are doing this right are indirectly building into it and then realizing that what they are actually doing is building a better customer experience. “There’s definitely room for improvement, but beyond that there’s probably room for some standardization around how to build out a strategy for customer experience management,” suggests Michaels.

And while there is room for improvement there is no doubt that the current recession has highlighted bad processes, making them stick out like a sore thumb. While some areas of the business easily slide under the radar when the economy is doing well it is possible to really start to see the companies who are doing things well emerge. Michaels believes the companies that are doing well have more than good technology in place. “Customer experience management is a cultural change for a lot of organizations, and you have to wrap a cohesive vision around what it is that you, as an organization, are delivering so that the message is being delivered.”     

Of course, constantly looking at how to improve the customer experience should be something businesses do as a matter of course rather than just a reaction to touch conditions. So, how can a focus on better management of customer experience be a key competitive differentiator? “It all comes back to benchmarking metrics within your own organizations,” says Michaels. “So not just measuring the metric, but taking the metric that you’re going to define and make that a predefined, standardized measurement to see whether you are improving or not.”

By comparing the same measurements over time it is possible to see whether there are improvements in a sector and it is possible  to be able to compare to industry norms or competitors. Michaels explains that he has seen far too many companies that are looking back six or nine months behind performance when it is too late, he says that it is vital to be reactive to the market. “You have to understand your data and I think that the companies that understand how to execute customer experience management effectively to some degree, are ahead of the ball. And the organizations that can react quicker and maintain that customer experience are interesting – when you start to see companies that market around recent changes, and all of a sudden there’s a commercial, you can see they’re already marketing around it.”

Importance of technology and culture
With technology as an enabler it is possible to execute a strategy throughout a company, so for example, it is possible to personalize an email campaign. However, every business depends on its ability to hire great people with great customer service skills, particularly people that understand the importance of the business/consumer relationship. Company culture becomes key to how those people interact with your customers and prospects and is driven by the decisions that management makes and ensuring that everybody is delivering the same message.

While Zappos is the well-known example of a company that truly values a positive customer experience, going out of its way to putting these beliefs at the heart of the business, Michaels cites Nordstrom’s as another company that is extremely good at managing the customer experience. “I had some shoes that were just falling apart and they were two years old,” explains Michaels. “And I took them in to the store and said ‘I’d like to pay to get them fixed’, and they said ‘No, you shouldn’t have to do that’, put a new pair on the counter and I walked away: no receipt, nothing. And since then I’ve bought shoes at Nordstrom’s exclusively, so that customer loyalty and retention has really paid off for them.”

The top 10
In a tough economy it becomes even more important to keep customers happy. In this year’s ranking of the top performing customer service companies, based on data from JD Power & Associates, more than half of the top 25 brands showed improved customer service scores over last year.

1. Amazon.com
2. USAA
3. Jaguar
4. Lexus
5. Ritz Carlton
6. Publix Super Markets
7. Zappos.com
8. Hewlett-Packard
9. T Rowe Price
10. Ace Hardware