Customer Experience Management (CEM) is repeating the mistakes of Customer Relationship Management (CRM)

Using the carrot or the stick?

Philosopher George Santayana once said, “Those who cannot learn from history are doomed to repeat it”. This is my concern when it comes to employee compensation and customer loyalty metrics.

The goal of customer experience management (CEM) is to improve the customer experience, increasing loyalty and driving growth. Your employees are in the best position to change the customer experience and improve your business. While I am an advocate of measuring employees on customer loyalty and value delviered, one size does not fit all. Know where you are in the adoption curve and design your compensation metrics accordingly.

One of the major failures of customer relationship management (CRM) was that the tools were deployed for the benefit of management, particularly in sales force automation (SFA) applications. SFA was deployed as a way for management to improve their sales forecasting. By having all sales people enter their forecast data into a centralized repository, sales managers could roll up the data to provide forecast by product, by region, by customer. But where was the value for the sales representative? It was another administrative task that took time away from being in front of customers.

As a result, adoption became a key issue. So what did management do to address the problem? Many decided not pay commissions unless they were “compliant” with the administrative tasks – using the stick approach. While this changed behaviors, it never really fixed the problem. The problem would have been much better served by finding ways for SFA to add value to the end user, making their job easier and offering them more value in managing their business – the carrot.

In my work with clients, I see the same mistake being made in CEM. Management wants a measure of loyalty or customer satisfaction. They understand the connection between loyalty and financial growth. They want everyone to be compensated based on loyalty so they can achieve growth. But designing a compensation program around your loyalty measure is just not that simple.

There are two major issues you need to focus on to collect an honest assessment of loyalty and improve it over time.

1. Participation & response rates
2. Action & accountability

Participation & response rates. Getting a measurement of loyalty is only as good as the data that goes into the measurement. It’s the old saying, “garbage in, garbage out”. Organizations need to ask themselves a number of key questions. Who is responding? Are they the right customers? Are they decision makers or influencers in my most strategic accounts? Are we getting a broad enough sample to know our friends AND our foe? Can we identify the detractors so we better manage our future sales pursuits? Have we identified our Promoters and defined a plan to leverage them more effectively? These are important questions to answer when trying to obtain an honest assessment of loyalty.

When it comes to participation it’s important to have both the systems and processes in place to make sure you are collecting insight from the right people. This is different in a relationship survey to your top account vs. a transactional survey in your call center. Design the participant strategy accordingly and then measure your organization on response rates. Most organizations accept 20% response rates as adequate. Fred Reichheld recently raised the bar suggesting that the goal should be 90%.

In transactional surveys, you can move response rates up significantly by better integrating the survey into your process and simplifying the survey so it’s easy for everyone to respond. In relationship surveys to your strategic accounts, a 20% response rate demonstrates a lack of relationship and active involvement from the account team. Active recruitment, leadership oversight and closed loop communication is critical to getting customers involved in your process.

Action & Accountability. Knowing the score is only helpful if you know how to change it. Where does your customer survey data go? Who uses it? How? What commitments are made as a result of the insight? Who is accountable to following through on those commitments? What immediate changes can be made in specific relationships to see immediate results? What consistent themes do you see across relationships or interactions that require investments or organizational changes?

In my next blog posting I will tackles the topic of action and accountability more thoroughly. This is a big topic and I can’t do it justice here. Isn’t taking action the whole point of the exercise? Why would you collect the data if you don’t plan to do anything about it?

I believe strongly that these two areas are much more important than the score itself. The score gives you insight that allows you to assess the health of your business, but without the right participants and without employees’ active response, the score will not help you achieve the desired results.

So, let’s learn from the CRM experience and find ways to make our CEM programs add value at every level in the organization. Let’s focus everyone on improving loyalty scores by collecting an honest assessment of current state, evaluating the ways we can improve the customer experience to increase loyalty and achieve long-term growth. Let's create an environment where management and front line employees work together to understand the drivers of loyalty and make changes to improve it. While compensating everyone on the score sounds good in theory, if you do not design the program correctly it will have absolutely the wrong effect on your employees and your customers. If there is any doubt, consider your last car dealer experience.

Creating Detractors and Why you should not use AIT.com

I continue to be amazed at how dysfunctional organizations can be. I recently had an experience with my PREVIOUS web hosting company, AIT.com that does such a great job of explaining HOW ORGANIZATIONS CREATE DETRACTORS that I will share it with you for two primary purposes:

1. To illustrate to my corporate readers how organizations create detractors through the dysfunction of how they handle their customer interactions, and
2. To use word of mouth marketing to tell everyone that they should NOT use AIT.com for their web-hosting provider

The morning of February 15th I noticed that my email box was not receiving inbound email. That's strange because I receive many emails a day and I am in the middle of a project that required my client to send me several documents. After placing a call to my web hosting company I learned that they had migrated some Windows servers and had a disaster on their hands as a result. All of their Windows clients were down and they had Microsoft there working on the problem. I went a full day with no email and no communication from my hosting company. I called several times, with long wait times and a few disconnected calls. Not a pleasant experience.

I got busy doing other things and thought, I can live a day without email, and went about my work using my Yahoo account for critical exchange of documents. The next day I called again, and again, and again and spoke with several customer service agents who shared with me their own frustration over the situation including one agent that told me she had been there all night due to the problem and another agent who actually told me that "it isn't our problem, it's Microsoft's problem". I could not believe what I was hearing. My business was down for over 24 hours and they tell me it's not their problem!

To keep this posting to a reasonable reading size I will summarize my UNBELIEVABLE customer experience.

* I was down for a full week with no answers as to when I would be able to receive email again. Keep in mind this is my business, not personal email.
* While on hold I all you hear is how they "put the customer first", and trying to pitch additional services that at the time I had no interest in hearing.
* Several times my wait time was 5 minutes, then 7 minutes, then 11 minutes, then 1 minute and after a while I was simply disconnected.
* A couple of times I asked to speak to a supervisor who I never spoke with and once I was disconnected in the process. They had my phone number, but didn't have the courtesy to call me back.
* After several calls, I was sent satisfaction surveys, stating that my problem had been resolved and requesting that I rated my satisfaction. I would respond to the survey with my COMPLETE DISSATISFACTION with no response from the company or any acknowledgement that they were trying to resolve my problem.
* When I followed up on my "closed ticket", they would reopen the ticket and tell me they would not close it until they spoke with me and confirmed that my problem has been resolved. Several hours later I would receive another survey and email stating my problem was resolved (these email are to my Yahoo account because I haven't received email at Windward for days).
* After several days I found a new web hosting company and switched providers to www.1and1.com (a referral from my web designerweb designer).. ...can you say word of mouth marketing.
* One week later I was back up and running at 1and.com with no word at all from AIT.com. Still haven't heard a word from them. I lost all email sent to me from 2/15 - 2/21. We cancelled out account, stopped payment on any outstanding billings and will tell everyone we know not to do business with them. Silence from AIT.com....

If I had time on my hands, I would have called every media outlet I know to see if I could get this on the front page of the Wall Street Journal or other mainstream media outlets. Ok, so it's not as big a deal as Jet Blue leaving passengers on the tarmac for hours, but it was a big deal to me. It cost me days of productivity and delays in communicating with prospective clients for future projects. It cost me real money!

This story illustrates how dysfunctional organizations are at truly embracing a customer centric culture. The front cover of Business Week this week shows the "Customer Service Champs". There is a story about a Southwest airline passenger with a mess of a travel experience and shortly afterwards received 2 free tickets from Southwest in the mail. All companies have issues; it's how you handle them and how well your processes are designed to address the problems that make the difference between detractors, promoters and neutrals. I don't know if the Southwest passenger is a promoter, but he is clearly not a detractor. My experience shows an organization a clear blueprint on how to create a detractor and I hope I can have a lasting impact on their future revenues by telling everyone I know NOT to buy services from AIT.com.

One last note on the power of word of mouth. Today I received a comment on my "Don't buy Mercedes"posting from June of last year. The comment shared a similar experience with Mercedes and his very positive experience with Lexus describing it as finding "heaven". The Internet provides a perpetual record of customer experience. So this is not a one-time thing, my experience with AIT.com could spread the word for years to come.