Customer Experience Leadership

Assuming the Helm

"On the Mississippi River, in Mark Twain's time, there were riverboat pilots who only knew a few miles of the river.  I mean, conditions changed so much, you couldn't know the whole trip.  Floods, sandbars, fallen logs...all a riverboat pilot could do was to know his little piece of the puzzle.  So for the next few hours, this is my ship.  We start our approach..."

--Robert Duvall as Captain Spurgeon "Fish" Tanner, Deep Impact, (1998)

Greetings, Customer Experience Leaders:

I'm Edward Lopez, a management consultant with Synovate Customer Experience.  I have had the pleasure of working with or meeting with many of you, and I look forward to meeting you all--even if only through our conversations on this blog.  As of today, I will author this blog and maintain the momentum we have built in our discussions on Customer Experience.

I want to thank Brian Lunde for being the pioneer and building a forum for us to share our experiences.   We are here because we know that customer satisfaction is no longer enough to win in today's marketplace.  We are here because we believe a differentiated customer experience will lead to enduring success for us and our companies.  We are here because customer experience is a relatively new frontier, and we know that the lessons we learn (and share) here will expedite progress for all of us on the 'Customer Experience Journey.'  We thank Brian for starting the conversation and for keeping us engaged with his sharp wit and thought-provoking commentary.

I'm excited for the opportunity to take the helm for this part of the journey.  When you check this blog, you'll read views, observations and experiences built by years of consulting Fortune 500 companies on the Customer Experience Journey and a lifelong love of marketing and customer strategy.  It's true--I have known since the ninth grade that my passion is marketing and attracting/retaining customers. 

I have worked with people and companies at all stages along the Customer Experience Journey, from new investigators to experienced companies with a deeply embedded customer focus.  I specialize in services businesses, so I will look to those of you in manufacturing companies to help balance my perspective.  From time to time, my posts may reflect other things about which I am passionate, including movies, music, sports, fitness, theater, travel and fatherhood.

Thank you for the contributions you have made to build this community.  I look forward to getting to know you and learning about your individual perspectives on Customer Experience.  Thank you in advance for checking in and chiming in when you can, and for welcoming other customer experience leaders to our community.  Working together, we can all move toward advanced competencies in Customer Experience Management that will wow our customers and leave our competitors behind.  Let's start our approach.

I Hope You've Enjoyed The Show

Today is my last day with Synovate Customer Experience; I'm moving on to a new opportunity. I just wanted to publicly thank those of you who have kept up with my blog posts and especially those of you who have engaged in the conversation with your comments. I've had a lot of fun and I hope we've all learned a few things along the way.

I understand Synovate plans to keep this blog alive, so don't change your bookmarks or RSS subscriptions yet! Hopefully you'll continue to find this blog a source of fresh ideas and interesting commentary on all things customer experience.

I don't think this is the end of my blogging days, so hopefully we'll meet again in the proverbial blogosphere!

To the future--

Brian Lunde

Revisiting the Airline Question

Back in June I posed the question, "What would YOU do if you were an airline CEO?" (see post here). I promised to give you my own thoughts on this question...and I was reminded of that when I read a news clipping today about Delta Airlines' being the first and only U.S. airline to offer broadband Wi-Fi access on its entire domestic mainline fleet. More on that in a moment.

If I were an airline CEO, I would initiate a major strategic initiative to transition the management culture to focus on the basic principles of the "service-profit chain." I wrote about the man who coined the term, James Heskett, in a recent post here. To put it simply, concentrate on employee relationships as the key to rebuilding customer relationships. This may seem counterintuitive for a business that is so capital-intensive. But I would argue that there is so much about the customer experience that airlines cannot control--weather delays, FAA-imposed ground stops and arrival holds due to congestion, the dehumanizing process of TSA security procedures, etc.--that focusing on employees becomes a critically important management option. And, focusing on internal branding--helping employees learn how to "live the brand"--will translate into a branded customer experience in all of those interactions between travelers and airline employees on the ground, on the plane, and in the call centers. An airline with a human face...

So this puts Delta's move into a different light. I don't diminish the temporary advantage that this might give Delta, but it's not strategic. It is a technology play that can be easily copied, and even more importantly, it is brand-neutral; it does nothing to reinforce Delta's specific brand values as a part of the experience, which means by definition it cannot provide any real differentiation. Like the "bed wars" initiated by Westin's launch of the Heavenly Bed® in their hotels, the profit advantage of this investment will be quickly competed away, failing the necessity of balancing shareholder value and customer value.

Working Hard for a 10

At a recent hotel stay in New York, I received this card in my check-in folio. Many of you will instantly recognize this for what it is: a way to game the customer feedback system to maximize this property's score. This is a common trick among auto dealers as well, who pressure you to give them the top score on the follow-up sales or service survey sponsored by the manufacturer.

None of these "gamers" are considering the impact of this practice on customer experience. This kind of communication transmits the following message:

"We don't really care about your experience; we care about getting a good score because it's money in our pockets. Now, it just so happens that to get the money we need you to either (a) feel good about your experience or (b) feel personally responsible if that doesn't happen, so your guilt makes you give us a top score. It doesn't really matter to us. So if you don't take the time and energy to speak up and ask us to fix whatever it is that prevents (a), then it is obviously not our fault, and (b) is your only option."

What's sad is how easy it is to avoid this. What kills the "Working for a 10" card is the opening sentence, which screams, "This is not about you, it's about us." The rest of the card almost works as-is (I'd get rid of the references to a "10" and use language that focuses on the customer benefit). Without that self-serving introduction, the card would have the same--possibly even a better--effect on motivating guests to speak up if they have a problem. And it would send a completely different message: we actually care about what the customer experience is for you (and we're going to trust that will show up in our scores).

Some of this stuff is so simple.

Loyalty Programs Not Working?

As reported in The Wise Marketer earlier this month ("Have Loyalty Platforms Caused Commoditisation?", subscription required), some recent research by the Aberdeen Group of 231 retailers suggests that loyalty programs are not producing any real competitive advantage for the majority of these retailers.

Readers of past posts may recall my use of the term "synthetic loyalty" to describe the kind of customer behavior produced by perks and rewards programs. I use this language to distinguish these programs from "natural loyalty," which is cultivated by producers when they deliver consistently branded customer experiences across all touchpoints.  Synthetic loyalty is bought and temporal; natural loyalty is earned and persistent.

This research finding supports my arguments against reliance on synthetic loyalty. Loyalty programs have created an "arms race" in which competitors play a constant game of one-upmanship, but in the end no player really comes out ahead. It is difficult--perhaps impossible--to create a sustainable competitive advantage with loyalty programs.

But the arms race metaphor also works to explain why these loyalty programs have become a cost of doing business and won't disappear anytime soon. It is much more difficult to induce trial if you haven't sweetened the deal like your competitors have with their rewards programs.

But here's the lesson: you cannot rely on these programs to win long term. The only way to win--to achieve persistent market share gains and grow profits--is to deliver customer experiences that are so thoroughly branded that no competitor can possibly duplicate them (or would even want to, for fear of confusing their own brand). So offer loyalty programs if you must, but only invest the minimum necessary to stay at or near parity with competition; spend your serious thinking, energy, and money on branded customer experience.

Excerpt: The New Math of Customer Relationships

Back in April Harvard Business School published a paper in its Working Knowledge series called "The New Math of Customer Relationships." It was based on an interview with James Heskett, the co-author of The Service Profit Chain, a seminal work that diagnosed and promoted the cause-effect relationship between employees, customers, and profits. This concept is foundational to managing customer experience, which cannot be maximized without employee engagement and cannot be considered successful unless it is impacting business performance.

Given our present economic situation I thought this quote from the interview was worth sharing:

Q: As we head into what appears to be an economic slowdown, what should companies be considering in terms of the service profit chain? Can it be a tool for competitive advantage in a cooling economy?

A: Relationships between customer and employee satisfaction, loyalty, and productivity become even more critical during times of economic stress. During such times, the most important advice that one can give is first remember that the service profit chain starts with employees—therefore, preserve that resource; second, consider dividing jobs at lower pay rather than laying off customer-facing employees; third, seek economic ways of making both employees and targeted customers know that you value their loyalty—this doesn't require a lot of money; and fourth, work even harder at creating "owners" by eliciting suggestions from employees and customers alike about ways of cutting costs while enhancing customer service.

While I would quibble with the last phrase--it should be customer experience, not customer service--this is nonetheless sage advice.

Chick-fil-A Gets It Right

Chick-fil-A, for those of you who don't know, is a quick-service resaurant chain specializing in, uhm, chicken. Based in Atlanta, they run 1,300 stores in 37 U.S. states and the District of Columbia. It is wildly successful business, racking up 40 consecutive years of sales growth and profiting store operators--who are very carefully chosen, not accepted--handsomely.

I just read a piece on Colloquy.com about Chick-fil-A's third annual "Cow Appreciation Day" (registration required). This is a brilliant piece of branded customer experience marketing. Chick-fil-A has been using a tounge-in-cheek ad campaign theme for several years now featuring cows who encourage us all to "eat mor chikin". On Cow Appreciation Day (11 July 2008), any customer who shows up at a Chick-fil-A store fully dressed as a cow gets a free combo meal. Last year, 4,000--yes, that's four thousand--customers did just that.

How much would you supposed 4,000 combo meals costs Chick-fil-A? I don't know but let's just say their costs average $5 per meal (that may be high). That's a paltry $20,000. The promotional costs are probably much more significant, but still my guess is they take a low-key, cost-effective approach that relies heavily on word-of-mouth.

The reason I like this campaign so much is that it ties customers so directly into Chick-fil-A's brand positioning, and it is experience-based.  And think about the impact on customers who show up at stores that day who had no idea what was going on, only to see a bunch of crazy people in cow costumes eating their free combo meals. It's a beautiful thing.

Another Nail in the Satisfaction Coffin

I am toying with the idea of becoming a full-time crusader against the entirely preventable disease of satisfactionitis. This terrible scourge of businesses worldwide is wreaking untold damage on brand health as it shouts "All is well!" while true loyalty ebbs away. We can eliminate this in our lifetime if we work together!

And here's another example of the deception of satisfactionitis. The UK-based e-zine CustomerStrategy reports "Customer satisfaction with airlines no guide to success." According to the article:

According to figures from YouGov’s Brandindex  looking at customer satisfaction with British Airways, EasyJet and Ryanair all three are satisfying fewer customers than two years ago. Yet while Ryanair’s customer satisfaction has fallen more sharply than that of EasyJet its customer growth seems to have surpassed its rival.

Hmm, customer satisfaction falling while business volume increases...? Who wants to argue that satisfaction is a good indicator of business performance?

Seriously folks, please move on...the use of a satisfaction anchored scale is SO 1970s...if you really want to understand whether or not you are delivering a customer experience that drives loyalty, you've got to cure your satisfactionitis pronto.

What would YOU do if you were an airline CEO?

Forbes recently reported what any of us who travel regularly already know: customer satisfaction with the airline industry just hit its lowest level in three years. But rather than add to the digital pile-on in the blogosphere with another illustration of the horror that airline travel has become, let's think about this from an airline CEO's perspective.

You're facing an explosion in fuel costs that is draining cash flow, and you know if things don't change and you don't do something you're going to fly right into bankruptcy. So you start cutting capacity and focusing on your most profitable routes...but you know this is going to make travelers even more miserable as planes are consistently packed to the overhead bins with people, and it's tough to get from "here to there" anymore if it's not a major route. You also start adding fees wherever you can on the theory that "every little bit helps"...again knowing this angers customers even more. It looks like you've got a business where the only way to make a buck--or just not lose too many of them--is to throw any notion of "a branded customer experience" out the window.

What would you do? And note, the answer "I'd do what Southwest is doing" doesn't fly [sorry], because you have to have some kind of differentiation. And, frankly, several of the big guys will say they tried that anyway (United's TED, Rest In Peace).

I'll weigh in with my idea later; for now, I'd like to hear from you.

Experience-Based Segmentation

A colleague and I were recently discussing the issue of whether or not companies are really successful in applying segmentation strategies from a customer experience viewpoint. We quickly agreed on examples where customers pay differentiated prices to experience differentiated service levels, e.g. first vs. coach class on a commercial flight, expedited shipping for an online order, front-row seats at a concert. But these are examples where customers self-segment the experience based on their value equation.

Are there examples of successful experience-based segmentation strategies that do not involve differentiated pricing? An illustration would be the leisure vs. business traveler checking into the exact same hotel, paying the same room rate for the identical type of room. Ideally, the leisure traveler would experience an "on boarding" process that is different from the business traveler, in a way that speaks to the context and expectations each have. For example the leisure traveler might get a more relaxed and paced check-in process that gives extra information about using the property for leisure purposes; the business traveler's experience might emphasize efficiency and business-related amenities.

Can anyone think of good examples of companies (B2C or B2B) that are delivering segmented experiences for the same core service or product, without relying on the customer to self-select via the pricing structure?  If so, how do they do it?