Tuesday, June 28, 2016

Making Useless Nails vs. Achieving Your Desired Outcome

Image courtesy of Christina Welsh
Which metrics have you selected to track your customer experience improvement efforts?

I've got a lot of questions about the metric(s) you've chosen to measure customer sentiment about the experience with your company and to track your progress toward improving that experience.

For starters: How did you select the metric? Was it based on a desired business outcome? Was it based on a desired customer outcome? Did a consultant tell you to use that one? Did you read about it in a book or hear about it at a conference? Was there some clear basis for selecting the metric?

And then: Why? What do you do with that metric? Track it? Focus on it? Figure out how to move the needle on the metric? Make it all about the metric?

Have you ever heard of Goodhart’s Law? It states: When a measure becomes a target, it ceases to be a good measure. According to Wikipedia, its origin lies in finance and economics:
The original formulation by Goodhart, a former advisor to the Bank of England and Emeritus Professor at the London School of Economics, is this: “As soon as the government attempts to regulate any particular set of financial assets, these become unreliable as indicators of economic trends.” This is because investors try to anticipate what the effect of the regulation will be, and invest so as to benefit from it.
According to AdExchanger, the most-often cited example of Goodhart's Law is from a nail factory in the Soviet Union:
The goal of central planners was to measure performance of the factories, so factory operators were given targets around the number of nails produced. To meet and exceed the targets, factory operators produced millions of tiny, useless nails. When targets were switched to the total weight of nails produced, operators instead produced several enormous, heavy and useless nails.

The above example is absurd, but illustrates the point: When a measure of performance is the same as the target, it can be abused to the point of no longer being useful in measuring the desired outcome.
My fear is that too many focus on making useless nails in order to simply achieve the target. Unfortunately, this is one of the pitfalls of NPS. The target, not the customer and his desired outcome, becomes the focus. Moving the needle is what it's all about, at all costs.

When it was first introduced, and still today, the beauty of NPS was that it gets executives focused on the customer experience. The problem is, many simply focused on NPS. The directive became: Identify the benchmark! Tell me what our competitors' scores are! Beat them!

While metrics can focus the organization on the customer and the customer experience, that can only happen if the metrics are presented in the right context - and they're not made the focus or the goal but simply a way to measure progress. In order to do that, you'll need to...
  • talk about the score in context, i.e., talk about what it means relative to the customer and the customer experience
  • avoid gaming surveys (selecting certain customers, surveying at a specific time when you know scores will be better, offering incentives a la “the car dealer curse,” etc.) just to get a score
  • model appropriate behavior that leads to improved customer experiences - and, ultimately, an improved score
  • reward and recognize behavior and experiences that your customers want and prefer
  • compensate based on improving the experience, not the score
  • dig deeper and get at what's behind the metric
  • think strategy, not tactics, in order to improve the experience overall
  • have an action plan for improvement - talk about it and own it
Listen to customers. Understand customers, their needs, and what they are trying to achieve. Fix the things that your customers tell you are wrong. Know what their desired outcomes are but also know the business' desired outcomes. Then use the metric to measure progress - each customer's and yours.

Don't measure anything unless the data helps you make a better decision or change your actions. If you're not prepared to change your diet or your workouts, don't get on the scale. -Seth Godin

Thursday, June 23, 2016

The Elusive ROI of Customer Experience

Image courtesy of Pixabay
I originally wrote today's post for Intradiem. It appeared on their blog on January 25, 2016.

Have you been able to prove the ROI of focusing on the customer experience to your executives?

When you're trying to get executive commitment for your employee and customer experience improvement initiatives, what's the first question they ask? Typically, it's something along the lines of: Why? What's in it for us? What's the ROI? If I spend money on those improvement initiatives, that takes money from some other initiative. Which is more important?

It feels like it's a no-brainer, and yet, it can be a challenge. The problem arises because executives like to see immediate returns, while customer experience improvements often take 18 months to two years to design, deliver, and begin to show up on the bottom line.

If you're faced with this challenge, you're probably wondering how you'll ever be able to answer the seemingly elusive ROI question. Let's take a look at five approaches you can take. (You'll likely want to use all five of them together.)

1. Develop a proof of concept
This approach is all about baby steps. Pick a small project within your own budget authority or authorization level - or engage the help of a department head who gets it and wants to help you champion the larger initiative - and build your proof of concept. For example, listen to customers, build a closed-loop process for service recovery, and show how many at-risk customers you were able to save by doing this. Link your customer experience metrics to financial outcomes. Those saved customers translate to reduced acquisition costs and revenue saved, as well. This is probably one of the most impactful proofs of concept to use.

2. Go the stats route
There are a ton of industry stats out there to help make your point. While these don't necessarily reflect the impact on your own organization, they do demonstrate impact and help to support the cause. Some examples include:
  • 97% of dissatisfied customers can be rescued with proactive intervention, and more than 40% of those people actually become raving fans. -Dell
  • 1/3 of American consumers would be willing to pay an average of about 4% more for simpler brand experiences. -Siegel+Gale Global Brand Simplicity Index
  • 94% of customers who have a low-effort service experience will buy from that same company again. -CEB
  • A 1% improvement in First Call Response = $276,000 in annual operational savings for the average call center. -SQM Group
  • 70% of buying experiences are based on how the customer feels he or she is being treated. -McKinsey
3. Look at some hard data
I can't write an article about ROI without sharing one of my favorite examples of hard data that supports the overall business impact of focusing on the customer experience: Watermark Consulting's annual tracking of customer experience leaders and laggards versus stock market performance. Their latest analysis shows that customer experience leaders outperform laggards by a large margin: leaders' stock outperforms the S&P 500 index by 35% and beat laggards by almost 80%. Any CEO can appreciate that.

4. Use existing customer data
You already know a lot about your customers; you've got a ton of data on who they are, their purchase behaviors, purchase history, lifetime value, profitability, and more. You've got call center data, e.g., call volume, hold time, wait time, first call resolution, etc. Work with your CFO to get the data you need. Link that data to the customer experience metrics you're getting through listening to customers. Segment customers by type, age, NPS segment, etc. to get a better picture.

The most important thing to remember is that you need to focus on business metrics that matter to your CEO and talk about - and tie your results to - business outcomes.

When you make your case for customer experience improvements, the picture you paint for your CEO ought to clearly show him that benefits include: increased purchases, incremental new business, increased retention, more referrals, and a subsequent lower cost to acquire and/or to serve.

5. Sometimes it's not about the money
OK, it's always about the money. But sometimes, just sometimes, we need to sell the story of the customer a bit more. Humanize the customer. Give them a face. I realize that your CEO may still be of the traditional mindset that the purpose of a business is to maximize shareholder value. But the purpose of a business is really to create and to nurture a customer. Then and only then can you maximize shareholder value; that's secondary.

Sometimes, ROI comes in more of a softer or an indirect fashion (with no immediate metrics to track). If we show that we truly care about the customer, the money will come. This is a harder story to sell, and the longer way around to showing or getting to ROI. But it has to be said. Tell your customers' stories. Share feedback. Map and discuss their journeys. Help your executives understand their desired outcomes - and the pain in achieving them because the experience is just so bad.

People cringe when they hear it, but ROI doesn't have to be a "three-letter word." Take a look at these five approaches and start to build your case. Once you've built a solid case for your CEO, the rest should be easy. If it's not, perhaps it's time for a new CEO.

Investing is a simple process of taking into account the present value and future value. The other major factor to understand here, is what you lose as a result of inaction. Consider what you can gain and what you can lose in your decision. -J.R. Rim

Tuesday, June 21, 2016

Lean and the Customer Experience Journey

Image courtesy of SydesJokes
Is your company a lean company? Should it be?

The concept of lean management came up a few times in the last week or two; that kind of coincidence always inspire me to write about the topic at hand.

So I set out to learn a bit more about it. I knew, conceptually, what it was, but digging deeper makes me think that every customer-centric organization ought to be lean. Nay, every organization should be lean so they can be customer-centric.

Whichever way you look at it, it seems to be a solid concept for any organization.

So, what is lean management, also simply referred to as lean?

According to Lean Enterprise Institute, lean management is: a series of practices that develops people to understand and own their problems, and aligns resources to achieve the purpose of the organization. Lean management engages everyone in designing processes to continuously solve problems, improve performance, and achieve purpose while consuming the fewest possible resources.

In short, I'd say it's a concept rooted in continuous improvement. Or, as I like to call it, a journey. It's not a one and done. It's not about the destination because the destination changes. Customers evolve. Needs evolve. Businesses evolve. Products evolve. The journey to be the best, to design a great experience, and to deliver value to your customers is a long, ongoing one.

Back to defining lean.

TechTarget defines it as seeking: to eliminate any waste of time, effort or money by identifying each step in a business process and then revising or cutting out steps that do not create value. The philosophy has its roots in manufacturing.

Guiding principles for lean management include:
  • Defining value from the standpoint of the end customer.
  • Identifying each step in a business process and eliminating those steps that do not create value.
  • Making the value-creating steps occur in tight sequence.
  • Repeating the first three steps on a continuous basis until all waste has been eliminated.
Defining and delivering value for customers is a key area of focus for customer experience professionals. You might have thought that price was a huge driving factor for why customers buy.  Price is secondary to value; if you've delivered value, price is less of an issue. Customers will pay if companies deliver on their promises, fill a need, and do it with minimal effort on the customer's part.

But don't take my word for it. Value is defined by your customers, by each individual customer. It doesn't mean the same thing to everyone. This is why you listen to customers. This is why you need to understand your customers. This is why you map their journeys, identify key moments of truth, measure where you don't deliver value or where you fall down, and employ continuous improvement processes to reduce pain and effort, iterating until you've got it right. Of course, once you've got it right, the target moves and you continue to iterate. Regardless, it's all about when the customer says the company has delivered value, not when the company thinks it has.

Of course, integral to this are your employees and an organizational transformation, a shift in the culture and in the way of thinking and doing.

There's a lot of good stuff under the hood of lean management, so I'll be taking a look at many of its components over the next several months.

It is not necessary to change. Survival is not mandatory. -W. Edwards Deming

Tuesday, June 14, 2016

Are You a Human or a Robot?

Image courtesy of Spectrum Solutions Pondicherry
What really happens to humans when they walk into their offices or places of employment?

A couple weeks ago, I wrote a post about emotionally unavailable customers. Hat tip to James Lawther for inspiring me to actually flip the tables here and think about emotionally-challenged employees, instead.

The question I posed in response to his comment on that post was: Why do we transform from humans into robots as soon as we walk into the office building? Unless people are emotionally unavailable and incapable of having relationships before they even walk into the office, why do we suddenly become something we're not? Why can we no longer think for ourselves once we're on the other side of that door?

At this point, I have more questions than answers about what happens at work. For managers, these questions apply as you think about both employees and customers.
  • Why can't you stick to your own morals and values and let them guide you throughout the work day?
  • Don't your values align with those of the organization?
  • Why do you make life difficult for yourself and for your customers? for your employees?
  • Why aren't you thinking of ways to make processes easier for everyone?
  • Why don't you push back if someone questions you trying to do that?
  • Is this how you run your life? your household? your own finances?
  • Is this how you treat your family? your friends?
  • Do you talk to your loved ones the same way?
  • Do you really lack the ability to express sympathy or empathy?
  • Are you emotionally unavailable?
  • Do you create rules and policies within your own life and relationships that make it difficult to get along with, or be friends with, others?
  • Do you hide your phone numbers and email addresses so friends and family can't find them?
  • Do you regularly ignore their phone calls, texts, and emails?
  • Do you set expectations, then fall short of them? 
  • Do you commit to something and then ignore the commitment?
  • Do you make promises, only to break them?
  • Do you try to earn trust but screw it up? Or don't try at all?
  • Do you fail to trust others? or believe they shouldn't be trusted?
  • Do you lie to your friends and family?
  • Do you forget their names?
  • Do you treat them like bank accounts rather than as humans?
  • Do you not care about them and simply think of them as a number, not as family?
  • Do you fail - or not care - to understand the needs of your significant other?
  • Do you forget your manners? please and thank you? being responsive?
The questions could go on and on. The point is, we are all generally good people. More importantly, we are all customers. Someone's customers. We know what it feels like to be a customer. We know how we want to be treated. So why do we do such an awful job of designing and delivering a great customer experience for others, for our customers?

Do you really have to be told that what you do, regardless of whether you're on the frontline or in the back office, impacts the customer experience?

Do you really have to be reminded that the company is in business to create and to nurture a customer? And that the customer pays your salary?

Why do we turn into robots as soon as we walk into the office building, incapable of doing anything but what we're programmed/told to do, without question?

Because of the culture. The leadership. It's toxic, and we do things we're expected to do, despite the fact that those things deviate from our own norms and values and what we believe is right.

Clearly, there are two things that can happen next, if you find yourself in this situation:
  1. Get out. There's no alignment with the values of the organization, and there's no culture fit for you.
  2. Stop yourself. Be different. Be the change you want to see within your organization. Model the behavior that you hope others will aspire to. Be a leader. If no one chooses to follow, revert to #1.
For me, I am driven by two main philosophies: know more today about the world than I knew yesterday, and lessen the suffering of others. You'd be surprised how far that gets you. -Neil deGrasse Tyson

Thursday, June 9, 2016

15 More Reasons to Map Customer Journeys

Image courtesy of CountyLemonade
Still not convinced you need to map customer journeys?

Earlier this week, I wrote about how eye opening journey maps and journey mapping workshops are. If you aren't mapping yet and still need to be convinced, I'll do my best to provide you some more reasons to map customer journeys. More? Yup.

A couple years ago, I wrote a popular post titled 18 Reasons to Map Customer Journeys. I've accumulated additional reasons to map in the last two years but didn't want to just go back and add to that post. Instead, I'll call these reasons out separately.

Here are 15 more reasons, in no particular order, to map customer journeys. Use them to...
  1. Bring the customer voice to life for the organization
  2. Return the business to human thinking, not number (policy, account, case, etc.) thinking
  3. Prioritize resources for improvement efforts/projects
  4. Visualize future state
  5. As a result, adapt to emerging and changing needs
  6. Tool for change management - update as improvements are made
  7. Tell the customer story
  8. Use as a decision support tool
  9. Optimize VoC efforts - listen where it makes the most sense to listen, identify those areas there are listening gaps
  10. Build ownership for moments of truth and improvement areas
  11. Drive organizational engagement and adoption - stakeholders get it and take ownership of what they learn is broken
  12. Identify gaps in the journey, i.e., which steps are not clearly defined, causing the customer to fail at the job he's trying to do
  13. Identify points in the journey that are outside of our control that we must, in turn, mitigate
  14. Identify hand-offs that are being missed
  15. Keep customers top of mind
I'll just throw in this reminder: journey mapping isn't just for the customer experience. Map the employee experience, the partner experience, and the experience of any other constituent with whom you interact, including your internal customers. If there's an experience that needs to be improved, there's a map to be made.

As we have no immediate experience of what other men feel, we can form no idea of the manner in which they are affected, but by conceiving what we ourselves should feel in the like situation. -Adam Smith

Tuesday, June 7, 2016

Your Journey Maps Ought to be Eye Opening!

Image courtesy of WoodWrkr
How are your journey mapping efforts coming along?

You are mapping, aren't you? (If not, I can give you a few reasons to get started now. Well, after you finish reading this post, of course.)

And you're following all of the key principles of mapping while you're doing it, right? Your maps tell the customer story accurately? And they're actionable?

Good. I thought so.

Let's focus on your journey mapping workshops. I'd like to add one more requirement to the workshop guidelines I outlined last fall:

Invite your CEO to attend - at least for a portion of the workshop.

Why? It'll be extremely eye opening for him or her. Here are a few of the benefits of having the CEO attend. It will...
  • Solidify executive commitment for focusing on the customer experience and dedicating resources to making ongoing improvements
  • Help her understand the experience in general
  • Identify how painful we often make the experience for our customers
  • Shore up the need for cross-functional commitment and involvement for every single journey
  • Help her understand the customer
  • Provide a clearer understanding of the jobs to be done by the customer, as well as his needs and desired outcomes
  • Emphasize how important handoffs from one person, area, or department to another are
  • Ensure that everyone understand that what happens between touchpoints is (a) out of your control but (b) in your hands to mitigate its effects
Does some of this seem a little tactical for what the CEO might want to see? Yes. And yet, no. "Want" to see versus "need" to see: two very different things. Journey maps are a great learning experience, not just about the customer but also about ourselves, for the entire organization; and the CEO is not an exception or immune to that. As a matter of fact, the more the CEO knows and understands on this front, the more we open her eyes and heart to focusing on the customer and the customer experience.

Every time I've done a journey mapping workshop and had the CEO stop in, even if just for an hour, it's been well worth it. I always describe that experience for the CEO as "eye opening" because, well, it is!

A mind that is stretched by a new experience can never go back to its old dimensions. –Oliver Wendell Holmes