Ipsos Loyalty A Step by Step Approach To Customer Experience Management

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Customer Experience Management

A Step by Step Approach from Ipsos Loyalty
C E M : A S T E P BY S T E P A P P R OAC H
Easier said than done

Business success is no longer based solely on product or service
traits but now requires the creation and delivery of holistic
branded experiences. Customer Experience Management (CEM)
is the name of the practice which places new demands on
enterprises as they coordinate the delivery of experiences across
functional silos. Yet, while many managers recognize the
importance and potential impact of customer experience
Customer Experience management, few are prepared to handle the demands CEM
Management (CEM) creates for their organizations.
is the practice that For the most managers the vision for CEM is clear. First,
requires the creation understand what drives customers experiences, attitudes,
behaviors and financial returns. Then, design holistic experiences
and delivery of holistic for targeted customers and implement the experiences by
branded experiences changing internal processes, structures, and systems. Finally,
track performance, take remedial action where necessary,
to customers respond to market and competitive dynamics, and create
engaging new experiences to keep CEM invigorated. Despite
being clear, the vision is realized in few organizations. Initial
efforts at CEM emphasized huge database systems. Billions of
dollars have been spent on Customer Relationship Management
(CRM) systems as organizations have struggled to understand
and connect with their customers. Many CEOs, CMOs and CIOs
alike will tell you that they have not seen the return on these
investments. More alarmingly, customers have not reported
great improvements in their own experiences despite all of the
resources deployed to their intended benefit.
Companies clearly need to do better in converting their CEM
visions into reality. In fact, many of our clients ask us about best
practices that we find as we help organizations bring their
customers to the center of their business strategy. During our
more than twenty years in this field working with dozens of
organizations implementing CEM, we have identified four critical
steps to implementing customer experience management.
• Engagement: Align the senior executive team

• Insight: Understand the drivers of customer behavior
• Action: integrate the customer experience with business
processes
• Embedment: Connect the entire organization into delivering
the experience
These steps were empirically derived by looking at what
successful clients do; the steps are at once powerful, practical,
and possible.
2
Copyright ©2017 Ipsos Loyalty. All rights reserved.
1. Engagement: Align the

senior executive team
Assess Readiness
Businesses tend to organize vertically around functional
expertise. Often this is overlaid by geography and the
idiosyncrasies of matrix management. Unfortunately for
organizational designers, customers interact with organizations
horizontally. Customers want innovative ideas that meet their We find that a
needs, products and services that work, and solutions to their “readiness assessment”
problems. To enable customers to achieve their goals, the entire
enterprise from the CEO down must be engaged in customer is a quick way to get an
experience management. The first trick then is to get the senior organization moving
team aligned with the CEM journey.
We find that a “readiness assessment” is a quick way to get an
organization moving. When organizations know their strengths
and weaknesses they can see where to begin and the effort it
will take. This helps take the risk out of beginning. It also starts
the process of getting executives involved.
We investigate several areas to test how ready the organization
is to accept evidence-based change founded on customer input.
In a typical situation, we know there must be CEO level
ownership of the customer experience management agenda, an
identified CEM team including a leader, and a stated goal to
improve the customer experience. Without these basic
ingredients, commencement of a CEM program should most
likely be delayed.
Diagnose Business Strategy

Healthy organizations emphasize one of three sources Apple is known for its ability to innovate for its target
of competitive advantage: product leadership, market – often without getting much input from its
customer intimacy, or operational excellence while customers. Apple’s customer experience must be
maintaining industry par levels of performance in the based on this product leadership dimension.
two areas they do not stress.
When the core strategy is customer intimacy, such as
Understanding your own organization’s emphasis will in the case of Starbucks, customers will accept
help communicate the CEM program in the context inefficiencies and premium prices in return for an
of the DNA of the organization, thereby increasing the exceptional experience. Total customer focus in these
potential for success. organizations is so ingrained that employees could not
conceive of trading off the customer experience for
Southwest Airlines is a classic example of an
better operational efficiencies or product qualities
operational excellence based company that can “turn”
alone.
their planes faster than any airline in the country.
Southwest’s customer experience must leverage this The point is that you have to know who you are.
operational capability to create a powerful and
Recognizing and sharpening your core DNA strategy
differentiated customer experience rather than
the doing everything possible to bring the customer
attempting to compete by pulling resources away
to the center of that strategy is imperative.
from this competency.
3
Implement a Broad Governance

Structure: Participation = Buy-In
Nothing facilitates success faster than a commitment to the right
governance structure. Executives and managers nod politely at
Nothing facilitates the need to treat customers as a corporate asset. However,
bringing agreement into action is quite another matter. A
success faster than a governance structure will get key players in the game – their
commitment to the right participation is an indicator of their commitment.
governance structure Everyone is the governance structure must have a clearly defined
role and responsibility that contributes to the success of the
customer initiative. People come and go; however, the truest
indicator of the success and potential for the customer strategy
will be who is the governance structure and how seriously they
take their participation.
Document the CEM Vision, Roadmap

and Business Case
At this point, our best practice clients document their CEM
vision, program deployment roadmap, and business case.
Creating a vision and high level roadmap does not have to be a
complicated process, but it does have to be cross-functional. All
that is required is a simple statement – the simpler and more
memorable the better – of the vision for the customer. This
vision is supported by a roadmap of basic strategies that can be
used as guideposts to define more specific goals and tactics as
the CEM program is executed.
To gain executive attention the CEM program needs to have a
clear business case. Managers want to know specifically how
customer experience improvements contribute to financial
performance. There are many studies that show this relationship,
and even most executives accept the logic behind the “employee-
customer-profit” value chain. However, our clients still demand
that we make the CEM ROI real to them.
We use financial linkage analysis and simulations to prove the
case for the customer. We create these models for clients where
“best practice” references and anecdotal evidence is not
sufficient for executive commitment.
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2. Insights: Understand the

drivers of customer behavior
Model the Relationship with
Your Customers
We advise our clients to understand the causal linkages between
customer experience, attitudes, behaviors, and results as a key
first step to understanding customer relationship dynamics.
This holistic understanding is the core to evidence based change.
From our research and experience we understand the cause and

effect relationship among:
Experiences: Events at each touchpoint that connect customers
to a business, many of which may be directly influenced through
actions taken by managers.
Attitudes: Customer images, feelings and mind-sets in three
key areas:
• Rational motivations – the “value for money” proposition
• Emotional motivations – underlying emotional need states
activated by experience
• Brand Essence – attitudes that relate to the specific brand’s
intended positioning
Behavior: Customer actions defined by the organization as those
that have the greatest impact on business results, for example:
• Repurchasing the brand
• Advocating or recommending the brand to others
• Expanding purchases to other offerings of the business
• Complying with requests such as price increases or move
to self-service
Results: Business returns coming as a result of customer behavior
in terms of increased revenue, reduced cost, and overall return
on investment.
5
Create a Voice of the

Customer Architecture
At this stage, we endeavor to create a line of sight from the
broad operations of an enterprise to the customer strategy.
Typically, an Customer understanding should happen at several levels.
Typically, an organization has multiple disconnected customer
organization has multiple “listening posts” at each of these levels causing unnecessary cost
disconnected customer due to redundancy and an overload of information that restricts
coordinated action by the organization.
“listening posts”…
In addition to reducing redundancy and confusion, creating an
causing unnecessary integrated Voice of the Customer architecture comprising these
cost…and an overload levels allows the organization to use internal operating metrics
of information and transactional measures as leading indicators of relationship
health and business results. Because operating metrics and
transactional measures are regularly collected and reported daily
or even more frequently, an organization is able to test and
correct customers experiences far more rapidly than by waiting
for end business results – a lagging indicator of customer
relationship health.
Understanding the Competitive Environment

CEM must be seen in the context of the competitive customer experience strategy and tactics may be most
environment. Learning how your customers and your effectively developed and deployed. Furthermore, many
competitors’ customers perceive the performance of all executives respond favorably to the challenges of
key market players across experiences, attitudes, and customer experience improvement once the impetus of
intended behaviors provides a perspective in which competition is introduced.
Many executives
respond favorably to the
challenges of customer
experience improvement
once the impetus of
competition is introduced
6
Map the Customer Experience

We help our customers map the experience flow that functional expertise second. Organizations have to get
their customers have as they cut across the organization’s together to talk about this. We help them look at their
business silos. Generally, functions operate fairly well basic business value chain then we work with them to
within themselves to handle the slice of the customer map the key cross-functional processes in the value chain.
experience that is owned by them. However, experiences Then, by drawing on interviews and existing research we
are seldom neatly contained within a silo. identify expectations, moments of truth, and pain points
to understand how the experience can be differentiated
Indeed, the customer experience is the reason the
and improved
organization exists. It is why all functions have to work
together and do so by putting the customer first and then
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3. Action: Integrate the

customer experience with
business processes
Launch and Manage Customer
Experience Improvement Initiatives
Knowing about the customer and acting on this knowledge are
two separate issues. At this stage, organizations should build a
pipeline of distinctive brand building customer experience
improvement projects that support the CEM vision, roadmap
and business case. Once launched, the organization may manage
the initial and subsequent projects as a portfolio, regularly
scaling up successes and divesting projects that are not positively
impacting customers and business returns.
Connect the Voice of the Customer

into Strategic Planning
While managing a portfolio of customer experience projects is
key to CEM, connecting insights from customers into the regular
strategic planning processes across the organization facilitates Customer information
broad engagement with customer experience improvement.
Leading organizations create a multi-year “Customer Plan” as
has to be injected into
part of the overall strategic planning process. Planning templates the decision making
issued from the corporate center to various business units should process if it is to have
include explicit sections driving each area to define its customer
strategy and key tactics to be deployed. an impact
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Tie CEM into Budgeting

Customer information has to be injected into the decision
making process if it is to have an impact. Customer data may
not always win the day, but it should be given the chance to
compete on a level playing field. Sometimes the squeaky wheel
gets the grease, but at other times evidence-based decision-
making wins the day. In either scenario, the customer has to find
a way to be heard in the resource allocation decision making
discussion. Customer data must get linked into this process – if
budget allocations are the same year-over-year; the customer
experience will be too!
Our clients typically follow a simple process that is supported by
disciplined tools:
• First, they analyze customer relationship and operational
data to discover insights that will improve the customer
experience.
• Next, cross-functional teams discuss the data and insights
to develop ideas for taking action.
• Then, the ideas are converted to initiative plans that are
Taking action on evaluated against criteria such as: customer impact, ease of
implementation, and customer exposure.
improving daily transactions
• Finally, the results are plotted. Initiatives having the greatest
can be extremely valuable potential are funded and launched.
to the overall customer
experience when aggregated Provide Regular Operational
across customers and Information to Promote
over time Corrective Action
Strategic initiatives take time to change the customer experience,
even though customers interact with the business everyday. It is
not enough to wait. Taking action on improving daily transactions
can be extremely valuable to the overall customer experience
when aggregated across customers and over time.
Making the right operational decisions means that the customer
is actively represented in the local management processes. Data
has to be delivered efficiently to managers, ideally in real time
to their desktop. This should also result in regular reporting to
local management committees to get at the root cause of
recurring issues so they can be solved cross-functionally.
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4. Embedment: Connect the entire organization

into delivering the experience
Communicate (in All Directions)
The first key in communications is to brand the Once communication between managers is in place,
customer strategy internally. Let people know it is broad communications with employees must follow.
important and give them a vision to guide them each Introduction and regular updates on the progress of
day. Overall, this is a marketing effort just like any the CEM program and the business results coming
other. Branding the CEM program and using the same from customer experience improvements are standard
effective approaches applied to consumer marketing practices. Ensuring that employees can provide
will help capture the minds and hearts of employees. feedback up to managers about the CEM program
creates stronger internal engagement with the efforts.
A customer strategy is intuitive to employees; they
know that customers are important and they like to Communication about the CEM program should not
serve them. However, management has to be visibly remain internally focused. Leading companies talk to
engaged before employees will change behavior all constituents including shareholders, government,
significantly in terms of CEM. There are many set and partners about the importance and direction of
events on the management schedule, such as: board the customer experience. Lastly, letting consumers
meetings, annual planning events, offsite management and prospects know about specific improvements to
retreats, weekly operational meetings and progress the customer experience is critical to setting new
reports. The customer strategy has to find a priority expectations that will yield enhanced attitudes and
place on the agenda. The time that gets secured in customer behavior.
these events is an indicator of management’s
commitment to the CEM vision and roadmap.
Enable with training tools Align with Performance

Happy employees make for happy customers. Management and
Employees respond well to be given the training and
tools necessary to deliver extraordinary customer Compensation
experiences. However, the “sheep dip” approach to All of our clients ask about connecting customer
training usually doesn’t work. Determining segments measures to performance management and
of employees and diagnosing specific training needs compensation to build buy-in and commitment. This
is more cumbersome but far more effective. is a good principle, but it requires time to implement
Ascertaining the levels of skill and will of each and a short line of sight. Often in the early stages it is
segment will guide the types of training and tools best best to measure individual performance and pay for
deployed. Customer experience leaders typically “activity” while transitioning to pay for performance
emphasize tools that empower employees to “do the using the customer measures as a guide.
right thing” for customers.
Strengthening corporate cultural attributes relating to
customer experience management requires aligning
the hiring, promotion and career management
processes of the organization. This realignment must
take place from the senior executive level all the way
through the organization to front line employees.
Employees respond
well to being given
the training and tools
necessary to deliver
extraordinary customer
experiences
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In Summary
The global competitive economy is driving organizations towards
delivering on higher and higher customer expectations for
holistic branded experiences in both consumer and business
markets. Knowing why customers relate to you is a good thing.
Tapping into it is essential. There may not be a cookie cutter
answer for doing this, but successful organizations realize they
need evidence about their customers if they are going to create
the right experience. With this evidence they can execute on four
critical steps in implementing customer experience management:
• Align the senior executive team
• Understand the drivers of customer behavior
• Integrate the customer experience with business processes
• Connect the entire organization into delivering the experience
With these words of guidance, we wish you well as you implement
your own customer experience management program!
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Ipsos Loyalty
Ipsos Loyalty is the global leader in customer
experience, satisfaction and loyalty research with over
1,000 dedicated professionals located in over 40
countries around the world. Our creative solutions
build strong relationships which lead to better results
for our clients. This has made us the trusted advisor
to the world’s leading businesses on all matters
relating to measuring, modeling, and managing
customer and employee relationships.
For further information contact your local Ipsos office,
details at: www.ipsos.com/loyalty
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WhitePaper

Customer Experience Management

Easier said than done

• Engagement: Align the senior executive team

1. Engagement: Align the

Diagnose Business Strategy

Implement a Broad Governance

Document the CEM Vision, Roadmap

2. Insights: Understand the

From our research and experience we understand the cause and

Create a Voice of the

Understanding the Competitive Environment

Map the Customer Experience

3. Action: Integrate the

Connect the Voice of the Customer

Tie CEM into Budgeting

4. Embedment: Connect the entire organization

Enable with training tools Align with Performance

Copyright ©2017 Ipsos Loyalty. All rights reserved. 1 7 - 0 9 - 0 1

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