Digging Deeper Into Customer Experience Management
Today you’ll be hearing from a guest blogger who I had the pleasure of introducing a few months ago. John Quaglietta has extensive hands-on learning and teaching in the realm of Customer Experience Management (CEM). He has over 20 years of experience as an accomplished leader, customer service & contact center consultant, and as a customer experience visionary. He has worked with the world’s largest organizations in solving some of the most challenging and thought provoking business challenges around customer-centricity, and the effect customer and employee engaged organizations have on both top and bottom line financial success.
I was fortunate enough to attend an IMT (Instituto Mexico de Teleservices) event in Mexico City. The event was focused on improving customer engagement and experience, and the people, technology, and processes that connect to make it all possible. I was impressed with both the presentations at the event, and the discussions around the topic that took place in the hallways. Everyone was interested and excited about the possibilities.
I was asked to present on best practices & trends in Customer Experience Management (CEM) for the event. Instead of just compiling the usual industry data on CEM, I decided to share what I have been working on the past few years with the audience in Mexico City. I was interested in getting feedback and testing some of my thoughts, and I will say the feedback was very positive.
The last few years have been interesting for me. I have spent time meeting with large, global organizations focused on improving their customers’ experiences. I have listened to their strategies and approaches, pouring over the various definitions of CEM put forth by analysts and others in the industry I have also spent time inspecting the role of various organizations in the CEM discussion(like the contact center for example), and finally, digging deeper into the economics behind what CEM is all about. I have come to a few conclusions that formed the basis for my presentation, and truthfully, a new way of thinking about what this topic is all about. I will blog about each of these individually in the coming weeks. For now, I just want to share with you the construct.
- CEM Definition; Everywhere you look, the definition of CEM is all from the customer’s point of view. And rightfully so, after all it is called, “Customer Experience Management”. The various definitions include pieces about the sum of all interactions and experiences a customer has with an organization as they move through the customer journey. I agree. But, what about the organization’s point of view? Why should an organization care about CEM, and how should they think about it? After all, there are 2 sides to this story. I have put forth a supplemental definition for CEM, looking at it from the organization’s point of view. It actually compliments existing definitions which tend to consider it from the customer’s perspective. CEM is the discipline of managing and treating customer relationships as assets, with the goal of moving satisfied customers to loyal customers, and loyal customers to advocates of your brand. In doing so, CEM is ultimately about improving the lifetime value of a single customer or segment of customers, and increasing the duration of the customer relationship as it affects a customer’s lifetime value.
- What is CEM all about for organizations? Why should they invest?; It’s actually very simple. As mentioned above, CEM is all about improving the profitability of a customer or segment of customers over the duration of their relationship with an organization. There are 2 dimensions here that matter most. Profitability & duration of relationship. Profitability can be measured in a single year and over the lifetime of a customer using customer lifetime value (CLV). Duration can be measured using retention. As the dimensions increase, a very dramatic and positive effect to an organization’s top line can be seen. There are 4 revenue & cost dimensions that affect customer profitability. Again, more on this in a subsequent blog, and we’ll discuss how to move these levers to positively impact customer profitability & lifetime value using the contact center for example.
- A model to manage CEM economics; Given my definition above, and thinking about terms like “discipline” and “manage”, it would seem logical that a framework must be developed to insure organizations stay on the right path and are able to link CEM investment back to top line growth. Over the past 3 years, I have compiled such a model. I call it the CLV framework. This model links technical KPI’s (% application availability as an example), operational KPI’s (Average Hold Time, First Call Resolution, Transfers, as examples) and strategic KPI’s (NPS, Retention Rate as examples) to CLV. The model illustrates how making subtle improvements in technical, operational and strategic KPI’s affect customer profitability. It also provides a means for linking CEM investment to CLV improvement. The model is valuable for many reasons. Probably the most understated value is that it provides people in the organization an understanding of how what they do every day, the things they are measured on, affect customer profitability & growth. It brings everyone along on the CEM journey. Again, we’ll cover this in a lot more detail in an upcoming blog.
- The role of the Contact Center; This may upset some people in the contact center industry, but it is my point of view. The contact center is NOT about delivering service or saving a company’s money. At least not when looked at through the lens of CEM. The contact center’s role in CEM is more about “growing & protecting assets”, those assets being customers. In this context, service delivery is a means to an end. Contact centers are thus in the business of asset management, not service management. Furthermore, all of the focus on efficiency & reducing cost is good, but only if it is in the pursuit of efficiently “growing & protecting assets” while improving the experience for customers. If you believe this like I do, then the way contact centers operate and are measured requires further inspection. Stay tuned for more on this point as well.
I’m excited about the future of Customer Experience Management and the role the contact center should play in this revolution. We’ll dive into more depth in upcoming blogs around each of these 4 topics in the CEM construct.