Mid-size companies across industries are increasingly focused on customer service, or more broadly the “customer experience,” to distinguish themselves from competitors and build customer loyalty. Traditionally, responsibility for measuring and improving customer experience has fallen to operational leaders. But at some of the most progressive mid-size companies, chief financial officers (CFO) have begun to step in and play an active role.
A recent article in the Harvard Business Review, “The Truth about Customer Experience,” describes customer experience as the cumulative impact of multiple touchpoints over time, which results in a real relationship feeling, or lack of it. “Organizations able to skillfully manage the entire experience reap enormous rewards: enhanced customer satisfaction, reduced churn, increased revenue and greater employee satisfaction.”
In other words, customer experience is a revenue issue that can influence the financial health of the company and thus deserves the attention of CFOs to ensure initiatives are appropriately funded. That doesn’t always mean writing big checks. While improving the customer experience is a true management imperative, there is generally too much talk in management circles of “delighting the customer” and “exceeding expectations.”
Research by the Customer Contact Council, a division of the Corporate Executive Board and featured in the Harvard Business Review, shows that exceeding expectations is expensive and, in fact, unnecessary since it may not correlate to increased customer loyalty. What customers care most about, and what does correlate strongly with loyalty, is the ease of doing business. CFOs engaged in the customer experience discussion can help ensure that investments in customer experience initiatives stay focused on this goal.
With this in mind, we have identified six critical elements for mid-size company CFOs to support effective customer experience management.
Visibility of Leadership
Senior executives—including the CEO and CFO—need to lead by example and demonstrate publicly and consistently through statements and actions that the customer experience is a priority for the company. This includes hiring a customer experience manager that reports directly to the CEO or the president to provide the necessary focus and support. This level of seniority is appropriate because the role of the customer experience manager cuts across different areas/functions of a business, including sales, marketing, operations, supply chain and customer service.
How senior leadership treats the issue of customer experience sets the tone for how seriously others in the company will take these initiatives.
Metrics that Matter
Remember the old adage, “If you can’t measure it, you can’t manage it.” Metrics might include on-time deliveries, win rates, employee satisfaction and turnover. Two key metrics to gauge customer experience are net promoter score (NPS) and customer effort score (CES).
NPS asks customers for feedback and divides them into three categories:
- Promoters are loyal enthusiasts who keep buying from the company and urge their friends to do the same;
- Passives are satisfied but unenthusiastic customers who can be easily wooed by the competition;
- Detractors are unhappy customers who feel trapped in a bad relationship.
The formula for NPS is the percentage of customers who are detractors, subtracted from the percentage of customers who are promoters. The highest NPS scores fall in the 50% to 80% range, but most companies are in the single digits.
Meanwhile, CES is a measure from a customer’s perspective and typically asks just one question, on a five point scale: “How much effort did you personally have to put forth to handle your request?” For example, CES data from 75,000 customers across a variety of industries reports that 94% of customers who indicated they had expended “low effort” said they would repurchase and 88% who had expended “high effort” would spread negative word of mouth.
While heavy service industries may be best served using CES, the selection of a customer experience metric is not a one-size-fits-all solution. New ways to measure loyalty will continue to develop, allowing companies to find metrics that allow them to identify root issues and opportunities.
Understand Your Customer
Customers want companies they choose to work with to have an understanding of their industry, their business and ultimately their specific needs. They are increasingly expecting companies to know them better and be proactive in delivering solutions. Companies that have access to the total customer view and can disseminate that clearly and concisely across the enterprise will differentiate themselves.
So beyond benchmark metrics such as NPS and CES, companies need to understand the complete picture of the customer, which includes gathering and analyzing data around customer profitability, customer touchpoints and customer needs. Those companies that truly have a complete understanding of all aspects of their customers—and can then use that data to invest wisely in the appropriate solutions—will outpace their competitors.
Design the Experience
Customer-journey mapping details the customer experience through a company’s process and is an excellent way to identify the potential pain points. This process provides an opportunity to step back and review the entire process and yields critical insights into customer wait time, requests for multiple pieces of information, and requests for the same information several times. Collectively, the management team can then identify and prioritize the projects to improve and engineer the customer experience.
Empower Employees
One of the most effective and efficient ways to respond to customer needs is to empower employees by creating a culture in which they are encouraged to solve customer needs or problems without having to seek additional levels of approval. Enabling the team to make decisions results in faster responses to the customer, plus it improves employee satisfaction and reduces turnover. Companies that are better at keeping seasoned employees are all the more likely to deliver a better customer experience.
Feedback Loop
Even if the customer data is robust and the employees empowered, the customer experience might not improve unless results are shared on an ongoing basis with senior management and front-line workers. Companies must learn what works and what doesn’t and have established policies and procedures to change course based on what it learns. Improving the customer experience is a journey, not a destination. That’s especially true in today’s business environment where technology advances can rapidly change customer expectations.
Getting Involved
CFOs of mid-size companies already have plenty of responsibilities, but customer experience management is an area deserving and in need of their attention given its strong link to revenue and financial health. A CFO can help the rest of the senior management team put the six critical elements for effective customer experience management in place, review the results and then make sure the company invests wisely in initiatives designed to make the customer interaction as easy as possible.
Chad Yoshinaka is customer experience leader at GE Capital, Corporate Finance.
