Customer Loyalty Research

A lot of companies segment their customer bases into various tiers based on revenue, and possibly a few other metrics.  The top-tier customers usually get some sort of preferential treatment whether that is additional support or even access to premier services.  This can cause companies, however, to miss out on huge opportunities with customers that have a lot of potential.

Low revenue customers can often be overlooked because companies are not factoring potential into what defines a top customer.  Lower revenue customers with a lot of potential can be accelerated into better performance by just getting some “love”.   Similarly, top revenue customers who have a high cost to serve may not be where a company wants to put their resources.

Make sure you consider more than just revenue in selecting where to allocate your customer resources.  You may be overlooking some great potential!

A few weeks ago I had a truly extraordinary customer experience. The Chris Tomlin Burning Lights Tour came to town. The concert was fabulous and we had a wonderful time!  But, that wasn’t the extraordinary part. My story is actually about the process of getting tickets.

Wanting to surprise my husband, I went online to the Ticketmaster website in search of tickets.

• They make everything easy to do yourself online. But that wasn’t the extraordinary part.
• Having a question, I called customer service and spoke with a representative who was able to help me and ensure everything was taken care of. But that wasn’t the extraordinary part.
• The tickets were sent electronically, just as promised. But that wasn’t the extraordinary part.
• Then I received something in the mail from ticketmaster. Here it is...the extraordinary part.

The customer service representative had sent a handwritten note thanking me for my patronage and saying to have fun at the concert. Wow! That note was above and beyond anything I expected. Because of that experience I have an extremely favorable impression of Ticketmaster and I want to tell everyone I know about it. That doesn’t just happen.

So, how does an extraordinary experience happen?  One place to start for your customer strategy is with creating a journey map of the customer experience. By investing time in understanding the path a customer takes, the people and functions they interact with along the way, and enablers and obstacles, a journey map will provide a complete picture of the customer experience. Insights from your customer feedback program will help you in this process. The next step is to identify the opportunities and changes needed to provide an extraordinary customer experience. 

What are you waiting for? According to Kerry Bodine at Forrester Research, one prediction for 2013 is that emotional insights will take center stage. “The idea that happy customers are more likely to remain loyal, try new products and services, and spread good news about their experiences, has started to catch on.” 

Kitty Radcliff
Vice President
 

Customer experience professionals are often called upon to share customer insights and recommendations. Consider these four must-haves for your next presentation:

1. Compelling & Relatable: Your audience is looking to learn something new; something they don't already know. Highlighting an unexpected insight will grab (and keep) the attention of your audience.
2. Concise & Relevant: The recommendations must be well thought out. Focus on the elements that tie to your customer retention & growth strategies and the activities that are important to the audience. Be on-point and specific with your recommendations.
3. Balanced:  Try to avoid using customer survey research terms and use terms your executives uses. This will help make the information relevant for the audience.
4. Actionable:   Frame your recommendations with the Call to Action(s) clearly stated, prioritized and obtainable.

Julie is a strategic account manager. She manages a number of complex business accounts and each one of them involves multiple relationships that all are important to maintain. She is focused on the performance of her accounts and her activity is aimed at driving growth within each of those accounts. It’s personal too – her income is directly connected to the performance of her customers. She is busy, aggressive, and determined.

YOU are in charge of customer experience initiatives. It's your job to provide Julie and other strategic account managers with customer intelligence to help them retain and grow their accounts. While Julie cares about her customers, she doesn't really care much about the reports and information you provide. Here are five reasons why Julie isn't very customer-focused and why it's your fault:

• It's a hassle. Instead of viewing your information as helpful, Julie sees it as more work. 
• It's too hard to access. It's a pain to log into another system, so customer intelligence is often overlooked.
• It's too complex. You provide great information, but it's too much. She doesn't have time to wade through it all.
• It's not relevant. Too much of the information doesn't really relate directly to her work with her accounts.
• It's not actionable. You haven't provided any training, so there is no clear instruction on how to put it to use.

Simple, fast, and relevant – those are the keys to driving results through strategic account managers like Julie. She already has more tools to access, more reports to file, and more company emails to read than she desires. Giving her one more thing to do, will not help. To get Julie on-board the customer intelligence you provide must help her retain and grow her accounts, which of course will help her be more successful.

Patrick Gibbons
Principal/SVP
Walker

An emerging trend in the study of relationships is how dependent the parties are on one another for success. When there is a good balance of power, there is a greater likelihood of success in the relationship. However, when one party holds the upper hand, the door opens for issues related to trust, conflict resolution, and unfairness to creep into the relationship.

Dependency has been seen to take a couple of forms in channel relationships. The first is a cost-based dependency. For the partner, this comprises the margins made on a supplier’s products, the costs for becoming and maintaining the level of partnership, as well as any potential switching costs to move business to another provider. The higher these are, the more that power favors the supplier, with the supplier being more dependent on the provider than vice versa.

The second type of dependency is more benefits based. Again, in the partner’s eyes, this would be types of things like brand awareness, promotional consideration, innovation, and the ability to add value to existing products provided by a supplier. This could also be exclusivity to sell certain products, early access to product announcements, trainings, and networking opportunities/lead generation, among other things. The higher these factors are again raises the level of dependency the partner has on the provider.

To mitigate this dependency, partners also have some tools to rely upon. First, they can develop a services-orientation approach, to help to implement and support products from a provider, often times doing so in competition with the provider (with lower overhead costs associated with it).  Secondly, they can diversify their own portfolio, maintaining a relatively level of status with several providers to be able to offer many options to the end consumer, focusing more on breadth and flexibility, rather than low cost and depth with one provider.

When power is evenly distributed, there is much greater likelihood that the relationship will be more collaborative, with flexibility demonstrated by both parties to achieve a mutually successful outcome, and less likelihood that contracts provide the foundation and boundaries for the relationship, which can cause strife between parties. At the end of the day, reviewing relationships in light of the distribution of power may be essential to determining the best pathway to growth, increased market share, and enhanced profitability, for both the partner and the supplier.

Brad Harmon

VP, Consulting Services

Walker Information

Here are three common reasons why customer experience initiatives fail:

1. Companies don’t start with the end in mind – Journey maps can be an effective planning tool. With a solid understanding of customer moments of truth and internal stakeholders engaged, customer experience professionals can create a plan that is focused on collecting the right information from the right customers.  
2. No action, no impact – Taking action implies change, which often encounters resistance. Be prepared for this resistance with executive support, a network of advocates, communication plans that reach a broad audience, and engagement workshops to ensure people understand their role.
3. Documented success – Once action is underway it is easy to change priorities and move on to the next topic. In doing so, companies lose sight of the initiatives’ outcomes and don’t document success. Avoid this pitfall by creating regular status updates and a dashboard that will demonstrate the business outcomes that are being achieved. 

When designing a voice of the customer (VoC) program, one common desire is to have some perspective of how your performance stacks up. Here are three options:

1. Add benchmark questions to your survey: Ask the customer to evaluate a benchmark company – this could be direct competitor or a "best supplier."
2. Benchmark against yourself: Companies can answer the “good or bad” question by looking at key segments within their business and creating a "best-in-class" score.
3. Look at scores over time: As a customer survey research program matures, it is natural to look at changes over time – evaluate your performance based on how your own scores are improving.

A key to creating a customer-focused organization is about the people. Without them, customer retention strategies will not be successful.  It takes people to:

• Take the initiative to create a better organization
• Ask customers for their constructive feedback
• Listen objectively
• Be an advocate for change
• Measure and monitor progress
• Share best practices
• Reward success
• Learn from failure
• Be relentless

Are channel partners interested just in incentives, profits, and compensation for their efforts with customers? The direct compensation VARs receive in return for their investment in a provider relationship is no doubt important, as it contributes to the viability of a partner today and in the future, but will partners recommend a product purely based on the incentives associated with it?

Across several partner-focused studies conducted by Walker that look at aspects driving preference of one provider over another, the Product Quality has much more influence than margins, rebates, and other incentives. This suggests that providing Products that VARs can count on, contribute to fewer implementation problems, require less ongoing support, and are interoperable across platforms are most effective in guiding partner recommendations.

VARs stake their reputation on the trust being placed in them by their customers, and regardless of the compensation associated with a particular provider or product line, Quality wins out most of the time, over other aspects like being Easy to Work With, Sales Enablement, or even Profitability.

Interestingly, while many customer feedback efforts allot significant focus on gathering product-specific feedback, most partner feedback initiatives only scratch the surface in identifying perceptions of the partners on Product Quality. Much more attention is spent on feedback related to Onboarding, Enablement, Training, and new or evolving Marketing Programs and Incentives.

Given the strong influence that partners play in their customers’ decision making process, more time should be spent understanding the concerns VARs have with individual products, and where their biggest successes are found. This information can be combined with customer feedback to identify the biggest areas of potential growth that will appeal to both partners and customers.

In addition, if partner perceptions are preventing new products from reaching large groups of customers, identifying and removing those barriers, with the help of product groups and engineers, will allow for additional customer feedback opportunities in the future.

Are you getting the right feedback about the quality of your products? Or, are you spending most of your time reacting and responding to feedback based on the incentives you provide to VARs?

A few years ago, I wrote a blog about the “Groupon Phenomenon”.  At the time, Groupon was booming.  Everyone was talking about it.  It’s hard to imagine that today the company seems to be barely hanging on, or at least not enjoying the same success they were in 2010.

So, what happened?  At the end of February, CEO Andrew Mason was let go from the company and offered some parting thoughts to employees, which included two things I wanted to call out specifically:

1. Have the courage to start with the customer.
 

2. The moments he regretted the most where the ones where he let a lack of data override his intuition about what is best for the customer.

Let’s start with item #1.  Have the courage to start with the customer.

Easier said than done, particularly in companies where product is king.  However, it is an important point that we as customer advocates need to consistently promote.  We need to have the courage to stand up within our organizations and make sure that customers have a voice and a vote on every agenda.  It’s ok for organizations to have a strong focus on products and operations, but there has to be a balance of customer focus as well.  Otherwise, it could be a very slippery slope.

Item #2.  Letting a lack of data override intuition about what is best for the customer.

We all fall into “prove it to me” mode, but we also need to trust our intuition.  We know our businesses, and we do know ultimately what customers want if we stay in tune to their needs.  Our decisions need to be based not only on strong data points, but ultimately also by using our gut.  Know what customers want and act upon it.  Don’t let the red tape get in the way.

I love a few things about Andrew Mason’s departure letter, including the humor.  However, what I most admire is his honesty to admit that he did fall short on being focused on the customer and was urging his company to not go down that path again.  It was an inspiring turning point to hopefully what will be a new start for Groupon.  We’ll see.

Katie Kiernan
Vice President, Consulting Services

Share one of these topics at your next company meeting, in a newsletter, or intranet site:

• A story of how someone turned around a customer relationship
• A new product idea that came from customer input
• The financial impact of a change that was prompted by a customer
• The top five things customers are saying on Twitter or Facebook
• The top five challenges customers are mentioning most often
• A product improvement based on customer input
• Share what is most important to customers
• Important customer initiatives
• The top things customers are proud of
• The top things customers want the company to work on

The Won/Lost Proposal Assessment is a transaction study focused on collecting objective and unfiltered feedback on individual sales opportunities. Companies use Won/Lost Assessments to:

1. Increase the win hit rate and reduce the time and expense of sales resources
2. Gain competitive insight related to products, services, and the selling process
3. Target and qualify high-potential customers
4. Debrief on individual sales opportunities (particularly for larger sales teams)
5. Monitor perceptions of customers throughout the lifecycle
6. Obtain relevant and real-time intelligence related to their sales process

How do you know whether or not making acquisitions is a smart decision? Here are three success factors to consider:

• Know the risk of the customer base you are buying. The due diligence process is critical. This includes predicting the future loyalty and growth of the customer base, in addition to understanding historical trends.
• Find the hot-spots. An acquirer doesn’t have to know every single area that needs improvement within the target company, but having indicators of weaknesses or hot-spots will give a clear indication of whether or not that company is a good fit.
• Use customer input in determining the integration strategy. Voice of the Customer feedback can help the acquirer to understand the strengths and weaknesses of the target firm; comparing this to a similar analysis of the acquiring company can identify leverage points that will increase the probability that the acquisition will be accretive in an accelerated fashion.

We have coined a phrase around our company:

Be Customer Intelligent

For years we have studied customer relationships and now, probably more than ever, customer continue to change. They are more demanding and they expect you to know them and deliver products and services in a manner tailored to their wants and needs. More options are available. Switching is easier. Companies you never saw as competitors may now be your biggest threat. 

Companies must rise to the challenge. They must know each of their customer's next moves. They will need to be sophisticated at monitoring what their customers are saying and doing, and they must have a big appetite for using customer insights to make better decisions. 

So what does it mean to be customer intelligent?

My colleagues and I came up with a list of ten things. In fact, we even set up a website and printed  cool posters of them! You can order free copies here. 

It means ...

You can never know too much about your customers. 

You know your customers' business objectives -- you are informed.

You listen intently to your customers in many different ways.

Big data about your customers is a big deal. 

You know your customers well enough to predict their next move.

You take action on customer insights -- right now!

Your company is completely aligned with customer needs. 

You understand your customers through the supply chain. 

You use insights to personalize your customers' experiences. 

Your success depends on the success of your customers. 

Patrick Gibbons
Principal/SVP
Walker

This blog series focuses on some trends and themes that I predict will have a great impact on the discipline of customer experience in 2013. In my last blog, I forecasted that we will continue to see great volatility in customer sentiment in 2013; this time, I want to focus my attention on a topic that is getting immense attention – big data.

“Big data” has become the buzz word du jour; like many buzz words, there seem to be different definitions of what this means, which results in different expectations on its impact. For purposes of this discussion, I would posit that “big data” relates to the collection and synchronization of disparate data sources with the intent of having a more holistic view of a system and its component parts. When looked at from this perspective, big data does not seem like such a radically new notion – after all, companies have always had customer lists, financial data, employee data, etc. The key point is on the notion of synchronization – in the past, most of these data sources were not able to talk to one another.

Big data reflects the realization of the promises of CRM – that is, firms can now not only look across a wide variety of data that is organized and linked in an efficient (if not complex) manner, but they can also begin to mine this data to reveal the underlying relationships that may not be evident to the casual observer. While I would offer that the full realization of CRM’s promise is yet to be achieved, we have certainly made great strides over the last decade.

How does this relate to the work of customer strategists? I would offer a few observations:

• As more behavioral data become available, we have the ability to identify meaningful customer segments; this will be especially valuable in identifying cross-sell and upsell opportunities.
• Linking survey-based data with behavioral data will become more the norm, not the exception. More emphasis will be placed on linking customer listening exercises to hard financial outcomes.
• Having a mechanism and process by which we can understand the inter-relationships of various data provides greater opportunities – and more imperative – to take a more action-oriented analytic approach. Stated differently – analyses that do not focus on action (and business outcomes) will have little value in organizations.
• The complexity of the data systems will require that customer strategists be skilled (or at least conversant) in the theory of data structures.
• As the volume of transactional data grows, the opportunity (and demand) for sophisticated longitudinal analysis and/or complex predictive analytics will increase. Customer strategists will need to be not only more data-savvy, but also will need to be more skilled in the use of complex predictive analytics.

Big data represents a great opportunity for the customer experience industry; however, it will require customer experience professionals to evolve. Here are my recommendations for staying ahead of the curve:

Continue to learn – Being conversant in data structures and analytics are a must. Even more important is to be more comfortable and capable in dealing with financial concepts and models in order to link customer experience work back to business outcomes.

Build new relationships – Learning new skills does not necessarily mean going back to school; expanding your business network beyond the boundaries of customer experience to include IT and financial resources will provide go-to resources who can aid in your ongoing learning.

Be proactive – Look for ways to embrace big data before you are asked; doing so shows initiative, and will speak to your ability to think strategically.

How is big data impacting your organization? What advice would you offer to customer strategists? As always, I welcome your comments.

Mark A. Ratekin
Senior Vice President, Consulting Services

Social media has emerged as a tool customers use to gather insights about products, services, and brands. However, social sources by themselves are not enough and can even be misleading. By relying solely on social media chatter, companies can end up focusing on the loudest voice instead of the areas that truly influence buying behaviors. By combining social media with a more structured and representative customer intelligence from a Voice of the Customer (VoC) program, companies get the benefit of immediate response from social channels and reliable prioritization of the drivers of customer behaviors.

Have you considered the importance of having an extended team focused on the customer experience? It takes way more people than simply the Customer Strategy owner or even the Customer Experience Team to fully embed a commitment to customers throughout all parts of your organization. 

No one is that good that they can do it themselves. We need a team working together to ensure customer feedback is understood and acted on.  At Walker, we believe having the right team is an essential element of a world class customer listening program. 

Here are a few tips: 

• The steering team should be represented by all cross-functional and front line groups.
• All team members should be proactively engaged in customer-related activities.
• Your highest level executives should see customer focused initiatives as part of their job and be actively involved in steering team activities.

See this blog for more information about the characteristics of effective teams. 

But, it goes beyond the team. A company I work with understands the importance of communicating with others throughout the organization. They recognize that acting on customer feedback is critical in conveying their commitment to customers. Everyone in the organization needs to be aware of the customer initiative; they need to understand it, believe it, and act on it. As a result, customer insights are being shared at their “All Hands Meeting” because they realize the importance of having all employees involved.

Do you have all hands on deck to act on customer insights from your VoC initiative? 

Kitty Radcliff
Vice President, Consulting Services

Journey mapping is a relatively recent term – one that’s generating a lot of buzz in the market.  This activity, in all its previous names, is something that Walker has conducted for companies for decades.  Journey Mapping engages both customers and cross-fuctional internal teams in exercises to illustrate the customer interaction points, critical moments of truth, unique strengths, and common challenges present in relationships between companies and their customers.  Customer relationships are complex, particularly in business-to-business – Walker’s “sweet spot” – and this process helps to make sense of these complicated relationships.  At its core, it harnesses three types of critical intelligence:  company/operational, customer, and competitive/marketplace.

The primary benefits to the companies we serve are:

• to advise the design (or redesign) of a customer listening strategy, including current or new operating metrics related to customer experience,
• to identify, understand, and align other critical (i.e. non-survey) sources of customer input,
• to engage audiences to create alignment on the areas that are most important to customers,
• to optimize resources in launching new initiatives or allocating towards existing initiatives,
• to define both current and ideal customer relationship elements,
• to create a ongoing living training tool to orient and educate employees and customers on the nature of their mutual relationships

In each engagement, Walker and the client collaborate in the process that includes defining customer strategy goals, identifying initial hypotheses around customer interactions, conducting cross-functional customer-facing workshops or role shadowing (complemented with select external customer interviews), identifying internal key metrics (KPI’s) to align with external perspectives, creating a visual depiction of the key relational elements, and developing a recommended customer experience roadmap to pursue.

Please share your own thoughts or experiences related to Journey Mapping and its benefits.

Brad Linville

Walker Information

The last business book I was reading took a familiar path when it came to the discussion of customer experience. They raved about Zappos, Southwest Airlines, and Apple. Yawn.

Don't get me wrong - they are great companies to hold up as role models. It's just that they seem to be cited all the time. Zappos' great service, Southwest Airlines' no-nonsense approach, and Apple's awesome products. I get it and I'm impressed. I'm just tired of hearing about it. 

So what do I find interesting? B-to-B examples!

B-to-B seems to go under the radar, but I love the way the way they are more down to earth. They are not focused on a slick brand or a rock star CEO. Instead, B-to-B examples are often more practical and bottom-line focused. My favorites include:

• An account manager that salvaged a customer account when he he read their feedback and jumped into action.
• A company that cut costs by diagnosing a process improvement from a stream of customer comments.
• A channel partner that boosted sales by following up with customers that shared their interest in a new solution.

Without a doubt, B-to-B CX is different and it's time we focus more on its unique characteristics. Toward that end my organization is even planning a customer experience summit specifically for B-to-B companies. 

So please - make my day! Share your stories of B-to-B customer experience success. 

Patrick Gibbons
Principal/SVP
Walker

Through our employee loyalty program here at Walker this year, a priority that was identified was an increased focus on mentoring.  As such, we have charged an internal team to re-energize our mentoring program.  There are three primary objectives for this:

1. Stay Competitive: increased competition drives the need for continuous learning, and talent development can yield competitive differentiation in a crowded market.
2. Stay Connected: increasing remote/virtual communications, social media, etc. are decreasing human connections and relationships, and mentoring offers proven ways to share our knowledge, experiences, and best practices (often in face-to-face, personal methods).
3. Stay Ahead: mentoring is shown to improve leadership elements such as retention rates, employee morale, individual self-confidence, trust, organizational commitment, job satisfaction, accelerated leadership development, reduced stress, stronger/more cohesive teams, and heightened learning.

A 2011 Sun Microsystems survey (a study conducted over 5 years) cited additional statistics to support the advantages of mentoring:

• Mentors are promoted 6x faster than those not in a program of this type
• Mentees are promoted 5x faster than those not in a program of this type
• Retention rates for both mentees (72%) and mentors (69%) are significantly higher than those who did not participate in mentoring (49%)

In addition, our own exit interviews and employee survey results show people want to stay when they are invested in relationships within the company.  With its impact on employee satisfaction and loyalty, mentoring contributes to the Service Profit Chain linking internal development investments to business success:

As the diagram depicts, mentoring can be a contributor to higher Employee Loyalty, which translates to better customer service and customer experiences, which influence stronger Customer Loyalty, which aligns with and impacts a company’s improved financial performance leading to success of the business.

Bottom line, not only is the decision to invest in mentoring reap internal benefits (such as retention, morale, trust, stronger teams, and deeper talent), but it also is strongly related to external advantages that give a company a competitive edge and a leadership advantage.

Please share your own experiences where being mentored or mentoring someone else led to a positive outcome for you in your career.

Brad Linville,

Walker Information