Following up on yesterday's look at customer experience from the internal perspective -- employee engagement, today we look at the second half of the equation, providing better experiences for end-users and customers.

Thinking about Customer Experience Management (CXM) from an end customer perspective, it’s becoming clear that the world has moved from classic Customer Relationship Management (CRM) techniques and is now focused on more disruptive ways to manage and engage clients.

There is a clear linkage emerging with how customer experiences are driving financial benefits. Companies that realize this and transform their customer experiences will be celebrated as millennial enterprises; those that fail will become extinct and most likely go out of business.

Change Drivers

So, why now? What is driving this CXM transformation?

Social and Mobile

First and foremost, social media and mobility have gone completely mainstream. The accelerated adoption and growth of several social platforms has captured the attention of many businesses. It has forced them to critically examine the opportunities and threats that this new phenomenon presents.

The mobile consumer has introduced a whole new set of opportunities around location-based services and real time interactions. The ability to engage customers through these social and mobile channels has become a strategic priority for many companies. These technologies are forming the foundation of many modern customer experience platforms.

Customer Retention

Second, the recession has reminded many companies that one of the best routes to achieving strong financial performance in a tough economic environment is to keep existing customers happy. It is ten times more costly to acquire a new customer than to retain one. The correlation between customer experience and loyalty remains very strong.

Improved Measurements

Lastly, organizations are now able to better measure and quantify the benefits of CXM programs. Widespread adoption of customer satisfaction and loyalty metrics, such as the popular Net Promoter System (NPS) now give organizations a baseline of how loyal customers are and how likely they are to be brand advocates that proactively recommend products and services.

Companies are also getting better at monetizing the revenue benefit that results from customer experience improvements. Some companies are reporting that this can be worth millions in annual revenue.

What Good Customer Experience Looks Like

So what does a good customer experience look and feel like in the millennial era? Leaders in this area are companies like Apple, Disney, Starbucks and Zappos to name a few.

No one would question what Apple has done in the way of creating a far superior customer experience with entirely new markets around “iAnything.” The loyalty to the brand is incredible despite the fact that there are often better technology choices available to consumers. If there are any doubters, just look at the demand the iPhone 5 (a fifth generation product!) has generated.

Disney is probably the best example of outstanding customer service where every customer interaction is greeted with a pleasant smile, informative exchange and fast resolution. The ratio of service professionals to customers makes you feel like you have one on one relationship. Have you ever noticed the attention to detail, the cleanliness of their theme parks, efficiencies of their transportation, availability of information when needed and use of technology to improve wait times and overall experience at their facilities? Now you will.

Starbucks is a great example of redefining a popular experience (coffee shop) to become the leader in coffee experience. The company created a brand around a total experience by fusing a comfortable, inviting location with music, technology (wireless) and innovative coffee products.

Zappos is a great example of a millennial company formed around the online customer. Its vast catalog of products offers unprecedented choice, their platform makes ordering very intuitive and they provide fast shipping and free return shipping. This has redefined the buying experience for shoes online. One interaction with any of their customer service representatives will clearly distinguish their service levels compared to other traditional retailers.

What This Means for the Rest

All of this means that the expectations have increased as certain companies have set the standard for outstanding customer experience. And, more and more companies are moving in that direction. The gap for many companies is widening, yet they are not moving fast enough to transform. The question is how much time is left before they become extinct and consumers flock to more modern equivalents which were built in the millennial age?

In addition to increasing customer expectations, customers now have more power and choice than ever before. Social has amplified the voice and power of the end customer. The “social-sphere” is littered with the bad experiences from companies that have failed to transform and change the speed and methods in which they service and interact with customers. And, people are listening.

According to a recent Forrester survey, 73 percent of millennial consumers listen to their friends and family for product and service recommendations. And, 62 percent rely on social ratings, opinions and reviews to decide which product or service to choose. What they are relying on much less is company website information, marketing collateral, print ads, TV and direct mail advertising.

Companies that are still focusing their attention in the wrong areas are not engaging customers and are certainly not improving customer experience.

Survey Says

So where are companies at today? When we asked about the key drivers behind an effective CXM program, we got a fairly well distributed set of responses across the typical areas of focus.

Improving customer loyalty and retention and better understanding customer behavior was at the top of the list with 44 percent of folks we asked, ranking this as most critical. Second, 37 percent were looking to provide competitive differentiation and brand awareness. And finally, 33 percent highlighted driving growth, improving up-sell and cross-sell opportunities and improving response times to service requests as most critical.

It became very clear that millennial technologies are critical to building an effective CXM platform. When asked what are the key components required, 56 percent highlighted that customer and content analytics are critical to predicting customer behavior. The ability to process the volumes and variety of customer data available is very much a big data problem and core to any CXM platform.

Next, 48 percent felt having mobile web and mobile applications available to end customers was critical for engagement and long term loyalty. And, 44 percent highlighted that having a social business platform in place was paramount in managing modern end customer interactions and service moving forward.

In addition to getting a clear understanding of what was needed in a CXM platform, we also wanted to understand what challenges companies are facing in rolling these programs into production. The number one challenge that 48 percent of folks we talked to highlighted was disparate business units or functions not aligning to support customer experience.

Closely related was that 31 percent felt they did not have a customer centric culture and 34 percent felt they did not have a proper corporate strategy around CXM. It was interesting to see that internal issues such as strategy, structure and culture are still the main reasons companies are struggling to improve the way they serve their end customers.

Defining measurable performance indicators (KPIs) still seems to be elusive for many organizations with 41 percent struggling to define hard ROI for CEM. Finally, 38 percent highlighted that limitations in their current technology infrastructure is limiting the functionality they can roll out to the end customer.

Moving Forward

So how do you tie this all together? There are a common set of principles that you should consider when embarking on your journey to transform customer and employee experience. If you create strong linkages between these you will undoubtedly create a lasting, customer-centric organization.

Here’s a top ten list to get you started in improving the customer experience:

  1. Location matters. Be conscious of where I (as an employee or end-user) am. Understand that I am now a mobile worker and consumer.
  2. Relevancy is king. Engage me in the context of where I am and what I am doing. Offer me what I need when I need it.
  3. Be social. Engage customers and employees in real time on social channels.
  4. Work is not a destination. Work is what I do, not where I go.
  5. Customer centric culture. Create a customer culture by first creating an employee culture. Work transparently, non-hierarchically, with no hidden agendas. Break down barriers to success.
  6. Humanize your brand. Ditch the IVR. It’s all about the human experience and interaction.
  7. Loyalty is skin deep. Consumers are only as loyal as their last transaction and experience. Employees won’t stay around if your polices remain antiquated.
  8. Experience is emotional. Play on my emotions. Create empathy. Video is more engaging than the written word.
  9. Measure. It is important that you understand the benefits: NPS for customers and internal delight for employees.
  10. Innovate. If you don’t, your competition will. Engage your company, customers and extended ecosystem to accelerate innovation.

Editor's Note: To read Frank's thoughts on the internal employee experience Improve Employee Engagement to Maintain Loyal Customers