Among retailers, customer experience is one of the most elusive terms you can imagine (second only to omnichannel, perhaps).
Discussions abound in professional circles, but only few share a decent practical understanding of customer experience management. Still, poor customer experience is estimated to cost US retail brands up to 25 percent of their potential revenue, according to research by Verde Group and The Wharton School of Business. Their UK counterparts, meanwhile, lose £234 billion a year, according to a study released in March by Censuswide and Magnetic North to competitors who can lure shoppers with a better digital service.
Despite common fears that permeate the industry, customer experience is manageable beyond idle talks, and it takes no other technical mechanisms but those lying behind everyone’s familiar CRM.
Not Why: It's How
We could talk at length about the perks of sustaining excellent customer experience, but by 2016 the question has shifted: it’s no longer why make an effort, it’s how to make it.
So let's stop talking about delivering customer experience per se, and move the conversation away from installing uber-technological equipment at your retail outlets, designing a slick online store and training your call center operators to deliver truly impeccable service.
Let's talk about revealing your rights and wrongs as your customer sees them — and taking actions.
As they say, customer experience starts with employee experience. And it’s not only about making your staff happy but enthusing them about the same cause.
This includes pan-organizational advocacy for a better service at every level (vendor relationships, inventory management, in-store experience, loyalty schemes, call center, etc.), imposed top-down where necessary and complemented with the corporate culture.
Once again, your entire company needs to be involved, across physical and digital platforms. If you need a motivation for such heavy alignment, think of the uniform, frictionless customer experience that will result from your employees’ consistently high awareness of the same goals.
At the technical level, this will translate into using the same silo with complete customer data sourced from and used by multiple departments as a single point of reference for your CXM team.
CXM in Retail: The Workflow
To implement CXM at both tactical and technical levels, you need to bring together your long-term customer experience strategy, business processes, CXM team and technology to enable the workflow that is customer experience management when adopted in its entirety.
Each of the following stages has its place in a CRM system if customized properly.
Voice of the customer — revealing issues
Ongoing voice of the customer programs should serve as information hubs that provide insights into your customers’ true level of satisfaction and become catalysts of change at the same time. Such programs are to collect and integrate into the CRM customer data from all available sources: e-store analytics, customer complaints/feedback (via web forms, live chat, call center, etc.), surveys, online reviews and social sentiment tracking.
Measurement and analysis — finding sources of trouble
As your customer data is pulled together in comprehensive metrics and put into the CRM for further assessment and analysis, you can analyze your mistakes and stop them. This is where business intelligence comes into play to help you statistically identify loopholes and drill down to their root causes at the departmental level. For example, the growing number of online store visitors who abandon at the checkout may signal an issue with their digital experience.
Immediate corrections — sticking patches
Bad scores scream for actions. Whether your customer can’t make head or tail of your shopping app or receives a broken product in the mail, you should always have a workable scenario for correcting mishaps immediately as they happen, with each action linked to the employee(s) in relevant roles and the technical possibility to track progress. Each time you have to say "sorry," make sure you know who will say it, to whom, when and via what channel. Your CRM is to accommodate such corrective workflows and organize your team’s efforts along your corporate policies.
Long-term influence — driving the sea change
Temporary patches on the sore points of your service won’t bring constructive improvements in the long run. But seeing repetitive patterns in your mistakes, you can identify the necessary change and come up with a set of preventive measures at the level of particular outlets, departments or the entire company.
For example, repeatedly missing one-day delivery deadlines for an online retailer would mean considering to reshuffle its logistic partners or open new warehouse facilities in the proximity of the problematic geographic area. Here, the CRM can serve as a watchdog to keep your attention on alarming issues until you find the way to resolve them, supporting this resolution with real facts.
Re-evaluation – scoring the wins
Once the required actions are taken, you will want to know if they were effective. This necessary round of re-evaluation helps to compare the new customer satisfaction indicators against the old ones. This is the stage where you can calculate the ROI from your CXM activities supported with historical, factual data. Watch out for the positive dynamics in such particular metrics as customer acquisition costs, customer retention, repeat purchases and social engagement.
Putting Relationship Back in CRM
It may come as a surprise, but you don’t need any other tool except the old good CRM system to manage customer experience.
There are no such things as traditional and revamped CRM. It’s down to how you use its extensive inherent capabilities as, contrary to the popular belief, CRMs were designed not for sales force automation only (though they were increasingly used for this sole purpose).
Apart from its data collection function, CRM has the capacity to follow your customers’ journeys post-sale, which means you can re-engage them anytime by defining a particular route of actions based on their interaction history and first-hand feedback.
This is the recipe for customer retention and loyalty, and the good news is, this model perfectly falls into studying and improving your customers’ satisfaction and overall experience.
Big Splash or Drop-by-Drop?
A CRM system can be compared to a living organism that evolves gradually as it matures. In our CXM practice for retail, we’ve seen companies both going for large-scale CRM customizations and making small but consistent steps on the way to Big Change.
With CRM at the core of your customer experience governance, it can be whatever commitment you are ready for.
Starting small is good for incremental changes that can be driven by your top and middle management. Knowing what’s been wrong in the past from their CRM dashboard, your marketing managers, call center managers, store managers, etc. can make their personal effort.
To start making advances, lay out your CXM strategy first, then align your CRM with (at least) your marketing automation tools and loyalty program management system and enable adjustable reporting dashboards. Yet, this approach can mean a less holistic picture of your customer landscape and deferred improvements with limited opportunities for systematic handling of customer issues.
Starting big may be a required step if you face losing customers, a market share or even reputation because of consistently bad customer experience with no identifiable sources of trouble. Here, professional CXM consulting may be a necessary ingredient to help you make the right decision along with assigning a regular board of CXM enablers to govern this transformational project.
And the Bottom Line?
For some sceptics, the ROI of customer experience management may seem as elusive as CXM itself.
But just earlier this year, consultants at KPMG Nunwood did a really great job of putting together every CXM benefit, monetary or otherwise, and we feel no intention to question the world’s leading CXM adepts.
In their research “Harnessing the Power of the Many. Learning from the USA’s Customer Experience Leaders,” the major ROI aspects of customer experience management listed are
- lower customer churn
- lower acquisition costs
- cross-sales and up-sales with lower price sensitivity
- higher brand advocacy with more positive word of mouth that wins more new customers
For those hungry for numbers, Bain & Company calculated that only a 5 percent increase in customer retention results in up to 95 percent higher profits.
Forrester follows with its Business Impact of Customer Experience to report the leaders of Forrester’s Customer Experience Index to achieve a cumulative 43 percent performance gain in the course of six years.
Ultimately, this leads up to increased cash flows and sustained business growth, and that’s the language of money every stakeholder gets.
Title image by Adrian Williams