Q-Bits: Articles

Competing on the Customer Experience - Are you Experienced?

There are few better ways for Companies to develop a sustainable competitive advantage than by delivering a superior and repeatable Customer Experience (CE). Many B2C and B2B firms in a variety of industries have used CE to offer a differentiated value proposition in a competitive market, including: TD Canada Trust (Banking), Nordstrom (Retail), and Disney (Theme Parks). These firms strive to move most if not all customer transactions to experience-based, life-cycle interactions, shifting the focus from product features to customer wants and needs. The results are impressive: superior customer satisfaction, reduced delivery costs and cycle times, alignment of service delivery to the brand promise and a differentiated market position. Not coincidently, the CE-focused firms have also delivered higher than average shareholder returns.

What is a Customer Experience?

Also known as customer-centricity, CE encompasses a variety of tactics, methodologies and processes used to comprehensively manage a customer's cross-channel contacts, interactions, transactions and support with a company, product or service. For retailers, this could include addressing a customer's current and future needs around special offer notifications, delivery updates, and product support through physical stores, web sites, and telephone support. Importantly, CE management is not the same as a CRM solution which tends to offer point technology solutions for specific customer-facing functions such as sales force automation and campaign management.

There are many reasons to consider CE even (or especially) if your business is in a commodity market. For one, interacting and transacting with customers is expensive. When properly defined and costed, CE related activities often make up 15% of the total delivered product cost, perhaps more if activities like product returns and relationship management are included. Secondly, CE activities have a major impact on the ability of a firm to deliver products and services in line with the customer's expectations (i.e. the brand promise). Thirdly, strategies that seek to shorten product lead times or improve support inevitably require consideration of CE. Finally, understanding CE is important to regularly monitoring competitive moves, mining customer insights and fostering cross-selling efforts.

Designing a New Experience

Building great consumer experiences is a complex mandate, involving strategy refinement, technology integration, brand management and executive commitment.
Designing a new CE in real time requires a systematic approach to analyzing, designing and implementing the initiative across an organization or division. Quanta helped a financial services company optimize its CE using the following research-based approach:
  1. Review Customer Buyer Needs and Behaviors - Understand how current and lapsed customers interact with the Company by transaction type and department;
  2. Identify Internal Players - Identify all relevant departments and individuals, both internal and external, that interface with the customer;
  3. Map the Current Interactions - Outline the existing processes, resources and tools used by the Company to handle all end-to-end customer interactions;
  4. Create Ideal State & Set Goals - Identify and set stretch performance metrics including cost, service time and satisfaction. Benchmarking against leading players within and outside the industry is a valuable exercise;
  5. Review Current Performance and Identify Gaps - Compare actual performance against target CE practices, stretch metrics and benchmarked firms;
  6. Redesign the Experience - Areas to consider include: prioritizing high profit, high vulnerability transactions and products. Focus on simplicity by removing unnecessary work flows and complexity. Ensure resources, talent and focus are deployed from customer need back through the organization;
  7. Implement - Create a scorecard to measure performance.
Implementing Your New Customer Experience

Notwithstanding its many financial and strategic benefits, improving CE is not for the faint of heart as many initiatives have floundered through poor execution and follow-through. Some of the critical success factors we identified to implementing with excellence include:
  • Enlist a senior champion, preferably the CEO or division head, to roll out the CE initiative;
  • Ensure the metrics are directly linked to key drivers in the customer relationship and business;
  • Treat any changes in CE as a change management exercise, including a strong emphasis on employee training;
  • Post deployment, monitor CE through every channel and course correct if necessary. Improving the CE should be looked as part of a continuous improvement process.

Copyright 2009 Quanta Consulting Inc.

For additional strategic planning insights and a discussion of our relevant client experience, please contact us-

Mitchell Osak
Managing Director
Quanta Consulting Inc.
99 Bideford Ave
Toronto, ON
M3H 1K5
(416) 937 2106