Regardless of how big a corporation grows, it’s important to have the mindset that the main goal is to serve customers. Just take a company like Disney. Everyone’s heard about their amazing customer service. Customers share positive stories about the brand all the time, and employees are trained to “create happiness”.
But what exactly makes a company like Disney so great? It’s their relentless focus on the Customer Experience, which is a shared goal for every employee. Most businesses intuitively know this. And yet it’s incredibly difficult to maintain this customer focus as your business scales and grows. This is known as one of the basic paradoxes in business:
Most growth initiatives substantially damage your most sustainable source of profits, your loyal customers.
At first, you are so close to your customer and you have so few. Then the gap between the C-Suite and the customer slowly widens. Decisions are made on assumptions rather than facts, and Customer Satisfaction Score plummets. For example, according to Bain & Co, 80% of businesses believed they were delivering a superior Customer Experience, but only 8% of customers agreed. One day, you might turn around, and your customers feel alien to you. When was the last time you talked directly with a customer?
So how can we close that gap between the C-Suite and customer to make the success of our customers our own success?
Build a strong business case
Senior leaders care deeply about making the business enterprise successful, and success is usually measured in terms of growth and profits. While customers should be the core focus of any business, unfortunately, the reality of running a business does not always reflect customers being a priority. Business priorities can inadvertently become separate from the customer – not to mention, the actual value of customer service can be nebulous and hard to justify spending precious resources on.
It makes good business sense to get closer to your customers and understand them:
customers with the best past experiences spend 140% more than those with the worst. Happy customers literally give you more money.
That’s why it’s important to build a business case for Customer Experience, and show execs why CX is so important. Instead of the value of customers remaining nebulous, we define it in concrete terms that execs can base their strategy on. The strongest business case is based on cost and revenue, the twin factors which determine profitable growth. Show the areas in customer experience where you can increase revenue, and also the areas where you can reduce costs.
Often, business success is defined in entirely different terms to customer success and happiness. It’s impersonal metrics that count, like Monthly Recurring Revenue, or Annual Revenue. If it does relate to customers, success is measured by Customer Acquisition Cost against Customer Lifetime Value. We’ll now look at some of the more compelling ways you can showcase the value of customer service to executives.
Show the research and the data
Senior leaders value facts and figures that tell them why they should do something. Hard data helps them justify taking a particular course of action. They are essential to your business case and you should include them in liberal doses.
Your organization is likely to already be sitting on mountains of data relating to your Customer Experience, or you at least have the opportunity to collect more meaningful data. Present this data to the C-Suite in the form of key performance metrics like Net Promoter Score™, Customer Satisfaction Score, and Customer Effort Score.
Metrics that the C-Suite values the most are overall revenue and Net Promoter Score™ – know your audience! NPS™ is the percentage of customers who would recommend your company (promoters) minus the percentage who would not recommend (detractors). A good NPS™ depends on your industry. The average score for airlines, for example, is 35.
Customer Effort Score is the relative effort it took for customers to complete an interaction with your company. It’s measured on a scale from 1 to 7, and it predicts future loyalty to your brand. A low Customer Effort Score results in 94% of customers claiming they would repurchase, according to Gartner. This fact is music to any executive’s ear.
Segment your customers and identify the segments who are the most valuable. Measure Customer Acquisition Cost versus Customer Lifetime Value, which is how much it cost you to acquire that customer (CAC) against the value the customer brings to the business over the course of your relationship with them (CLTV). You’re aiming for the lowest CAC ratio to CLTV to help you identify the customers you should invest in the most.
In the tower and in the trenches
Your leaders should know exactly what it’s like to be your customers. It’s great if you can have a Customer Experience representative in the C-Suite, such as a Chief Customer Champion or Director of Customer Happiness.
If this isn’t possible, measure the KPIs that are aligned with CX like the ones we mentioned earlier – NPS™, CSAT, and CES.
Find a CX champion to support your cause, such as Chief Product Officer or Chief Revenue Officer, who also cares deeply about customers.
Hopefully your leadership team can gain direct experience of customer service in the trenches, or are at least hearing about it. The goal is for them to learn (or relearn) what it is like to be on the front line of the business.
Alex Turnbull, founder and CEO of Groove, talked to customers 20+ hours a week. However, this isn’t always possible for executives, and is often impractical at best.
Instead, ensure your customers remain people rather than numbers, by using the power of storytelling. Send anecdotes to the monthly C-Suite meeting so they can hear directly from customers. This approach will hopefully entice them to learn more. Then, once a year, start a tradition for executives to shadow customer service team members.
None of this comes easy.
Only 23% of businesses say they are able to act on the data they collect.
A hugely important part of understanding your customers is soliciting their feedback, and a well-timed survey can be effective. The most valued metric by executives is Net Promoter Score™, so NPS™ surveys are always popular. Don’t forget to humanize the data you present to the C-Suite - ideally with customer names, faces and quotes.
Customer experience as value add
There’s a clear theme emerging. It’s important to show executives again and again that customer experience adds value, since many businesses still view it as a cost center. Companies that succeed in meeting customer expectations treat their most profitable customers so well they keep coming back and become loyal advocates. It’s more than worth the investment you spend.
There’s a good reason to go to all this effort – happy customers are exponentially valuable for your business. A happy customer tells up to nine people, so they literally attract more customers to your business – for free. Loyal customers also drastically reduce the cost of customer acquisition – it costs five times more to acquire a new customer than to retain an existing customer.
Unfortunately, those same existing customers can also drive potential new customers away.
As CEO of Amazon Jeff Bezos so aptly says,
“If you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the Internet, they can each tell 6,000 friends.”
You can measure these happy or unhappy customers by whether they are Promoters or Detractors for your business.
For example, the Promoters for your business can be identified from your Net Promoter Score™. Promoters are the people who score 8 and above. They are extremely loyal to your business, and will rave about you to their friends and family. Detractors score between 0 to 6, and they are not happy. You need to contact these customers to find out why they’ve had such a bad experience with your brand, and try to fix your reputation. Read more on making the most of your NPS data here.
Breaking down walls
We often build artificial walls and siloes inside our organizations that prevent us from truly connecting with customers. This problem worsens the higher you climb up the chain of command, as roles become more specialized and stratified. Executives and other employees feel separate from customers, but really we all want the same thing: to solve problems with our products and services.