Professional Documents
Culture Documents
Customer Experience
A consortium benchmarking study
BEST-PRACTICE Report
APOC
P U B L I C A T I O N S
M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e
Project Personnel
Study Personnel
Rachele Williams, project manager
Steve Huynh, project support
Kimberly Lopez, project support
Peggy Newton, project support
Gerry Swift, project support
Steve Wright, project support
Angelica Wurth, project support
APQC
Subject Matter Expert
Patricia Seybold, CEO
Patricia Seybold Group
Editor
Krystl Campos
Designer
Connie Choate
membership information
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copyright
2005 APQC, 123 North Post Oak Lane, Third Floor, Houston, Texas 77024-7797. This report
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ISBN 1-932546-57-x
Statement of Purpose
The purpose of publishing this report is to provide a reference point for and insight into the processes and
practices associated with certain issues. It should be used as an educational learning tool and is not a
recipe or step-by-step procedure to be copied or duplicated in any way. This report may not represent current
organizational processes, policies, or practices because changes may have occurred since the completion of
the study.
M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e
7 Executive Summary
15 Study Findings
113 Index
M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e
Sponsor Organizations
Servicemaster
BT Group
Sun Microsystems
Citigroup
TIAA-CREF
USAA
USPS
Direct Energy
Verizon Wireless
Washington Mutual
Sears
M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e
Partner Organizations
M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e
Executive Summary
m m aa rry y
s suu m
STUDY SCOPE
Drawing on input from the subject matter expert and secondary research, the
APQC study team identified four key areas for research. These areas guided the design
of the data collection instruments and were the basis on which the study findings have
been developed:
1. understanding the business case for concentrating on the total customer
experience;
2. organizational structure and support implications of improving the total
customer experience;
3. investigating the technology enablers to create a seamless, transparent customer
experience; and
4. measuring the impact of managing the total customer experience.
OVERVIEW OF FINDINGS AND ORGANIZATION OF REPORT
This report is about managing the total customer experience. The total customer
experience, in this context, means ensuring a consistent, positive customer experience
across access channels/customer touch points and across the customer life cycle. How
do organizations accomplish this? The study team found a number of key findings,
or themes, illustrated by the best-practice partners. These findings are organized into
chapters centered around four key questions about how organizations manage the
total customer experience.
1) How do organizations that are leaders in customer experience operate? This includes
considerations of the organizational culture that facilitates a total customer
experience, the organization structure and accountability mechanisms that foster
it, employee training and empowerment, provision of information to dealers
and other third parties that influence the customer experience, provision of
information to customers and customer self-service, capturing customer feedback,
and understanding customer needs and processes.
2) What do best-practice organizations do to deliver a total customer experience? This chapter
addresses the mechanisms that best-practice organizations have put in place to
understand customers and customer knowledge management, to measure and
monitor what matters to customers, to deliver a consistent experience across
channels and the customer life cycle, and to streamline customer interactions
with the organization.
3) What are the results from investing in the total customer experience? This chapter discusses
how some best-practice partners have demonstrated the return on investment
from their efforts to manage the total customer experience.
4) How is technology used to provide a good customer experience? This includes how
best-practice partners leverage technology to facilitate a positive and consistent
customer experience.
s u m m a ry
Greater detail on the practices at Air Products and Chemicals, Cisco Systems, and
Lands End can be found in their case studies.2
In general, the findings from this benchmarking study are no surprisethey are
practices that most companies would expect to be prevalent in an organization that
successfully manages the customer experience. This point was succinctly put by one
of the site visit hosts at Lands End, a company well known for its great customer
service, who stated, It is not rocket science, but you can make it rocket science.
Admittedly, some best-practice partners were stronger in certain areas than others,
and the study team did not find any one single organization that excelled in every
aspect of managing the total customer experience. In addition, since the study scope
is very comprehensive, coverage of any particular topic is broad rather than in-depth.
However, across the portfolio of organizations studied, a collage of best practices to
manage the total customer experience emerged. The learnings and the value from
this benchmarking report, as with any benchmarking report, originate from the
observation of how the best-practice partners address these challenges, the examples
and stories that they provided at their site visits, and ultimately the demonstration
that their efforts to manage the total customer experience have paid off for both the
customer and the company.
The following key findings, or themes, emerged.
Chapter 1How Do Organizations That Are Leaders in Customer
Experience Operate?
Corporation Web site for greater detail on their processes for customer and market knowledge.
Many of the practice examples described throughout this report derive from this Baldrige
application summary.
summary
The business case for investing in the customer experience is based on competitive
differentiationthe quality of the customer experience is viewed as a competitive
differentiator by best-practice organizations.
Investing in delivering a brand-consistent, high quality, end-to-end customer
experience across interaction channels and throughout the customer life cycle
generates higher customer lifetime value and a growing number of loyal, profitable
customers, which translates into profits and greater company value.
Investing in streamlining customer-critical processes decreases customers timeto-decision and increases revenues.
10
s u m m a ry
30%
Telecommunications
10%
Networking/Computer/
Telecommunications equipment
10%
Retail
10%
Utility
10%
Other
30%
Primary Customers
Consumers
40%
Business end
40%
Both
20%
0 10 20 30 40 50 60 70 80 90 100
Partners (n=5)
Frequency of Response
Figure E.2
11
summary
Sales/Service Channels
Partners
20%
Dealers
20%
Agents
20%
Resellers
20%
Retailers
20%
Integrators
20%
Franchisees 0%
Consultants 0%
Other
0 10 20 30 40 50 60 70 80 90 100
Partners (n=5)
Frequency of Response
Figure E.3
APQCs Benchmarking
Model: The Four-phased
Methodology
12
E-tailers 0%
Brokers 0%
s u m m a ry
Phase 2: Collect
100%
Web site
100%
Marketing/Advertising
100%
80%
E-mail
Mail
60%
60%
60%
40%
Fax
40%
Field service
20%
20%
Catalog
20%
Kiosk/ATM 0%
Wireless handheld device 0%
Other distribution channels
20%
Other
20%
0 10 20 30 40 50 60 70 80 90 100
Partners (n=5)
Frequency of Response
Figure E.4
Phase 4: Adapt
13
summary
14
m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e
Study Findings
15
Ch a p t e r 1
How Do OrganizationsThat
Are Leaders in Customer
Experience Operate?
Greatest Contributors to a
Customer-centric Culture
(Rank-ordered, with 1 being the least contributor)
Enabling technology
5.2
4.8
Visionary leadership
4.5
Executive-level support
3.7
Employee compensation/
incentives
3.3
Employee training
2.2
Competitive landscape
1
Partners (n=5)
2.2
2
Frequency of Response
Figure 1
17
chapter 1
processes with the right thing for the customer. For example, Lands End accepts
returns with its Guaranteed. Period. credo. The company accepts any return for
any reason at any time. Air Products and Chemicals has trained employees to recognize
and deliver services and experiences that customers need and value. Harrahs employees
greet customers with, Good luck! and take every opportunity to make their valued
customers feel special, and Cisco takes pains to empower customers to be able to serve
themselves. Caterpillar Financial deeply understands its customers business processes
and aligns its processes and metrics around those of its customers.
Each companys founder and/or current leader also believes in putting customers
priorities at the top of the corporate strategy agenda, in bathing the organization in
continuous customer input and feedback, in empowering and supporting employees
and channel partners to meet and exceed customers expectations, in investing in
customer-impacting technologies, and in monitoring and improving the quality of
customers experience with the brandin people, products, services, and processes.
All partners exhibit a culture and values based on the principle that a customer-centric
companyone that cares about the quality of the customer experiencedelivers
higher value to customers, employees, and shareholders.
Linking of Customer Experience to Brand Promise
There is a strong correlation in most organizations between the brand image that
the organization wants to project to its customers and prospects and the customer
experience the organization delivers. The customer experience/brand marriage is
reflected in the corporate culture. Organizations that are successful in delivering a
great customer experience have strong brands that are supported by corporate cultures
in which the customer experience is recognized as part of the brand differentiation.
In an era of tough competition, the customer experience/brand linkage combined
with a strong customer-centric culture provide the competitive differentiation that
todays organizations seek.
Lands End provides a good example of establishing
and nourishing a customer-centric corporate culture.
Founder Gary Comer put customers at the center of
FIGURE 2: The Lands End Principles of Doing Business4
corporate strategy from the beginning.
Lands Ends customer-centric culture has survived
1.We accept any return, for any reason, at any time. Our
products are guaranteed. No fine print. No arguments. We
the departure of its founder and its merger with giant
mean exactly what we say: GUARANTEED. PERIOD.
retailer Sears. The current management team and its
2.We ship faster than anyone we know of. We ship items in
employees have the Lands End customer-centric culture
stock the day after we receive the order. At the height of
the last Christmas season the longest time an order was in
so deeply ingrained in them that it has already permeated
the house was 36 hours, excepting monograms, which took
parent company Sears.
another 12 hours.
Figure 2 shows three of the Lands End Principles
3.We believe that what is best for our customer is best for all
of Doing Business, which demonstrate the companys
of us. Everyone here understands that concept. Our sales
and service people are trained to know our products and to
customer- and employee-centric culture.
be friendly and helpful. They are urged to take all the time
necessary to take care of you. We even pay for your call,
for whatever reason you call.
18
Ch a p t e r 1
Customer success is not only a personal passion of mine, but our first priority
as a company. No matter how good we are, the one thing that can bring us down is
getting too far away from our customers. Ive seen it happen time and time again,
which is why we take a fanatical approach to customer success and view it as the
foundation of our culture.
John Chambers, CEO
Cisco really walks the talk when it comes to customer experience: 100 percent of
Cisco badged employees annual bonus is dependent upon meeting Ciscos customer
satisfaction goal (the criteria may vary by grade level, however). Performance-to-goal is
accessible to all employees 24 hours per day, seven days
per week via the intranet.
FIGURE 3: Customer-centric Values at Best-Practice Partners
Figure 3 summarizes the customer-centric values
Products
Consistently provide the customer only the
discussed by the best-practice partners at their site visits. Air
and Chemicals products and services they truly value.
Key Finding:
Best-practice organizations empower employees to understand
and anticipate customers needs and to delight customers.
Harrahs
Employees at study best-practice organizations Entertainment valued customers through a unique combination
are empowered, both to take actions on behalf of their
of great service, excellent products, unsurpassed
unsurpassed distribution, operational excellence,
customers and with information about customers
and technology leadership.
in order to more efficiently serve them. Lands End is
Lands' End Believe that what is best for our customer is best
an example of a company that encourages employee
for the company.
empowerment to understand and anticipate customer
needs and delight customers. The companys culture
is based equally on customer service and an employee
focus. Employee input and involvement is relied upon heavily in corporate decisions.
Lands Ends employees are true customer advocates: They are encouraged to take
whatever time necessary to resolve a customers question or issue. They understand
their customers so well that customer service representatives serve as proxies for
customers needs and reactions during any new product design and/or process
improvement effort in the company. In addition, Lands End invests heavily in
employees so that they can anticipate and address customers needs. For example,
the companys detailed product training enables a sales associate to fit the correct
polo shirt to the lifestyle needs of each customer and/or to anticipate which style of
clothing will be most appropriate. Employee empowerment and a collaborative work
environment are key factors contributing to the resulting high employee tenure/low
turnover at Lands End.
Managing the Total Customer Experience 2005 APQC
19
chapter 1
c h a p t e r 1
properties and across access channels. Access to the data warehouse is provided to all
key customer contact employees. Comprehensive customer information is housed
in the data warehouse, including which offers that a customer has received, which
properties they have visited, what restaurants they have patronized, and what comps
they use.
Lands End employees have a comprehensive view of the customers account
(purchase history, behavior, customer survey results, etc.) as long as it is within their
job responsibilities.
Caterpillar Financials philosophy is that, as a service organization selling the
most generic of commoditiesmoneythe effective use of information allows the
organization to add value to the basic commodity they provide to their customers. To
accomplish this, Caterpillar Financials systems fully support the key core processes
and support processes and allow access to users, dealers, employees, and suppliers. For
example, CustomerExpress, Caterpillar Financials customer relationship management
software, provides employees and dealers one convenient portal to the full array of
customer information.
Cisco customer service agents use a knowledge-based Web portal called ISAAC,
which streamlines access to information documented through many years of operation
at Cisco, to leverage previous answers and solutions and resolve customer issues
and questions.
More information about the specific software used by the best-practice partners
to facilitate a consistent customer experience is detailed in Chapter 4 of this report.
As will be further discussed in Chapter 3, best-practice partners have made a
strong linkage between employee satisfaction and customer satisfaction. Employees
are surveyed regularly to ensure that they are feeling satisfied, empowered,
and supported.
Key Finding:
Best-practice organizations ensure that employee recruitment, training, and performance
management all focus on customer experience delivery.
Good customer experience starts with empathetic employees who are naturally
inclined, trained, and motivated to understand customers needs and who are
empowered to help customers achieve their desired results.
Recruiting and Retaining Customer-Friendly Employees
21
chapter 1
22
c h a p t e r 1
the best solutions to customers. The Teamwork across Cisco recognition program
is one of several programs that reinforce cross-functional employee collaboration.
The purpose of this program is twofold.
1. It provides opportunities for high-level exposure (theatre- and organization-wide)
for teams that have produced successes for Cisco.
2. It highlights cross-functional teamwork and collaborative behaviors and provides
a way for all employees to share knowledge, experiences, and successes.
The CEO and senior leadership recognize teams through different media and
at various events during the year including the company and all-hands meetings.
The experiences of the quarterly finalists are shared with the entire organization
through the Cisco Employee Connection, the Teamwork across Cisco Web site, and
senior leadership Web sites. These stories are communicated so that every employee
and manager has clear examples of cross-functional teamwork and collaboration.
In addition, each member of the quarterly winners receives a desktop award to
commemorate this event. Then, at the end of each fiscal year a Team of the Year is
selected and a $5,000 charitable contribution is made in the teams name.
Performance management for CIN agents focuses on customer experience delivery by
rewarding agents on their cross-functional ability, on the number of skill sets they posses,
their availability, and overall customer satisfaction. These agent measures are important
for Cisco as they focus on value add and the contribution of quality feedback.
Cisco has also been formally recognized by an independent party for its employeefriendly practices. The company was No. 28 on Fortune magazines 2004 100 Best
Companies to Work For list.
Training Customer-Friendly Employees
Eighty percent of partners state that they engage in formal customer experience
training for their employees. Types of customer experience training listed by
participants included:
customer segmentation training,
soft-skills training,
customer issue training,
new hire training,
customer satisfaction training,
customer role-play,
role-specific skill-based training,
sales training,
technical/internal operating system training,
one-to-one coaching,
training on first-time resolution,
direct customer observation, and
company-specific special training programs.
Managing the Total Customer Experience 2005 APQC
23
chapter 1
24
c h a p t e r 1
Some study participants sell and service their products/services through thirdparty avenues, such as partners, dealers, agents, and resellers (Figure E.3, page 12).
It can sometimes be challenging to ensure a consistent customer experience via these
third-party channels, especially if the third party sells and services other brands and if
your organization has little to no control over the third party. Best-practice partners
have attempted to overcome this challenge by empowering their dealer/channel
partners to understand and anticipate customers needs and to delight them.
25
chapter 1
Air Products and Chemicals has formed a Distributor Advisory Council to help
ensure a consistent customer experience with its distributors. The purpose of the
Distributor Advisory Council is to improve the relationship between Air Products and
the distributors in order to accelerate mutual profitable growth. The council consists
of managers from the distributors, a sales manager, the distributor manager, a senior
representative from the technology department, and a marketing representative. This
council is an advisory council, not a policy making council. The council provides input
into the definition and implementation of work processes, services provided, and the
brand experience. This council meets twice a year and provides a forum for the sharing
of best practices. Air Products also utilized the council meetings to ensure a consistent
brand experience for all customers through the network of distributors. Distributors
are expected to share the same tenets of the company brandunderstanding, integrity,
and passionas well as the same commitment to the product line. The company wants
customers to associate the Air Products name with all their distributor interactions.
Dealers are at the heart of Caterpillar Financials service delivery. Having the territory
manager co-resident in each dealers location ensures that the company can support its
dealers in listening to, understanding, and even anticipating customers needs along
with the dealer.
Lands End was purchased by Sears in 2002, and Lands End clothes can now be
purchased in Sears retail outlets. To facilitate the Lands End customer experience
in Sears stores, Lands End began an Ambassador program, whereby Lands End
employees were placed in select Sears stores to train Sears personnel on the product
lines. This has resulted in positive feedback from customers, as well as an increase
Cisco Systems surveys both direct customers and indirect customers (customers that
access the companys products via resellers) to measure satisfaction with the customer
experience and to facilitate a consistent customer experience. Ciscos resellers and
system integrators are heavily supported and empowered through both self-service and
employee-assisted channels such as Ciscos innovative ISAAC knowledge base and its
global Customer Interaction Network.
While Harrahs does not deliver its services through channels per se, the corporate
philosophy is that when engaging in acquisitions (such as the recent acquisition of
Harveys), one of the first activities that the organization undertakes is to implement the
underlying technology so that the new properties are tied into the existing properties
customer knowledge and loyalty program. Customers have one account, which is
linked to one customer database, so that their treatment at different properties is
consistent, and they are encouraged to visit multiple properties in order to continue
to earn rewards points (cross-market play).
26
c h a p t e r 1
Key Finding:
Best-practice organizations empower customers to provide valued input and to help shape
company priorities.
The study team found that the best-practice partners are not just customercentric; they are customer-driven. Customers priorities around products, service
delivery, and the customer experience shape the companys strategy.
For example, in response to feedback from customers in focus group sessions,
Harrahs revamped its Total Rewards customer loyalty program in June 2003. The new
rendition of the program remains profitability-based and is called Total Rewards II.
Company leaders researched extensively before making the changes to Total Rewards.
They conducted focus groups and created sophisticated models for each segment.
They determined that customers wanted control of their accounts and visibility of
the program; it was mysterious and complicated before. Total Rewards II gives the
customers complete insight into how they earned a reward credit and how much they
have in their accounts. Now the program is completely bankable and portable. The
change has been well received by customers.
Caterpillar Financial also serves as an example of an organization that considers
customer priorities as a key factor in corporate strategy setting. From a corporate
strategy-setting standpoint, all strategies, action plans, and individual goals are
evaluated based on their impact on customers and linked to specific critical success
factors in Caterpillar Financials Business Excellence model (one of which is customer
satisfaction: We must delight our customers by understanding and exceeding their
expectations) in order to ensure that key stakeholder needs are deployed through
every level of the organization. At a more granular level, the needs and expectations
of Caterpillar Financials three key customer groups (users, dealers, and Caterpillar
business units) are systematically captured through a variety of customer listening
posts (such as surveys, focus groups, industry councils, etc.) and used as a key input,
along with key core process performance data, to divisional SWOTs and planning
workshops at the Annual Leadership Conference. (The Annual Leadership Conference
is a week-long session conducted each June in which overall corporate strategies are
translated into preliminary division and support department strategies.)
Key Finding:
Best-practice organizations enable customers to manage their own relationships.
27
chapter 1
c h a p t e r 1
Percentage of Organizations
Able to Provide Real-Time,
Self-Service Access
Product/Service purchase
60%
60%
60%
29
chapter 1
Harrahs can monitor very precisely the relationship between customers survey
responses and feedback on a variety of interaction touch points and life cycle stages,
with customers actual spending and referral behavior.
Cisco has a holistic and comprehensive customer information gathering and
application framework. Cisco uses both general/comprehensive customer loyalty
and satisfaction surveys to calibrate how the company is doing overall, as well as
incident-based customer surveys that are administered after customers interact with
the company to resolve an issue, buy a product, get information, and/or manage their
accounts. Customer feedback and input is fed directly back to employees based on
their jobs and roles in the company. Customer feedback and input is updated and
reported continuously. Employees can see how their team/role/function is doing on
customer satisfaction and loyalty 24 hours per day on the intranet. Employee rewards
and recognition (including performance-based pay) are linked to meeting or beating
customer loyalty goals.
Key Finding:
Best-practice organizations align the company and culture around customers needs and
customers processes.
80%
Customer hand-off/transfer
80%
80%
Product repair
60%
Returns handling
60%
Billing
40%
Quote-to-cash
40%
Lead-to-order
20%
Process classication
framework
20%
Other
20%
0 10 20 30 40 50 60 70 80 90 100
Partners (n=5)
Frequency of Response
Figure 8
30
Core Processes.
c h a p t e r 1
equipment usage, and context varied greatly by industry, the actual life cycle stages
and the processes within each stage were very similar.
At Cisco, the first step taken to improve the customer experience was to identify
key business processes (Figure 9). In order to make the company more efficient,
streamlining processes was a priority. To accomplish this goal, the Business Process
Operations Council (BPOC), a corporate council made up of select executives,
identified necessary key processes. The council has representatives from all
Cisco service lines who are tasked with analyzing processes across the enterprise.
Additionally, the company created a common front-end support organization across
all customer-facing functions. The main questions that Cisco had to answer were how
to streamline the customer interface to ensure that the key processes were going to
work and how the customer interaction at the first level would be aligned with the
optimization of the processes.
Market
to
Sell
Research to concept
Research to market
identification
Concept to commit
Design to prototype
Validate to ramp up
Monitor to improve
Improve to EOL
Quote
to
Cash
Forecast
to
Delivery
Source to buy
Order validation to
commitment
Forecast to plan
Campaign to lead
Delivery to revenue
recognition
Ship to receive/install
Lead to order
Invoice to cash
Account strategy to
relationship
Contract to renewal
Market identification
to plan
Plan to build
Commit to deliver
service
Issue
to
Resolution
Issue detection to
problem identification
Develop solution to
resolution
Return to replace
Closed loop feedback
Figure 9
31
chapter 1
Key Finding:
Best-practice organizations make customers priorities their priorities in monitoring and
managing performance.
Best-practice organizations use voice of the customer input and their own
understanding of customer-critical processes to pinpoint areas for improvement. For
example, Caterpillar Financial identified key metrics to meet or exceed for each of its
customer-critical processes.
Lands End monitors the time from order placement to product delivery; turnaround
time on customer questions received via e-mail; and metrics that revolve around the
customer experience at the contact center, such as service level, occupancy rate, call
volume and handle time, and call abandonment rate.
A common customer-driven priority for all partners is first-contact resolution.
No matter how the customer chooses to interact with the organizationby phone,
Internet, e-mail, direct sales, telesales, dealer representativeand no matter what
stage of the customer life cycle, a top customer priority is to get the right answer or
resolution in a single interaction.
While 80 percent of the best-practice partners track first-contact resolution, few
organizations were willing to share their actual first-contact resolution numbers in
their detailed questionnaire response, so general observations about the actual rates
are hard to make. Average first-contact resolution rates at the three partners who were
willing to share this information in the detailed questionnaire were in the low- to
mid-90 percentage range.
Best-practice organizations strive to provide first-contact problem resolution.
No matter what touch point or channel the customer chooses or what stage of the
customer life cycle (planning, exploration, decision making, purchasing, usage,
upgrades, renewals, account management, problem resolution)the partners goal
is to answer their question or resolve their issue satisfactorily in a single interaction.
For example, a primary goal of the Cisco Systems Customer Interaction Network is to
create a one-stop shop for customers to answer their questions on their first contact
with Cisco.
In another example of a company making its customers priorities its priorities,
Caterpillar Financial identified its customers most critical scenarios and a handful
of key customer experience moments of truththe rubber-meets-the-road
points that are most important to customers, along with the particular attributes that
customers cared about for each one. For example, the company set and monitored
specific metrics for turnaround times for the moments of truth that mattered most
to customers such as: receive a finance proposal promptly, receive credit approval
promptly, receive accurate documents and correct funds in a timely manner, receive
requested modifications quickly, and complete payoff promptly.6
32
c h a p t e r 1
Key Finding:
Best-practice organizations have visionary customer-centric leaders who believe that a high
quality customer experience engenders customer loyalty and improves customer and company
profitability.
33
Chapter 1
34
c h a p t e r 1
the
organizations recognition of the importance of the customer experience at the
highest levels has already been discussed. In another example, at Caterpillar Financial a
discussion of the results from the various customer listening approaches is conducted
on the first day of the Business Excellence Councils semi-monthly meetings. At
Harrahs, the vice president of service operations reports on customer satisfaction and
how the company is rallying to serve the customer at quarterly operating committee
meetings.
In general, study participants indicated that the customer experience is most often
talked about at monthly executive committee meetings and through sharing customer
stories and sharing and discussing customer experience surveys.
Central Coordination/Planning; Distributed, Field-Level Implementation
At Harrahs, customer segmentation and segment-specific marketing
campaigns
and reporting is centralized, but the customer experience is delivered at the property
level. Some marketing campaigns are also handled out of the property. There is a
property customer service director at each casino that monitors the quality of the
customer experience delivered at that property. These property customer service
directors report to the general managers of their properties, with a dotted line to the
vice president for customer satisfaction.
Lessons Learned About How Customer Experience Leaders Operate
35
c h a p t e r 2
What Do Best-Practice
Organizations Do to Deliver a
GoodTotal Customer
Experience?
n Chapter 1, the study team presents a picture of how best-practice partners are
focused and organized to provide the total customer experience. It discusses the
conditions that exist in such organizationstop management support, well-equipped
channel partners, and well-trained employees bathed in customer information.
This chapter sets the frame in motion at a tactical level. It demonstrates what an
observer would see in the daily operations as teams segment and serve customers. It
highlights the decisions that customer-facing employees make one at a time as they
live out the organizational strategies. It shows how employees are tearing down silos
to provide seamless service. The following is what happens when customer-centric
strategies are acted upon.
Key Finding:
Best-practice organizations understand customers deeply, and they segment customers to
anticipate and meet their needs.
Partners use segmentation to understand and anticipate various customer needs and
requirements in order to better tailor experiences for each segment. In this context, the
point is not to provide increased service or perquisites to the most valuable customers
but to provide the product or service that best meets customer requirements.
37
chapter 2
In 1998, Caterpillar completed a distribution study that included research for its
distribution network, users, and industries where Caterpillar products are used. From
this study, Caterpillar Financial defined its industry criterion as 13 industry segments
within the two primary markets that Caterpillar serves: equipment and engine.
The equipment market includes mining, general construction, heavy construction,
industrial, waste, quarry and aggregates, forestry, and paving. The engine market
includes industrial engines, marine, oil and gas, electric power, and OEM
truck engines.
Once the industry segments were identified, industry councils were created to
provide a deep understanding of the customer needs, market opportunities, and
industry-specific success factors for the various industry segments.
Other customer segmentation criteria include application, customer
demographics, and transaction size.
Air Products customer experience program is based on customer segmentation by
customer value analysis and customer profitability analysis (Figure 10). By carefully
studying the needs and expectations of different types of customers across product
lines, the company has been able to segment customers based on a combination
of their potential for profitability, their strategic fit with Air Products, and what
attributes they value, such as technical focus and innovation. Air Products was able to
lower its costs-to-serve while still providing acceptable levels of service to companies
in different market segments.
Air Products describes its customer moment of truth as revolving around
understanding what each customer segment truly values at each touch point. Because
the company deals business to business, customers are not just the end-users of the
product: They are employees in different rolespurchasing agent, plant managers,
engineers, chemists, etc. Air Products may have between 20 and 30 contacts in up to
five to six functions in the client company. The organization must understand what
each of these customers value and render a solution that is appealing to customers and
fits within prescribed service levels for that customer segment.
Lands End uses customer segmentation in its catalog marketing to promote
childrens apparel only to customers with children or grandchildren and to promote
warm clothing to people who live in cold climates. Representatives suggest lightweight clothes to customers in warmer climates and high-end items to customers who
have purchased more expensive items in the past. When a representative receives a
call from a high-end customer, he or she receives a prompt to inform that customer
of other luxury items such as cashmere.
To Deliver Products and Services Differently to Each Segment
Some partners use segmentation to deliver different levels and types of services
to customers and to market effectively. They deliver consistent, managed levels of
customer experience to different customer segments based on their current and future
value to the company.
38
c h a p t e r 2
Price and
Profit
Management
Customer
Segmentation
Best
Practices
Profitability
Analysis
Operational Targets
Levers
Product Services
Hierarchy
Profitability
Analysis
Segmentation Plan
Customer categories
Offerings
Business rules
Channel strategy
Work level activities by category
Targets by category
Business
Strategy
Development
Customer
Feedback
Analysis
Customer
Value
Analysis
Service Level
Agreements (SLA)
Supply Chain
Requirements
Competency
Profiles
Score Card
Results vs. KPIs
Business Performance
Deployment
Brand
Promise
SalesForce.com
Behavioral
Training
Performance
Management
Figure 10
39
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c h a p t e r 2
orders/transactions, (6) past orders/transactions, (7) bills and invoices, (8) customer
service incidents, and (9) updated customer information.
In some mature core businesses at Air Products, 20 percent of customers contribute
80 percent of revenue and volume purchased. Therefore, difficult choices must be
made regarding how to best segment the customer base. The number of customer
segments varies from business to business. Air Products distinctly separates what does
and does not qualify as segmentation. The underlying philosophy is not to treat all
customers in the same way but rather to treat each segment in the same way.
Key Finding:
Best-practice organizations understand what different types of
customers need in different phases of the customer life cycle
and tailor the customer experience for those life cycle stages.
80%
41
chapter 2
customer is satisfied with the order. The call-backs have proven to be successful in
increasing customer retention and re-purchasing.
The customers of at least two partners (Air Products and Caterpillar Financial)
are businesses, and the companies recognize that their relationships with the various
roles within the customer organization (such as receiving clerk, accountant, sales
representative, chief financial officer, and product consumer) are important. They have
processes in place to address the needs of each person with whom they interact.
Key Finding:
Best-practice organizations understand what customers care about in different
c ontextswhat outcomes are they trying to reach and what context they are in.
Examples abound of partners who adjust their products and services based on the
outcome that the customer is trying to reach.
Harrahs understands that many of its customers have an expectation about how
long they want their money to last during a gaming session. The company carefully
monitors the time spent and money wagered in order to respond appropriately if the
customer isnt falling within his or her entertainment profile.
Caterpillar Financial understands that customers in different industries and in
different sizes of companies have different goals and parameters.
Understanding the context within which customers are contacting the company
calls for an exceptional type of employee. Cisco has transformed its representatives,
who were laboring to meet customer needs one-by-one in a necessary evil call center,
into highly skilled and knowledgeable agents who add value to each call. Through
training, these agents recognize the big picture presented by the customers and the
outcomes they are trying to reach. They add value to every call by educating the
customer and documenting the answer for future use. In addition, they add value by
selling a unique solution that, in the past, customers would have to seek out through
contacting the company multiple times.
Key Finding:
Best-practice organizations identify and anticipate customers moments of truth
what the make or break points are in customers processes.
c h a p t e r 2
The senior vice president of relationship marketing at FIGURE 12: Metrics Used to Track Improvements in the
Harrahs noted in their site visit that sometimes customers Customer Experience
Partners
go to other companies just to change their luck. In
Participant
(%) n=5
other words, the company has done nothing specifically
Customer loyalty/retention
100
wrong, but the customer is tempted to distance himself
80
just because he can. Best-practice companies catch the Customer satisfaction
80
customers during these vulnerable moments and give Cost-to-serve
Customer complaints/compliments
60
them reasons to increase their loyalty.
60
If a Harrahs customer is losing money at a rate Time-to-resolution
60
that disappoints her, Harrahs operational customer Moments of truth, key points of contact
60
relationship management system will compensate by Customer steps, reduced
60
issuing special perquisites or by triggering a visit by a Profits per customer
Luck Ambassador who can stop by to chat.
Customer time saved
60
The company purposefully identifies the customers Number of customers/market share
40
that it wants to make more loyal and targets them Employee feedback
40
through direct marketing. For example, it knows that if Number of products per customer
40
it can attract a customer for a third visit, the customer is Share of wallet
40
likely to become loyal.
Additional business
40
Caterpillar Financial concentrates its efforts on the few
Customer frustration/aggravation reduced
40
key moments of truth that customers have made clear Customer renewals
20
are the most important to them. For example, in the loan
Customer churn
0
origination process, moments of truth include receiving
Customer lifetime value
20
a prompt and appropriate finance proposal, receiving
Customer referrals
20
credit approval promptly, and receiving accurate
documents and correct funds in a timely manner.
During the loan modification process, customers want to receive their requested
modification quickly. During the loan termination stage of the life cycle, customers
want to complete their payoff promptly. Throughout their life cycle, customers want
a timely and complete response to requests.
Lands End realizes that if customers cannot see and feel the material that a product
is made from, they cannot decide whether to purchase it. The company offers swatches
of every fabric (except leather, cashmere, and quilts).
Key Finding:
Best-practice organizations take proactive steps to anticipate customer-impacting critical
issues and to avoid them.
43
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retailer). In response, the company created Lands End Custom clothing, powered
by smart sizing software, to allow online consumers to easily and affordably design
their own clothes. Customer feedback to this program has been very positive, and it
has resulted in profitable growth for the company through new customers, deeper
customer relationships, and higher customer lifetime value.
One of Air Products three brand tenets is understanding: The company promises
that it will consistently anticipate customer needs and provide what the customer
truly values. For example, in one business discussed during the site visit, supply chain
performance is critical, but some commodities are resource-constrained. Air Products
was able to proactively offer a no run outs value proposition to certain customers,
who were willing to pay more to be protected.
In another example, since a significant percentage of employee incentive
compensation is tied to customer satisfaction at Cisco, transactional customer
satisfaction surveys (bingos) are proactively analyzed to allow the corporation to
resolve any customer issues identified in the bingos ideally before they affect the
organization-wide customer satisfaction score (and thus, employee compensation).
Key Finding:
Best-practice organizations measure, monitor, and improve what matters to customers.
Organizations have the capability to measure almost everything, and they can
be paralyzed from taking action unless they know to focus on the attributes that
customers value. Partners learn what customers value in a variety of ways but rely
greatly on frequent and regular survey programs to educate them about customer
needs. Following are examples of companies who have researched what customers
really require to remain loyal and have concentrated on them.
Harrahs customer survey asks a key question: Would you recommend Harrahs?
The answer is tracked not only overall but also after any organizational or procedural
change that affects the customer. This loyalty metric is linked to two organizational
attributes: wait time and employee helpfulness and friendliness. Personnel from
the chief executive to the front line focus laser-like on the two. The company knows
how long customers have waited on the phone and at the front desk and whether
they are greeted appropriately. The company generates reports by property and touch
point. For example, reports can show how the Total Rewards center at Harrahs Las
Vegas is performing in terms of friendly/helpful versus wait time. The metrics
are also assessed by customer segment, and an appropriate wait time for a Platinum
customer may not be acceptable for a Diamond customer.
To better serve its customers and improve procedures, Harrahs measures play
time, play winnings, and rewards received. It captures metrics on customer time
saved, customer steps reduced, cost-to-serve, customer loyalty, and share of wallet.
Lands Ends measured goals include high first-contact resolution, time to answer
the phone (20 seconds or within the first ring), and delivery time (within 48 hours).
44
c h a p t e r 2
Harrahs
45
Chapter 2
Key Finding:
Best-practice organizations deliver a consistent and seamless branded customer experience
across channels and touch points and all stages of the customer life cycle.
46
Ch a p t e r 2
To ensure that customers have a seamless and consistent branded experience, the
company created a brand architecture around the three tenets of Understanding,
Integrity, and Passion. This architecture is referred to as the Brand Bulls Eye
(Figure 14). Air Products conducted a significant amount of worldwide research
to create the model and solicited input from many customers throughout various
segments. The interview results legitimized the brand of the company.
Our commitments
to our customers
Brand Aim
Knowledge
Determination
Brand Essence
Enthusiasm
Commitment
Dedication
Openness
Substantiators
They help me
stay ahead
Brand Characteristics
Understanding, integrity
and passion
Figure 14
47
Chapter 2
Air Products links managing the branded customer experience with the brand.
From a customer perspective, each principle of the brand comes with a promise from
the company. For understanding, the company promises that it will consistently
anticipate customer needs and provide what they truly value. For integrity, Air
Products promises that it will always be true to its word. If the company commits to a
promise, they promise to deliver and to do so in a safe manner. The company has been
identified as one the safest chemical companies in the United States over the last five
years. For passion, Air Products promises to strive to exceed customer expectations to
achieve a mutual benefit. As discussed previously, the company culture now focuses on
achieving a win-win result for the company and customer. Company commitment
is predicated on the customers value to the company and what that customer will
truly agree to purchase.
When utilizing the branded customer experience for deploying customer
segmentation, Air Products has the following objectives:
delivering a consistent experience across all customer touch points (people,
Web sites, literature, etc.);
managing customer expectations by consistently delivering as promised;
creating brand equity, or preventing the brand from eroding;
creating customer loyalty and perceived value;
mitigating the risk of becoming too internally focused; and
preventing employee indifference.
The Web site for Air Products, www.airproducts.com, is a touch point for the
customer and has also been part of the evolution toward providing customers with a
branded customer experience.
Key Finding:
At best-practice organizations, employees work together across job functions to create a
one-stop shopping environment designed to streamline customers interactions with the
organization.
One of the most significant findings among best-practice partners is the degree of
cross-functional cooperation that has been institutionalized in order to make it easier
for customers (and the partners and employees who serve them) to do business.
Harrahs invests significantly in technology to power its customer database and
relationship marketing; one of the first activities that the organization undertakes
when it acquires another company is to implement the underlying technology so that
the new property is tied into the existing properties customer knowledge and loyalty
program. Customers have one account, which is linked to one customer database, so
that their treatment at different properties is consistent, and they are encouraged to
visit multiple properties in order to continue to earn rewards points.
48
Ch a p t e r 2
When Harrahs implemented its Web Book-It initiative to allow Total Rewards
members who receive an e-mail offer to make hotel reservations online, they pulled
together a task force of cross-property and cross-functional participants. This crossfunctional, cross-property team met regularly to provide consistent answers online, in
the call centers, and at the hotel properties; ideally this team handles complimentary
offers, casino rates, and support rate calendars.
Because Lands End customers use various media simultaneously to make purchases,
the employees cannot operate in silos. Managers estimate that approximately 50
percent of its business is conducted via the Internet. Even though the Web site has
been designed to be user-friendly and capable of completing purchases, customers
choose to take additional steps. If a customer decides to contact a representative
after exploring the Web site, 63 percent of the time the customer will make contact
via telephone, 25 percent via e-mail, and 12 percent via Lands End Live. (Lands
End Live is a feature that was introduced to customers in 1999 that allows Internet
customers to work with a representative through live text chat or by clicking a button
on the site that asks a representative to call back.)
Lands End contributes to a streamlined customer experience by making every
one of its employees responsible for the customer relationship. No single person is the
champion of the customer relationship. All employees are responsible for promoting
a positive customer experience.
The company focuses on training with the understanding that employees must
have the necessary product knowledge to assist customers with their orders. Training
for new hires is extensive, but the company feels that ongoing product training is
necessary in order to keep customer service consistent. During the training process,
trainers ensure that the front-line customer service representatives literally hold the
products so that they can learn about the product features and better convey product
details consistently to customers.
The goal of training is for customers who contact the call centers to have the
same experience, regardless of the representative who answers that call, whether the
question has to do with fit or style, with billing or shipping, or with refunds or
returns.
Cisco has developed the Customer Interaction Network to provide one-stop
shopping to customers. Before the CIN, customers would receive a different
experience depending on where in the company they called in. The CIN provides a
seamless and consistent experience; its purpose is to transform the front-line contact
centers into a cross-functional virtual organization that increases customer satisfaction
and showcases Cisco products, best practices, and the power of the Internet.
The concept of CIN has developed over time. The company looked at its various
call centers; they had one agent acting reactively to the request of one customer. The
call centers evolved into contact centers that empowered the customers to use other
access channels. The contact centers focused on serving many customers with one
answer. It educated the customer to solve his or her issues.
49
Chapter 2
The next evolution was CIN, the preventative cross-functional collaboration in which
a customer reaches a wider spectrum of resources with a single call (Figure 15).
Call Center
One: One
Reactive / Responsive
Silo by Organization
Productivity
Many: One
Proactive
Silo by Organization
All: All
Preventative
Cross-Functional
Collaborative
Time
Figure 15
Ch a p t e r 2
Air Products evaluates and selects the distributor best suited for a relationship with
the company. In one highly technical global business, it ensures that the distributors
sales forces are also highly technical and consist of chemists or chemical engineers.
This scientific background increases the understanding necessary to sell products to
customers. Distributors who can sell products that complement the Air Products
product line are also viewed as beneficial channels to market.
As discussed in Chapter 1, Air Products established the Distributor Advisory
Council to foster relationships with its distributors so they can provide a branded and
consistent customer experience, thereby accelerating mutually profitable growth.
For Caterpillar Financial, independent dealers represent a primary distribution
channel. The dealers are protective of their long-term relationships with the users and
want high user satisfaction, quick turnaround, fast funding, and easy-to-use processes.
They rely on Caterpillar to work by their side, and they are not disappointed. Through
territory managers who office on-site, dealers are well supported to represent the
Caterpillar brand experience.
Key Finding:
Best-practice organizations strive for single-contact problem resolution.
As discussed in Chapter 1, 80 percent of the partner organizations measure onestop shopping through their level of first-contact resolution. They ensure that the
customer has to make only one contact to have a question answered, order a product,
or lodge a complaint. Fifty percent of the partners report that their levels of firstcontact resolution are trending upward.
High levels of first-contact resolution not only mean satisfied customers but also
increased productivitytransferring customers from one area to another consumes
resources. Those with high levels of first-contact resolution have improved their work
flows and torn down their silos. They have created an environment in which the
company is transparent to the customer, that is, the customer can easily understand
how to do business with the company. As previously discussed, four of the five bestpractice partners measure first-contact resolution.
In addition to striving for first-contact resolution, best-practice organizations
do not leave customers wondering what happened to their product, suggestion, or
complaint. The study finds that all partners have a formal process for closing the
loop on outstanding issues. Partners realize that reconnecting with customers to
answer questions, notify them of changes, or inform them of progress is essential to
an excellent customer experience.
All of the partners use verbal communication to keep the customer up-to-date;
80 percent use written communication.
Lands End has specific customer support representatives who are tasked with
closing the loop with customers on issues such as out-of-stock items and follow-up
calls to first-time buyers.
51
Chapter 2
Eighty percent of the partners have the capability of letting the employees know
how the loop was closed with the customer. When agents know how issues are
resolved, they are more capable of solving the same issue with a different customer
more quickly and efficiently.
Harrahs first-contact resolution is tracked at the call centers and is currently above
90 percent and trending upward.
To streamline a customers interaction with Lands End, call centers operate 24
hours a day, seven days a week. Operators are encouraged to spend as much time with
the customer as necessary, which allows them time to converse with the customers to
give them advice, cross-sell, and make sure their orders are complete. For example,
if the customer on the phone or chat line needs someone to measure a garment, that
employee is able to walk quickly to a central closet, locate the article of clothing, and
measure any dimensions the customer needs.
Lands End also closes the loop proactively. The company concentrates on
delivering quickly. If the company is unable to deliver an item, an operator personally
calls the customer back to let him or her know. (The call-back program works to
increase sales because the customer typically orders one or two more items to replace
what is not available.)
Additionally, having associates that are well trained and can easily access requested
information lends itself to achieving first-call resolution. Currently, the companys
first-contact resolution level is at 94 percent.
52
c h a p t e r 3
53
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feedback as the impetus for change. The biggest business drivers for improving the
total customer experience are competition and commoditization.
Air Products believes that the best way to differentiate its products and services in
a commodity marketplace is customer segmentation deployed through a branded
customer experience.
For Caterpillar Financial, being a captive lender does not mean that customers,
including Caterpillar dealers, are required to use the companys services; therefore, the
company recognizes that strong customer relationships are critical to its success.
Instilled in Lands Ends culture of customer service is the idea of building close
customer relationships as a competitive differentiator, and the rest will take care
of itself.
Key Finding:
Investing in delivering a brand-consistent, high quality, end-to-end customer experience across
interaction channels and throughout the customer life cycle generates higher customer lifetime
value and a growing number of loyal, profitable customers, which translates into profits and
greater company value.
Good Customer Experience Increases Customer Loyalty, Which Drives Profitability
Best-practice partners believe, and several can explicitly demonstrate, that their
efforts and initiatives to manage the total customer experience have resulted in
increased customer satisfaction and loyalty, which in turn correlate into increased
organizational profitability. Three of the five best-practice partners have created an
economic model that objectively links the impact of their efforts to manage the total
customer experience on revenues and profits. Two out of three partners indicate that
this model was internally developed (the third used a consultant/vendor for model
development).
Harrahs can track customer satisfaction scores to profitability at an individual
customer level and has been able to demonstrate that changes in customer satisfaction
drive changes in revenue. The results of its analysis demonstrate the importance of
keeping loyal customers satisfied and of moving target customers satisfaction scores
upward. A migration in a customers satisfaction score from a B to an A, for example,
translates to an increase in revenue from that customer by 10 percent to 15 percent.
Likewise, when a customer moves from a C to an A, this increase is even more
dramatic. On the other hand, if a customer moves from an A to a B, or a B to a C,
his or her revenue declines dramatically. Therefore, a key focus of marketing and
IT at Harrahs is to enhance the customer experience. In 2004, Harrahs achieved
approximately 50 percent A scores across all properties and programs.
Harrahs Total Rewards customer-loyalty program has enabled Harrahs to
assemble a database of more than 28 million players who accumulate cash, comps,
and other benefits by playing at any of their casinos.
54
c h a p t e r 3
Three out of five study best-practice partners can quantify the impact of their
efforts to manage the total customer experience on revenues.
At Air Products, using profitability analysis to drive customer segmentation to
tailor customer experiences for different types of customers has served as a key tool to
more than double profits. By focusing on providing the tools and information that
its smaller business customers needed in order to decide whether or not a customdesigned product would fit their needs, Air Products was able to lower its costs to
provide custom samples, to shorten the time to adoption, to dramatically increase
the adoption of custom products, and dramatically improve the cycle time for
break even.
Caterpillar Financial is able to correlate specific customer metrics with increased
profitability. For example, by shortening the total time to loan approval by industry
segment, Caterpillar Financial was able to increase equipment sales by its dealers
without sacrificing loan quality. By improving the turnaround time on loan
modificationssomething customers cared about a lotCaterpillar Financial was
able to improve collections.
8 Source: www.hoovers.com (retrieved April 2005)
55
chapter 3
Lands End tracks the recency, frequency, and order size by customer. The company
correlates catalog drops to customers buying behavior and shortens customers timeto-decision by providing tools and resources to help customers make up their minds,
such as good decision-making tools on their Web site (e.g. sizing charts and product
comparisons). For example, Lands End offers a free swatching service to its customers,
whereby customers request swatch cards of different fabrics for products that they are
considering buying that are then mailed to the customer within 24 to 48 hours. While
this generates a cost to Lands End, the company has found that a high percentage of
these customers (in the 70 percent range) call the company back to place an order.
Lands End also carefully monitors the payback on customer experience initiatives
taken at other stages in the customer life cycle. For example, once customers have
made an initial purchase, Lands End customer service representatives are involved
in a first-time buyer call-back program whereby representatives call these first-time
customers back within two weeks of purchase to ensure that everything is all right with
the order (no upselling involved). The company has found this program to increase
customer retention and rebuying. Similarly, the item unavailable call back program
(representatives call a customer back personally if an item is unavailable) has also
been rewarding for both customers and the company because it typically results in the
customer ordering other items as a result of the call.
Key Finding:
Investing in streamlining customer-critical processes decreases costs-to-serve and
increases profitability.
By focusing on monitoring and improving what matters most to customers, bestpractice partners are beginning to show lower costs-to-serve (and therefore increased
profitability).
Air Products and Chemicals reported that by aligning customer experience with
customer segments, it was able to reduce its cost per project by 50 percent, while
increasing project adoption rates by 70 percent and shifting its break-even on one
product line from 3 years to four months.
Caterpillar Financial has dramatically reduced its costs to support its end-customers
and its dealers by empowering both through the use of technology (for example,
the introduction of FinancExpress to automate loan processing for dealers in 2001
increased dealer self-service, thereby reducing Caterpillar Financials costs-to-serve
dramatically, at the same time that more loans are processed more quickly and more
products are sold).
Cisco has reduced the cost and complexity of managing separate voice and data
networks and increased its ability to deliver much higher first-contact resolution to
customers, partners, and employees, with greatly reduced costs-to-serve. By moving
to a single, cross-functional, 24 by seven follow the sun customer/partner/employee
support model, Cisco is able to lower its costs-to-serve and deliver much more
complete single-contact resolution.
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Key Finding:
Investing in improving employee experience to improve customer experience results in greater
employee and customer loyalty and lower costs-to-serve.
A similar story is told by the detailed questionnaire with regards to the ability of
study participants to go one step further in the service-profit chain and quantitatively
link employee satisfaction to customer satisfaction/loyalty and in turn to organizational
profitability: Three out of five best-practice partners have been able to quantitatively
prove this linkage.
Lands End recognizes the pivotal role that employees play in delivering on the total
customer experience to the extent that the corporation has implemented a heavily
employee-centric (in addition to customer-centric) culture through a significant
investment in training, an open-door environment with leadership, and an open
communication policy with employees, which has resulted in high tenure and low
employee turnover.
APQC conducted a recent secondary literature search to explore the explicit
quantitative relationship between employee satisfaction and customer satisfaction.
This concept is an entrenched one over the years, and a number of studies
have demonstrated this relationship. Below are some sample statistics from the
literature search.
A five-point improvement in employee attitudes will drive a 1.3 point improvement
in customer satisfaction, which in turn will drive a 0.5 percent improvement in
revenue growth.10
A 5 percent increase in employee commitment results in a 2 percent gain in
customer loyalty, which in turn drives a 2 percent gain in profit.11
Correlation of customer satisfaction and employee satisfaction is 0.86.12
Correlation of employee satisfaction and patient satisfaction is 0.89.13
Taco Bell identified outlets with the lowest levels of staff turnover as generating
up to double the sales of those at the highest end.14
13Source: What Goes Around Comes Around. The Satisfaction Monitor. Mar/Apr 1999.
14Source: Putting The Service-Profit-Chain to Work. HBR. Mar/Apr 1994.
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c h a p t e r 3
that it can increase revenue (through capturing lost revenue opportunities, increased
customer satisfaction and loyalty, and increased share of customer spend) and
decrease expenses in the process, but this was not a driving factor in the business case.
While it is too early in its implementation to discuss the ultimate business results
from the Customer Interaction Network, preliminary input from customers has
been favorable. In addition, not only is the CIN anticipated to increase customer
intimacy and satisfaction, but a positive byproduct will also be its favorable impact on
operational efficiencies through increased Web self-service and resolution, increased
resource utilization, reduced cost for communications infrastructure, and reduced
agent attrition. In general, over the past year (fiscal 2003 to fiscal 2004), the company
experienced approximately a 17 percent growth in sales.16
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c h a p t e r 4
All of the best-practice partners have mature customer information systems that
maintain accurate records of customer accounts, transactions, and customer history.
While all of the partners felt that they could do even better in managing their own
view of customer information and in analyzing that information, they all have robust
customer information systems.
Lands Ends mainframe-based customer information system tracks all present
and past Web and catalogue orders. Customer profiles and family members profiles
are maintained in a centralized database that is used as the source for segmented
marketing campaigns.
Managing the Total Customer Experience 2005 APQC
61
chapter 4
62
c h a p t e r 4
Key Finding:
Best-practice organizations use technology to provide
customers the ability to serve themselves throughout their
customer life cycles. Customers are willing and able to serve
themselves to accomplish most of their desired outcomes.
Effectiveness of Customer
Self-Service Capabilities
(1 - Not effective, 5 - Very effective)
Problem resolution
The most significant finding in the technology realm
is the degree to which best-practice partners have enabled
User prole management
their customers to serve themselves via the Internet and/
Product delivery status
or IVR (Figures 16).
As can be seen from Figure 16, partner organizations
Renewals or replenishment
have made it a point to enable customers to perform a
wide variety of tasks, from checking on the status of a
Service/Approval work ow
product delivery, to setting up a product, to resolving
Product set-up
a problem or issue, scheduling an appointment,
managing a service contract, paying or contesting a bill,
Appointment scheduling
changing the customer profile or account information,
Billing questions
purchasing products or services, getting help or
guidance, and receiving alerts and notifications. This
Change of customer
information
outside in approach to customer self-service is a key
differentiator for best-practice organizations. Partners
Product usage, training,
or guidance
expect customers to serve themselves and want to enable
Account status inquiry
customers to do so.
Air Products and Chemicals offers its customers
Product/Service purchase
self-service functionality via its AP Direct suite of
applications. This is a customer portal that enables
Alerts and notications
customers to customize their own views into a variety
Product/Service selection
of applications (such as orders placed via EDI, real-time
pricing information, and auctions).
Product/Service information
At the core of Caterpillar Financials success are the
1
dealer self-service and customer self-service applications
Partners (n=5)
that enable both dealers and customers to serve
Figure 16
themselves. End-users and dealers can use FinancExpress
to initiate their own quotes, credit applications, and
documents 24 hours per day, seven days per week.
AccountExpress provides users and dealers the ability to
access and maintain their account records online.
Cisco has long been a strong proponent of enabling customer self-service
throughout the customers life cycle by providing self-service tools to both endcustomers and dealers that enable them to configure their own systems, place orders,
change orders, track shipments, get technical support, and renew maintenance
contracts. With the advent of the Customer Interaction Network, customers who
have difficulty using the Web site to accomplish their desired outcomes will be able
to get directly to an empowered contact center representative who can handle any
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
4.8
4.7
5.0
5.0
4.0
4.6
4.4
2
Average
63
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question the customer has at any point in the customer life cycle and then co-browse
with the customer to show him how he can find the solution online the next time.
Lands End provides a best-in-class Web site that more than 50 percent of its
customers use to place and manage their orders. The Web site is seamlessly integrated
into Lands End contact center operations. Sales associates can assist customers via live
chat (Lands End Live) or by pushing particular Web pages to the customer and/or
enabling co-browsing.
Harrahs provides customer self-service via the Internet site as well as via IVR for
customers to manage their Total Rewards accounts, to book reservations, to avail
themselves of special offers, and to redeem rewards.
Key Finding:
Best-practice organizations use technology to provide customers with a consistent view of their
accounts across channels and touch points. Customers can manage their own accounts.
c h a p t e r 4
65
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the ability to launch a collaboration agent to assist if needed. The end result consisted
of having all access media well blended, whether via e-mail or telephone call.
Lands End provides customers with an industry-leading Web site that enables
customers to handle virtually any kind of transaction they want or need to do.
Customers have access to their complete profile (including stored personal profiles,
stored address books, and reminders).
Key Finding:
Best-practice organizations use technology to provide customer support and service personnel
with the information that they need and provide a consistent view of the customers accounts
across channels and touch points.
c h a p t e r 4
100%
100%
100%
0 10 20 30 40 50 60 70 80 90 100
Partners (n=5)
Frequency of Response
Figure 18
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68
Lessons Learned
m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e
Partner Organization
Case Studies
85 Cisco Systems
97 Lands' End
69
m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e
Air Products
and Chemicals
71
a i r p r od u c t s
This case study looks at the work of one business within Air Products. The
process and experience depicted in the case study are works in process and are being
replicated globally throughout all applicable businesses within Air Products.
The Customer Experience at Air Products
72
For many years, Air Products viewed the customer as king and perceived itself as
being all things to all customers. The approach to customers has evolved over time
to a new philosophy. The customer focus has remained intact during this evolution,
and the current culture at Air Products is now to consistently provide the customer
with only the products and services that they truly value. This is also the focus of the
segmentation theme discussed previously. Value is defined by the company as what
the customer is willing to pay for, and the companys current stance is to strive for
more of a win-win situation for the customer and the company.
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a i r p r od u c t s
The Web site for Air Products, www.airproducts.com, is a touch point for the
customer and has also been part of the evolution toward providing customers with
a branded customer experience. Air Products initially invested in the Web site, AP
Direct, with the belief if you build it, they will come. At first, the site manually
entered orders into an ERP (enterprise resource planning) system. In addition to order
entry functionality, AP Direct also contains a suite of other applications that promote
effective and efficient customer self-service.
Presently, AP Direct has effectively integrated ERP into the order entry system.
Additionally, the current online service is continually adding functionalities to target
specific audiences and provide improved online customer self-service.
UNDERSTANDING THE BUSINESS CASE FOR MANAGING THE TOTAL
CUSTOMER EXPERIENCE
Linking the Customer Experience to the Organizations Brands
74
Our commitments
to our customers
Brand Aim
Knowledge
Determination
Brand Essence
We push quality
Relationships Lasting relationship built Dedication
on understanding
standards higher
and higher involving
customers and
Honesty
Enthusiasm
suppliers
They look after
me well and get
Commitment
Openness
things done right
When we say
something we do it
Substantiators
They help me
stay ahead
Brand Characteristics
Understanding, integrity
and passion
Figure 20
throughout different business segments. The interview results legitimize the brand of
the company.
Air Products has linked managing the branded customer experience with its
brand. From a customer perspective, each principle of the brand comes with a promise
from the company. For understanding, the company promises that it will consistently
anticipate customer needs and provide what the customer truly values. For integrity,
Air Products promises that it will always be true to its word. If Air Products makes a
commitment, it promises to deliver and to do so in a safe manner. Safety is a core value
at Air Products. The company has been identified as one the safest chemical companies
in the United States over the last five years. However, within a customer segment, the
company will only commit to whatever is in the customer offering. For passion,
Air Products promises to strive to exceed customer expectations to achieve a mutual
benefit. As discussed previously, the company culture now focuses on achieving a
Managing the Total Customer Experience 2005 APQC
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a i r p r od u c t s
win-win result for the company and customer. Company commitment is predicated
on the customers value to the company and what that customer will truly agree
to purchase.
ORGANIZATIONAL STRUCTURE AND SUPPORT IMPLICATIONS OF MANAGING THE
TOTAL CUSTOMER EXPERIENCE
Structure and Accountability
Air Products has created a structure of processes and tools to achieve its objective
of deploying customer segmentation through a branded customer experience. The
management of this process begins with the business strategy. In this stage, Air
Products attempts to develop additional capabilities by performing profitability
analysis and customer feedback analysis, largely around loyalty studies and customer
value analysis research.
From this strategy work, the company determines operational targets, business
levers, and the product-services hierarchy. This then leads to the customer
segmentation phase. In this first phase of the process, several tools are used. Price and
profit management is one such tool. Customer feedback analysis is also performed in
the segmentation phase, and includes a complaint resolution process. This process is
currently being examined further to identify areas for improvement.
The customer value analysis portion of this section has been conducted on three
previous occasions with positive results. Here, the company looks at what offering
attributes the customer values, how the company performs against those attributes,
and how competitors perform. This is a more sophisticated tool, requiring surveying
beyond the customer base. Additional interviews must be conducted with competitors
customers to assess Air Products value performance relationship in the market relative
to its competition.
Profitability analysis is another crucial portion of the structure. It is important that
the company understand the profitability implications at the business and customer
levels. In addition, the company performs a competitive analysis by finding and
analyzing industrial best practices. This relatively new effort is evolving into a formal
program and includes internal and external benchmarking.
Within Air Products, internal service level agreements are utilized as the move
toward a multi-tiered approach within the customer service organization takes place.
Agreements are reached between the Air Products business units and support groups,
so that the business units clearly understand what level of service each customer
segment will receive. Customer service levels are determined by business predicated
on the segmentation.
These tools and programs lead to the segmentation plan, which includes:
customer categories;
offerings;
business rules;
channel strategy, direct or indirect;
76
77
a i r p r od u c t s
78
4. the economic impact of segmentation analyzed and embedded into business line
operating targets.
In order to implement this strategy Air Products had to first create a core, crossfunctional segmentation team. This team developed the segmentation criteria to align
with overall business strategy elements. It also developed an attributes matrix for
segmenting customers in order to determine what criteria a customer had to possess
to drive the strategy forward. Within each category, the team listed attributes that
would determine potential, such as the customers growth rate and market share.
The attributes were determined as part of a large group function across Air Products
teams. After three iterations, the list of attributes was narrowed down to the final
objective list. Often, the segmentation team would interview customers to validate
information. Customers received a number of points based on their position in the
market. For instance, if a customer was within the top five in their market, then they
would be a candidate for the top-level customer segment.
After segmenting the customer base, the company created a master list of services
that they offered and ranked these activities by function and importance. The services
could be divided into four categories: technical services, sales services, commercial
services, and supply chain services. These services were then prioritized by asking if
Air Products could provide varied levels of service for different customers and which
customers had the highest potential for creating additional value based on the strategy.
If a customer met the established criteria, then Air Products would provide the product
or service. After these service levels were developed by segment, the segmentation team
created channel strategies and customer account plans. This was critically important
as it linked day-to-day actions with the segmentation plan, and thus ensured that the
strategic goals of the business would be implemented.
Air Products segmentation team validated services with customers, trained
customer-facing employees, created tracking metrics, established profit impact goals,
and began implementing the process to institutionalize the change.
COMPLETENESS/CONSISTENCY AND EASE OF ACCESS
Information/Content Repositories and Accessibility
Regarding information access, Air Products utilizes both direct and indirect
channels to create a branded customer experience. In the indirect channel, the
company has a network of distributors and agents who play a critical role in facing
customers. Additionally, Air Products has formed a Distributor Advisory Council to
foster the relationship between the organization and its distributors.
In some business units within the company, Air Products chooses to work with
distributors, and in other cases the company enters into agreements with sales agencies
or a field sales person. This decision is considered the first phase of the process to
determine channels to market. When making this decision, the first factor considered
is the cost to serve model. The costs of a field sales person to sell to a particular
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80
Air Products also utilizes mechanisms to collect customer feedback and analyze
customer loyalty. Through benchmarking efforts, the company has realized the
importance of understanding the voice of the customer (VOC). This has been the
crucial first step in shifting the company toward a customer-focused culture. The
cross-functional team at Air Products selected Burke, Inc. to assist in the creation of
an ongoing VOC process.17 The ongoing customer loyalty process at Air Products
includes gathering information through surveys of customers around the world via
17 Ricci, Robert. Move from Product to Customer Centric. Quality Progress. November 2003.
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telephone and the Internet, disseminating survey results throughout the organization,
and tying the information to the business strategy to highlight critical improvement
needs.18 Members of the different business units have been involved in both the
survey creation and the identification of customers to contact. This involvement at
the business unit level has been critical in obtaining overall support for the changing
culture. Eventually, the company began surveying customers on a regional basis with
different business units each quarter, which helped the customer loyalty processes
evolve into an ongoing listening post for the entire company.19
Air Products acknowledges that although measuring customer loyalty is valuable,
it is merely a measurement of itself. The company realizes the need in the future
to move beyond just measuring customer loyalty and also focus on a market value
analysis, including comparisons to competitors.
SUMMARY AND LESSONS LEARNED
18 Ibid.
19Ibid.
82
Looking ahead, Air Products has established goals to further its effectiveness in
this area. First, it is working to integrate tools in managing the branded customer
experience that will create a consistent touch and feel for the customer. Additionally,
the organization plans to develop new capabilities across the various businesses.
For example, a tool chest is being developed from a marketing perspective to be
integrated across the businesses. Also, Air Products will be finalizing segmentation
efforts for customers who have not yet gone through the process. Furthermore, the
organization plans to revisit businesses that have already been segmented. This is done
to review the results of the business, how customers responded, and any business
strategy changes and how that might impact the segmentation and offering. It also
serves as a refresher course and again reinforces the commitment to the branded
customer experience at Air Products. Finally, the company drives the branded
customer experience into everyday work. Air Products believes the branded customer
experience manages customer expectations, creates customer loyalty and perceived
value, mitigates the risk of becoming too internally focused, and short-circuits
employee indifference. In summary, Air Products believes that the branded customer
experience has equity for the company.
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cisco systems
Cisco Systems
isco Systems develops and markets hardware, software, and services for Internet
solutions. Its products include routers and switches, remote access servers,
Internet Protocol (IP) telephony equipment, optical networking components, and
network service and security systems. Cisco sells its products and services directly
through its own sales force and indirectly through a network of channel partners,
including resellers and integrators. The company primarily sells its products to
large businesses and telecommunications service providers (switchers and routers
account for about 65 percent of sales) and also markets some products to small
businesses and consumers. Cisco faces many competitors in all of its market segments.
Key competitors include 3Com, Extreme Networks, Juniper Networks, and
Nortel Networks.
Founded in 1984, Cisco sold its first product in 1986, and the company went
public in 1991. Since 1993, Cisco has used acquisitions to broaden its product lines.
These acquisitions also enabled it to acquire engineering talent in short supply due
to a highly competitive industry environment. In 2001, as a result of the technology
industry downturn, it faced multiple challenges. The biggest challenge was that Cisco
had invested heavily in IP telephony equipment and services, and customer purchases
slowed dramatically. Therefore, Ciscos CEO John Chambers decided to change the
structure, aligning the business by core technologies instead of customer segments.
The Customer Experience at Cisco
Customer success is not only a personal passion of mine, but our first priority
as a company. No matter how good we are, the one thing that can bring us down
is getting too far away from our customers. Ive seen it happen time and time
again, which is why we take a fanatical approach to customer success and
view it as the foundation of our culture.
John Chambers, president and CEO
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cisco systems
For 20 years, Cisco has grown at an extremely rapid pace, mainly through
acquisitions. Because of its growth, multiple contact centers were established to handle
the large number of customers needing service. As a result, customer interaction
was siloed, and customers were getting lost in Cisco processes. The customers
perceptions were that Cisco was very bureaucratic and solutions were too difficult
to access. For example, Web tools had been implemented without regard for ease-ofuse functionality. Customers attempting to use Ciscos Web tools often got lost and
confused. This situation prompted Ciscos problem statementto make changes in
the way customers were serviced and improve the overall customer experience.
Identifying Customer-centric Processes
As Figure 21 indicates, the first step taken to improve the customer experience
was to identify key business processes. In order to make the company more efficient,
streamlining processes was a priority. To accomplish this goal, the Business Process
Operations Council (BPOC), a corporate council made up of select executives,
identified necessary key processes. The council has representatives from all Cisco
service lines who are tasked with analyzing processes across the enterprise. Additionally,
the company created a common front-end support organization across all customerfacing functions. The main questions that Cisco had to answer were how to streamline
the customer interface to ensure that the key processes were going to work and how
the customer interaction at the first level would be in line with the optimization of
the processes.
The strategic objective for Cisco was streamlining the customers first contact via
the Web site to ensure that value-added actions were taking place. Cisco acknowledges
that it is more typical for its customer to go to a Web site than to use a phone number.
Therefore, Ciscos goal was to ensure that customers would be able to find answers
easily by navigating its site. To achieve that goal, Cisco had to ensure that its Web
pages were easy to navigate and that Web collaboration was effective. A scenario Cisco
kept in mind was if a customer navigating through its Web site was unable to obtain
support or even create a service request online, then the customer might quickly
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cisco systems
Market
to
Sell
Research to concept
Research to market
identification
Concept to commit
Design to prototype
Validate to ramp up
Monitor to improve
Improve to EOL
Quote
to
Cash
Forecast
to
Delivery
Source to buy
Order validation to
commitment
Forecast to plan
Campaign to lead
Delivery to revenue
recognition
Ship to receive/install
Lead to order
Invoice to cash
Account strategy to
relationship
Contract to renewal
Market identification
to plan
Plan to build
Commit to deliver
service
Issue
to
Resolution
Issue detection to
problem identification
Develop solution to
resolution
Return to replace
Closed loop feedback
Figure 21
leave the site and move to a competitors site. The thought of competition was a key
motivator for ensuring that the Web site would satisfy customers needs.
The Customer Interaction Network (CIN)
Since Cisco customers access services through various media, it was imperative
that customers have meaningful and useful contact the first time. To accomplish
that goal, Cisco created a common front-end customer support organization across
customer-facing functions. This change resulted in the creation of the CIN, powered
by Ciscos own technology. In the beginning, the call center experience was made up
of captive interaction in a one-to-one scenario. One customer spoke to one agent, and
consequently, one question resulted in one answer. Some Web interaction existed but
mostly internally through the agents access, browsing for documentation. With the
arrival of the contact center, some media blending took place, and customers had some
interaction via the Web site. Cisco decided to take the next step in completing media
integration by leveraging its full suite of technologies. This would allow customer
autonomy in accessing answers through Ciscos Web site and the ability to launch a
collaboration agent to assist if needed. The end result consisted of well-blended access
media, whether via e-mail or telephone call. The initial contact center went through
an evolution to become the CIN as depicted in Figure 22, page 88. Cisco approached
and presented its ideas for the CIN to customers, and the ideas were well received.
87
cisco systems
88
cisco systems
Differentiated
Services
CIN
Customer
Value
Low
Contact
Center
Operational Efficiencies
Increased Web self-service and
resolution
Increased resource utilization
Reduced TCO for communications
infrastructure
High
Call
Center
Revenue Growth
Capture lost revenue opportunities
(Cross-sell/up-sell)
Necessary
Evil
Low
The role of the agent in Ciscos CIN is to take ownership of calls on first contact.
Ciscos goal is to achieve one-call resolution, thus becoming a one-stop shop. To
achieve that goal, a metric shift from time on the call to the value of the call took
place. For example, how long a customer stays on the line is no longer a metric; what
is important is the agent going the extra mile to get the customers problem resolved.
The agents goal is not to flood customers with multiple questions, but to empower
them and give them ownership of their own success.
Managing the Total Customer Experience 2005 APQC
89
cisco systems
Leverage the
Internet
Allow agent to take
customer to the
Internet hands free
Web collaboration
Core
customer expert
CiscoLive!
Cisco.com / CEC
ISAAC web
portal
GEM agents
Contact Center
Technology
Customer
request
Intelligent
routing
Customer interaction
network agent
Figure 24
The role of the agent becomes more strategic as he or she becomes the voice of
the customer. Agents are the ears of the company since they are the entry point for
customers. Agents identify the type of relationship Cisco has with specific customers,
in terms of support contracts (e.g., gold level support) and must effectively follow
processes and document pertinent information.
INVESTIGATING THE TECHNOLOGY ENABLERS TO CREATE A total CUSTOMER
EXPERIENCE
The Vendor Model
The CIN was established based on an outsource model for the front line as shown
in Figure 25. With traditional processes, Cisco had silos in the organization. It was
very difficult for a customer to go from an incorrect department to the right one. The
ISAAC tool enables Cisco to capture knowledge that can be accessed by multiple
agents. In addition to streamlining processes, the ISAAC tool enables agents to build
up their knowledge base so that they can take more second line calls. For example with
the ISAAC tool, an agent in Germany is able to access knowledge and information
created by an agent in another location. This tool enables agents to instantly expand
their own knowledge and skill set. Agents use a red flag system to document customers
feedback and offer opportunities for improvement.
In 2004, Cisco conducted a rigorous request for proposal (RFP) process lasting
approximately six months. An RFP team was assembled to review the possible vendors.
The RFP team of 30 employees had representation from existing call centers, the
second line call center, and also from cross-functional groups with representation from
areas such as procurement and HR. GEM was selected as the vendor in Belfast.
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cisco systems
$
Satisfaction
$$$
New Process:
Ongoing streamline of operation tools
In 2005 Cisco will select other site-specific vendors. A key criterion for selecting
site-specific vendors is a good culture match. Other criteria in vendor selection are
that the vendor must have a local look and feel and operate 24 hours per day, seven
days per week. Cisco wants to ensure that vendor-managed agents are offered a career
path as they contribute to the value-added customer experience.
As shown in Figure 26, page 92, agents are cross functional and not organized by
business line. Agents are rewarded on their cross-functional ability, on the number of
skill sets they posses, their availability, and overall customer satisfaction. These agent
measures are important for Cisco as they focus on value add and the contribution
of quality feedback. Although Cisco is engaged in outsourcing, it wants to continue
to capture knowledge utilizing the ISAAC tool as its mechanism to obtain quality
feedback. The feedback can then enable the company to improve processes.
Cisco has three basic call types: a simple call hand-off, a typical front-line request,
and a call with a request that may require a more complex level of support. Ciscos
goal is to continue to build the ISAAC tools capability so that agents are able to take
more of the second level support calls, thereby increasing value. The goal is to reduce
the amount of calls that are transferred and have the first agent resolve issues and close
out the call.
Cisco is concerned with maintaining a positive morale among its agents. If an
agent is unable to resolve a customer issue, he or she may feel a sense of dissatisfaction
as a result. In order to address that issue and avoid future instances, agents can use
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cisco systems
Quality,
Learn,
Improve
Quality,
Learn,
Improve
Web collaboration:
Using Web collaboration to help customers
find and learn to use our online resources
Three basic call types identified:
Simple call hand-off
Typical front-line requests
Requests that traditionally require
second level support
Quality,
Learn,
Improve
Pure
Transfer
Web
Collaboration
Handle
or Resolve
First Line
Web
Collaboration
Handle
or Resolve
Beyond
First Line
Benchmarking
Cost
Impact
Customer
says . . .
Idea and
improve
Process
and change
Global Standards
ISAAC
ICM
Collaboration
IPCC
Web portal to
CRM systems
Organization independent
Utilize ISAAC
Capture experience
Capture barriers
Figure 27
92
CISCO systems
Cisco tracks the reasons customers are calling to ensure that it is adding value.
Some calls must be escalated immediately, such as a network being down. The ISAAC
tool enables agents to select the right category to request action and subsequently
finish out the call. The action class in ISAAC will indicate what the agent did. The
Cisco.com registration scorecard shows not only why a customer is calling, but also
what the agent did to assist them. The following list of action codes are commonly
used to track interaction with customers.
Dropped Call
Escalated: ISAAC Info Inadequate
Escalation Only Process
Handled: Follow Up Initiated
Last Resort: No Process Found
Resolved: No Further Contact Required
Sales Lead or Marketing Form Submitted
Transfer to Named Employee
Figure 28 shows the survey methodology Cisco uses to measure customer
satisfaction. The sources for the survey are customers who have experience with Cisco
products and services. According to its latest numbers, Cisco reports that out of 64,000
people who replied to a survey, 47 percent of the respondents were staff. This is a good
indicator for Cisco because it wants to obtain feedback and information from people
who actually touch its product and deal with its services. Primary and secondary
surveys are conducted in order to pull information from multiple sources.
Survey Methodology
Source
Customers with experience with Cisco
products and services
Commerical
27%
BP 33%
Theatre Distribution of Survey Sample
Customer Profile
63,998 customer replies
APAC
18%
9% CxOs/Execs, 8% directors,
27% managers, 46% staff, 10% other
EMEA
30%
AI 8%
Japan 4%
U.S.
40%
Figure 28
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CISCO s y s t e m s
On its survey, Cisco asks customers to rank their experience. The company tries
to minimize the use of numeric scales to simplify international data collection. This
approach allows for greater consistency, since numerical rankings may be confusing
depending on the country of the customer. When an agent must escalate a call to a
tier-2 agent, the customer will not be surveyed until the call is closed and resolution
achieved.
Loyalty is another key metric that Cisco measures. The loyalty scorecard is derived
from the customer satisfaction surveys. Cisco has information on the impact on
the bottom line resulting from increased customer loyalty. Cisco measures value,
marketing, competition, and account teams. The account teams are measured because
of their direct contact with the customers; they obtain feedback related to product
satisfaction. Also, Cisco operates through a large reseller network. It is important that
they know how the resellers are doing with the end customer.
Some of the data sources Cisco uses in its measurement analysis include:
global customer satisfaction survey,
U.S. customeroutbound transactional survey, and
USA brand marketing research brand equity.
Agent Compensation
Ciscos quality control center for the CIN will be moving into a new building in
May-June 2005. This building is referred to as the connected building because the
entire building has wireless capabilities using IP connected telephones, and there are
no hard-wired telephones. The building is able to accommodate up to 400 people, and
it is part of the executive briefing tour for customers. Within the control center, Cisco
will have a set of agents testing new documents, software, new releases of ISAAC,
and various other Cisco products. The center enables the agents to test in a real time
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CISCO systems
environment. These agents will be tasked to ensure that products are well-designed
and that documentation is effective.
Internal Benchmarking
One of the key lessons for Cisco was the need to focus on quality. Quality
begins with creating an appropriate job profile for the CIN agent, whether inhouse or outsourced. The job profile should clearly articulate the necessary job skills
and requirements to provide a good customer experience. The recruiting function
was very involved in ensuring the profile was effectively created as well as utilized.
Once candidates are identified and hired, they complete a comprehensive training
program including basic information, such as who is Cisco. Outsourced agents must
understand that they work for Cisco and not the vendor. This is the first step in
ensuring quality.
The second step in quality assurance is effective training. Once agents get on the
floor, their calls are monitored. Cisco has people shadowing agent actions on live calls
to ensure that they are providing the right answers to the customers. Surveys are used,
and feedback is provided to ensure that the perception of quality matches among the
agent, Cisco, and the customer.
A critical success factor is having a successful communication plan. Cisco noticed
that once there were any deviations from its communication plan, the roll out was
delayed. A clear communication plan is necessary, and changing the interaction model
with each country is imperative.
Additionally, the customer experience teams relationship with the IT organization
is critical. Technology enablement allowed Cisco to unify its contact centers to
provide a helpful single access point. The ISAAC tool provides ways for agents to
find answers to customer issues by capturing information and reusing solutions.
Another example of effective IT support took place in Europe. Cisco had many phone
numbers its European customers could use, and IT was able to successfully route calls
to the appropriate areas with comparative ease. The technology components are a
differentiator in Ciscos total customer experience.
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lands' End
Lands End
97
lands' end
Lands End has a reputation for excellent customer service. Some examples of its
customer-friendly policies are listed below.
The Guaranteed.Period. return policy allows customers to return any items at
any time for any reason for refund or replacement.
Specialty shoppers are available to help customers with sizing questions, gift ideas,
and wardrobe coordination from 7:30 a.m. to midnight every day.
The company will hem and cuff trousers free of charge for customers and supplies
swatches of fabric (as well as additional buttons or luggage parts or repairs) to
customers who request them.
The Lost Mitten Club will replace any childs mitten lost in the same season at
half the price of a pair, with free shipping.
The Customer Experience at Lands End
The underlying philosophy at Lands End is that what is best for the customer is
best for the entire company, and the organization strives to provide each customer
with a personal experience that builds a lasting relationship. The founder of Lands
End, Gary Comer, summarized Lands Ends work ethic and dedication to customer
service in The Lands End Principles of Doing Business.20 These eight principles
shape the way business is conducted throughout the various departments in
the organization.
1. We do everything we can to make our products better. We improve material and
add back features and construction details that others have taken out over the
years. We never reduce the quality of a product to make it cheaper.
2. We price our products fairly and honestly. We do not, have not, and will not
participate in the common retailing practice of inflating mark-ups to set up a
future phony sale.
3. We accept any return, for any reason, at any time. Our products are guaranteed.
No fine print. No arguments. We mean exactly what we say Guaranteed.
Period.
4. We ship faster than anyone we know of. We ship items in stock the day after we
receive the order. At the height of the last Christmas season the longest time an
order was in the house was 36 hours, excepting monograms which took another
12 hours.
5. We believe that what is best for our customer is best for all of us. Everyone here
understands that concept. Our sales and service people are trained to know our
products and to be friendly and helpful. They are urged to take all the time
necessary to take care of you. We even pay for your call, for whatever reason
you call.
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6. We are able to sell at lower prices because we have eliminated middlemen, because
we dont buy branded merchandise with high protected mark-ups, and because
we have placed our contracts with manufacturers who have proved that they are
cost conscious and efficient.
7. We are able to sell at lower prices because we operate efficiently. Our people are
hard working, intelligent, and share in the success of the company.
8. We are able to sell at lower prices because we support no fancy emporiums with
their high overhead. Our main location is in the middle of a 40-acre cornfield in
rural Wisconsin.
To contribute to these principles, the Lands End customer call center is staffed
24 hours a day, seven days a week. During the off-peak times of year, the call center is
staffed with approximately 2,300 sales representatives, while during the peak season,
this number increases to about 3,100.
Lands End has four primary call centers through which customers can experience
the organizations customer service. The first center is located at the companys
headquarters in Dodgeville, Wis. This was the first call center for Lands End and
began in 1979 with only nine telephones. The Dodgeville center is the only location
that is open 24 hours a day and also handles incoming calls from the United Kingdom
and Canada. There are between 600 and 900 representatives at this center that focus
exclusively on customer sales. These representatives handle various types of calls
including sales for Lands End for Men, Lands End for Women, Lands End for
Kids, Lands End for School, and calls received from the 800 number provided on
the Lands End Web site. In addition, this call center receives incoming calls on behalf
of the Wisconsin Board of Tourism organization.
Some of the more specialized services provided by the Dodgeville call center
include the first-time buyer call-back program. The company has been providing this
service since 1999. Two weeks after a customer has made his or her first purchase from
Lands End, a customer service representative will call that customer to ensure that
he was satisfied with the order. This practice has proven to be successful in increasing
customer retention, as well as re-purchasing in the future.
Another similar service provided by the Dodgeville representatives is the call-back
program for unavailable items. Representatives personally call a customer to let him
know that an item that he ordered is unavailable. As with the first-time buyer callback program, this service has proven to have positive results with customer retention,
as well as adding money to the overall order since the customer usually orders an
additional one to two items to substitute for the unavailable item.
Another call center is located in Cross Plains, Wis. This center was added to
the organization in 1988 and is open from 6:00 a.m. until midnight, seven days a
week. There are approximately 600 to 800 representatives working at this center,
including half of the group that handles calls originating from the number posted
on the Internet. (These calls are divided between the representatives at this center
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and the Dodgeville center representatives.) Additionally, this center receives all calls
originating from Sears locations.
Reedsburg, Wis. is another call center location for Lands End. This is one of the
organizations larger centers, with approximately 700 to 1,000 representatives. The
Reedsburg location was built in 1992 and is open seven days a week between the
hours of 7:00 a.m. and 11:00 p.m. This center, as with the other call centers, receives a
variety of calls for different areas of Lands End merchandise. Similar to the Dodgeville
center, this center was approached by an external organization, Weber, the grill
manufacturer, to handle its incoming calls as well. Lands End officers have indicated
that these external partnerships have proven beneficial to all parties involved.
The most recent addition to the call centers is located in Stevens Point, Wis.
This center was opened in 2001 and is staffed by approximately 250 representatives
during the peak customer season between the hours of 8:45 a.m. and 2:00 a.m.
Approximately 150 of the representatives handle Lands Endrelated calls, while the
remaining 100 representatives handle calls from Sears Direct.
Evolution/History of Managing the Total Customer Experience
There was no particular impetus that caused Lands End to concentrate on the
total customer experience. Providing a positive customer experience has always been a
crucial part of everybodys job function and the overall company culture. Even when
the company has gone through significant changes in its environment, leadership has
stressed the need for there not to be a resulting change in the customer experience.
Since Lands End believes that a strong synergy exists between employee satisfaction
and customer satisfaction, they feel that one way to ensure a consistent positive
customer experience is to maintain a positive employee experience as the company
undergoes periods of transition.
One of the significant changes was the companys first restructuring in 1999,
which resulted in a number of layoffs. Naturally, the remaining employees experienced
a mixture of fear and decreased morale as a result of the restructuring. Lands End
leadership reinforced its strong commitment to the employee base to ease the
resulting anxiety. To do this, the company has an open-door policy when it comes
to communicating with employees. If an employee requests to meet with a member
of management, the organization has committed to meeting with that employee
within 24 hours of the request. Employees are encouraged to speak with the person
with whom they feel comfortable, regardless of that persons title. This has allowed
employees to feel as if they are being listened to and that their concerns are not
being ignored.
Additionally, Lands End utilizes multiple communication channels to keep
employees informed and address any concerns. These channels include quarterly
meetings, communication meetings, distributing information via the company
intranet, and utilization of the company newsletter.
Another significant change for Lands End was becoming part of the Sears
organization three years ago. To assist in this transition, Lands End began an
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Ambassador program, where Lands End employees have been placed in select Sears
stores to train Sears personnel on the product lines. This has resulted in positive
feedback from customers, as well as an increase in sales. Fortunately, Sears has
given Lands End a significant amount of autonomy and has not changed its unique
culture. This has been instrumental in not causing a sense of culture shock for Lands
End employees.
As a result of stressing the importance of employee relationships, Lands End
was able to re-enter the 100 Best Companies to Work For, as ranked by Fortune
magazine in 2002. The leadership at the organization points to the tenets of respect,
pride, camaraderie, trust, and fairness in employee relations as crucial factors in
making this list.
Customer Touch Points/Access Mechanisms
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Mail openingThis team opens orders that have been physically mailed to the
company. This accounts for a small percentage of orders, but some customers still
prefer this method.
Gift certificatesThese representatives are tasked with the daily processing and
mailing of all gift certificates. The first electronic gift certificate was ordered
February 4, 1999, and gift cards were introduced in spring 2004.
PartsThrough this service, customers can get a needed part for an ordered item,
such as shoelaces or buttons. Additionally, if a customer loses an item, such as one
mitten, they can receive a replacement for one-half of the original cost through
the Lost Mitten Club.
SwatchingThis is a free service that has grown tremendously over recent years.
Currently, the company is sending out over 300,000 swatches a year for all items
except leather, cashmere, and quilts. After performing an audit, Lands End has
found that 73 percent of the time a customer who has requested a swatch will call
back to place an order.
Landsend.com
We believe what is best for the customer is best for all of us.
Lands End business operating principle no. 5
As discussed previously, there was no explicit catalyst for Lands End to focus on
the total customer experience. Providing customers with a positive experience and
building lasting relationships has always been the mission of the company.
Lands End has taken this commitment to a culture of customer service and
aligned it with its commitment to the employee base. The overall philosophy is that
strong employees will create a strong customer experience. The company takes pride
in customer feedback, and various customer letters and testimonials decorate the
hallways of the company facility.
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In order to foster a positive culture for employees, and consequently the customers,
Lands End encourages employees to provide input and become involved in decision
making. This collaborative work environment includes a casual dress code every day;
having everyone be on a first-name basis with everyone else; and modern, state-ofthe-art facilities. The goal is to make the company atmosphere similar to a family
atmosphere. The fact that the various facilities are all located in small town settings
has made this objective even easier to attain. It is not uncommon for employees to see
each other when shopping or during other activities outside of the office.
ORGANIZATIONAL STRUCTURE AND SUPPORT IMPLICATIONS OF MANAGING THE
TOTAL CUSTOMER EXPERIENCE
Structure and Accountability
In managing the total customer experience, Lands End has created a structure
that they believe will best deliver a positive customer experience. Figure 30 outlines
the corporate structure. Some of the executives listed in this chart have been employees
for more than 20 years and are, therefore, also a tribute to the companys strong
commitment to its employees.
Executive Assistant
Amy Gordon
Director
LEBO Operations
Jackie Johnson-Caygill
Senior Manager
Special Services
Mary Judkins
Senior Manager
RB Contact Center
and Promotions
Rhonda Clerkin
Senior Manager
DV and CP Contact Centers
Diane Huza
Director
Business Operations/ACE
Kurt Van Dyn Hoven
Figure 30
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The vice president of CSS and LEBO reports directly to the executive vice
president of employee services and customer sales. The senior manager of the special
services department, indicated above, oversees the handling of all incoming mail,
Internet inquiries, and the quality program. The senior manager of the Reedsburg
(RB) contact center manages customer service at this center, as well as promotions
and the specialty shoppers group, while the senior manager of the Dodgeville
and Cross Plains contact center oversees a portion of the Internet group and
employee services.
As discussed previously, all employees throughout the organization are tasked
with the responsibility of promoting a positive customer experience, so there are no
champions specifically responsible for driving change toward a customer-oriented
culture. The importance of the customer experience is evident at many levels,
including the executive level, as illustrated by the founders creation of the Lands
End principles of doing business, cited previously.
Contributors to a Customer-centric Culture
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Customer Support Processes
In order to enhance the overall customer experience, Lands End has redesigned
certain business processes to improve the quality of the total customer experience.
These processes include:
customer transfers,
product repairs,
product packaging,
problem resolution, and
returns handling.
Continuously improving product quality and offering new services with the
customer in mind is another crucial ingredient in managing the total customer
experience at Lands End. Lands End designers add numerous features into the
products to add quality, as well as distinguish them from those of competitors. For
example, the locker loop is included on the back of shirts, which is a unique feature
rarely seen elsewhere. All features like this one are also added to the products for
children as well. During the training process, trainers ensure that the front-line
customer service representatives literally get their hands on the products so that they
can learn about the product features and better convey product details consistently
to customers.
To further enhance the customer experience, the customer service representatives
make suggestions or offerings based on past customer orders. One such example is
the Great Go-Togethers program, which has been in place for the past 4 years.
Under this initiative, if a customer orders a pillow, a prompt will appear to the sales
representative reminding him or her to also offer the customer the opportunity to
purchase a pillow protector. This is considered a natural pairing. Similar procedures
are in place for ensembles; if a customer buys a swimsuit, then the representative will
also inquire if that customer also needs sandals or towels. Not all customer service
representatives were comfortable with this approach at first, so the change was made
to only have the representative make these offers if it feels comfortable to them.
Lands End estimates that approximately 30 percent of the sales representatives feel
comfortable enough to use this technique.
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Another service aimed at enhancing the customer experience is the Smart Service
program, which is currently in the pilot stage of development. The idea behind this
program comes from collaboration between customer service and the direct marketing
group. An example of this service is when a customer has purchased an item in the
past that has later been updated or improved, that customer would be notified of the
improvement the next time they contact the company to place an order. Another
marketing approach is to emphasize certain products to a customer based on their
geographic region, such as more light-weight clothes to customers in warmer climates.
One other technique includes identifying customers who have purchased high-end
items. When a representative receives a call from one of these customers, he or she will
receive a prompt to inform that customer of other luxury items, such as cashmere.
Again, the customer service representative must be comfortable with this approach
and have a seamless, natural approach to offering these items to the customer.
COMPLETENESS/CONSISTENCY AND EASE OF ACCESS
Information/Content Repositories and Accessibility
The following is a list of the customer self-service tasks that Lands End classifies
as very important to offer:
product/service information;
product/service selection;
product/service purchase;
product delivery status;
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data will translate that figure into a number of calls, which will enable the department
to accurately staff the center at the relevant time. Aspect technology is the primary
system used for forecasting. Lands End finds this system reliable, calling it the bread
and butter of forecasting.
Once the schedules have been established, they are managed on a daily basis.
Centerwide floor supervision provides the needed management. This type of
supervision looks at the entire enterprise, as well as the specific centers. Within the
individual centers, supervisors constantly monitor activity by the half-hour, and then
make staffing recommendations after predicting activity for future half-hours.
In order to do this accurately, supervisors need real-time staffing information.
As a result, the Intra-day team process was created as a form of exception reporting.
Any exception to the schedule should be reported, so a manager can then look at the
report to determine if the necessary staff is present. For example, if 100 customer
service representatives should be on the call center floor at a certain time, and there
are only 80, then the difference should be reflected in the exception report. If there is
a deviation, then that means a staffing issue must be immediately addressed.
Call routing is another area where technology plays a major role in the customer
experience. Lands End must route calls from 375 800 numbers, with 95 percent of
those calls coming in on the companys 12 main numbers. For its call routing needs,
Lands End uses the CISCO ICM 4.6.2 and Spectrum 8 systems.
All calls are supervised from Command Central at the Dodgeville campus. From
here, there is remote access to all the call centers, as well as a live, real-time view of all
calls received at all the sites. To ensure consistency, all call routing or scripting changes
are handled at the Command Center.
Some of the other call center products and solutions used include:
Aspect Series 6.11 WFM (workflow management),
Witness Systems e-Quality,
Cisco Collaboration Server (allows for the Web chat feature),
Sprint (Lands Ends inbound/outbound interexchange carrier), and
Nortel-Meridian PBX (Private Branch Exchange) for office phones.
Various modes of Web collaboration also contribute to Lands Ends use of
technology to serve the customer who decides to access the company through the
Internet. In addition to the live text chat feature, which allows a customer to avoid a
voice call when placing an order or requesting information, there is also a page-sharing
feature that allows one party to push a Web page for the other party to view. Another
useful tool is the Form Share feature, which allows a customer to complete a Web form
jointly with a sales agent. Of all these Web features, Lands End indicates that the text
chat feature is the most used Web tool by customers.
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MEASURING THE IMPACT OF MANAGING THE TOTAL CUSTOMER EXPERIENCE
Customer Measures
When measuring the customer experience, Lands End has a number of service
goals. The first is to answer 90 percent of incoming calls in 20 seconds or less.
Additionally, the company strives for between 86 percent and 92 percent occupancy
rate, which refers to how busy the representatives are during the work day. The
company also has a goal of maintaining less than a 1.5 percent call abandon rate. In
2004, the service results for the contact centers were a service level of 90 percent, an
occupancy level of 88 percent, and an abandon rate of 1.85 percent. Additionally,
Lands End tracks first-contact resolution and has a current performance level of
94 percent.
Examples of financial measures that Lands End analyzes are the cost per call and
the total variable expenses for the customer sales and services division as a percent of
net sales.
The Linkage Between Employee Satisfaction Information and Customer Satisfaction
Although Lands End does not have concrete metrics to correlate employee
satisfaction to customer satisfaction, one of the original guiding principles of the
company is that what is best for the customer is best for the company. Lands End
believes that a simple approach is best when measuring customer satisfaction (or, as
stated by one of the site visit hosts, It is not rocket science, but you can make it rocket
science.) and that it is fruitless to attempt to quantify areas that are more qualitative.
As the Lands End staff describes it, they look at calls and numbers, but they talk more
to behaviors.
To capture employee satisfaction, the Great Place to Work survey is administered
by the company once a year to a random sample of employees. This survey, which
is the employee survey that the company spends the most time monitoring, is also
administered to the entire employee population every three years. The survey gauges
employee feelings and perceptions in areas such as recognition, company policies, the
work environment, and empowerment.
Customer Feedback
To Lands End, customer satisfaction is not enough; they also want to achieve
customer loyalty. Empowering the front-line employees to do whatever is necessary to
please a customer is a major contributor to fostering customer loyalty and developing
lasting relationships. To measure customer satisfaction, customers are surveyed
on a quarterly basis. Additionally, focus groups are also conducted on a monthly
and quarterly basis to collect customer feedback. Daily efforts to collect customer
feedback include the logging of customer support and service calls; reviewing
e-mails, regular mail, and suggestion cards; and debriefing sessions with front-line
customer personnel.
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SUMMARY AND LESSONS LEARNED
The site visit to Lands End illustrated the following best practices in managing
the total customer experience:
building a truly customer-centric culture does not happen overnightit can take
decades;
having knowledgeable personnel that customers can contact by telephone, e-mail,
or live chat is critical, even for customers who prefer using the Internet;
investing in training and retaining employees is a key ingredient in managing the
customer experience;
make the sales associates into customer advocates by encouraging them to bring
customer ideas to the forefront;
a truly customer-centric culture will enable sales representatives to naturally do
the right thing for the customer; and
building customer loyalty through quality products and service can alleviate the
need for separate tiers of service for different types of customers.
To summarize, Lands End points to the following as necessary steps to successfully
manage the total customer experience:
empower front-line employees,
invest in employee training,
maintain the quality of the products,
be a great place to work,
put the customers first,
focus on creating repeat customers,
make it easy for customers to contact a live person 24 hours a day, and
measure what matters to the customer.
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Index
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i n d e x
Index
(Includes sections headings
and figure titles)
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Customer Access Mechanisms and Touch Points, Figure E.4, page 13
Customer Sales and Service, Figure 29, page 101
Customer Segmentation Deployed Through a Branded Customer Experience at Air Products,
Figure 4, page 22
Mechanisms for Fostering Accountability for the Customer Experience, Figure 5, page 25
Metrics Used to Track Improvements in the Customer Experience, Figure 12, page 43
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Migration to a Customer Interaction Network at Cisco, Figure 15, page 50
New Outsource Model for Front Line, Figure 25, page 91
Organizational Structure and Support Implications of Managing the Total Customer Experience
Outsourcing the Common Front Line and Incenting the Right Behavior, Figure 26, page 92
Percentage of Organizations Able to Provide Real-Time, Self-Service Access,
Figure 7, page 29
Primary Customers, Figure E.2, page 11
Process Redesigned to Improve the Quality of the Customer Experience, Figure 8, page 30
Providing Customers with a Consistent View of Their Account Information, pages 6566
Recruiting and Retaining Customer-Friendly Employees, pages 2123
Sales/Service Channels, Figure E.3, page 12
Sample Customer Experience Measures, Figure 13, page 45
Stages in the Customer Life Cycle in Which Effectiveness Is Measured, Figure 11, page 41
Summary and Lessons Learned
page 34
page 64
Understanding the Business Case for Managing the Total Customer Experience
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