Tuesday 17 September 2019

Essential guide to improving your customer's experience

Why Premium is New Black

The next great battleground is not in product differentiation, but in customer experience.
The next great battleground is not in product differentiation, but in customer experience.

Alan O'Neill

Businesses around the world and across industry are trying to cope in a new marketplace. More and more service providers are coming to terms with the reality that they cannot differentiate on product alone. As technology improves, the barriers to entry for new competitors reduce and new competitors find it easy to copy established brands, quite quickly.

So how then can organisations differentiate in this new world? The next great battleground is not in product differentiation, but in customer experience. And it's not just ordinary customer experience - Premium is the New Black. That, of course, means different things to different people in varying industries. In structured detail, this interactive course will help you to do what's right and put customer experience at the heart of your business.

Here I draw tried and tested concepts from iconic global brands across many industries who, in turn, are number one in their respective industries. I will show how you can adapt the best of what they do so that you too can achieve great customer experience strategies in your business, regardless of what industry you're in or what size you are.

The feature focuses on what is great customer experience and how to build a customer-centric culture as a default for your organisation. This applies whether you're B2C, B2B or public sector. A fundamental principle at the heart of this feature is that when a customer has a great experience they are more likely to buy from you, today and in the future and be strong advocates for your brand.

To get the most from this interactive course, I encourage you to set time aside with your team and work through each exercise in sequence, to agree what actions are right for your business.

If you'd like a PDF copy of this, email alan.oneill@kara.ie. The concepts set out here are excerpts from Premium is the New Black, my debut book available on kara.ie

Alan O'Neill is Managing Director of Kara Change Management, specialists in strategy, culture and people development. Go to kara.ie if you'd like help with your business.

 

Module 1

The business case for premium service

 

Does great customer experience really deliver sales? Let’s explore weekly grocery shopping as an example. (These numbers are fictitious and are designed to illustrate a point).

 

 

 

Based on this example, the lifetime value of the average Eurospar customer is €240,000, and they have choices on where to spend it. Imagine if you were working in that store and a customer approached you, asking you to help them spend €240,000 all in one go? You would treat them like royalty.

But why should they be treated any differently just because they’re taking 40 years to spend it? As a Eurospar shopper browses the aisles, they make several decisions about what to buy and what not to buy. But as they walk out the door they also decide if they will return or not.

Let’s use this model and apply it in a B2B world such as a beverage wholesaler of bottled beers, and minerals, whose customers are publicans and hotels. Here is what the example might look like in this industry:

 

 

 

 

Doesn’t it change how you might look at each customer from now on? Far too often customers are treated as a ‘today’ customer only, with no consideration for their future potential. If everyone on your team thought of every customer as a lifetime customer, it would change behaviours instantly.

Do this exercise now for your own business

1 What is your customer’s average age? (If relevant) A1

2 What is your customer’s average transaction value? A2

3 How frequently in a year do they spend this amount? A3

4 What is their value per year (A2 x A3)? A4

5 For how many more years are they likely to be a customer? A5

6 Multiply A4 x A5 to get the lifetime value of your customer A6

 

What if customers have a poor experience?

The above scenarios illustrate the commercial value of giving great customer experience. On the other hand, what are the implications for your business if your customers have poor experiences with you? Does it really matter?

Here is an interesting challenge that should make you take this seriously. The percentages differ across industry, but this example tells a story nevertheless.

 

If the numbers for your business are anything like this, then you have to admit that you have a problem. These defectors were also asked why they defected. A massive 71pc of them said it was due to the quality of their interaction, ie the service level they did or didn’t get.

So in a nutshell — if you do not prioritise service and if you get it wrong, you’ll lose customers. That makes it harder for you to grow. Undoubtedly, you already have a strategy for getting new business — but what is your separate strategy thereforefor retaining your existing customers? There is, of course, the added emotional benefit of giving great customer experience. It’s a really nice and proud feeling when you know that customers are happy with you.

 

Key Questions for You…

1 Is customer service on your radar?

2What is the lifetime value of your average customer?

3What is your actual or estimated customer- defection rate?

4What are you doing about it?

5How much of this have you communicated to your own people?

 

MODULE 2

What is customer experience?

For a customer experience to be great, we have to think of the whole experience at every customer touchpoint. Using the analogy of a three-legged stool, the legs are represented by Product, People and Place (place referring to the physical environment for B2Cs — and route to market for B2Bs). In a nutshell, your customers have expectations of a certain standard for each leg. But if one ‘leg of the stool’ is missing, the customer’s experience is less than expected. This is a superb tool to help you communicate your standards to your own people.

Product n What level of quality and pricing?

  • What range of sizes, packs, colours and style?

PEOPLE

  • How many people are needed?
  • What behaviours do we expect?

PLACE

  • What standard of housekeeping?
  • What is the most appropriate delivery schedule?

The stool on its own, however, is not enough. You also need to consider your positioning in the competitive marketplace. For example, the three-legged stool will work for a motor dealer regardless of whether they are selling high-end vehicles or low-end ones. Clearly both are poles apart in terms of price and quality however. Therefore, the brand positioning matrix should be used in conjunction.

Brand Positioning Matrix — linked to level of service

Your brand DNA should set the context and inform the standards for your product, people and place.

The answers are determined by what your desired brand DNA is. Your brand DNA is the core reference point and umbrella for every business. It informs ‘what good looks like’ for product, people and place. To further help you define your brand DNA and as a quick visual way to communicate it internally, plot your business in the price/service quality matrix on the right.

Example for illustration purposes…

Generally speaking – in the airline industry, Airline A would be in the top- right-hand corner and, by comparison, Airline B would be in the middle bottom. Generally speaking again, a Michelin starred restaurant would be in the top-right-hand quadrant and a fast food restaurant would be in the bottom-left one.

How to use this for your business…

Start by listing all of the main competitors in your sector. Take the most prominent competitor and rate it on both scales ie product and quality and put their initials in the appropriate quadrant. For example, if competitor ‘A’ scores 8 on price and 4 on quality, then insert ‘A’ in bottom-right-hand quadrant. Now using that first competitor as a baseline, complete the exercise and measure all other competitors against that baseline. Leave your own organisation to last. By plotting everyone in the matrix, you’ll get a visual picture of your competitive set.

What does it tell you? Are you happy with where you sit? Are your competitors better differentiated and positioned than you? Does it prompt you to rethink your offer for differentiation purposes? The stool provides a possible set of questions and your desired positioning in the matrix will provide the answers.

Now consider where your optimum new position should be in the matrix. Do you need to make more changes? Know that there is a global movement in customer experience and organisations the world over are trying to improve their proposition. Excellence in customer experience is on the agenda of every organisation I work with. If you don’t focus on it, you’ll be exposed for not matching your customer’s expectations. You simply have no choice but to improve your proposition.

As you read this, your competitors are having similar thoughts about this topic and they too recognise the need to improve their proposition. Doing nothing as they improve, therefore, means that you risk going backwards.

Key Questions for You…

1  Where do you sit in the competitive positioning matrix and where do you aspire to be in the future?

2 How can you make the 3Ps relevant for your business?

3 What is your USP under each of the 3Ps?

 

MODULE 3

Deliver premium service through product

Although differentiating on product alone is difficult, product is of course very important. It is the backbone to what drives business and profitability for most organisations. What are the things that you need to consider, to make you relevant for your market segment? ‘What does good look like’ for you?

1 Price architecture

Customers need choice while organisations need sales. Retailers marry these two by focusing on price architecture, ie good, better and best. For example, a cookshop won’t just stock one model of frying-pan. They might stock Prestige (good entry price level); Stellar (better or mid-price); and Fissler (best or premium range). By having this wide range of prices, they’ll appeal to a wider audience and fulfil their expectations. It also gives the salesperson more opportunity to up-sell. We introduced this concept to a professional services provider and it’s driving more sales.

2 Category killers

A category killer is where an organisation has developed the best edit for a category of product/service. The opportunity here is one of ownership in a chosen category, which is about being the destination and having real authority for that category.

Selfridges in London has the largest collection of ladies’ shoes in Europe. Recognising the potential in shoes from a sales perspective and as a footfall driver, it invested heavily in space, shopfit, merchandise edit and marketing. You might say that Selfridges ‘owns’ shoes and is the destination for shoes in London.

3 Exclusivity and newness

We live in an age where customers expect and are inspired by ‘the next best thing’. And for some sectors of the market, customers want something that is different. ‘Exclusivity and newness’ might refer to a product or service, a way of working, new promotion, new advertisement or catchphrase — or whatever other concept might make products stand out.

4 Samples, tastings and testers

Customers expect and like to imagine what it will be like to own your product. That’s why shops have fitting rooms and motor dealers encourage test drives. The masters of this practice are the beauty product houses. They have lots of testers on display at their counters for consumers to interact with. This practice is not just limited to retail, it will work for B2Bs also.

5 Sizes, pack sizes and out-of-stocks

Pack sizes are influenced by a number of factors — packaging cost savings, delivery cost efficiencies, shelf size, product safety and picking efficiencies. But what’s optimum for your customer? When did you last check? Rather than just doing the maths from your own perspective, consider the implications for your customer. Likewise, if your customer orders something from you that is temporarily unavailable, tell them.

6 Best and worst Sellers

Your customers will take comfort and reassurance from your honesty when you tell them that something is a bestseller. But be careful as it doesn’t mean that it’s okay to lie and pretend that a ‘dog’ is a bestseller. As a short-term response, customers might believe you and buy. But if their purchase does not suit their needs they will be upset with you afterwards.

Key Questions for You…

  • What categories can you dominate?
  • Does your product range match your aspired position in the competitive marketplace?
  • Do you have a sensible range of products or services at varying price levels?
  • Do you know what your competitors are doing that is giving them an advantage?

 

MODULE 4

Deliver premium service through place

Place can mean different things depending on your business model.

n Your place — this is when a customer comes to your premises, such as a restaurant, hotel, retailer, motor dealer, bank, government department, hospital, clinic, solicitor’s office, etc. In these cases, place is everything to do with the physical environment. (B2Cs)

n Customer’s place — this is where you are delivering your physical or digital goods to your customer’s premises, such as if you are a manufacturer, distributor, wholesaler, tradesman, consultant, developer, etc. Then place is more about your route to market. (Usually B2Bs).

1 Access, housekeeping, hygiene standards, and health and safety

Your car park, entrance doorway and reception of your premises should be clear, uncluttered, welcoming and easy to access. How would you feel if you arrived in to a store and the aisles were cluttered or too narrow for you and your child’s buggy, or if the floors, ceiling or walls were dirty? The customer is intent on spending money with you, so treat them with the respect that they deserve. Whatever business you are in and wherever you aspire to be in your competitive matrix, when is it ever OK to have poor standards? Why not step outside and walk back in to your own premises with the mind of a customer. What do you see? What would you change? 

2 Merchandising standards

Visual merchandising is the manipulation of attractive displays, merchandising to engage customers and to boost sales. Merchandising is about presenting your product in its best possible way to appeal to the customer. This might be a physical product on a shop floor, a set of brochures on an exhibition stand, or the credentials presenter in the hand of an estate agent. In all cases, you need to think about visual appeal.

3 Signage

There are three tiers of hierarchy for signage,

1 Navigational — to help you move around a large space such as an exhibition, department store or hotel

2 Category — to clearly identify product categories, eg to separate laptop computers, smart phones

3 Product signage, to explain the product specifications

4 Adjacencies in retail

When you go to do your weekly grocery shopping, you are unlikely to find the detergents on the same shelf as the bread. Apart from the health and safety issue, it just doesn’t make sense. To address this, you have to get inside the mind of your customer and their buying ‘journey’. Non-retailers can learn from this too. Find cross-selling opportunities in whatever way you can, such as your website, brochures, correspondence and other collateral.

5 Ambience and senses

Today we know so much more about how customers buy. We know, for example, that customers are often influenced more by emotional (heart) issues than practical (head) issues. The use of senses can impact that, which are sight, sound, touch, smell and taste.

6 Effort

In this time-poor world we live in, customers will punish you if they have to apply more effort than is reasonable to buy from you. That might apply to the waiting time on a call, the queuing time in a bank, the difficulty in getting to your premises, parking challenges, public transport constraints, online purchases, return  policy, and so on.

7 Wifi

One of the first things that people do when they arrive to a new place, destination or venue, is to check for wifi. Always-connected is a new reality in their lives and businesses might ignore this at their peril.

8 Order process

If you are a B2B such as a distributor, manufacturer, tradesman, consultant, estate agent, then place is more about your route to market and how well that represents your brand. Do you offer choice that suits your customer such as online ordering, telephone or face-to-face?

9 Deliveries

In some businesses, the only person that a customer meets on a regular basis is the delivery person. If that person is employed or contracted by the company, they should be trained on their role in delivering great experiences. Grooming, tone, language, behaviour all have an impact. If you outsource the service, then you should agree an SLA (service level agreement) with the outsource provider to ensure that your customers get an experience that reflects your brand.

Key Questions for You…

  • Is place sufficiently on your radar?
  • Does your place reflect your brand DNA?
  • Do you know what elements of your place are important to your customer?
  • What is best practice in your sector?

Module 5

Deliver premium service through people

Often when the 3Ps are weighted, People comes out as the most important. While Product and Place are of course important, on their own they will not make a customer feel special. Only a person can do that. What are the key touchpoints for when your people interact with your customers? What does good look like?

Every person needs to know how you expect then to behave with customers. They need a sufficient level of knowledge to their job. They need to have a positive attitude and of course they need an appropriate set of skills to do the job that is expected of them.

Knowledge

In this age where customers have access to so much information, what knowledge do your customer-facing people need in order to really help and sell to customers? They should at least have more product knowledge than the customer can find on the internet. They should know your best and worst sellers, supply chain, out-of-stocks and your customers. They should know your processes, rules and regulations and they should know your competition. 

What are the risks if your people don’t have this knowledge? How will it affect their confidence? How will it affect customer service and sales? Every organisation has its own set of unique answers to these questions, so the responsibility of ensuring your people have this knowledge lies with you.

Attitude

When morale is good and your people have a positive attitude, that usually translates to customers getting a good experience. Customers will notice a bad or negative attitude instantly by the way they are treated. Now you can teach your people everything that they need to know and you may even train them on relevant skills. But if they don’t have the right attitude, then all the training in the world won’t make a difference. A poor attitude permeates and infects the team. So hire the right people for their attitude and then train them on the required skills.

Skill — The 3Cs

Every single customer-facing person in your organisation should be trained on the 3Cs of great customer service.

  • Connect — Smile and greet each customer in a friendly way
  • Consult — Engage with the customer to establish and satisfy their needs
  • Conclude — Show appreciation for the business and thank the customer

This is a simple mantra for all your people and it applies to all forms of customer interactions; on the telephone, in-person, webchat, emails. I’ve studied customer complaints over the years and I can vouch that most complaints are to do with rudeness and unfriendliness. Even though in our society we have become less formal and more relaxed, it doesn’t mean that basic manners shouldn’t prevail.

What behaviours are appropriate?

Intermingled with the 3Cs, we should be conscious of behaviours too. You need to think through what the appropriate behaviours are for your organisation, based on your brand DNA and the expectations in your industry. But you’re unlikely to go wrong with these generic behaviours.

  • Courtesy — This is about the please and thank you that your parents taught you as a child. Be nice and ensure a pleasant tone of voice.
  • Efficiency — Most customers are under pressure for time and they don’t appreciate unnecessary delays. Make sure you show respect with a sense of urgency.
  • Finesse — It is never okay to be gruff or sloppy with your customer. Even if you position yourself low on price, it’s never okay to be rude,  or dismissive with your customer.

Key Questions for You…

1 Have you thought about how you want your customers to be treated by your own people?

2 Have you defined the competencies for each role using knowledge, attitude and skills?

3 Have you communicated your standards to all of your people, both new and existing?

4 Have you trained them on how to interact or sell to your customers, in line with your desired brand positioning?

Module 6

Seek and measure customer feedback

Some organisations measure their service by the number of complaints that they get. If the number is reducing, that of course is a good measure. But that assumes that every customer that has a bad experience will actually tell you. Here are some other means to measure your customer’s experience.

  • Mystery shopping — This is a service that is provided by an external service provider. Questions are agreed in advance that reflect a great customer experience. The agency usually has a panel of contractors or professional shoppers who are then requested to carry out an agreed number of interactions with your business. The scores are then collated and presented back to the client.
  • Observation — Once the service has been defined, agreed, and communicated to all, managers should take time out every now and then to simply observe how customers are being spoken to and treated by front-line personnel. After observing, managers should then follow up with the colleague and give them feedback, regardless of whether it is good or bad.
  • One-to-ones and focus groups — Making proactive contact with a customer and asking them “how do you feel about our service today?” or “how could we improve our service for you?” is very effective. Direct and immediate feedback is valuable if done with authenticity. Customers will immediately recognise you genuinely want to know how they feel and will give you essential feedback.

Focus groups will do the same thing. But be careful as if they are not facilitated, they can become very negative. Pick candidates that are individual in thought that don’t just go along with others because they don’t want to be disagreeable.

  • Suggestion box — A suggestion box is good for getting quick and short comments. They typically ask a short few questions about the experience. The mix of questions vary and there is no universal pattern to them. But there is one question that will have the most value to you! And it is this… “Mr/Ms customer, thank you for shopping/dining/staying with us today. We try hard to give you the best experience we can. What is the one thing we could improve on in the future?”. That will focus the customer and they will more than likely give you a valuable comment.
  • Surveys — Surveys are a structured way of getting the customer’s written views on their experience, using a structured set of questions that mirrors their experience at key touch points. For B2C organisations that will include the whole shopping/dining experience. For B2Bs, that should include all touch-points form the time of ordering all the way through to deliveries.

Surveys are a powerful way of identifying strengths and weaknesses in your proposition and will help you to improve.

Net Promoter Score (NPS)

Net promoter score (NPS) is a new way of measuring customer loyalty and is widely adopted by large and small corporations around the globe. NPS is calculated based on responses to a single question… “How likely is it that you would recommend xxxx product/service to a friend or colleague?”. This question is considered to be the most important question, as after all, customers are unlikely to recommend their bad experiences to their friends. The NPS score gives you a sense of how the customer is feeling after their interaction. It doesn’t give you the reason why, so other questions are of course critical to establish their reasons.

Post-Feedback Corrective Actions

Having a way of measuring what your customers think of you enables you to take corrective action accordingly. If you don’t take action, then what’s the point in measuring?

Key Questions for You…

  • If customer feedback is being discussed at your board meetings, that of course is a good thing. But are you also exploring the causes?
  • Are corrective actions being taken to prevent recurrence?

 

Module 7 

The last word for leaders

How do organisations such as Disney, Harley-Davidson and Amazon continually score highest in the world for excellent customer experiences and sales? How do Irish companies such as the Credit Union, Primark and Specsavers achieve similar accolades? It starts at the top. The common denominator is that their leaders know customer experience is the new battleground, and it’s a top priority for them. I have no doubt that this applies to B2B companies too. Here are my last words as a message to business leaders.

1 Set a vision for your business that puts customer experience at the heart of all decision-making. Work with your teams to agree ‘what good looks like’ at every touchpoint in your customer’s journey.

2 Recognise that your people have the biggest part to play in delivering this. Hire people that share this as a value. Take time to communicate your expectations to everyone. Train and retrain on the skills.

3 Be a role-model for great customer service yourself.

4 Look to overcome whatever obstacles are preventing great customer experiences.

5 To ensure consistency 24/7, monitor and take corrective actions.

I’m firmly convinced that when customers get a great experience, they’re more likely to buy from you today, come back in the future and recommend you to a friend. The numbers shown in Module 1 also illustrate the impact on your sales.

The ideas here do not have to cost much money. Don’t fall into the trap of thinking that excellent customer experience is just for the top hotels or companies with deep pockets. It’s a proven enabler of success for businesses across all industries and all sizes. Excellence is a relative term, so if your profile is to be 2-,3-,4- or 5-star, be the best you can be in your space.

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