Home > Digitalizacija > John A. Goodman: Customer Experience 3.0; High-Profit Strategies in the Age of Techno Services

John A. Goodman: Customer Experience 3.0; High-Profit Strategies in the Age of Techno Services

If you want to deliver an end-to-end Customer Experience (CE) with mesaurable financial payoff, you need to use aggresive services and technology in order to create emotional connection. First step is mapping the existing CE and the ideal CE, then you need to create a customer-focused company culture. In doing so make sure everything is measurable. If it is not, you cannot manage it. When you create customer centric culture, you can start with creating listening and learning process, that will evolve into Voice of the Customer (VOC) process.

Three main issue with this process and most probably reasons for failure of building proper CE are: the improper use of technology, not empowering employees to be flexible in handling customer’s problem and the lack of savvy CE leadership.

The first part of delivering what you promise is making sure the customer understands what was pledged. This requires a company’s marketing to be honest and customer to read and understand the contract between them and the company on what is to be delivered.  The majority of dissatisfaction occurs when the product is delivered exactly according to specification. These causes are rooted in both the customer and the company. Customers misuse products, and companies poorly design, market, and produce products and services. When the sales or marketing departments fail to clearly communicate product limitations, they are creating dissatisfaction of the worst kind.

Second important part of CE is easy access to company. Unless companies make it easy for customers to complain, most will not bother; they will simply take their business elsewhere. The actual act of complaining must be effortless. That also involves setting up communication channel that is easy to use. Companies are not aware of the number of customers who are dissatisfied because relatively few customers with problems complain.

When you want to create proper environment to move executives to act on CE, you need to create proper financial explanation and show them how much money they are leaving on the table. Quantifying the cost of inaction will precipitate action. Author estimates that company is losing 20% of silent customers that do not complain. He also estimates that winning new customer costs about 5 to 10 times the cost of handling a problem to a successful conclusion. Negative experience usually causes two to four times as much negative word of mouse (mouth) (WOM) on the Web.

Great CE is only possible with use of proper technology. It should be used for tracking, analyzing and acting upon customer and transaction data.

Customer experience = People + Process + Technology. People can only deliver great end-to-end CE if they are supported by well-designed processes and technology. CE covers every activity that organization performs, including activities that do not directly touch customer but that affect the customer’s overall experience.

Four-part framework of CE strategy consists of:

  • Doing It Right the First Time (DIRFT)
  • Encouraging easy access to service via effortless channels. (access)
  • Creating a complete customer service experience via every communication channel. (services)
  • Listening and learning by creating an effective VOC process. (L&L)

Customers start with a set of basic expectations. Challenges to success in DIRFT can be based in wrong expectations set by sales and marketing, customers having wide range of expectations to the product and outside factor or customer situation, that can vary significantly. One example of company that changed standard of bad practices (overage, late payment, early termination fees) in industry was Ting – cellular provider. Another company with good practices is Zappos, shoe selling company, with its policy of free returns.

A company’s approach to creating effective access should break down barriers to customers seeking assistance and then ensure that the system is flexible enough to successfully handle their request. When customers are thinking about your product, they will have questions and company should be available to them. Accurate forecasting is the key to having adequate capacity across all communication channels. Another challenge is becoming security. Companies now have more and more info for customers on the other side of firewall.

In today’s CE-oriented organization, the service delivery function should have five objectives:

  • First-contact resolution
  • Cross-selling when appropriate
  • Preventing future unnecessary service contacts via education
  • Creating emotional connection when appropriate
  • Collecting information for the VOC

Listening and learning (L&L) is broader than the traditional VOC. It means receipt and analysis of all input received about and from the customers’ experience. The learning aspect of L&L includes taking the VOC information and making sure the organization acts on what it heard. Customers calls, emails and letters are timelier than survey, so they can be act upon immediately. Technology is critical to both anticipating and tailoring the experience. Tailoring to individuals requires knowing their history and personal circumstances. Changes in VOC now comes from online communication and speech analytics.

Metrics and measurements are needed for all four components of CE. Not a lot of companies have all of them. It is important to acquire metrics also on how expectations are set, how customers are educated on products, how complaints are solved, how effective VOC and L&L processes are.

When quantifying the cost of inaction, have in mind, that companies that ignores minor problems can drive away huge amounts of revenue. It can be easy to quantify cost of providing service, inventory and quality, but sometimes it can be hard to quantify revenue and especially WOM damage of not providing them.

As mentioned before loyalty can be decreased up to 20% by bad experience, but solving problems can also bust up loyalty from 20-50%. Bad experience also increase sensitivity to price. When we talk about active WOM process, 5 % of the general population post reviews, but 30% of customers that made a purchase has done so based on reviews. CE management must explicitly include fostering, measuring and managing all aspects of WOM.

When you are making CE measurement and revenue calculations, you should involve:

  • Increased revenue from retained customers.
  • Revenue from customers that you won based on improved WOM referrals.
  • Increased margin due to better loyalty of customers (price increase due to more value and fewer problems).

The Market Damage Model allows you to calculate the revenue payoff due to varying any of the three basic parameters:

  • The percentage of customers with problems.
  • The rate at which customers complain.
  • The effectiveness of the service system in addressing reported problems.

You can address those issues by:

  • Better problem handling will increase the satisfaction and loyalty of customers who complain.
  • Greater service system accessibility will get more customers to complain.
  • Problem prevention will eliminate the cause of dissatisfaction.

You can actually show financial impact calculating difference between current status and improved status, that can be based on improved complaint rate, problem resolution efficiency, preventing problems with proactive education of customers.

WOM either reinforce your marketing efforts and generates additional customers or counters your marketing efforts and leads to fewer customers. WOM depends on channel used – personal and online, their reach, their segmentation and their action potential.

Most executives view the cost of a great CE to be primarily staff salary and refunds to customers. Some studies showed that if you invest into customer education, workload of needed services is reduced by 30%. Positive WOM can help increase market share (avoid saying that will reduce market budget) and resolving barriers for customer reach to the company can increase representative efficiency.

But in order to be most efficient you need to learn to pick your battles. You can help identify priorities by using Market at Risk calculation.

Overall % customers experiencing a problem * % customer experiencing a particular problem * % customer not likely to buy product again = % customers at risk due to that particular problem.

DIRFT – doing it right the first time

The key to delivering perfection is to clearly promise what you intend to deliver and then deliver exactly what you promised with flashes of brilliance. You should set customer expectations honestly. You should design a system that is flexible enough to consistently deliver on the promises as modified by the diversity of individual customer needs. You should create a culture that fosters inexpensive flashes of emotional connection. The key to success of all three – consistency, flexibility and culture of connections – lies in your technology.

The basic goal of DIRFT is to provide an end-to-end customer experience that delivers value without any unpleasant surprises. The best approach to reviewing DIRFT is to create a process map that shows, from customer perspective, how the customers hears about, buys, takes delivery and uses your products. Your best consultants for this process mapping exercise are the frontline staff from each functional department.

Steps in creating good CE starts with product design. A standard problem in product design is making the product so complicated that the customer is overwhelmed and has difficulty doing simple tasks. Next step is creating awareness and value of product. Putting product message in front of the customers in a way that leads to purchase consideration. Doing that requires good communication channels to provide information to customers. Reduce complexity of marketing pitch and messages you want to give to customers. And then you should work on purchasing part. Best practices for the purchasing make purchase fast, easy and fun. Customers want fast delivery and especially certainty in terms when things will happen. In order for customers to use your products in a proper way and to avoid problems, you should educate your customers. Education should be available in small bites, via many channels and formats to accommodate the diverse range of customer learning styles.

People, processes and technology must be properly tuned in nine areas to create a flexible, customer-focused culture.

  • Clear Brand Promise – the brand promise is the foundation, which directs the people, processes and technology in the next eight areas.
  • Clear Accountability for Delivering the Brand
    • Formalized structure
    • Leadership that leads by example
    • Peer accountability
    • Employee empowerment
  • Focused Values Translated into Operation Guidelines
  • Formal Processes for All Key Activities
  • Measurement and Feedback – direct data sources include customer satisfaction measurement, complaints, market research, social media and VOC processes. Indirect sources include quality measurement, operational data, online reviews sites and continual feedback on employees.
  • Ongoing Communication to Customers, Channels and Employees
  • Intentional Emotional Connection
  • Employees Who Deliver the Brand – companies can teach people the necessary skills but cannot change their basic personalities.
  • Customized Brand for Market Segments and Geographies

In order to get DIRFT right, you need flexibility. That requires tailoring your value proposition and the actual product, as well as the delivery and user experience, to the individual customer’s needs. Your product and marketing must allow for common customer preferences, including product attributes, payment mechanisms and length of commitment as well as customer familiarity with your brand and overall product category.

Metrics and how you set them up are also important. The metrics should measure the degree to which customer expectations were fulfilled and if company was able to deliver emotional connection and extra value. Sources of metrics are: customer comments, surveys, operational data and employee inputs. When you are asking technology guys to bring you data, define first what areas are most crucial and task them with getting data about frequency and because that best describe the most important events in CE.

Communication channels and customer contacts (access)

Valuable contacts are those that, if handled well, will increase loyalty, sales and WOM. Good example of an effortless channel is a mobile app 45sec.com, which allow customers to record 45 second message. The app software then identifies the appropriate recipient of the complaint and transmit the complaint to the company in 90 seconds. Another example is technology company that required that each employee’s email signature block have the phrase: »How am I doing? Tell my boss! « with their boss’s email address.

When we estimate actual contact workload, we can use formula:

Actual contact workload = Total questions and problems – self-service utilization – barrier reduction (importance, visibility, channel availability, service promise).

Importance of channel availability is high. If the channel is not available when the problem occurs, the customer will not bother to wait until the channel becomes available. If you channel contact data are not visible customer will not bother. Also, employee behaviors signal availability or lack of interest in helping. In retail environments, staff must be visible and available.

When you are planning customer access strategy you should take into consideration areas like: segments, workload, communication channel, hours of operation, service level, routing method, resources required, information required, analysis and improvement and strategy for introducing new services.

Segments inform service systems about the customer’s general profile at the start of the transaction. You should limit them to 3-4 designations. The biggest mistake most companies make is creating too many segments or introducing multiple segmentation schemes into service system. Workloads forecasting should include seasonality and special events. In communication channels social media are gaining traction. Service level is the speed of access to the service system and applies both in a phone and a retail environment. Seven tolerance factors in estimating service level are: level of motivation, availability of substitutes, the competition’s service level, expectations, time available, cost of service and external factors like weather and current news events. If a routing mistake is made (customers being transferred to wrong department), customer satisfaction is severely damaged. Resources required are human and technology. They are driven by forecasted workload and cost of resources. Technology systems include CRM and KMS (knowledge management system). They should support self-service and Web functions. Information required should include what information is needed to describe the customer, the nature and the complexity of issues, what information should be captured during interaction and what do we need to satisfy reporting and privacy requirements. Three big mistakes in information collection are to collect too little information to allow proper routing, to collect too much and annoying customer and not to pass on the collected data to the response process. Data need be collected only once.

Metrics that measure true accessibility are: noncontact rate, percent waiting an unreasonable amount of time, percent opting out of routing process, percent abandoning the contact attempt.


Easy to do business with (ETDBW) is a broad term that includes designing, evaluating and upgrading service delivery across every customer touch point. The primary objective of the service system is contact resolution of all customer requests, questions and problems either immediately or in a timely fashion. But other objectives like creating emotional connection, preventing future problems, up-selling and cross-selling and input into the VOC process are also important.

The key drivers of ETDBW are:

  • Ease of finding information and assistance
  • Ease of access to the service system
  • Minimum of bureaucracy
  • Complete FCR
  • Follow-through

Key service functions are: anticipation of needs, intake of request, response, follow-through, history and evaluation.

Anticipation uses existing knowledge in CRM to identify and deliver customers’ future need before customer asks for it. Intake of a service request has four steps: greeting, authenticating the customer’s identity, recording the issue and classifying it. Response is the most complex function. There must be a complete response to all dimension of the customer’s request, accompanied with clear explanations, empathy (when appropriate), and possible emotional connection. Response consists of investigation, response, formulation, connection, prevention and transmittal. Follow-through consist of the management and actual delivery on any extant or outstanding promised actions associated with the response. Previous interactions with customer should be recorder so that other employees could understand what was promised to customer and analyst to understand what was a root cause of the problem. Evaluation consist of measuring the timelines and effectiveness of the response process. Methods are surveys, evaluation of existing contact records and recording and evaluating with use of speech or text analytics.

Technology can be used in all phases of services. Main tools are CRM and KMS systems and operational databases. CRM identifies the customer’s product and history, KMS suggests the flexible solution spaces and general response rules, operational databases, when linked to the CRM automatically, indicate, the actual status of the customer’s particular transaction, greatly reducing bureaucracy.

Listening and learning

VOC refers to systematic information on the experience of current customers. A separate sector of market research focuses on winning new customers. Majority of market research is aimed at winning new customer. Four attributes of effective VOC:

  • Data gathered on the end-to-end CE
  • It drew upon and integrated multiple sources of data
  • Unified view
  • Finance department and CFO buy-in and accept it.

Key building blocks of VOC are:

  • Well-defined ownership of process and issues
  • Unified data collection across whole life cycle
  • Integration of multiple data sources
  • Visible, granular, actionable reporting
  • Clear revenue and profit implication
  • Formal processes for translating data into actions and targets
  • Formal systems for tracking impact
  • Process supported by company-wide incentives

Seven sources of information are very valuable for VOC process:

  • Internal operational and operations exception metrics
  • Internal quality metrics including call quality – monitoring evaluations
  • Complaint data and customer inquiries – don’t put them together, complaint have more weight
  • Mobile contacts and interactions
  • Survey data
  • Social media, online reviews, communities and other unstructured data
  • Employee input

When creating a single system for collecting customer data and manage it, you should create robust system. One categorization could include:

  • Reason for contact/symptom
  • General cause
  • Root cause
  • Escalation code
  • Product and location identifier
  • Action taken to resolve – often called disposition
  • Outcome

Each data element should be numerically coded to allow data processing and contribution to the analysis. The codes use for describing the CE must be actionable, that is:

  • Comprehensive
  • Granular
  • Mutually exclusive
  • Hierarchical

You can use all gathered data and estimate using Market Damage Model revenue impact of inaction. Executives make faster decisions when provided with the problem, the cost of inaction and an action plan. When you are preparing presentation have in mind:

  • Simplify the reports to three issues
  • Tailor the report to each unit of function
  • Humanize data with quotes and recordings
  • Do not criticize, show how much money is left on the table
  • Provide a design for pilot testing the solution to each issue
  • Provide ideas for new products and processes
  • Report on previous issues fixed and celebrate the lead manager function
  • The plan should suggest targets for improvements and process metrics


When technology is poorly implemented or used, it becomes a major barrier and a part of the problem rather than a path to resolution. The two biggest challenges in implementing technology are automating existing non-ideal, wasteful processes and modifying the processes to fit the technology.

The key CE activities to be process-mapped are: product design, marketing, information search, sales offer, purchase, delivery, start-up, ongoing use and billing, providing access to service, customer service, listen and learn and feedback on listen and learn. When you are doing the mapping, you first map current CE process, identify broken processes, then map ideal process, create action planes for modifying broken processes (fill the gap from existing to ideal) and focus firstly on short term wins. Better a small success than a big disaster. The ideal CE map should be the basis for your discussion with IT department.

First step is to create unique customer identifier. Data and information have to be linkable. Operational transactions and customer issues must be defined in the same way.

Jim Albert, CIO of Bankers Financial Corporation has identified seven strategies to tie together IT, business departments and executives, some of the are below:

  • Blur the lines – make joint presentations, departments should look at work of an agent together.
  • Solution design thinking – move away from the megaproject and focus on day-to-day operations to address practical problems.
  • Pilot-test process changes – people who use it, should test it.
  • After-action analysis – every IT implementation should be analyzed
  • Celebrate improvements – recognition is a key motivator

CRM system is central hub for CE process. CRM should have single identifier for customer and it should be mapped to ideal CE of company, not following predefined structure in CRM. Reporting and ability to collect also failure data is a must for good CRM. Emails and chats are now becoming integral parts of CRM systems. The websites must be treated as the first and primary communication channel with the customer. Almost everybody with a question or problem goes to website before emailing or calling. Speech and text recognition and analysis tools allow the conversion of unstructured information into structured knowledge. Video is one of the most powerful technologies for educating customers and preventing problems. Video should be short. KMS are critical to effective cross-channel response and the proactive education of customers. The biggest problem with KMS is that companies don’t maintain the information in the system and fail to share it with customers. Mobile and social media are channels that are growing, so companies should have them in their channel strategy. Another important segment are online communities – there companies should decide what is their purpose, if they create them and how to motivate people to be active (content, fun, incentive). In recent times gamification has become more and more popular as tool of engagement.

As for everything else in order to manage CE aspect of technology some metrics are needed. Metrics like: percentage of transactions where the customer self-service by type of transaction, percentage of transaction that are anticipated and executed before the customer asks, percentage of self-service transactions that fail, customer satisfaction with each of the service transactions, employee satisfaction with the transactions by type of transaction.

Culture of Empowerment and Connection

There are six prerequisites for empowerment:

  • the right people,
  • an effective job description,
  • guidance and training on handling the most prevalent difficult situations,
  • information on the customer’s situation,
  • time to create a connection and
  • positive reinforcement.

Company must plan to create opportunities for connection. Planning for connection – one strategy is to create a number of high-involvement transactions that can create an opportunity for connection, if executed well. Second is to use vanilla transaction and make it memorable.

Six approaches to connection:

  • Put customer first
  • Identify with the customer
  • Anticipate customer needs
  • Friendly interaction
  • Show expertise on the topic
  • Financial or value-add

Executives are key to successful CE. They should emphasize CE in communications, walk the talk, make CE a key attribute for appraisals and incentives and break down barriers to frontline success.

Role of CE leader is a must for proper CE in company. CE leader should oversee the mapping and analysis of the current CE and ideal CE process, coordinate VOC and own the VOC data collection planning process, create the economic imperative for action, identify priority problems and opportunities that should be addressed, facilitate action planning, measure and celebrate progress, act as advocate for customers to top management. But he should never accept two functions: assuming total responsibility for customer satisfaction and loyalty and fixing all quality and service issues.

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