Why transform the customer experience?

Customer Experience

The dictionary defines Experience as: "The sum total of

conscious events."

Gartner defines Customer experience as: "The customer's

perceptions and related feelings caused by the one-off and
cumulative effect of interactions with a supplier's employees,
channels, systems or products."

Gartner defines Customer experience management as: "The

practice of designing and reacting to customer interactions in
order to meet or exceed customer expectations and so increase
customer satisfaction, loyalty and advocacy."
Source: Gartner 2
Customers Complain More, Switch More, Tell More,
Use More Channels and Pay More
44% of executives say that a customer is
willing to pay for a great CX but 86% of
customers say they are already doing so 93% of all consumer sentiment on
— Oracle, "Global Insights on Succeeding retailers' privacy initiatives was negative but
in the Customer Experience Era," 2013
80% of all consumer sentiment on
personalization was positive globally
46% of consumers believe they are — Capgemini, 2015
more likely to switch providers compared to
10 years ago
— Accenture Global Consumer 47% of U.S. respondents were okay with a
Pulse Research, 2014 grocery loyalty card that allowed them to save
money, even if their shopping data would
97% of customers are multichannel users, be sold to third parties
— Forbes Pew Research, 2015
customers use 5.6 channels on average

— Nice Systems and BCG, 2016

Source: Gartner 3
Customer Satisfaction Correlates With Stock Prices

Superior CX

Standard CX

CSAT : Customer Satisfaction Score Source: Gartner4

The customer satisfaction score, or CSAT as it's often called, intends to measure a customer's
satisfaction with the service received.
In its simplest form, CSAT is expressed as a percentage between 0 and 100, with 100% repre-
senting complete customer satisfaction. There can be a large variance between the CSAT
scores of companies in a given industry, or at the same company over time. Many companies
that boast high customer satisfaction are those with CSAT scores in the upper 80's or 90's,
though how this is measured can be very tricky.
CSAT is often determined by a single question in follow-up surveys along the lines of “How
would you rate your overall satisfaction with the service you received?” This is often graded on
a scale of one to five, with a score of one representing “very dissatisfied” and five representing
“very satisfied.” All surveys are then averaged for a composite CSAT score. Some organizations
set their standard at a 4-out-of-5; any customer who provides a score of 3 or less triggers a
callback from a manager or QA team member.
This methodology doesn't take into account that many mildly satisfied or mildly dissatisfied
customers don't tend to complete surveys. It also fails to differentiate specific factors that con-
tribute to customer satisfaction such as good value (the quality and quantity of the service for
its price), how closely the customer's expectations are met, and how valued the customer feels
at the end of a transaction with this company. This lack of detail can skew CSAT results in
either direction.
As with other metrics, one of CSAT's most useful purposes is to track the correlation between
changes in training or procedures and the satisfaction of customers. As long as the method
used to measure satisfaction does not change between pre– and post-change surveys, CSAT
can help companies determine the effect of new initiatives on their customers' satisfaction.
5
 Importance of the customer experience and
its impact on a company's profitability
Studies by Harris Interactive and Strativity Group
Customers not only are likely
to leave after one negative
experience, but also are
willing to pay for a better
experience.
• 89% of people would discontinue
their business with a company after a
negative customer service
experience, rising from 68% in 2006
in the previous year's (2011) survey
results.
• 86% of consumers would pay more
for a better customer experience.
• 73% of consumers would expand
their purchases with a merchant by
10% or more if the merchant
delivered a superior customer
experience.
Source: Gartner
Customers use social media When an organization
to demonstrate acknowledged and
dissatisfaction, as well as responded to a customer's
problem resolution: negative complaint:
• 26% of consumers posted a negative • 46% of consumers were pleased.
comment on a social networking site, • 22% posted a positive comment
such as Facebook or Twitter. about the org.
• 79% of the consumers who shared
complaints about a poor customer
experience online had their
complaints ignored.
• Of the 21% who received a response
to their complaint(s), more than half
had positive reactions to the same
company about which they had
complained.
6
Case Study
Tokio Marine & Nichido Fire Insurance, a property and
casualty insurance company, was able to increase its early
renewal rate from 29.4% in 2005 to 72.5% in 2010 with its
customer experience redesign project.

SJ, a government-owned Swedish rail operator, was able to

substantially increase its average revenue by redesigning
its processes impacting the customer experience.

PhotoBox, an online digital photo personal publisher, was

able to grow its customer base 44.5%, increase sales 15%
among its customers and save £240,000 in its cost-to-
serve costs by engaging its customers, centralizing all
customer interaction data and using analytics to
transform quantitative data into quality information.
Source: Gartner 7
CEO Survey 2015, Top Technology Investments, Next 5 Years

Q: Which five technology-enabled capabilities will be the most important areas of investment to improve your business over the next 5 years?

Source: Gartner 2015 CEO Survey

8
Customer experience management is top of the CEO's agenda. CEOs, CIOs and
chief marketing officers have become interested in this topic because low-cost
and ubiquitous access to information for customers, the rise of globalization,
and the "death of distance" mean that customers are more empowered than
ever. While this isn't true of every industry and geography, it's the case in more
sectors every day. Customers can compare experiences across industries and
force regulators and governments to be more accountable. At the same time,
competitive differentiation — achieved through a strategic decision to invent
better products that are hard to imitate, or by being the most efficient producer
of a service — has diminished over time. What remains the same is how
challenging it is to create a superior customer experience that will serve as a
sustainable differentiator.

9
 The Digital Disruption Has Already Happened

World’s largest taxi Largest accommodation Largest phone World’s most valuable
company owns no provider owns no real companies own no retailer has no
taxis estate telco infra inventory

Most popular media Fastest growing World’s largest Largest software

owner creates no banks have no movie house owns vendors don’t write
content actual money no cinemas apps

10 Source: IBM 10
In one sense, this portends a frightening future for some, but it also unlocks
wealth-creation opportunities on a scale never seen before.

The most contentious battle yet in the telecoms space has to be the fact that while
traditional fixed and mobile operators have invested in the underlying
infrastructure to make broadband over computers and smartphones almost
ubiquitous, the reality is consumers are using this infrastructure to make calls and
send messages using services from Facebook, WhatsApp and others.
Known as over-the-top (OTT) platform providers, services like Facebook
Messenger, WhatsApp and Skype are eating the lunch of telecoms providers all
over the world who are struggling with the digital disruption that they laid the
groundwork for. Skype was acquired by Microsoft two years ago for more than
$8.5bn and Facebook acquired WhatsApp for $19bn. These services effectively
allow consumers to make voice and video calls for free. As of September 2015,
WhatsApp had over 900m users while Skype has over 660m users. Meanwhile,
voice and SMS revenues that were a pot of gold for telecoms operators are
steadily declining.

https://www.siliconrepublic.com/companies/digital-disruption-changed-8-industries-
forever

11