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Wanted Chief Experience Officer

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					                           Wanted: Chief Experience Officer


                                          A survey of UK FTSE 100
                                                        companies
                                     By Amit Kakkad under the direction of

                                                              Chris Voss
                                   Professor of Operations & Technology
                                                           Management

                                                          Senior Fellow
                                     Advanced Institute of Management
                                                              Research

                                                              April 2006




     Sponsored by




http://www.foviance.com/
Executive Summary
Attention to customer experience is becoming increasingly important to UK
companies. A survey of 24 UK FTSE 100 companies indicates that managing
Customer Experience is recognised by nearly all as important, with 83% seeing it as
very important. In addition 78% indicated that they would be devoting increasing
emphasis to it in the future. The majority of companies also saw customer experience
on-line becoming as important in the future.

Despite the positive attitudes, the growing importance of customer experience was
not reflected in the organisation of most companies. US experts have argued for the
appointment of a Chief Experience Officer to lead in this area, but only 1/3 of the
respondents had a person with a specific responsibility for customer experience. In
many of the companies that did have such a post, the person reported to the board.
However, in most companies the responsibility was either not clear, or spread
throughout the organisation. In particular, there did not seem to be an integration of
on-line and off-line customer experience efforts with responsibility for on-line and off-
line experience split amongst multiple people.

B2C companies were more likely to have a person responsible for experience than
B2B companies, despite growing evidence that customer experience in B2B
companies is as important as in B2C.



The Authors

Chris Voss is professor of Operations and Technology Management at London
Business School and is a senior fellow with the Advanced Institute of Management
Research. Amit Kakkad is a doctoral student at London Business School.

This research is part of an ongoing programme led by Professor Voss, examining
experiential management, and builds on two previous research reports:

       •   Trends in the Experience and Service Economy – The Experience
           Profit Cycle.

       •   Experience and the Brand

Both reports can be obtained from Fran Husson at London Business School
fhusson@london.edu

For more information on London Business School’s Experience Management
Research projects and publications, please visit http://www.london.edu/otm/

The research was made possible by sponsorship from Foviance and funding from the
ESRC’s Advanced Institute of Management Research [ http://www.aimresearch.org/ ]




                                                                                       2
Introduction
Customer Experience is increasingly being seen as a real and sustainable
differentiator between competing organizations (see figure 1). The use of customer
experiences to create value has been called the experience economy1


               Figure 1 - Experiences create value



                 Competitive Positioning

                        Differentiated
                                                                             Experiences



                                                                 Services


                                                     Goods



                                           Commodities
                       Undifferentiated
                                                             Pricing
                                            Market                              Premium
                                                                        Source – Pine and Gilmore




An important driver of attention to customer experience is the decreasing
effectiveness of traditional media. Customer interaction and experience with the
organisation can develop an emotional bond with the company, which is very hard for
competitors to break. Innovative companies are building portfolios of experiences to
support their products and services and to build brands. Moreover, customer
experience is now increasingly becoming part of the offerings not just of leisure and
entertainment, but also of business in general.

Placing greater emphasis on customer experience poses a new set of management
challenges. Experiences are like two-edge swords. If handled well, they provide a
strong positive association with the brand for the customer. But if not handled well,
they can also leave a lasting negative impression on the customer. Since every
touch-point has such a potential for both positive and negative impact, it is imperative
for a company wishing to leverage customer experience to have a complete
understanding of the entire space over which customers can interact with the
organization. With this holistic view, organizations need to properly define, create and
deliver consistent customer experiences across channels over a period of time.

To assess whether UK companies shared our view of the growing importance of
customer experience, we designed and conducted a small survey to examine
companies’ attitudes towards and organisation for customer experience.

Managers from UK’s top 100 FTSE companies were invited to participate in an online
survey conducted in March and April 2006. Out of 38 responses received, 14
incomplete responses were discarded, and remaining 24 responses were used in
report.



                                                                                                    3
          “Business strategies centred on the holistic design and delivery
          of total customer experiences consistently create superior
                 2
          value”



Survey Results

Importance of customer experience

The first set of questions that the survey addressed was whether FTSE 100
companies see experience as important, its future importance to their organisations,
whether this is as important in the growing world of on-line business. Our data
indicates that all respondents see customer experience as important, most (83%)
seeing it as very important (see figure 2).



               Figure 2: On a scale of one to five how important is the
                  experience of the customer to your organisation?




           1 - Very important
                 (83%)                                          2 - Important (17%)



                                                                   3 - Neither important
                                                                  nor unimportant (0%)
                                                                   4 - Unimportant (0%)
                                                                    5 - Not at all
                                                                  important (0%)


Whilst this response may be expected, we also asked respondents on the relative
importance of improving customer experience in the future. This indicated more
clearly that the companies were seeing it as important with 71% stating that it would
be more or much more important than other activities (see figure 3).




                                                                                           4
               Figure 3: How important do you believe improving the
             customer experience across your organisation will have to
                        be in comparison to other activities?
                                            4 - Less (4%)


                                                             1- M uch M o re (25%)

                          3 - So me (25%)




           5 - M uch Less (0%)                              2 - M o re (46%)




Increasingly companies are delivering service online through the web, as well as
offline. This is reflected by the majority of companies (71%) indicating it as important
or very important (see figure 4). Even more thought that it would become important or
very important in the future (See figure 5).

               Figure 4: How do you rate importance of managing online
                 customer experience vs. managing off-line customer
                                     experience?



                      1 - Very important
                            (25%)




                                                                      2 - Important (46%)

           4 - Unimportant (4%)



               3 - Neither important
                  nor unimportant
                       (25%)




                                                                                            5
                 Figure 5: How important do you think managing online
                    customer experience will become in the future?




                                                               2 - Important (38%)


                  1- Very important
                        (58%)




          4 - Unimpo rtant (0%)
                                                       3 - Neither important
          5 - No t at all impo rtant                   nor unimportant (4%)
                     (0%)




Wanted – Chief Experience Officer

Responsibility for Customer Experience
Given the growing importance of customer experience, we expected that this would
be reflected in organisation and responsibility. We asked the question:

      Do you have someone responsible for managing "Customer Experience" in
      your organisation?

  We were surprised that only 1/3 of respondents had anyone (either one or more
     persons) responsible for managing customer experience (see figure 6).
                  Figure 6: Do you have someone responsible for managing
                        "Customer Experience" in your organisation?




           1 - Someone                                             2 - No one
          Responsible for                                        Responsible for
             Customer                                              Customer
         Experience (33%)                                       Experience (67%)




                                                                                     6
Where there was someone, we asked for their job title and reporting relationship. In
the US there have been a number of calls for the appointment of a Chief Experience
Officer (CXO), so we asked for details of job titles and reporting relationships. As
might be expected, there was no one with this title, but as the job titles listed below
indicate, a number were similar.
   •   Experience Manager
   •   Consumer Planning
   •   Customer Insights Mgr overall, plus another specifically for online.
   •   Head of Customer Experience
   •   Customer Services
   •   Marketing Director
   •   Several people

All but one of these people had been in post for at least twelve months. All of these
organisations considered these roles as successful. One of the dilemmas that have
been identified with the CXO role is where the person should report. The role is
essentially cross-functional, with expertise needed from a wide range of sources.
This is reflected in the diversity of reporting relationships.

   •   Marketing
   •   Head of Market Research
   •   Monthly to CEO and Leadership Team, line report in Marketing
   •   Managing Director
   •   Operations
   •   Retail Banking Director
   •   Marketing, Service, Ops etc



On a positive note, the growing importance of customer experience is reflected in two
reporting to directors and a third reporting monthly to the CEO.

Given the limited number of companies who had a person responsible for customer
experience, we looked to see if there were any underlying patterns. We found that
those whose business was mainly Business to Consumer (B2C) were more likely to
have such a person than Business to Business (B2B) companies, with only one B2B
company out of seven had a person responsible for experience. This is despite
growing evidence that customer experience is as important in a B2B as a B2C
environment.

On-line and Face to Face experience

The data shown earlier indicated that companies are seeing on-line experience as
becoming increasingly important. However, our survey indicated that there may be a
lack of integration between face-to-face and on-line customer experience
management. 86% of the companies indicated that they had a cross-channel
strategy for improving customer experience, but in no company did a single person
lead this effort. 80% of the companies indicated that they had more than one person
responsible for managing on-line as well as off-line experience.

Managing and improving this area requires measurement and a positive response
was that a wide range of measurement tools was used:


                                                                                     7
Which tools do you use to measure customer experience?

       1, Phone survey, 40%
       2, Face to face survey, 30%
       3, Web survey, 80%
       4, Focus group, 60%
       5, Direct mail survey, 60%
       6, Other, 50%
       (Response: 10)

In addition all of these companies were using these tools to improve customer
experience, and 60% had a dedicated team to do the improvements.




                                                                            8
    Appendix 1: Customer Experience Survey Results

1. Please state your company name:

2. On a scale of one to five how important is the experience of the customer to your
organisation?
1 - Very important, 20, 83%
2 - Important, 4, 17%
3 - Neither important nor unimportant, 0, 0%
4 - Unimportant, 0, 0%
5 - Not at all important, 0, 0%
(Response: 24)

3. How important do you believe improving the customer experience across your
organisation will have to be in comparison to other activities?
1 - Much More, 6, 25%
2 - More, 11, 46%
3 - Some, 6, 25%
4 - Less, 1, 4%
5 - Much Less, 0, 0%
(Response: 24)

4. How do you rate importance of managing online customer experience vs. managing
off-line customer experience on a scale of 1 to 5, 1 indicating highest importance for
online customer experience management?
1 - Very important, 6, 25%
2 - Important, 11, 46%
3 - Neither important nor unimportant, 6, 25%
4 - Unimportant, 1, 4%
5 - Not at all important, 0, 0%
(Response: 24)

5. How important do you think managing online customer experience will become in
the future on a scale of 1 to 5, with 5 indicating very high importance for online
customer experience?
1 - Very important, 14, 58%
2 - Important, 9, 38%
3 - Neither important nor unimportant, 1, 4%
4 - Unimportant, 0, 0%
5 - Not at all important, 0, 0%
(Response: 24)

6. Do you have someone responsible for managing "Customer Experience" in your
organisation?
1 - Someone Responsible for Customer Experience, 8, 33%
2 - No one Responsible for Customer Experience, 16, 67%
(Response: 24)

7. What is their job title?
1, Consumer Planning,
2, Customer Insights Mgr overall, plus another specifically for online
3, Head of Customer Experience
4, Customer Services
5, Marketing Director
6, Experience Manager
7, Several people
(Response: 7)




                                                                                    9
8. Who do they report to? (Job title only)
1, Head of Market Research
2, Monthly to CEO and Leadership Team, line report in Marketing
3, Managing Director, Operations
5, Retail Banking Director
6, Marketing
7, Marketing, Service, Ops etc.
(Response: 7)

9. How long has the role existed?
1 - 0-3 months, 0, 0%
2 - 3-6 months, 0, 0%
3 - 6-12 months, 1, 12%
4 - 12+ months, 7, 88%
(Response: 8)

10. On a scale of one to 5, how successful do you feel they are?
1 - Not successful at all, 0, 0%
2 - Unsuccessful, 0, 0%
3 - Neither successful nor unsuccessful, 0, 0%
4 - Successful, 6, 75%
5 - Very successful, 2, 25%
(Response: 8)

11. Do you have one person or many responsible for managing online as well as off-
line experience?
1 - 1 person, 0, 0%
2 - Many people, 12, 80%
3 - Nobody, 3, 20%
(Response: 15)

12. Who are they?
1, Channel owners
2, Too many brands to assess,
(Response: 2)

13. Who do they report to?
(Response: 0)

14. Is there a cross-channel strategy for improving the customer experience?
1 - Yes, 2, 14%
2 - No, 12, 86%
(Response: 14)

15. Do you have any responsibility for any aspect of customer experience?
1 - Yes, 11, 46%
2 - No, 13, 54%
(Response: 24)

16. Which aspects of the customer experience do you have responsibility for?
1, Customer service operations
2, Day-to day experience on ba.com,
3, All - across channels
4, Responsibility for marketing website
5, Website (4)
6, Global customer communication channels
7, Day to day management of service
(Response: 10)




                                                                               10
17. On which of the channels?
1 - Face to face, 2, 20%
2 - Store experience, 2, 20%
3 - Telephone, 3, 30%
4 - Call centre, 4, 40%
5 - Website, 8, 80%
6 - Other, 3, 30%
(Response: 10)

18. Which tools do you use to measure customer experience?
1 - Phone survey, 4, 40%
2 - Face to face survey, 3, 30%
3 - Web survey, 8, 80%
4 - Focus group, 6, 60%
5 - Direct mail survey, 6, 60%
6 - Other: 5, 50%
(Response: 10)

19. Do you improve the channel using the findings?,
1 - No, 0, 0%
2 - Yes. If yes, how?, 10, 100%
(Response: 10)

20. Do you have a dedicated team to do the improvements?
1 - Yes, 6, 60%
2 - No, 4, 40%
(Response: 10)

21. Which organisation / organisations do you consider do a good job of managing
customer experience? Why?
1, Virgin have a good reputation for managing their experience, as well as other premium
brands who major on customer experience as apart of their intrinsic offering
2, Starbucks, BMW
3, Virgin Group
4, Starbucks and John Lewis
5, Volvo, BMW, and Honda
6, Easyjet - website says what they do well and delivers a no-frills service
7, BT
(Response: 7)

22. If you would like to leave a comment which may be used in the report please do so
here.
1, We strive to ensure our customers have a successful experience when dealing with our
company
2, I believe that the success of a brand is directly linked to the strength of its customer
service.
(Response: 2)




                                                                                        11
Notes and References

1. Joseph Pine and James Gilmore, “Welcome to the Experience Economy”, Harvard
    Business Review, July-August 1998; and “The Experience Economy”, Boston, Harvard
    Business School Publishing, 1999
2. Chris Voss “Trends in the Experience and Service Economy – The Experience Profit
    Cycle”, London Business School, March 2004



About London Business School

London Business School’s Vision is to be the pre-eminent global business school, nurturing
talent and advancing knowledge in a multi-national, multicultural environment. Founded in
1965, the School graduated over 800 MBAs, Executive MBAs, Masters in Finance, Sloan
Fellows and PhDs from over 70 countries last year. The School’s executive education
department serves 6,000 executives and 60 corporate clients on its programmes every year.
London Business School is based in the most accessible and international city in the world
and is one of only two UK business schools to have twice been awarded the highest research
rating of five-star (5*), by the Higher Education Funding Council for England (HEFCE),
confirming the School as a centre of world-class research in business and management. For
more information on London Business School, please visit: http://www.london.edu

For more information on London Business School’s Experience Management Research
projects and publications, please visit http://www.london.edu/otm/
Contact: Fran Husson fhusson@london.edu




About Foviance

Foviance are expert in customer experience across digital channels, and are breaking new
ground with its Experience Management Service. This unique offering blends web analytics
with usability consultancy to help businesses deliver effective customer experiences across
digital platforms. The service is available across all digital channels including the Internet,
interactive TV and mobile. Formed from the merger of The Usability Company and
Webabacus, Foviance is at the forefront of the experience economy as it applies to digital
platforms. Its consultancy and services are used by clients including Barclays, Sky, Nokia and
Microsoft. For more information on Foviance, please visit http://www.foviance.com/

Contact: Catriona Campbell Catriona.campbell@foviance.com
Tel: +44 (0)8450 546 500




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