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CUSTOMER ENGAGEMENT RESEARCH REPORT
Maximizing the Value of Customer-Facing
Processes and Solutions
BY: HARRY KLEIN, PRESIDENT, CUSTOMER ENGAGEMENT STRATEGIES, INC.; ELAINE EISENMAN, PhD, DEAN, BABSON EXECUTIVE EDUCATION;
CAROL O’BRIEN, MARKETING DIRECTOR, BABSON EXECUTIVE EDUCATION
“Vision without action is a day • Loyalty is fleeting stand-alone CFPSs are failing to
dream. Action without vision deliver on their promises.
is a nightmare.” • Customer support is required 24/7 In particular according to our
— Japanese Proverb research, CFPSs are being de-
• Customers want multiple veloped and deployed without the
“Never mistake activity communications channels for benefit of a strategic vision that
for achievement.” interacting with companies encompasses the entire customer
— John Wooden, retired Head life cycle. This more often than not
• Customers want instant responses
Coach and eight-time national results in less-than-desired value
and satisfaction
champion, UCLA Men’s Basketball for all concerned stakeholders.
• Differentiation is critical Clearly, action without vision will not
There is no denying that the Age of achieve desired results.
the Customer is in full swing. Re- • Avoiding commoditization
gardless of the industry or product, is an ongoing battle for While companies do report hav-
today’s customers are keenly aware many businesses ing underlying philosophies for
of the increasingly global competi- implementing individual process
tion for their dollars and attention. In response, companies are trying or solutions, few integrate their
They know what it means when to win, win back, or retain custom- CFPSs or view them as critical
products become commodities and ers by being more customer-centric. components of an entire customer
which product attributes are worth a experience strategy.
premium price. Rightly so, they are In more cases than not, companies
demanding more than satisfaction are being reactive in their eager- Successful customer experience
from the companies they do busi- ness to invest in the deployment strategies incorporate goals for
ness with and have come to expect and improvement of Customer- each of the following stages of cus-
service excellence. And they are Facing Processes and Solu- tomer interaction:
savvy enough to seek substitutes tions (CFPSs), including customer
when their desires are not met. relationship management (CRM), 1. Initiation – the active
customer engagement manage- management of welcoming
Companies of all types and in all ment (CEM), call centers, and (onboarding) a new customer and
industries have felt the impact of customer self-service. beginning the relationship (starting
the customer being in charge: the work for which a company has
While companies and their custom- been hired, implementing a product
ers are realizing some benefit and or service, etc.).
value from these deployments,
BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
2. Integration – the active each stage of the customer indicate they have the appropriate
management and assessment of life cycle, CFPSs will be more commitment levels for implementing
the product or service after the successful in driving value for the CFPSs. Nearly 80 percent of the
initiation stage has been completed, organization. In other words, for executives we surveyed
i.e., development/building/creating companies to be truly successful indicated their companies have
is complete and production usage at being customer-centric, they underlying customer-facing
has begun. The ultimate goal of must determine what they want philosophies upon which all CFPSs
the Integration stage is achieving customers to think, feel and do at are built. Additionally, 71 percent
operational excellence. every stage of the relationship and report having senior management
build processes and solutions that commitment, albeit with varying
3. Intelligence – the active support those objectives. degrees of commitment strength,
management of accumulating for their “customer-engagement
all previous learnings from the The Current Status of strategy.” Sixty-seven percent
Initiation and Integration stages, Customer-Facing Processes even have clearly defined goals for
conducting additional fact and Solutions customer experiences.
finding and research, assessing Respondents to the 2007 Customer (See Table 1.)
performance of the customer and Engagement, Experience, and
the vendor, the vendor deciding Loyalty Study have deployed a wide While the motivations are strong,
what level of further relationship range of CFPSs with CRM and Call fewer companies are succeeding
investment is warranted from a Center solutions being the most through implementation. For
financial return standpoint, and frequently deployed. (See Graph 1.) instance, of the respondents with
developing a deep and keen customer-facing philosophies, a
understanding of the customer’s Companies report they are focused surprisingly small number actually
long-term strategic goals. on being customer-centric and deployed CFPSs. (See Graph 2.)
Customer Engagement Strategies Inc. and Babson Executive Education conducted an online survey with
seventy-five corporate executives in April and May 2007. This white paper provides key findings and analysis
from that research effort. This white paper provides insight into where the strategic gaps exist between the
current deployment status of CFPSs and the true potential benefit and value of these solutions. Specific
recommendations for eliminating these gaps are provided.
4. Value Creation – the active
management of developing a
partnership with the customer to
become an inextricable part of
the customer’s performance, find
opportunities to drive innovation,
create new value, and gain
recommendations from the
customer for new business.
By aligning CFPSs with clearly
defined intellectual, emotional,
and behavioral objectives for
Graph 1. Installed CFPSs 2
BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
Additionally, companies are Possible explanations for the low 2. Lack of process – it takes focus
reportedly stopping stop short of levels of measurement across the to determine what customer-centric
taking proactive steps to ensure customer life cycle include: issues are most important to a
CFPSs are tied closely to resulting company and to put processes in
customer experiences. For 1. Conflicting priorities – companies place to measure performance.
instance, only 63 percent tie brand are focused on short-term
promises to customer experiences performance (especially public 3. Lack of commitment – top-down
and fewer than half (46 percent) companies) and driving revenue and bottom-up commitment is
have defined what constitutes and earnings trumps long-term required to develop and implement
a “loyal customer.” customer development. appropriate CFPSs.
Please indicate how much you agree with the following statement: Strongly Agree % Somewhat Agree %
My company has an underlying customer philosophy upon which all customer-facing
24% 55%
processes are built.
My company has clearly defined goals for “customer experiences.” 25% 41%
My company has formal “customer-experience” programs and processes in place. 19% 36%
My company’s brand promises are closely aligned with customers’ experiences. 27% 36%
My company has a clearly defined process to determine what it wants customers to feel,
3% 47%
think, and do at every step of the customer life cycle.
Table 1. Commitment to Customer Centricity
The Metrics (Not)
Being Measured
An additional finding is that few
companies are measuring customer
metrics beyond satisfaction and
profitability. (See Graph 3.) For
instance, 81 percent of respondent
companies report tracking customer
service and slightly more than 50
percent report they track customer
profitability. However, less than half
track the quality of the customer
experience and customer loyalty.
And less than one-quarter of
the companies surveyed track
lifetime value and the likelihood
of making referrals, two of the key
metrics in tracking value creation
Graph 2. Installed CFPSs for those with Underlying Customer Philosophies
and managing the entirety of the
Graph Note: Respondents were asked which CFPSs (CRM, CEM, Call Center,
customer life cycle. Customer Self-Support, None, Other) were implemented at their companies; with the
instruction to select all that apply.
3
BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
4. Lack of funding The Current Value of
Customer-Facing Processes • Excellent customer experiences
5. Lack of confidence – there and Solutions
has been a steady stream of Corporate investments are • Customer satisfaction
management theories and solutions generally made based on value
during the past decades that had an propositions. CFPSs are no • Customer loyalty
impact on CFPSs (TQM, balanced different. Their value proposition
scorecards, CRM, and CEM, to must be examined to better • Customer referrals
name a few). Companies may be understand the status quo, how it
concerned that a new CFPS is just can be improved upon, what the • Revenue
the flavor of the month and are not future of CFPSs may look like, and
confident about realizing a return on what deploying CFPSs may mean • Earnings
their investment. to companies’ future performance.
• Achievement of company-specific,
6. Value – given confusion, A full 23 percent of respondents customer-facing goals
conflicting priorities and other reported that none of their CFPSs
impediments, deploying CFPSs provide the most strategic value to “Substantial” is, of course,
may not offer enough their company. Given the significant subjective and therefore must be
perceived value to justify large amount of time and dollar resources defined by each company deploying
resource expenditures. that are typical of CFPS CFPSs. Value performance should
be viewed as a “living” concept
based on companies’ changing
status and customer-related
opportunities. Value performance
requirements should change over
time as companies become more
sophisticated in their strategic
use of CFPSs and their value
increases or decreases in relation
to customer-related opportunities.
The components that define
value performance will vary from
company to company based on
industry, customer type, customer-
facing opportunity, and other
factors. For example, a company
that sells a one-time use product
or service with very low customer
lifetime value will have a different
Graph 3. Customer Metrics Tracked
value performance focus than
that of a company whose model
Of the possible explanations implementations, these processes is dependent on high customer
described above, the value question and solutions must result in a lifetime value.
is one of the most compelling—and, substantial “value performance”
possibly, the area that should be to be viewed as successful for the To gain insight into CFPSs’ value
the highest priority to address for company. Specifically, CFPSs must performance, respondents were
most companies. drive some or all of the following: asked to choose the CFPS that
4
BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
provided the most strategic value less than $100,000 to more than provided the most strategic value
to their company and the CFPS $5 million. Annual operating costs to their company to colleagues or
that provided the most value to ranged from less than $25,000 to peers. This is a clear indication of a
their customers. (See Graph 4.) more than $2 million per year. lack of excellent value performance.
They were then asked to focus on
that one CFPS that drove the most
strategic value to their company
and report on how that value was
realized. (See Graph 5.)
The difference between what
companies found of most strategic
value to their company and
their customers is perhaps to be
expected but also may highlight
opportunities for future CFPS
development and implementation.
CRM is viewed as almost twice
as valuable to companies as
customers. Conversely, and to a Graph 4. Value of CFPSs to Company and Customers
much lesser degree, Customer
Self-Service is more than twice
as valuable to customers as
companies according to the
companies (no customers were
surveyed). This is not surprising
given the direction each CFPS
faces. The opportunity lies in
being able to ensure that Customer
Self-Service experiences are
captured by the CRM solution
and that data can be analyzed to
identify customer “hot spots,” better Graph 5. How Value Was Realized for One CFPS of Most Strategic Value
understand customer behavior, and to Company
generally enhance the customer
experience and drive value for It must be noted that the majority The Ultimate Question, as
customers and company alike. of respondents didn’t know the Fred Reichheld calls his loyalty
installation or annual operating question1 is: How likely would
Also not surprising is the clear costs of the CFPS providing you be to recommend X to a
evidence that CFPSs are not the most strategic value to their friend or colleague?
providing “known” value to company. Only those citing Call
companies that have deployed Centers who didn’t know were A 10-point scale is used, from 0 (not
them. (See Graph 6.) The cost to in the minority, but just barely at all likely) to 10 (extremely likely).
deploy and maintain CFPSs varied at 44 percent. Responses of 0 to 6 are considered
widely. The costs of CRM, Call active detractors who display little
Center, Customer Self-Service, Lastly, respondents were not very loyalty but do have some passion
and “Other” solutions ranged from likely to recommend the CFPS that about their response.
5
BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
Responses of 7 and 8 are customer referrals at 40 percent
considered passive detractors who or higher across the board―were
display no passion and will likely asked how likely they would be
never be able to be moved in either to refer their CRM solution to a
direction. Responses of 9 and 10 colleague or peer. The results
are considered active promoters. of this loyalty measure are quite
dramatic in that there is very little
The NPS is determined by loyalty. (See Table 2.) given the
subtracting the percentage of active Net Promoter Score (see sidebar)
detractors from the percentage of of negative four (-4). Were they
active promoters. expecting more value from the
CRM solution; unhappy with the
Respondents who rated CRM service from their solution provider;
as the CFPS providing the most unhappy with the cost of the
strategic value―with increased solution; unhappy with managing
revenue, earnings, customer the solution?
satisfaction, customer loyalty, and
Graph 6. How Value Was Realized for One CFPS of Most Strategic Value to Company
6
BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
On a scale of zero to 10, where zero is not at Customer Customer
all likely and 10 is extremely likely, how likely Relationship Experience Customer
Call Center None Other
would you be to recommend the solution to a Management Management Self-Service
colleague or peer? (CRM) (CEM)
0 0% 0% 0% 0% 0% 20%
1 0% 0% 0% 0% 0% 0%
2 0% 0% 0% 0% 0% 0%
3 0% 0% 0% 0% 0% 0%
4 0% 0% 0% 0% 0% 0%
5 17% 50% 22% 0% 0% 20%
6 14% 50% 0% 25% 0% 0%
7 17% 0% 11% 25% 0% 20%
8 24% 0% 33% 0% 0% 20%
9 10% 0% 11% 25% 0% 0%
10 17% 0% 22% 25% 0% 20%
NPS 14% -50% 33% 25% 0% -20%
Table 2. Net Promoter Score for CFPS with Most Strategic Value to Company
Respondent Demographics
Respondents came from the following industries:
Manufacturing 17.6%
Banking 5.4%
Finance / Accounting 4.1%
Insurance / Real Estate / Legal 2.7%
Federal Government (Including Military) 1.4%
State / Local Government 1.4%
Medical / Dental / Health 20.3%
Communications Carriers 1.4%
Transportation / Utilities 1.4%
Construction / Architecture / Engineering 4.1%
Wholesale / Resale / Distribution 4.1%
Education 2.7%
Marketing / Advertising / Entertainment 4.1%
Business Service / Consultant 6.8%
Computer Manufacturer 6.8%
Other 16.2%
Total 100.0%
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BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
Respondents came from small
to very large companies with 51
percent from companies with $750
million or more in annual revenue.
(See Graph 7).
Near-Term Next Steps
There will be significant deployment
of CFPSs in the coming 12 to 18
months according to respondents.
(See Graph 8).
Note that “in-person seminars and
conferences” leads the way. That’s
not surprising. Highly valuable
customers require high touch.
Given the human-form factor, being
face to face will never be out of
fashion. But be it face to face,
online, a Call Center―no matter
the CFPS to be deployed―all of
the above recommendations hold.
Graph 7. Companies With $750 Million or More in Annual Revenue
CFPSs need to be deployed as part
of an overall strategy that includes
the entire customer life cycle if true
value is to be realized.
Graph 8. CFPSs to be Deployed in 12-18 Months
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BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
Recommendations for • Culminating Status – the state determining intellectual, emotional,
Management Executives of the customer at the end of and behavioral customer goals,
The following recommendations a specific stage which with only 3 percent strongly
are offered to demonstrate how to enables the transition to the agreeing that they have such a
successfully deploy CFPS; in this next stage process. Without those goals, no
case, “successfully” means the CFPS integration can be achieved.
CFPS provides value to both the The four stages also pinpoint The lack of that set of goals dooms
customer and company across the directional change necessary to CFPS deployment to be less
customer life cycle. generate the customer knowledge effective and integrated, resulting
needed to create new value for in less value to both companies
1. COMPANIES AND the customer and vendor alike. and customers.
THEIR CUSTOMERS The road map also clarifies which
MUST DEFINE WHAT THE customers warrant long-term Customers must be involved in the
CUSTOMER EXPERIENCE investment and which ones do not. process of experience definition.
SHOULD BE INCLUDING One simple technique is to literally
GOALS AND METRICS FOR Additionally, the four stages help ask customers “if you could
ACHIEVING SUCCESS. companies establish internal and change ONE thing about being our
external experience expectations customer, what would it be?” Ask
One solution for determining that are easy to communicate and “most valuable” customers. Develop
customer experience goals is understand, measure, and manage, a plan for implementing meaningful
through The Four Stages of and will have a direct impact on changes that address customer
Customer Interaction: initiation, their financial performance. They concerns. Companies that follow
integration, intelligence, and provide a framework for developing this process end up with more
value creation (described in and implementing all customer- insight into what CFPSs to deploy
more detail above). facing processes and solutions. and the value performance metrics
on which to focus.
The attributes and processes of The four stages enable companies
each stage of the customer life to look at the collective impact of 2. COMPANIES MUST LOOK AT
cycle result in a specific customer all CFPSs. Once companies define CFPS AS COMPONENTS OF
experience. Each stage results in ideal customer interactions at every A CUSTOMER EXPERIENCE
an experience designed to lead to stage of the life cycle, they can STRATEGY AND BREAKDOWN
the next stage, ultimately resulting then analyze internal and customer THE SILOS THAT DELEGATE
in achieving value creation for both feedback to determine how well CFPS TO INDIVIDUALIZED
parties. The experience in each their CFPSs are enabling those SOLUTIONS.
stage is comprised of three action ideal interactions and where the
states and an end state: “hot spots” are located. They will Companies report having
have a strategic vision to share with philosophies around individual
• Emotional – what the CFPS solution providers that will CFPS, but few look at the customer
customer should be feeling assist those providers to develop experience as a whole. Indeed,
new tools that will help companies CRM, CEM, Call Centers, Customer
• Intellectual – what the attain their customer goals. Self-Service, and other solutions
customer should be thinking exist in silos for the most part,
While 79 percent of companies resulting in a patchwork experience
• Behavioral – what the
report that they have an underlying for customers and a lack of vision
customer should be doing
philosophy upon which all CFPSs and insight into customer behavior
(including customer behaviors
are based, only 50 percent report and experience for companies.
the vendor wishes to change)
having a formal process for These silos must be broken down.
9
BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
For instance, marketing must • More customer referrals While respondent companies
have keen awareness of customer reported having success measuring
experiences prior to launching • Customer loyalty results from customer satisfaction,
campaigns. As one example, they fell short on defining and
recently a “triple-play” cable • More targeted spending on measuring loyalty; very short on
company launched a customer customer-facing processes measuring the likelihood of the
referral campaign in the midst of a and programs customer making a referral; and,
series of technical issues that had didn’t track customer lifetime value
been ongoing for months. Clearly • More value for their investment to any great degree.
had they been tracking customer
experience and loyalty, they would Customers: These behavioral measurements
have made a different decision than and others must be in place when
to launch a referral campaign. • Experiences that live up to or attempting to maximize the value of
exceed expectations customers. Companies must figure
Many companies look to CRM out which customer behaviors are
as a be-all and end-all solution • More easily realized benefits the best indicators of loyalty and
to being a customer-centric measure them.
organization. CRM is focused • Relationship clarity
on improving companies’ ability When it comes to measuring
to manage their customer data • Greater confidence in success―and deploying CFPSs
and transactions. It really isn’t their decisions in general―start slowly. Much
focused on customer experience like physical exercise, trying to
as much as it is on keeping • Trust in vendor do too much too soon, can be
track of customer actions. painful. One way to do this is with
Alternatively, CEM is focused • More value for their investment customer segmentation.
on ensuring customers have
excellent experiences, i.e., Lastly, interdepartmental Focus efforts to define and measure
brand promises are realized by challenges to successful loyalty, track referrals, or compile
customers (at a minimum). deployment must be dealt with customer lifetime value data on a
in advance. If, for example, a smaller customer set. Clearly this
CRM and CEM―and Self-Service sales organization is expected should be done with a customer
and Call Centers and all other to use a new CRM application, set that represents great current or
CFPSs―ultimately need to they will need to understand how potential value. As processes are
work together to track, assess, it will help their sales process, rolled out and knowledge is gained,
manage and support a two-way what’s in it for them, and that their other customer segments can be
communication flow that supports relationships with customers and included in the effort.
value being realized by companies prospects will be respected.
and customers alike. There are
many benefits for both business 3. ONCE COMPANIES DEFINE
and companies as a result of a WHAT CUSTOMER EXPERIENCES
holistic solution set: THEY ARE TRYING TO DRIVE,
AND BREAK DOWN THE SILOS
Companies: OF THEIR CFPSS, THEY
MUST IMPLEMENT FORMAL
• More revenue PROCESSES TO MEASURE
SUCCESS THROUGHOUT THE
• Greater customer lifetime value ENTIRE CUSTOMER LIFE CYCLE.
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BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
MAXIMIZING THE VALUE OF CUSTOMER-FACING PROCESSES AND SOLUTIONS
About The Study About Babson Executive Notes
Customer Engagement Strategies Education 1. Fred Reichheld has spent more
Inc. and Babson Executive Babson Executive Education was than 20 years researching
Education have partnered to offer founded 30 years ago to meet the customer loyalty and the best
The 2007 Customer Engagement, growing needs of corporations and way to measure it. His “Ultimate
Experience, and Loyalty Study. individuals to develop leadership Question” asks about likelihood
The study provides guidance and professional development skills. to refer and from that he
and recommendations to those calculates the Net Promoter
responsible for creating and Specifically, we enable global Score. (See http://netpromoter.
managing customer engagement, organizations and individuals to: typepad.com/fred_reichheld/ for
experience, and loyalty through more information.)
various customer-facing • Become leaders and
processes and solutions. influence change
• Understand and apply strategies
About Customer Engagement to manage their businesses
Strategies Inc.
Customer Engagement Strategies • Build business &
analyzes, assesses, designs, management foundations
and builds strategic customer
experience and relationship Today, Babson Executive Education
programs and processes. Its Four is ranked among the world’s best
Stages of Customer Interaction executive education providers by
methodology is used to align BusinessWeek and Financial Times.
Customer Experiences with Brand Organizations across the globe
Promises through appropriate and from key industries choose
Business Processes. This results us for progressive and flexible
in customer interaction practices solutions that leverage the global
that are essential for long-lasting, business and teaching expertise
profitable customer relationships. of our faculty, industry experts,
and partners. Our client-centric
For more information, please solutions include a strategic blend
contact Harry Klein at of education, consulting, coaching,
781-559-8202 or and research to enable our Clients
hklein@customerengagement.com to analyze challenges, develop
or visit solutions, and implement strategies
www.customerengagement.com. to meet their goals.
For more information, please
contact Carol O’Brien at
781-239-4989 or
cobrien@babson.edu or
visit www.babson.edu/bee/.
11
BABSON EXECUTIVE EDUCATION CUSTOMER ENGAGEMENT STRATEGIES, INC.
Babson Park, MA 02457-0310 USA
Phone 1·800·882·EXEC or +781·239·4354 Fax +781·239·5266 E-mail exec@babson.edu
www.babson.edu/bee
P.O. Box 920171, Needham, MA 02492
Phone 781-559-8202 Fax 781-240-0777 E-mail info@customerengagement.com
www.customerengagement.com
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