Customer experience to become the CIO’s top priority

Link to: Customer experience to become the CIO’s top priority

Customer experience is typically a concern of the CMO. In some organisations, the position of chief customer officer signals a recognition of the fundamental role customer experience plays in a customer-centric business. It’s a trend that we should see progress even further, as prioritisation – or at least an appreciation – of the experience consumers, customers and clients have when dealing with an organisation occurs across non-marketing functions.

An analyst for Forrester Research has argued that things are about to change for the CIO, someone for whom customer experience may not have been a high priority. Nigel Fenwick, who is vice president and the principal analyst serving CIOs, says this is, “in part because unhappy customers have the power to alter the course of any organisation, as Netflix CEO Reed Hastings discovered in 2011 when his US customers forced him into an about-turn on his strategy to split movies-by-mail from online streaming.”

Netflix is one example of the technical structure of a business’ offerings significantly impacting customer experience. It’s for this reason Fenwick sees CIOs in the future paying much closer attention to what customers have to say.

But it’s tricky. Fenwick says investing in customer experience can be a challenge because it can be perceived as an abstract notion, with a return that’s difficult to define. “Companies like USAA, a US insurance company with a strategic focus on customer experience, have spent years reshaping their entire organisations to think from the outside-in, focusing on the end customer,” he says. “USAA did this because they believed it was the right thing to do, not because of some compelling business case.”

But there isn’t a complete lack of evidence. Forrester research shows a correlation between customer experience level and market performance. Does it follow that investing in improving customer experience will improve a sluggish business? Not necessarily, there are always other factors at play, but the below bar chart is rather compelling. It compares stock performance over the last six years of public companies that are rated by Forrester’s annual Customer Experience Index (CXi) as being customer experience leaders and laggards, and also compares those two groups to the S&P 500.

CX vs stock

For companies like Australian Unity’s Retirement Living business, customer experience is taken very seriously, for a very good reason. Around 70% of new business is generated, or at least influenced, through word of mouth, something which is a direct result of a the customer experience, good or bad.

Merryn Bray, head of marketing and products at Australian Unity (Retirement Living) tells Marketing that the aged-care service provider is continually looking to optimise, and that the brand is undergoing a revision to highlight the importance of the customer.

“To be fair, we have always put it first but measuring it in a quantitative sense is difficult,” Bray says. Like Fenwick’s analysis, Bray agrees that it is difficult to put a dollar value on customer experience, but it will become vital for the CIO to account for high-performance measures in this area in the future.

The bottom line is sales and occupancy rates, which can be used as indicators, but to paint as clear a picture as possible Bray employs annual customer service satisfaction surveys, and has developed a customer journey model in house. It’s a multifactorial model based on international research that aims to travel the pipeline from top to bottom.

A curious shift in outlook is popping up – the idea that a low customer complaint level is a good thing. The issue is especially significant for service brands where the standard 9am-to-5pm customer complaint ‘wall’ is long gone.

One brand finding itself on a quest to encourage more feedback is STA Travel. Tania Tandora, STA’s marketing and online director, explains that the attitude of the company’s CEO is changing in regards to customer experience. The brand has a great customer complaint ratio, says Tandora, historically low, in fact. But top management aren’t impressed. It’s too low. No news is not necessarily good news, Tandora tells Marketing: “We are kidding ourselves if we thing customers aren’t talking.”

And with Australia and the UK representing the business’ largest divisions, they’re being used as models in STA’s quest to benchmark and grade the management of service issues to create standards across the company.

Customer service quality benchmarks are aligned across different divisions, retail and online, and a big shift is being seen in customers turning to social network pages demanding immediate responses and even resurrecting issues online that the business initially thought were resolved. There has even been progress in linking Facebook ‘Likes’ for example with customer lifetime value. Online communities run by STA Travel are managed with communication between all divisions, and Tandora says that whomever the social media representative is, they must know all aspects of the business, from the top down.

In this sense, even the CIO’s involvement in customer experience is not taking things far enough – a truly customer-centric business demands a holistic outlook from every corner of the organisation, with fluid communication between all parts, from top management to whom or whatever represents the business at each touchpoint.