Customer Experience Governance Approaches & Maturity Stages

Where does the customer experience sit? What are the responsibilities and, most importantly, the authority of the customer experience owners within organisations? These were some of the questions we looked to answer with our research amongst senior customer experience professionals and executives from leading Telcos in North America, Latin America, Europe, Africa and the Middle East. What prompted us to do this research was that during our Global Customer Experience Management Survey 2011 we found that Telcos were allocating the most resources to customer experience. A Bloomberg Business week research also reported that 92% of Telecom executives say that customer experience is a top strategic objective for them and yet they themselves as well as customers, rate the experience poorly or average at best. So we thought to investigate where do things break up and governance was the place to start.

Who owns the Customer Experience?

In 50% of the organisations we spoke to Customer Experience (CE) was sitting within the Marketing department. Marketing people are the ones most used to thinking about the consumer psychology, emotions, buying behaviour and conducting research so this is a natural incubator place for it. The problem with this one though is that in some cases they have little authority over Operations which makes implementation of initiatives more difficult.

In 18% of the cases Customer Experience was sitting within Customer Service. Again this seem to be a natural place for it as customer service people usually have the customers at heart and have a view of what causes customer irritation, complaints etc. The potential problem with this position though is that Customer Experience is seen as fixing the basics or rebranding of Customer Service rather than eliminating root causes and designing a deliberate experience that will differentiate the organisation (as per the strategic objectives of 92% of executives).

Another 18% of the respondents said that Operations own the Customer Experience within their organisation. However for us the more interesting finding was that 9% said that in their organisation the Customer Experience was established as a cross functional team that reports to the board. Those were organisations who took on the customer experience journey about 3 years ago. We’ve been long advocating for a cross functional Customer Experience Council as a way to fight silo mentality and now it seems more organisations are taking on this route.

What we didn’t find in Telecoms and is a rare practice in Fortune 500 companies but also one that needs consideration is the case when Customer Experience sits within Human Resources (which by itself is an awful word i.e. treating people as resources). That way the HR managers can be responsible for both the employee and customer experience which are interlinked. For that to work you need an HR manager who is really good at convincing and less on admin and hitting on the brakes (as most HR departments do).

As you can see from the above, where Customer Experience sits in the early stages of its development depends from the situation within the organisation and ultimately who within the boardroom has endorsed it and is sponsoring it. Once it gets past its embryonic phase and more people endorse it, we would recommend that it becomes a cross functional unit governed by a Customer Experience Council, chaired by the Chief Customer Officer.

So what is the typical customer experience maturity path?  

The Naïve Stage

Usually it all starts with people being supportive on words. When the organic growth prospects become dimmer executives start to look at the customer attrition ratios, customer complaints etc. Everyone is in support to the idea of improving the experience and someone is given the task but when it comes to actual implementation and assigning resources people are unwilling to let someone interfere with their usual way of working or the project is seen as cost to the business. This is where the support of an exec is extremely important to take the improvement initiatives off the ground.

Low End Transactional Stage

As the organisation is not yet ready to jump with both feet, it’s best to start with a pilot project to prove the concept. For example some teams create initial set-up leaflets, e-mail guidelines etc. thus eliminating dump contacts like “how do I do x?” thus reducing costs and at the same time improving the experience. Another one could be eliminating major sources of complaints e.g. TV and broadband teams missing their home visit appointments, which drives extra call centre traffic as well.

Once the pilot project has proven its worth, organisations increase the capacity of the Customer Experience teams and make them formally responsible for the Customer Experience within the organisation. They are to own the voice of the customer program and to act on it. So the team start collecting lots of customer data and acting on some findings but in a years’ time many of the overall metrics e.g. Customer Satisfaction, Net Promoter Score® etc. don’t improve significantly.

There are several reasons why this usually happens. For one the team is missing an overall strategy which aligns the whole organisation e.g. HR, Finance, Legal, Marketing, Operations etc. Without such; each does what they think the experience should look like or sometimes what’s best for their own department. The end result is a disjoined experience. A second reason is the lack of authority for the head of customer experience to implement the changes needed. When the Head of CE goes to the manager of another department and speaks of a better way to serve customers that manager may get defensive as to why are they intruding and teaching him how to do his job, or the excuse often is “yes, that sounds good, but I don’t have the resources to implement it… I need xyz from another department”.

High End Transactional Stage

The path to forward goes through overcoming the above mentioned obstacles. The Head of CE needs his word to be heard over what type of people get recruited, what gets measured, what’s the basis of people’s remunerations as well as to poses some budget of his own and has a say over the operational expenses.

The understanding of senior management and proof from the pilot project that the concept works are crucial for the Head of CE’s role to be elevated to a level where he needs to give his stamp on decisions, reports to the board and can easily set-up appointments to meet the CEO who can play an arbitrage role at times. One of the early goals for the Head of CE at this stage for his team is to be involved in the early and final stages of new product and service development. That way they can have their input in the design of new products/services and the final word when those have passed through all other departments and deviated from the original concept.

Some organisations have taken this even further to the extent where the Head of CE has “veto rights”. For example when the company was about to launch a new product, the Head of CE said that for it to be successful and the customer experience to live up to the standards it needed the full support of the IT department but the IT people said that they couldn’t commit the resources required at that stage. Therefore the Head of CE vetoed the decision to launch the product as it would have been rushed.

We have worked with many organisations that have fallen in such traps. In the early stages of development they have been too much focused on acquisition mode and rush to market while the customer matters have been of second tier importance until they reach an enormous back-log of problems and complaints, customers start to churn at higher rates and a bad word of mouth starts to circulate.

Apple is an example which shows that not rushing in to the market when things are not yet to standard is a strategy that pays off. For example, when Steve Jobs was about to launch Apple Stores, he and his store guru, Ron Johnson, suddenly decided to delay everything a few months so that the stores’ layouts could be reorganized around activities and not just product categories[1].

A similar thing happened as Jobs and Jony Ive, Apple’s industrial designer, were finishing the iPad. At one point Jobs looked at the model and felt slightly dissatisfied. It didn’t seem casual and friendly enough to scoop up and whisk away. They needed to signal that you could grab it with one hand, on impulse. They decided that the bottom edge should be slightly rounded, so that a user would feel comfortable just snatching it up rather than lifting it carefully. That meant engineering had to design the necessary connection ports and buttons in a thin, simple lip that sloped away gently underneath. Jobs delayed the product until the change could be made[2].

Enlightened Stage

The key characteristic of this stage is the existence of a Chief Customer Officer. A study published by HBR shows that the name can vary e.g. Chief Experience Officer (at Signa), Executive Vice President Member Experience (at USAA), Chief Global Customer and Marketing Officer (at Dunkin’ brands)[3] but the essence remains the same. The elevation of this role comes as organisations realise that in the ever more connected customer environment in order to continue growing they need to be more focused on the customer than ever before. Prior to that role the case usually is that operations are focused on products and services, finance on collecting payments, sales on meeting short-term revenue goals but no one is looking after the customer.

However if your organisation just wants to follow the trends and decides to skip a stage and appoint a Chief Customer Office, you might be setting yourself for failure as there are three important pre-conditions for this role to succeed: 1) a strategic mandate to differentiate based on customer experience (which 92% of telecom executives say is the goal of their organisation); 2) a portfolio of successful projects to create buy-in and start the CE cultural change (accrued during the Transactional Stage) and 3) a uniform understanding and support of the board for what the position can accomplish[4].

In our research amongst 40 Telecoms we did not come across one that has introduced the role of Chief Customer Officer yet but we also didn’t come across a Telco that is admired and considered as a true role model by others in the industry. Therefore Telecoms need to look outside the industry for best practices. Companies like Philips Lighting, FedEx, SAP as well as the above mentioned USAA and Dunkin’ brands have already implemented this role.

 

Natural Stage

Finally if you reach the natural stage, where the DNA of the customer is embedded within the organisation and employees have a natural understanding of the customer needs and emotions, and the senior leadership is putting customers in front of short term profits then you won’t need the role of Chief Customer Officer anymore nor a dedicated customer experience department.

To read more about our research amongst Telecom’s customer experience professionals download our white paper.

Zhecho Dobrev is a consultant and project manager for Beyond Philosophy. He has worked with a wide array of large corporate companies. Zhecho’s expertise includes customer behaviour analytics, customer loyalty, complaints management and journey mapping. He holds an MBA and Master’s degree in International Relations. Zhecho Dobrev on Twitter @Zhecho_BeyondP