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In our webinar on 30 April 2021, the Board Leadership Center was joined by Patrick Maes, Head of Customer, Sales & Marketing Advisory at KPMG in Belgium, who shared his views on the changing landscape in customer experience and the imperative for companies and boards to adopt a customer-centric approach. This article summarizes the key takeaways for boards.

 

Customer dynamics are changing. Today’s “emancipated customer” has taken control of the selling process; companies can no longer “push” their products or messaging through advertising. To capitalize on this shift in power, companies need to put their customers at the center of their decision-making processes. However, if 77% of CEOs don’t feel that they have a good understanding of their customer1, then how can you, as a board, ensure that your strategy and processes are outside-in, rather than inside-out?

 

Who are today’s consumers and what do they want?

With shortening attention spans and more and more people “bored by default”, today’s consumers are starting from a position of skepticism. They are approaching new products and services through the lens of: Could this be interesting? What’s in it for me?

Consumers are becoming more collaborative – they want to share what they’re doing and they want to consult with others.

They are also highly demanding – they are operating in a 24/7 mode and expect companies to respond to that. When their high standards aren’t met, they are easily disappointed and ready to share complaints, including on social media, where they can quickly go viral. At the same time, though, there’s an opportunity for companies who delight their customers. Customers can be extremely passionate about brands they are happy with and will use those same social media channels to promote these brands proactively. 

Inside-out vs. Outside-in

One way to quickly identify whether your company is customer centric or not is to determine whether you operate “inside-out” or “outside-in”. 

Graph inside-out outside-in

Inside-out

For companies who are “inside-out”, the decision-making process starts with internal priorities, with conversations centering around profitability, efficiency and/or targets. You may hear questions such as: How will this new idea bring us extra revenue? How will we make sure that this passes with clients and partners without too much friction?

Outside-in

“Outside-in” companies still have conversations about profits, efficiency and operational excellence. However, these are balanced at the same time with questions such as: But what about the customer? How will this new idea impact their perception of the relationship?

Being a customer-centric organization is not only about having happy customers; it’s also about having happy employees. It’s part of the culture – you cannot achieve customer centricity if your people are not on board. 

Building a more customer-centric organization

Understand customer needs through segmentation and personas

The concept of “personas” may seem outdated – with customer-centric organizations moving to “dynamic segments” and “markets of 1”. However, using personas to define your top 3-4 typical customers, which make up the majority of your customer-base, provides you with a visualization of your customers that can be used throughout your organization, with third parties, etc. It gives you a rich picture of who your customers are, what triggers them, what they do/don’t like, what their expectations are, etc.

Your customer personas can then be used in decision making throughout your organization. For example, if you’re considering whether to replace a call center or customer access to a subject matter expert with an app or chatbot, you might consider your cost-benefit analysis alongside your customer personas – how well will they adapt to a new way of interacting with you? How many customers might you lose? What’s the cost of losing those customers vs. the savings of going digital?

Map customer experiences through customer journeys

A customer journey map is a visual of all the touch points that your customers have with your company – from exploration, sign-up and on-boarding to delivery, complaints and upselling. It also shows the emotional journey, the engagement channels used, the pain points, and remediation.

A good customer journey map is not only for the marketing department; it’s also a useful exercise for other departments. It can show dips in the relationship or complaints and map how these customers may leave or how the issues can be remediated, turning the customers into promoters. It can also be used to identify improvements to enhance your customers’ experience, employees’ experience and increase efficiencies. 

Systematically track customer experience through a voice of the customer program

If you want to be customer centric, you need to listen to what your customers tell you. However, an effective voice of the customer program is more than an annual survey. It’s a continuous process that’s embedded into the target operating model.

A voice of the customer program not only asks a customer how they feel, but also looks at other metrics, including social listening, emotional tracking and conversation analytics to activate (personal) reach-outs to specific clients and prospects. For example, you may look at how rapidly invoices are paid, what kind of emotions are displayed in customer interactions, whether customers are using all the functionalities of your product, whether they have stopped using certain functionalities, etc. 

Have a clear customer strategy in place

Customer centricity is not about giving in to every whim of every customer; it’s about clearly defining what kind of experience customers that work with you can expect. Your customer strategy should be a clear part of your business strategy. It defines where you will excel and create the wow-factor vs. where you will conform to the market average, or even underperform. 

Operate with a clear set of customer-related metrics

Defining a customer strategy is about finding a balance between the level of satisfaction you want to achieve, the cost you are willing to pay to achieve it, and the level of effort/cost you are willing to push to the client in order to balance the two:

  • Net Promoter Score (NPS): Using a scale of 1-10, NPS takes into account only the promoters and detractors to look at what proportion of people want to promote you. What level of NPS do you want to achieve and maintain?
  • Cost to Serve (CtS): How much of every €1000 turnover do you want to spend to serve your customers?
  • Customer Effort Score (CES): How much effort (and cost) can be moved to the customer before you overreach into the friction zone where your customers begin to question why they need you? How will you communicate with your customers and provide them with the right tools to feel empowered to self-manage? 

Resolution

Most customers can understand the errors that occur – in logistics, timing, etc. – if they are resolved thoughtfully. In cases where errors are handled properly, previously unhappy customers can even be turned into promoters. How does your organization turn an error into an opportunity? How do you leave your clients feeling delighted rather than slighted?

Key questions for Boards to consider

  • Do we understand our customers and their needs through segmentation and personae?
  • Have we mapped our customer experiences through customer journeys?
  • Do we systematically track customer experience through a voice of the customer program?
  • Do we have a clear customer strategy in place?
  • Do we have a clear set of customer-related KPIs? What’s our NPS? What’s our CtS? How many complaints have we received and what’s the nature of those complaints? Are they arising from structural problems?
  • Have we used data analytics to perform a sentiment analysis?
  • What’s our process for resolution? How many repeat customers do we have after resolution?

About the BLC

The Board Leadership Center offers non-executive and executive board members and those working closely with them (including CROs and Heads of Internal Audit) a place within a community of board-level peers. It also offers access to topical seminars and more technical Board Academy sessions, invaluable resources, thought leadership and lively and engaging networking opportunities.

 

Compiled by Kimberly Rofrano, BLC Program Manager, kimberlyrofrano@kpmg.com