APICS is the premier professional association for supply chain management.

It’s All About the Customer

By Elizabeth Rennie | July/August 2013 | 23 | 4

Business leaders must identify new and creative ways to maintain and advance customer bases in this exceedingly competitive marketplace. An effective approach to the total customer experience can deliver sustainable value to consumers and organizations.The new ultimate supply chain experience

Business leaders must identify new and creative ways to maintain and advance customer bases in this exceedingly competitive marketplace. As always, this challenge is compounded by pressure to reduce costs without compromising quality or service levels. An effective approach to the total customer experience can enable supply chain and operations management professionals to deliver sustainable value to their consumers and organizations. 

Customer experience management encompasses a strong and consistent brand, smart marketing and sales tactics, cost-optimizing technologies, a fully integrated supply chain, mobile and social media, and much more. It is no longer sufficient for organizations to be efficient and transparent; they now must be great listeners, intuitive, responsive, and always flexible.

The Forrester Research report “2013 Customer Experience Predictions” by Kerry Bodine and Ron Rogowski says market forces have “catapulted the field of customer experience into strategic stature.” Yet, the authors admit that it will be years before customer experience is rooted as sturdily as more mature business disciplines such as finance, human resources, and information technology (IT). They write, “The customer experience industry will be characterized by efforts that range wildly from systematic change initiatives to desperate shortcuts … While many firms have been working diligently to improve their customer experience for years, still others remain woefully in the dark.”

ACCO Brands, a supplier of office and consumer products including At-a-Glance, Day-Timer, and Swingline, is one company that recognizes the importance of customer experience management as a business discipline. “Our goal isn’t to sell a customer a product; it’s to secure a customer for life,” says Lissa Cupp, vice president of e-commerce and consumer marketing. “Anyone can sell in a one-and-done situation … You may make a quick buck. But without a true experience by the customer, you lose future profitability—not to mention potential product and company advocates and loyal supporters.”

Cupp leads ACCO’s direct-to-consumer business. “Our planning and organizing products are very personal,” she says. “For that reason, we help customers find the right set of tools for them. This includes our expertise in how people do short- and long-term planning; scheduling; note-taking; and, more recently, interfacing technology with their planning, including smartphones and tablets.”

To achieve these goals, ACCO uses some traditional tactics—focus groups, surveys, and customer service call evaluations—and some more innovative approaches. “We perform ‘shop-alongs’ during the back-to-school season to get hands-on, live feedback and input on our customers’ buying experiences,” Cupp says, adding, “The voice of the customer should drive any business, and we’re no different.”

A wide variety of analytics tools evaluate sales fluctuations in ACCO’s very cyclical business, monitor response rates to promotional emails, and the like. In addition, the company employs a team of analysts who specialize in long-range business forecasting and identifying specific trends on which ACCO can capitalize by stocking allotted shelf space with the right products. Cupp says product reviews play heavily in determining how to enhance the customer experience. “During every touch point with the customer, you should be taking the opportunity presented to you and get customer feedback, both positive and negative,” Cupp explains. 

Know the score
Carlos Herrera is global customer loyalty leader for Life Technologies, a biotechnology tools company. Like ACCO, Life Technologies has been striving toward exceptional customer experiences for quite some time through a program called the net promoter score. Herrera and his team engineered this system for communicating with more than 75,000 customers to ensure they are satisfied with Life Technologies’ products and services. “We interpret thousands of comments every day,” Hererra explains. “These connections allow us to build a blueprint to a better customer experience.” 

Calculating a company’s net promoter score is simple. First, take the percentage of people who are “extremely likely” to recommend your company—those who answer the basic question “How likely is it that you would recommend our company to a friend or colleague?” with a 9 or 10 on a 10-point scale. These are the company’s promoters. From that number, subtract the percentage of customers who answer with a 0 through 6. This group is known as detractors.
For example, at Life Technologies, cross-functional teams formed by IT, inventory planning, operations, and customer care have addressed customer dissatisfaction with back orders in two ways: by improving internal processes to reduce shortages in commonly ordered products and by finding ways to communicate with customers about when they can expect their orders to be filled. Herrera says changes like these, rooted in customer feedback, are fundamental to increasing net promoter scores and driving growth.

Company initiatives at Life Technologies are closely related to this feedback and are prioritized based on the likelihood of a customer recommendation. Feedback management tools help the business consolidate voice-of-the-customer information and achieve real-time and on-demand reporting.  

The Forrester report adds, “Companies often start their journeys to better customer experience [by] integrating net promoter scores into a more comprehensive measurement framework. Many firms have gained proficiency in these areas and are ready to tackle their next big challenges.”

It’s interesting to note that even employees who don’t interact directly with customers can help improve net promoter scores. For instance, say an employee has a particularly good experience with her telephone company. She can share details about what that business did right with the customer group at her own organization. Sharing these experiences may help spark new ideas for how the business can satisfy its own customers. “You can share ideas on how to improve internal processes to make them more lean and efficient, which has an impact on customer interactions with the company,” Herrera says.

Calculating net promoter scores also helps Herrera and his colleagues better understand customer loyalty levels and where Life Technologies stands compared to competitors. The score tends to correlate positively with revenue, as well. “Good things happen when customers are loyal,” Herrera says. “This is not a numbers game; it is about people and relationship building … and the best measure of loyalty is increased revenue. So ask yourself what gaps may exist if your top line is not consistent with loyalty metrics.”

Take a fresh approach
The very basic foundation of customer experience management is this: Greater satisfaction results in customer loyalty and higher revenues. “The goal of all business is to make money. Loyal customers result in repeat business,” says Subhrojyoti Mukherjee, vice president of loyalty, enterprise marketing management, for Customer Centria and director of germination management services at Germination Technology Services—both of which are customer engagement and experience solution providers with offices in Mumbai. 

Mukherjee believes feeding “rich” data to team members is crucial, whether that information is about product engineering, brand positioning, target segment analysis, or another process. His companies use analytics, data mining, and measurement of various customer engagement programs to get products to the appropriate customer segment. “Once the right product and right customer segment are mapped, a campaign management suite [is used to] reduce the cycle time,” he says. Campaign management can identify the 20 percent of customers responsible for 80 percent of the business—an example of Pareto’s law—making it possible to generate ever higher demand levels and present specific offers to customers with similar consumption patterns.

“Supply chain management ensures … satisfaction to the customers, internal and external,” Mukherjee says. “However, the delivery of the right experience is possible only if there is integration with [customer relationship management] (CRM) supplying input to the supply side value chain.” 

Experts say an integrated system makes customer centricity significantly easier for employees to achieve. Benefits include
  • cost savings through improved productivity, fewer data errors, uncovering new cross-sell opportunities, and faster resolution of customer issues 
  • revenue growth driven by clearer understanding of customer buying patterns 
  • improved efficiency of strategic processes, which provides a platform for winning, keeping, and developing customers
  • giving staff access to information that helps them perform better
  • faster response to customer inquiries
  • enhanced management of the sales pipeline
  • more targeted marketing campaigns 
  • improved customer communication and longer-lasting relationships.

In short, customer experience is a function of all the activities performed by each part of the value chain. “It is an outcome,” Mukherjee says. “If the experience with a product or service is greater than expected or perceived, then experience equals delight. Delight results in customer retention and higher lifetime value.” 

Mukherjee also cautions that loyalty programs often fall flat due to lack of integration. He offers the example of Company X, a Fortune 500 conglomerate in India. One of the most trusted brands in the nation, it deals in consumer goods, both durable and fast-moving. It sells its products across 26 states in India.

“In these days of stagnating and saturated consumer demand, as well as clutter in the market with cheap and localized ‘me too’ brands, supply side efficiency is key to sustaining operating margin,” Mukherjee explains. He and his colleagues worked with Company X to create two pioneering projects. They first created a fantasy cricket league to engage customers. In three months, they reached 1 million registered users and collected demographic, psychographic, and consumption habits. 

“We could segment customer statistical analysis, such as association and correlation, based on parameters like geographical location, zip code, age, responsiveness to various communication and sensory inputs … consumption habits, and shopping destinations,” he says. For each segment, his team arrived at a “market basket”—a modeling technique based on the idea that, if you purchase certain items, you are more (or less) likely to purchase certain other items. Then, it became possible to create segments and predict market baskets for different locations’ particular customer archetypes (needs, wants, and aspirations).

Mukherjee adds that, in India, each state is quite distinct in its culture, preferences, habits, and lifestyles. However, the data—after being fed to supply chain and CRM systems—brought about greater responsiveness to these differences. The end results included improved operational efficiency, faster turns, and reduced marketing dollars. 

The second part of the customer experience initiative with Company X involved creating a three-dimensional, virtual world similar to Second Life. The design and activities of the initiative’s eight regions were based on psychographic characteristics, with the customer archetype mapped to match. “The look, feel, and activities were developed for those archetypes,” Mukherjee explains. “We measured consumer behavior based on interactions with these regions. Products with brand personalities also were mapped to these regions. Thus, a synergy was established between product-customer archetype behaviors and attitude toward the products.”

This was no doubt a fascinating take on customer experience management—and certainly something to be considered. At the same time, however, the Forrester report warns against “prioritizing big data over big insights.” The authors say they expect to see analytically driven organizations become “absolutely mesmerized by the potential of … information—and go overboard in their efforts to catch up in the area of customer understanding.” 

The potential danger is in spending enormous amounts of time and money stockpiling new data sources and not enough effort determining what to do with it. Firms that are predisposed to quantitative inputs may neglect research methods such as observation and one-on-one interviews and thus miss out on essential qualitative findings. Still, the authors do encourage taking a new look at things: “Invest in people and new methodologies,” they say. “The same employees doing the same things they’ve done for years will not miraculously lift your organization out of the customer experience doldrums.”

Listen smart 
Without a clear listening strategy, valuable feedback very quickly can become noise. Thus, Herrera says, more than selecting the type of feedback on which to focus, the real measure should be the effectiveness of the listening strategy. This includes how to capture information from customers in different channels, prioritize the responses, and take appropriate action.

Clare Cummins, manager of product management at Sage, a CRM cloud software provider, agrees, noting that “listening in” offers a chance to improve customer relationships when things go wrong. “By tuning in to all the relevant conversations, the chances of finding unhappy customers quickly and addressing their issues before they do serious damage to a brand are dramatically improved.”

She finds that Sage customers and prospects have a renewed interest in the various needs and wants of customers. They are embracing modern methods such as social media, email marketing, and reporting and analytics. “Without social media interaction, a business can only know about the conversations [it has] had directly with customers. What happens when those customers talk about the business in other forums?” 

Manage the experience
As customer experience professionals scrutinize processes and operations, they likely will realize that these initiatives pivot on corporate culture and employee engagement. “It’s a natural and desired outcome for employees to learn the ins and outs of your products and their true customer benefits,” Cupp says. “However, just because you know all of this detailed information, you must always remember that most customers do not.” 

She advocates asking your employees to put themselves in customers’ shoes in order to become fully educated on your products and services and their true benefits. Customers will truly appreciate it and, most likely, become your best product advocates. “The pivotal catalyst to improving the customer experience is people,” Herrera says. “Yes, tools help measure, direct workflow, communicate … However, if teams are not engaged in serving customers, all this infrastructure is of little value.”  

He adds that organizations must promote diversity of thought and weave it deeply into the company culture. This creates a vibrant, powerful mix of talent, backgrounds, and ideas. Still, Herrera maintains that the process starts and ends with the customer: “To be acknowledged makes people feel important, valuable, and recognized. And this is exactly what our customers deserve.”

Elizabeth Rennie is managing editor for APICS magazine. She may be contacted at editorial@apics.org.

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