What we learnt at this October’s CCO Forum
Customer Driven Operational Excellence – Hard to do “in totality”
Twice a year we have the honour of chairing the Chief Customer Officer Forum, an “un-conference” for which we source key speakers and case studies on the leading edge of customer experience. The October theme was “Operational Excellence Today” and we sought case studies of companies excelling in some aspect of their operations because those rare organisations who excel in everything, are often reluctant to share in these kinds of forums. We had two outstanding key note speakers who have led major businesses through significant operational change. As always, the Chief Customer Officer Forum is run under Chatham House rules so we can talk about what was said but not attribute it to the particular organisation or speaker. We’ve grouped what we heard under three themes:
Counter intuitive issues in Customer Strategy that underpin Operational Excellence
Driving improvements from data
How specialisation can drive excellence
Customer strategy and operational excellence
a) Selling “excellence” for the customer is a long term strategy One of our speakers made it clear that the investment community were looking for shorter term returns and therefore often objected to the costs of longer term investments for customers. This is a challenge for CEOs and boards to resist the siren call and invest in excellence that rewards customers and shareholders over a longer period. It showed that a customer focus is a more long-term strategy that needs executive and board support.
b) Down-selling is an important customer investment Among the longer term “customer investments” one speaker urged companies to consider down-selling i.e. offering discounts or other loyalty rewards, to existing customers. This strategy trades off short term gains for the benefits of loyalty and reducing customer churn. It is counter intuitive as the benefits are not immediate and to understand the benefits companies need a sophisticated understanding of customer loyalty and profitability.
c) Doing right by the customer forms a clear part of social license to operate One of the companies that presented is in an almost monopoly position in its market. However it has continued to invest in improvements that benefit the customer because it sees these as a necessary part of its “social license” to operate. These investments also have benefits in areas like contact reduction but they are not the prime motivation behind the decision. Social license to operate will become a bigger issue in an era of re-regulation.
d) Benefits from technology need to be shared with the customer One speaker urged companies to think through how customers benefited from technology investments and share these benefits with the customer. The speaker urged companies to prioritise those investments that produced customer and company gains and to make sure the gains were shared. This speech questioned investments in technology where only the business received the benefits.
e) Service design is a science not an art One of our speakers discussed the emerging body of research which shows that there are key repeatable behavioural principles to follow in service design (design of all customer experiences). Using designers who understand and apply these principles will produce more reliable and predictable outcomes from improvement projects. The cases discussed showed material improvements in outcomes such as customer loyalty, sales conversion and resolution. One of our key notes described how a large retailer had built on these principles using a concept called an “explorium” where customers had far more than a retail experience in their stores and spent more as a result.
Improvements from Data
a) Understanding customer contacts is even more critical in a multi channel world and text may be the key This case study showed that in a multi-channel world, there is a risk that customer contact proliferates across channels and becomes even harder to manage. This company was able to use data analytics to bring together contacts from all channels and report on all contacts including chat, email, calls and messaging. This intelligence helped it identify areas where contacts could be eliminated and automated for the benefit of customers and the company. Part of the secret was getting all contacts, even speech, into a similar text form so that the power of text analytics could be applied.
b) Continuous tracking is possible once you train the machine Two cases at the Forum shared that the latest data analysis tools can track contact information continuously and can also grow in sophistication once AI is applied. However, these two case studies made it very clear that you get faster results if you have ways “to train the machines” and show them what to look for. The analytics got to value faster when given a well designed initial taxonomy of what to look for. Similarly, process analysis by well trained designers kick-started robotic automation and ensured the technology was thrown at the right problems rather than “boiling the ocean” to find the right problems.
c) Data can now show you sources of poor experience like poor resolution without asking customers One case also demonstrated the most sophisticated approach we have seen to tracking repeat contacts and lack of resolution. The analytics described above made it possible to understand resolution at the level of each contact type and each agent. This level of analysis made issues and improvements far clearer to that company.
d) Interaction type tracking may be the most effective Voice of Customer The cases shared showed how understanding what drove customer contact led rapidly to opportunities for improvement. One of the cases suggested that the companies had been able to cut back on VOC customer surveys once they started treating “reasons for contact” as true Voice of Customer. This had saved both customer and organisational effort as we described in our book “Your Customer Rules”.
Specialisation, Scale and Excellence
a) Legacy organisations do it tough even when they know what to change.
This case illustrated the complexity of change in large and complex companies. It illustrated that even when the company knew what to change, there are many layers to the problem before a solution can be found. This was a stark contrast to a “Fintech” company that described the speed with which it can change systems and processes.
b) Smart growing businesses treat every contact as a source of possible improvement The Fintech start up had recognised that the role of customer service was to drive improvement elsewhere in the business. They had recognised that service areas don’t drive their own contacts but need to work with those areas of the business that do (as we described in The Best Service is No Service). This showed a very similar approach to the early days of Amazon.com.
c) Dis-economies of scale may become more of a disadvantage in the age of disruption One of our CEO speakers described just how hard it is to lead our biggest institutions because of their complexity and scale. He forecast that they would continue to be vulnerable to more nimble product specialists or “mono-line" businesses. He thought these companies would be able to offer a more refined customer proposition and that customers now had the tools and knowledge to act as “aggregators” of specialists and thereby reduce the need for large complex organisations to combine those products and services.
d) The funding models of start ups drive experimentation that is hard to imitate This case explored the models that start up businesses have to apply to obtain rounds of funding. It highlighted that it forces them to adopt agile concepts like “minimum viable product". Much as large organisation try to mimic these methodologies, the necessity that drives start ups forces innovation and risk taking that most large organisation can’t match. Of course large companies have advantages like access to capital and pools of talent, but it's still interesting to reflect on what drives the underlying methodologies.
Wrap Up We hope we have conveyed some of the interesting discussions that happen “around the table” at the Chief Customer Officer Forum. The CCO Forum is a "by invitation" group that meets twice each year. The group is open to new members. We are also always happy to discuss these ideas in more detail if they are of interest.
For more information email us at info@limebridge.com.au or call 03 9499 3550.
