Magnus Franzen explains why customer experience management is essential to delivering what your customers need.
Customer experience management (CXM) is both a discipline and a philosophy.
“ACROSS ALL INDUSTRIES, COMPANIES THAT FOCUS ON CUSTOMER EXPERIENCE AND GET GOOD AT IT SEE SUBSTANTIAL RETURNS”
As a discipline, it is a way of operating and a continuous improvement process focused on the experience that a customer has in dealing with a company. CXM has five main components, as listed opposite.
Main components of CXM
- Purpose and strategy
- People and culture
- Measurement and governance
The first, purpose and strategy, is essentially an articulation of why a company exists, and what role it has in the life of its customers.
Design is about starting to see experience and the journey that customers are on as something a company can intentionally design. It doesn’t just happen.
Operations are all the plumbing and back-end infrastructure that is needed to support the design.
People and culture are all the complex and tricky stuff that actually work as the glue that keep all the operational pieces together. In fact, the engagement and motivation of employees is a critical piece of the CXM philosophy, to deliver great experience. Happy employees make happy customers.
Measurement and governance are the fifth and final component. As the saying goes, ‘what isn’t measured can’t be managed’. And inherently, managing the experience is what we want to do in CXM.
A very common way of measuring is called Net Promoter Score, which measures customers’ propensity to recommend the company to a friend. This is a simple score which in its simplicity has both strengths and limitations. Its main strength is that it works very well for benchmarking. You can compare yourself against competitors or companies in other industries. It is also quite limited as it sometimes has emotional connotations which can be problematic in the pharmaceutical industry (that is, recommending someone to buy a similar phone to yours is not the same as recommending they try out a life-saving treatment or choose one insulin over another).
From a philosophical point of view, CXM is about understanding three things:
- People buy experiences and the ability to get a job done, they don’t buy products
- People that have good experiences become more loyal to the company than people that have bad experiences
- Loyal customers drive value for the company.
If you buy into these three things, the importance of taking a structured approach to managing your customers’ experience becomes self-evident.
Delivering customer value on a daily basis
Delivering customer value on a daily basis depends on a number of things; the company, the portfolio, the customers and stakeholders involved in treating the condition, the condition itself, and so on. However, by becoming more customer-centric, you start to think about experiences and helping customers to get jobs done rather than thinking about products and brands. This means that you begin to understand who you, as a company, are serving and what role you want to play in their lives. These form a really good starting point. The ‘how’ will come as a result and it will look different in every situation.
To get more practical, it is difficult to know where to start – we know that. In fact, many companies we work with struggle with getting started because they don’t know what they are not doing and where they need to improve. As I mentioned, we have a framework that looks at the main component of a functioning CXM capability and helps companies assess themselves to identify the maturity of their different components. From there, it is easier to determine what weaknesses to improve and what areas of strength to build on.
I find it quite helpful to see this as a continuous improvement process. Rome wasn’t built in a day and amazing experiences are not conjured up quickly. It takes time and effort. On top of that, customers’ expectations are constantly evolving. In the age of Amazon and Apple, people (and yes, customers are always people) are expecting a similar level of customer experience in every part of their lives. In the same way, the pharmaceutical industry’s customers’ expectations have evolved, while the industry has stood still.
Therefore, it is important to take a structured approach, build your CXM ‘maturity’ over time and continuously improve the experiences.
Benefits of CXM
Across all industries, companies that focus on customer experience and get good at it see substantial returns. They outperform their competition in revenue growth, profit, customer loyalty, employee satisfaction – you name it. In fact, I believe companies should be asking themselves ‘what is the risk if we do not start thinking about the experience of our customers?’.
For example, one company has started to look at CXM and in one meeting they explained that they have never had to do anything about this before. They have had an amazing drug which has completely outperformed other treatment options for several years. They didn’t have to do anything, the drug sold itself. However, today it looks different: the competition has caught up, new drugs in the pipeline don’t have the same differentiation and so on. Our question to them was ‘what will you do now? How will you be relevant to your customers? Why should a customer choose you now?’.
In order to implement these changes, support and recognition amongst senior leaders is a priority and a crucial starting point. Then it comes down to fairly standard steps of change management:
- Define the burning platform and case for change
- Set the vision (which in our CXM framework is a lot about strategy and purpose)
- Get the right people on board (it’s often a broader stakeholder group than you think)
- Build the capabilities, create the governance, align incentives etc
- Show the quick wins.
The proof of the pudding is in the eating, of course. The methodology at a high level might be quite standard, but every organisation is different and what is actually needed might be quite different.
Communicating with customers
There is no need to find new ways to communicate the same old thing. Start with your customers, figure out what value is to them, then think about what you can do to provide that value. Then, and only then, start thinking about the channels through which you will provide the value.
Magnus Franzen is a Management Consultant at PEN CX.
Go to www.pencx.com