8 Customer Experience Megatre

Temkin Group Insight Report

Temkin Group [email protected] 617-‐916-‐2075 www.temkingroup.com

Eight Customer Experience Megatrends Looking Ahead To The Next 3 To 5 Years

By Bruce Temkin Customer Experience Transformist & Managing Partner Temkin Group

May 2010

Copyright © 2010 Temkin Group. All rights reserved. www.temkingroup.com

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Eight Customer Experience Megatrends

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As we examined the changes going on across companies, we idenQfied the following eight trends that would have a major impact on customer experience efforts over the next 3 to 5 years.

1.   Customer insight propagation… customer insights will drive decisions across the company�

2. Unstructured data appreciation… text analytics will become a critical capability�

3.  Customer service rejuvenation online interactions will increasingly use touch-screens�

4. Loyalty intensification… loyalty metrics will be a major element of executive dashboards �

5. Interaction iPod-ization… online interactions will increasingly use touch-screens�

6. Social media assimilation… social media will get absorbed into the fabric of companies�

7.   Digital/physical integration… experiences will blend mobile devices with retail locations�

8. Cultural renovation… engaging employees will become a key stepping stone for engaging customers�


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Megatrend #1: Customer Insight Propaga>on

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Inside of companies, most decisions are made without any real customer insight. People may have some pieces of informaQon about something that has to do with customers. But oYen Qmes it’s spo[y or outdated.

Companies are increasingly recognizing that they need to integrate a deeper understanding of their customers throughout their company. That’s why Voice of the Customer (VoC) programs are one of the most popular customer experience efforts. A new cadre of vendors are making it easier to collect, analyze, and share customer informaQon broadly across just about any organizaQon.

Key implicaQons: •  More companies will create centralized customer insight teams to capitalize on a very underuQlized asset, customer insight.

•  Market research budgets will shiY away from project-‐based efforts to ongoing, conQnuous voice of the customer (VoC) programs.

•  Companies will develop processes for reacQng more quickly to customer feedback


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Megatrend #2: Unstructured Data Apprecia>on

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Customers have shared their feedback since the beginning of Qme. But companies haven’t had a way to deal with those responses, so they’ve forced customers to translate their rich thoughts into simplisQc mulQple-‐choice responses. Deep feelings about a company get truncated into a 5-‐point, 7-‐point, or even 11-‐point scale; making it difficult to uncover unexpected issues or dig deep into “why” things are happening.

New applicaQons are making it considerably easier to analyze unstructured data like comments on surveys, call center verbaQms, or social media discussions. These text analyQcs applicaQons can quickly process thousands of pieces of unstructured data and discern what’s making customers happy or what’s making them upset.

Key implicaQons: •  There will be an explosion of text analyQcs applicaQons within companies as they see the power of this emerging tool

•  Companies will increasingly idenQfy and collect unstructured sources of data from inside and outside their organizaQon

•  Customer feedback systems will become less reliant on mulQple choice survey quesQons


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Megatrend #3: Customer Service Rejuvena>on

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As companies have become more “professional” over the last several decades, they’ve labeled customer service as a cost-‐center. As a result, the focus has been on cost-‐reducQon and operaQonal efficiency. That’s why many companies moved large porQons of their customer contacts to lower-‐cost regions of the world. Unfortunately, this cost-‐squeeze has created many poor experiences for customers.

As companies do touchpoint analyses and customer journey maps, they oYen find that customer service is a key “moment of truth” for customers. This analysis opens their eyes to the reality that poor customer service is creaQng a very negaQve percepQon of their brand.

Key implicaQons: •  Customer feedback metrics will displace some purely operaQonal metrics like average handle Qme (AHT) as key measurements for contact centers

•  Companies will shiY high-‐impact interacQons away from purely low-‐cost contact center locaQons and providers

•  Companies will increased investment in agent desktop technologies and training


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Megatrend #4: Interac>on iPod-‐iza>on

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One of the major reasons that computers became mainstream was the adopQon of a common entry device, the QWERTY keyboard, which was invented in the late 1800s for typewriters. This standard interface freed technology providers from invesQng in training customers on data input.

But a keyboard-‐based QWERTY device is not the ideal interface for the next generaQon of digital devices. Fortunately, Apple’s iPod (and iPhones, iPads) are doing the same thing that QWERTY did over 100 years ago, teaching myriads of people how to interact with a touch-‐screen.

Key implicaQons: •  There will be an increasing number of touch-‐screen interfaces on all types of products, especially where keyboards are impracQcal.

•  New soYware applicaQons will emerge that take advantage of this richer, quicker interface.


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Megatrend #5: Loyalty Intensifica>on

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Since the Harvard Business School was created 100 years ago, a cadre of MBAs and future execuQves have been trained to opQmize shareholder value. So companies have run their business on quarterly results like sales, profits, and capital expenditures. Why? Because they had access to that data.

Over the last several years, many execuQves have realized that shareholder value is not an objecQve; it’s actually the outcome of building stronger customer loyalty. Companies have started to use measures like Net Promoter Scores (NPS) to establish clear metrics around loyalty.

Key implicaQons: •  ExecuQve teams will increasingly add loyalty metrics to their monthly and quarterly business dashboards

•  Financial analysts will increasingly look for loyalty metrics as a part of quarterly earnings calls

•  Companies will increasingly invest in understanding and affecQng the drivers of customer loyalty


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Megatrend #6: Social Media Assimila>on

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The meteoric rise of social media sites like Facebook, TripAdvisor, and Twi[er has generated a lot of acQvity and interest. Most companies have established some Social Media teams and programs.

But Social Media is not really a new thing for companies; it represents just another interacQon channel with customers. Companies will increasingly fold Social Media acQviQes into the core acQviQes of the company.

Key implicaQons: •  Customer service organizaQons will become increasingly social; blending agent interacQons, self-‐service applicaQons, and mulQ-‐channel knowledgebases with customer-‐to-‐customer interacQons

•  Social media listening efforts will get incorporated into overall voice of the customer (VoC) programs.

•  Social media tools like wikis, Facebook, and blogs will be increasingly used to facilitate and sQmulate communicaQons within organizaQons.


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Megatrend #7: Digital/Physical Integra>on

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As mobile phones become an increasingly important digital device, online experiences are no longer limited to homes and offices; they can happen anywhere. Consumers can go online while they are doing acQviQes like browsing through a mall or eaQng at a restaurant. In addiQon, iPhones introduced consumers to the noQon of task-‐specific applicaQon downloads.

In this environment, companies can no longer think about online as a separate and disQnct channel. They will need to design experiences that blend together online and offline interacQons.

Key implicaQons: •  A customer’s locaQon will be an increasingly important piece of meta data that companies use to customize interacQons

•  MulQ-‐channel experience teams will emerge to design mobile applicaQons within retail stores

•  MarkeQng teams will increasingly incorporate mobile devices in mulQ-‐channel markeQng campaigns


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Megatrend #8: Cultural Renova>on

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Companies are increasingly recognizing that “unengaged employees can’t create engaged customers” which is one of my “6 Laws Of Customer Experience.” So many firms are starQng the process of focus on the culture of their firms; making sure that they create an environment that aligns employees with the vision, mission, and brand of the company.

Cultural change takes several years to take hold; so significant changes won’t show up in companies immediately. But when change happens, it will very difficult for compeQtors to replicate.

Key implicaQons: •  HR execuQves will be increasingly tapped to lead strategic culture iniQaQves

•  “Manage-‐by-‐the-‐numbers” senior execuQves will get replaced by more employee-‐centric leaders

•  Companies will increasingly define and discuss their core values


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About the author, Bruce Temkin

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Bruce Temkin, Customer Experience Transformist & Managing Partner of Temkin Group, is widely viewed as a leading expert in how organizations build differentiation with customer experience. He has worked with hundreds of large organizations on the business strategies, operational processes, organizational structures, leadership, and culture required to create and sustain superior customer relationships.

Bruce is the author of the blog Customer Experience Matters (experiencematters.wordpress.com) which is one of the most popular blogs on customer experience. He regularly posts insights on topics such as customer experience, branding, and leadership.

During his 12 years with Forrester Research, Bruce led the company's business-to-business, financial services, and customer experience practices. As a Vice President & Principal Analyst, he was the most-read analyst in the company for 13 consecutive quarters and was one of the most highly demanded consultants and speakers in the industry. Bruce authored several Forrester’s most popular research reports on customer experience and created Forrester’s Customer Experience Index, which rates more than 100 firms on their overall customer experience.

Bruce has been widely quoted in the press, including such media outlets as New York Times, Los Angeles Times, and Business Week. An accomplished public speaker, Bruce has delivered keynote speeches at many company and industry events.

Bruce holds a master’s degree from the MIT Sloan School of Management, where he concentrated in business strategy and operations. He also holds an undergraduate degree in mechanical engineering from Union College.


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About the Temkin Group

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Temkin Group is a customer experience consulting firm. We have one simple goal for our clients: increase customer loyalty by becoming more customer-centric.

Any company can improve portions of its customer experience. But it takes more than a few superficial changes to create lasting differentiation.

The Temkin Group combines customer experience thought leadership with a deep understanding of the dynamics of large organizations to help senior executives accelerate their customer experience efforts. We work with our clients to build four critical competencies: Purposeful Leadership, Engaged Employees, Compelling Brand Values, and Customer-connectedness.

Temkin Group was founded based on four core beliefs:

1.  Customer experience drives loyalty. Our research and work with clients has shown that interactions with customers influences how much business they’ll do with you in the future and how often they recommend you to friends and colleagues.

2.  Improvement requires systemic change. Companies can improve customer interactions in isolated areas, but they can’t develop competitive advantage until customer experience is embedded in their operating fabric.

3.  It’s a journey, not a project. Building the capabilities to consistently delight customers doesn’t happen overnight. Companies need to plan for a multi-year corporate change initiative.

4.  We can help you make a difference. Transformation efforts aren’t easy, but leading your company to be more customer-centric is worth the effort. Temkin Group can help organizations accelerate their results and avoid many of the bumps along the way.

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8 Customer Experience Megatre

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