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Human Beings Are Driven By Their Personal Predictive Analytics

In yesterday’s NY Times, there’s an excellent article, We Aren’t Built to Live in the Moment (written by Martin Seligman and John Tierney). It discusses how human beings process information, and the emergence of a new field called prospective psychology. Here’s a very simplified summary of what it says…

Human beings:

  • Are distinctive from other species in our ability to focus on, value, and plan for the future.
  • Store our memories in three different components: what happened, when it happened, and where it happened.
  • Use our mental “downtime” to run many, many simulations about the future by reconfiguring the elements of our memory in different ways.
  • Tap into the results of simulations to make fast decisions by predicting the likely outcomes of different options.

My take: First of all, we pay attention to whatever Seligman says; he’s the father of the Positive Psychology movement (see the post, Positive Psychology Meets Customer Experience). This view of human psychology describes that the brain as if it is constantly running a very advanced suite of predictive analytics. Here’s why this is meaningful for CX professionals:

  • Humans’ focus on the future is what gives power to Purposeful Leadership, as it creates the motivation for people to be part of achieving something important in the future alongside other people.
  • Since people selectively reconfigure their memories, we need to design experiences to create specific memories. That’s the cornerstone of what we call “Design for Real People,” which is one of the strategies of the CX competency: Customer Connectedness.
  • The myriad of simulations provide people with an expectation that doing something good for someone else will likely lead to a good emotional outcome, which is what creates empathy.
  • To motivate customers, employees, or leaders, it’s helpful to introduce future scenarios that tap into elements of their previous experiences.

And here’s why prospective psychology is important for everyone: it determines your happiness. Like any predictive model, it needs fine tuning. If your model is always calculating the worst-case outcomes, then you’ll tend to be sad and depressed. On the other hand, if your model is looking for positive scenarios, then you’ll stay happy and motivated. We’ll be following the research to see how people can adjust their personal predictive models.

The bottom line: Pay attention to prospective psychology.

Introducing The Customer Experience (CX) Institute

I’m very excited to announce the launch of the Customer Experience (CX) Institute

The CX Institute helps organizations become customer-centric. It provides leaders across your organization (from first-line supervisors to senior executives) with the knowledge, skills, & mindset required for an organization to become more customer centric.

We developed our training to engage all levels of leaders, regardless how much they currently know about customer experience. It combines Temkin Group’s deep expertise in creating customer-centric organizations with leading-edge eLearning design techniques.

CX Institute will initially have two areas of offerings:

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Report: The Shift To Customer Journey Insights

We just published a Temkin Group report, The Shift To Customer Journey Insights. Here’s the executive summary:

Customer insights are critical to customer experience programs. However, current insights’ efforts tend to focus on individual interactions rather than on a customer’s entire journey, and as a result, they often fail to provide a complete picture of a customer’s experience with the company. This report helps companies shift their insights efforts from concentrating narrowly on single transactions to focusing broadly on customers’ journeys.

Here are some highlights :

  • We developed an approach to help companies create a comprehensive view of journeys called Customer Journey Insights (CJI), which is made up of five strategies: Internal Journey Alignment, Journey Data Farming, Journey Performance Tracking, Journey Visualization, and Journey Prioritization.
  • We share 20 examples of best practices from companies that are applying these strategies to develop a more complete understanding of their customers’ journeys.
  • To help companies master these strategies, we have identified three stages organizations proceed through on their path to enabling customer journeys: 1) Customer Journey Orientation, 2) Customer Journey Enablement, and 3) Customer Journey Mastery.

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Here are the best practices focused around five strategies for shifting towards customer journey insights:

  1. Internal Journey Alignment. Shift the company’s mindset away from siloed interaction success to customer goal facilitation.
  2. Journey Data Farming. Tap into adjacent data sources and make linkages across channels.
  3. Journey Performance Tracking. Overhaul metrics to measure performance across customer journeys.
  4. Journey Visualization. Create mechanisms for communicating insights in a way that reinforces the centrality of customer journeys.
  5. Journey Prioritization. Focus on the journeys, customer segments, and channels that are strategic business priorities.

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CX Competency: Compelling Brand Values (Video)

Temkin Group has found that the only path to sustainable customer experience differentiation is to build a customer-centric culture. How? By mastering Four Customer Experience Core Competencies.

This video provides an overview of one of those competencies, Compelling Brand Values, where the goal is to deliver on your brand promises to customers.

Here Are Three Steps to Compelling Brand Values:

Report: What Happens After a Good or Bad Experience, 2017

We just published a Temkin Group report, What Happens After a Good or Bad Experience, 2017. This is our annual analysis of which companies deliver the most and least bad experiences, how consumers respond after those experience (in terms of sharing those experiences and changing their purchase behaviors), and the effect of service recovery (see last year’s report).

Here’s the executive summary:

To understand how good and bad experiences effect customer behavior, we asked 10,000 U.S. consumers about their recent interactions with more than 300 companies across 20 industries. We then compared results with similar studies we’ve conducted over the previous six years. Here are some highlights:

  • About 19% of the customers who interacted with Internet service providers and TV service providers reported having a bad experience – a considerably higher percentage than in other industries. Of the companies we evaluated, 21st Century, Spirit Airlines, and HSBC deliver bad experiences most frequently.
  • We looked at the percentage of customers in an industry had a bad experience and combined that number with the percentage of customers who said they decreased their spending after a bad experience and then used this data to create a Revenues at Risk Index for all 20 industries. Rental car agencies stand to lose the most revenue (6.7%) from delivering bad experiences, while retailers stand to lose the least (1%).
  • Investment firms are most effective at recovering after a bad experience, whereas TV service providers are the least effective.
  • After customers have a very bad or very good experience with a company, they are more likely to give feedback directly to the company than they are to post about it on Facebook, Twitter, or third party rating sites. Customers are also more likely to share positive feedback through online surveys and share negative feedback through emails.
  • Compared to previous years, customers are more likely to share feedback over Facebook and Twitter, and these channels are most popular with consumers who are between 25- and 44-years-old.
  • Of all the companies we evaluated, The Hartford is the most likely to receive negatively biased feedback directly from its customers, while Chubb is likely to receive the most positively biased feedback.

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Here are excerpted versions of 3 (out of 19) graphics in the report:
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Comcast Moves Its Customer Experience Team. Does It Matter?

Comcast recently moved its Customer Service and Customer Experience teams into the company’s Technology and Products division. Charlie Herrin will remain as the chief customer experience officer and Tom Karinshak will remain as the chief customer service officer, but they will now both report into Tony Werner, president of Comcast’s Technology and Products Group.

Werner was quoted as saying

We are making these changes consistent with the guiding principles that have served us well – to move faster, minimize hand offs, reduce overlap and provide clear authority and accountability

My Take: Let me start off by saying that Comcast has little to lose with any reorganization of its customer experience efforts. The 2017 Temkin Experience Ratings show that Comcast continues to be one of the worst companies in the U.S. when it comes to customer experience.

But it’s fair to ask, will this move help or hurt Comcast’s customer experience in the future?

I am often asked about the impact that organizational structure has on customer experience. People want to know what the perfect reporting structure is for a customer experience team. Should it report into marketing? Into customer service? Directly into the executive team?

Actually, I don’t think it matters very much. I’ve seen companies drive successful change with the same organizational structure that led to failures in other companies. Rather than judging a customer experience effort based on how it lines up on a Powerpoint slide, I like to ask questions associated with these four Ps:

  • People: Does the CX leader (in this case Herrin) and other executives leading the effort have the CX knowledge and skills, along with the  influence across the company, to be successful change agents?
  • Power: Does the organizational alignment (both formal reporting and informal access to the senior executive team) provide the change agents with the ability to overcome thorny obstacles that they are bound to run up against?
  • Passion: Does the senior executive sponsor (in this case Werner) have a real understanding of customer experience and a willingness to make the difficult trade-offs that will be required to create and sustain meaningful CX improvements?
  • Perception. Does the move signal to the rest of the organization that customer experience is more important to the senior executive team?

If the answer to all four of these is “yes,” then it’s a good organizational structure for the CX team. If any of the answers are “no,” then it’s not going to be successful.

I can’t answer these questions for Comcast, but we will be measuring its customer experience again next year. So we’ll see what happens.

The bottom line: When it comes to transformation, people trump structure.

CX Competency: Purposeful Leadership (Video)

Temkin Group has found that the only path to sustainable customer experience differentiation is to build a customer-centric culture. How? By mastering Four Customer Experience Core Competencies.

This video provides an overview of one of those competencies, Purposeful Leadership, where the goal is for leaders to act consistently with a clear, well-articulated set of values.

Here are the Five P’s of Purposeful Leaders:

Report: The State of CX Management, 2017

We just published a Temkin Group report, The State of CX Management, 2017.

For the eighth straight year, Temkin Group has evaluated the state of Customer Experience (CX) management at large companies. It includes a lot of details about customer experience within large organizations and examines their effectiveness across Temkin Group’s Four CX Core Competencies: Purposeful Leadership, Compelling Brand Values, Employee Engagement, and Customer Connectedness.

When we analyzed their efforts and their progress this year, we found that:

  • While only 8% of companies view themselves as industry leaders in CX today, 55% aspire to be leaders within three years.
  • A majority of companies have a CX executive in charge of their efforts and a central team who coordinates significant CX activities. The median number of CX staff members falls between 11 and 15 full-time professionals.
  • Companies find significant value in working with voice of the customer vendors, and the percentage of companies who get value out of this relationship has been steadily increasing.
  • We used Temkin Group’s CX Competency and Maturity Assessment, which evaluates four CX competencies­ (Purposeful Leadership, Compelling Brand Values, Employee Engagement, and Customer Connectedness) to benchmark the maturity of companies’ CX efforts and found that only 10% of companies have reached the highest two levels of customer experience, while 59% still find themselves in the lowest two stages.
  • When we compared CX leaders with CX laggards, we discovered that the leaders enjoy stronger financial results, are more likely to have senior executives leading company-wide CX efforts, employ more full-time CX employees, use more experience design agencies, and feel more supported by senior leaders.
  • This report also includes an assessment that companies can use to benchmark their CX efforts and capabilities.

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Here are the results from Temkin Group’s CX Competency & Maturity Assessment:

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Happy 6th CXPA! From A Proud Founder

Six years ago I announced the creation of the Customer Experience Professionals Association in a blog post called…

Announcing The CXPA; Customer Experience Professionals Unite!

In that post, I listed these objectives that co-founder Jeanne Bliss and I had for the CXPA:

  • There are many customer experience networking groups, but the industry has hit a stage where it needs a single, collective voice to map its evolution.
  • We want to help customer experience professionals embed customer experience management skill sets across their organization.
  • Our goal is to identify standards and best practice approaches and transfer those skills across the industry.
  • We want to ensure that that customer experience management continues to generate a vibrant set of opportunities for customer experience practitioners.

Six years later, we have a thriving global community of customer experience professionals that has made strides across all of those objectives. Here’s a sampling of the great things that the CXPA has accomplished:

  • We’ve had 100’s of local networking events where CX professionals discuss best practices, network, and hang out with each other. I’ve had the opportunity to attend a couple dozen of these sessions and am amazed at how much energy there is when CX professionals get together.
  • In two weeks we’ll be holding our 7th Insight Exchange in Phoenix where more than 300 CX professionals will participate in an intense two-days of sharing. These are great events, that are unlike any others in the industry. Rather than focusing on one-way presentations, we create environments where people learn from and share with each other. This special sauce is called member-to-member, or just plain M2M.
  • We’ve also created CX Day, which is an annual celebration of great customer experience and the professionals who make it happen (mark your calendar for October 5th!). It’s an exciting day where CX professionals around the world join together.
  • There are amazing educational resources for members. Our online community offers great content, from CX tools to webinars. And our members actively share their learnings with each other through rich online conversations. They can even query a group of CX Experts to get answers to specific questions.
  • We’ve created a Mentor Match Program, where the CXPA connects individual members together to form mentorship relationships.
  • And one of the most important things that we’ve done is to create the Certified Customer Experience Professional (CCXP) designation. Having an independent certification system is a critical step in the evolution of our profession, Here’s what I wrote about being a CCXP.

I’ve been amazed to see the passion and commitment that our members have to the association and to each other. CXPA members are more than just people who pay an annual fee to belong to a professional association. We’re family.

I’m so proud to be a member of the CXPA family!

Report: The Four Customer Experience Core Competencies (Free)

If you are only going to read only one thing about customer experience, then this report is it. It’s the blueprint for building a customer-centric organization… and it’s free.

We just published a Temkin Group report, The Four CX Core Competencies. This blueprint to building a customer-centric organization is an update to our groundbreaking research that was originally published in 2010 and updated in 2013.

Temkin Group has conducted multiple large-scale studies demonstrating that customer experience (CX) is highly correlated with loyalty across many different industries, in both business-to-consumer and business-to-business environments. When customers have a good experience with a company, they are more likely to repurchase from the company, try its new offerings, and recommend it to others.

While many companies try to improve their CX by making superficial changes, Temkin Group has found that the only path to lasting differentiation and increased loyalty is to build a customer-centric culture. Temkin Group has studied hundreds of companies to uncover the difference between CX leaders and their less successful peers, and has identified four CX competencies that companies must master if they wish to build and sustain CX differentiation:

  1. Purposeful Leadership: Operate consistently with a clear set of values. (see video)
  2. Compelling Brand Values: Deliver on your brand promises to customers. (see video)
  3. Employee Engagement: Align employees with the goals of the organization.
  4. Customer Connectedness: Infuse customer insight across the organization.

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This whiteboard video describes the Four CX Core Competencies:

Here are the best practices described in the report:

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Consumer Emotions To Health Plans Differ Across Age Groups

In a recent post, Temkin Group analyzed 10 emotions that consumers feel after completing a number of different interactions. We decided to dig deeper into one of those interactions, researching a health plan. We analyzed the emotional responses across different ages of consumers after that interaction and found that:

  • Consumers who are 44-years-old or younger tend to feel happy
  • Consumers who are 45-to-64 years old tend to feel frustrated
  • Consumers who are 65-years-old and older tend to feel relieved

As you can see in the chart below:

  • 18- to 24-year-olds: The most common emotion of the youngest consumers is happiness, and these young group are the happiest of any age level. They are also the most likely to feel appreciated (along with 35-to-44-year-olds) and angry.
  • 25- to 34-year-olds: This age group is also most likely to feel happy, but are also the group that is most likely to feel excited, worried, and confused.
  • 35- to 44-year-olds: This age group is also most likely to feel happy and is also the most likely (along with the youngsters) to feel appreciated.
  • 45- to 54-year-olds: This age group is by far the most likely to feel frustrated and is the most frustrated of any age group. They are also the most likely to feel disappointed.
  • 55- to 64-year-olds: This age group is most likely to feel frustrated and are also the age group that is least likely to feel happy or appreciated.
  • 65-years-old or older: The most common emotion of the oldest consumers is feeling relieved, and they are the most relieved of any consumers. They are also the most likely to feel confident. In addition, they are the least likely to feel angry, excited, confused, or frustrated.

Why is this important? Our research shows that emotion is the largest driver of customer loyalty. So companies must not only start talking about emotion, but they also need to develop unique approaches for dealing with different emotions across their customer segments.

The bottom line: It’s time to make customer emotion a top priority.

Focus On Employee Engagement, Not Employee Experience

We are finally seeing a movement by the general business world to seriously focus on the role and value of employees, which is why “Embracing Employee Engagement” is one of our 2017 CX Trends. Temkin Group has viewed employee engagement as a critical foundation for customer experience since our inception. It’s one of our Four CX Core Competencies.

While the trend is great, there’s still a long way to go. I’d love to see many more human resources organizations recognize that employee engagement is one of their strategic objectives (see my post, HR Execs: Wake Up To Employee Engagement!).

As this area has gained attention, there’s been a troubling misunderstanding creeping up in the dialogue. People are confuscating Employee Engagement with Employee Experience. They are not the same.

It’s important to understand the distinction, because only one of them is the foundation to success. So let’s look at each of them:

  • Employee Experience deals with how employees enjoy their job or environment. It deals with making things fun and enjoyable. People often say things like “let’s treat the employees’ experience like we do the customers’ experience.” They think of ways to make the work place more exciting and fun, by adding things outside of work like pizza parties and gift swaps. Employee experience can be measured by questions like “how much fun do you have at work.
    • My take: This is a very nice thing to do for your employees, but it is insufficient to drive success.
  • Employee Engagement deals with how committed employees are to the mission of their organization. It deals with human beings’ intrinsic needs for a sense of meaningfulness, choice, competence, and progress. People who want to affect change in this area must focus on the design of the work environment using what we call the Five I’s: Inspire, Inform, Involve, Instruct, and Incent. Employee engagement can be measured by the three questions in the Temkin Employee Engagement Index.
    • My take: This is a requirement to drive long-term success.

If you want to build a high performing organization that consistently delivers great customer experience, then you need to focus on employee engagement. If you happen to improve employee experience along the way, then that’s an added bonus.

The bottom line: Focus on employee engagement, not employee experience.

P.S. Based on some great comments to this post, I want to clarify something. Improving employee experience is not a bad thing. But a company should not be focusing its energy on improving employees experience just for the sake of that improvement. The ultimate goal should be in creating an engaged workforce, not just ensuring that employees enjoy their work experience. See my post: Are You Creating Engaged or Entitled Employees?

Temkin Well-Being Index for U.S. Consumers Jumps To Highest Levels

Temkin Group has been doing large-scale consumer research for several years. As part of our ongoing studies, we track many consumer attitudes. To gauge the overall quality of life for the U.S. population, we created the Temkin Well-Being Index (TWBi) based on a few of those attitudinal elements.

The TWBi is based on a survey of 10,000 U.S. consumers in January. The overall index is an average of three measurements representing the percentage of U.S. adults (18 and older) who agree with these statements:

  • I am typically happy
  • I am healthy
  • I am financially secure

We’ve been tracking it since 2012.  As you can see in the figure below:

  • After the TWBi reached 65.9%, the highest over the six years we’ve been tracking the metric.
  • The increase of 4 %-points between 2016 and 2017 is the largest single-year increase.
  • All three areas of the TWBi are at their highest levels, and increased since last year. The largest increase is in financial security, which gained 5.5 %-points between 2016 and 2017.

The bottom line: U.S. consumers are more well off this year.

Customer Obsession Lessons From Amazon.com’s Bezos

Amazon.com CEO Jeff Bezos recently sent a letter to shareholders sharing his view on how Amazon would avoid what he calls “Day 2,” because…

Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.  

I’ve shared the full letter below, but want to share my thoughts on Bezos’ four themes he shares for avoiding Day 2:

  1. True Customer Obsession: Obviously this theme completely resonates with me. I love the line… “Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.” My take: Companies need to look for the unchartered white space, and innovate at the intersection between customers’ latent needs and emerging capabilities.
  2. Resist Proxies: Bezos calls out “process” and “surveys” as proxies to watch out for. Process is an issue because it can reinforce compliance and complacency, instead of empowering individuals to drive innovation.  Surveys are an issue, because they can provide employees with a superficial understanding of customers. Deep insights into what people like, love, and dream about aren’t fully answered with percentage points. My take: You need to create deep customer empathy, not just statistically significant charts and metrics. Find ways to include more qualitative research.
  3. Embrace External Trends: Amazon will likely be more adept at grabbing the “tailwinds” of trends than most companies, but it’s critical for all leadership teams to keep an eye on how the world is changing. That’s why we issue our annual listing of CX trends. I was also very intrigued by Bezos’ discussion about easy access to Amazon’s “deep learning frameworks.” An API that taps into Amazon’s rich analytics backbone could be much more exciting than even IBM’s Watson. My take: Every organization should identify a set of key trends and ask the question: “How will these put us out of business or help us to create even more value to customers?”
  4. High-Velocity Decision Making. Bezos discusses three elements of his leadership philosophy. First of all, treat many decisions as reversible, so that you are creating an option — not just putting all your chips on a single approach. Second, is to get comfortable with making decisions without full information. Thirdly, he talks about “disagree and commit” which means that everyone needs to get in line when a decision has been made. Finally, he wants true misalignment to be identified and dealt with immediately. Nothing kills a culture more than lingering, unaddressed issues. My take: It’s smarter to get moving and learn along the way (see my post Modernize Leadership: Learn and Adjust).

The bottom line: Every leadership team should proactively avoid Day 2.

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