How Do You Engage Employees? Adopt The Five I’s

One of the key goals of any Experience Management (XM) program needs to be employee engagement. This is not only a critical outcome for Employee Experience (EX) efforts, but it’s also a critical input to delivering great customer experience. Why? Because engaged employees are the trigger of a “virtuous cycle” of good customer experience and strong business results.

So how can companies tap into this value? By focusing on a set of activities that we call the Five I’s of Employee Engagement:

  • Inform. Provide employees the information they need to understand the organization’s vision and brand values. Ad hoc, inconsistent communications are not effective in engaging employees. Instead, organizations should develop a thorough communication plan and deliver key experience management (XM) messages through multiple channels on a regular basis. XM leaders we have interviewed stress the importance of persistent and consistent communications to ensure messages are heard, understood, and internalized by employees.
  • Inspire. Help employees understand the organization’s vision and values, and to recognize how their role contributes to them. Leaders play a key role in inspiring employees to embrace the company’s vision and values. Whether that’s meeting directly with employees to share organizational stories or demonstrating commitment by holding leaders and managers accountable for changing behaviors to support XM goals, successful organizations identify specific ways to tap into the positive influence of the senior executive team.
  • Instruct. Support employees with the training, coaching, and feedback they need to be successful. Employees first need to know what to do and then be enabled to do it with the necessary knowledge and skills. This happens through activities like formal training, on-the-job coaching, and peer reinforcement, to name a few. Organizations also need to make sure they are making it easy for employees to put what they are learning into action. If employees are constrained by things like out-of-date systems that require workarounds or frustrating policies they have to enforce with customers, then neither employees nor customers will have a positive experience.
  • Involve. Take action with employees when designing their jobs, improving work processes, and solving problems identified through customer or employee feedback. Raising engagement isn’t a one-sided effort. Successful organizations find ways to involve employees whether that’s through a formal voice of employee process, journey mapping, employee-driven process improvement or innovation processes, or other ways. Even if early efforts are informal and simple, take action to raise employee engagement from the ground up, not only top down.
  • Incent. Deploy the appropriate systems to measure, reward, and reinforce desired employee behaviors and motivate employees to give their best. Employees and teams that deliver excellent experiences – to customers, fellow employees, partners, or others – should be celebrated with meaningful gestures of appreciation along with formal awards and incentives. And if engagement is truly important, then organizations should establish and measure employee engagement levels as a management metric with defined goals, action plans, and progress tracking on a regular basis.

Putting the Five I’s into action isn’t solely on the shoulders of the Human Resources (HR) or EX team. Executing on the Five I’s involves stakeholders from across the organization, including:

  • Senior executives: The leaders of an organization need to be visible and accessible to employees as they reinforce the importance of XM as a company priority. Their daily actions including how they help overcome internal resistance and hold others in the organization accountable can be very valuable when bringing the Five I’s to life.
  • Middle managers: This group of people is an important leverage point as they help their teams understand and apply the organization’s vision and values into daily work. They can be particularly helpful in providing coaching and feedback to employees following training and fostering an environment that encourages feedback and recognizes people for doing the right things.
  • Marketing: This function is a key collaborator when it comes to supporting communication plans, promoting employee involvement opportunities, and incorporating employee recognition into internal messages.
  • Finance, IT: In their own way, each of these internal functions may be asked to support the Five I’s through policy, process, system, or tool changes. For Finance, it may be systems and budgeting for employee rewards and recognition programs. For IT, it could be updating internal social networks to allow for easier employee connection-building and collaboration. 
  • CX core team: As an important part of the XM machine inside an organization, the CX team does have a role when it comes to raising employee engagement. It can contribute starting points for organizational success stories, curate customer feedback to spur employee innovation or recognition initiatives, and help translate organizational values into a clear set of customer promises employees help to keep through their roles.
  • Human Resources: While they don’t take whole responsibility for employee engagement, the HR team is the de facto leader of strategic engagement initiatives from the start. Many functions native to HR are key enablers of the Five I’s, including training/development, performance management, employee feedback oversight, and compensation (to support rewards and incentives).

Tapping into the Six Traits of Human Beings During a Crisis

Experience Management (XM) is all about human beings. Customers are human. Employees are human. Partners, leaders, suppliers, prospective customers… all human. In the current environment, where many people are facing hard times, it’s more critical than ever for organizations to find ways to demonstrate their humanity and build deeper emotional ties with all the people who interact with them.

This, unfortunately, is easier said than done. Human beings are complicated and can be difficult to understand. So to adapt your experiences to address the shifting concerns of the people you care about, consider their needs across all Six Traits of Human Beings:

  1. INTUITIVE. People use two different modes of thinking to make decisions and judgements: Intuitive Thinking, which is fast, automatic, and emotional and relies on cognitive biases and heuristics (mental rules of thumb) to make decisions, and Rational Thinking, which is slow, effortful, and deliberate and relies on logic and reason to reach conclusions. While humans always tend to use Intuitive Thinking more frequently than Rational Thinking, our dependence on it intensifies during times of stress and uncertainty. So emergencies often exacerbate our existing biases – such probability neglect, availability bias, aversion to uncertainty, and herding behaviors – leading to “irrational” reactions, like buying mountains of toilet paper.
    • Customer Example: Reduce customer uncertainty by proactively communicating how your company is addressing the current situation (e.g. new safety precautions, expanded channels for reaching customer service, plans for waiving certain fees or penalties, etc.). Studies show that during an emergency, communication is most effective when it is timely, credible, empathetic, emphasizes useful individual actions, and is tailored to specific audiences and segments.
    • Employee Example: Engage employees’ Rational Thinking by providing them with a continuous flow of relevant data and insights and then holding them accountable for using that information to make evidence-based (rather than intuition-based) decisions.
  1. SELF-CENTERED. Everyone views the world through their own personal lens, which is informed by their unique life experiences. Unfortunately, this individual context can make it hard for us to put ourselves in other people’s shoes and see the world through their eyes. However, in the current environment, where empathy is paramount, organizations must actively work to help leaders and employees escape their individual context and instead demonstrate understanding and compassion for each other and for customers.
    • Customer Example: Instead of continuing to survey customers about the company’s performance, shift your Voice of the Customer efforts to understand how your customers are doing on a personal level. Shorten surveys to only a few open-ended questions that ask people how they are feeling and how the organization can help them get through this challenging time.
    • Employee Example: Engender empathy in employees for both coworkers and customers by sharing people’s stories in their own voice – whether that’s through contact center recordings, customer verbatims, or inviting employees to recount their experiences during team or company-wide meetings. 
  1. EMOTIONAL. As Maya Angelou once said, “People don’t always remember what you say or even what you do, but they always remember how you make them feel.” Human beings remember experiences based on the most emotionally extreme points and how it ends – a phenomenon known as the “Peak-End Rule.” Because of the heightened emotional climate, people are going to be particularly sensitive to how organizations make them feel right now…and will remember those emotions long after this episode has passed.
    • Customer Example: To create positive emotional peaks, review your major customer journeys and find moments where your organization can add a special moment of surprise or delight, such as sending a customer a handwritten note, waiving a fee, adding a small gift to their package, or empowering employees to spend a certain amount of money to go above-and-beyond to make a moment special.
    • Employee Example: When conveying bad news to employees, lessen the negative emotional spike by carefully preparing for the conversation in advance rather than leaving it up to chance. Think through how you will explain the situation and its causes, communicate with transparency and respect, deliver the news in an appropriate setting and format, and allocate plenty of time to answer their questions at the end.
  1. MOTIVATED. All people strive to fulfill four intrinsic needs – a sense of meaning, choice, progress, and competence. These four motivations are especially important for a company to tap into during a time of crisis as people often feel stalled and discouraged, and the business may not be in a position to incentivize people with extrinsic motivators, like money or formal recognition.
    • Customer Example: Tap into customers’ desire for choice by offering them a variety of solutions to problems they encounter, such as canceled flights, out of stock items, or long wait times for the contact center. Studies show that when companies give customers a variety of potential solutions to choose from to resolve an issue, they are ultimately more satisfied with the outcome.
    • Employee Example: Tap into employees’ desire for meaning by finding ways to redeploy your organizational capabilities to help the community (e.g. repurposing factories, donating products, providing logistical support, etc.), and provide opportunities for employees to contribute to these efforts – both within the scope of their everyday roles and on a volunteer basis. 
  1. SOCIAL. People are naturally social, and we particularly enjoy connecting with other people and institutions who are “like us.” Because people are more attracted to brands who are able to give them a sense of community and belonging, in this time of social isolation, companies should actively create opportunities for employees and customers to connect with each other around shared interests.
    • Customer Example: Give frontline employees space to emotionally connect with customers by waiving efficiency metrics like Average Handle Time.
    • Employee Example: Studies show that the greatest predictor of a person’s success and happiness during a challenging time is his or her social support network, so encourage all employees to start every day by reaching out to someone in their social network – a coworker, family member, friend, etc. – to briefly express gratitude and appreciation. This will help people to feel more connected and recognize they have more social support than they may think.
  1. HOPEFUL. People flourish when they envision a positive future. When we are optimistic, our brains perform better across a number of different categories – such as intelligence, resilience, and creativity – compared to when we are feeling neutral or pessimistic. To help people focus on the positive amid the continuous barrage of bad news, organizations should articulate a compelling vision of the company’s future that specifically addresses people’s personal needs and aspirations.
    • Customer Example: Instead of only communicating with customers to convey negative or disappointing news, share inspiring stories from around the business as well as positive lessons the business has learned that will be carried forward to make the company – and its customer experience – better than before.
    • Employee Example: Start every company meeting by highlighting successes, praising team members, or sharing something you’re excited about. Priming people with positivity will change the way their brains process the challenges you are about to tackle.

XM Fireside Chat: ROI Of CX With Bruce Temkin And Moira Dorsey

Our XM Institute team was looking forward to seeing everyone who was coming to Salt Lake City this week for Qualtrics X4 Summit. Unfortunately, that great event was postponed. So we decided to pull together an XM Fireside Chat series to share some of our thinking through an informal discussion format. I hope you enjoy it!

In this segment of XM Fireside Chat, I chat with Moira Dorsey about the ROI of CX.

Ensuring that your CX program (or any type of XM program) delivers value is critical, which is  why “REALIZE” is one of our Six XM Competencies. If you’re interested in ROI of CX, then check out these recent research reports mentioned in the XM Fireside Chat that you can download for free from the XM Institute:

New Research Digs Into Industries And Consumer Feedback Patterns

The XM Institute is kicking off the year with a research bang.

In a previous post, I mentioned two reports from late last year that show the business value of CX, The ROI of CX and What Consumers Do After a Bad Experience. Since then, we’ve actually published a number of new research reports with an emphasis on industry-specific data. These reports are based on a survey of 10,000 U.S. consumers and examine almost 300 companies over 20 industries.

Enjoy these free reports:

200120_XMIResearch

Industry CX Snapshots

2001_CXRetailIndustryGraphics_v1This series of reports dig into CX data for a number of industries:  AirlineAutoBankingHealth InsuranceHotelInsurance, and Retail.

Each Industry Snapshot looks at how the highlighted industry’s XMI Customer Rating compares to the Ratings of the other 19 industries and examines the connection between a customer’s experience and the likelihood that they will recommend, rebuy from, and trust a company within that industry. These Industry Snapshots also explore the potential cost of delivering poor experiences, the most broken journeys within each industry, and how experience perceptions differ across age groups

How Consumers Give Feedback

Download the free report, Data Snapshot: How Consumers Give Feedback

2001_HowConsumersGiveFeedback_Graphics1Did you ever wonder what channels consumers use to give feedback, and how that differs between good and bad experiences and across age groups? Then this is a great report for you.

We found that people are more likely to talk about bad experiences than good experiences. When consumers do tell someone about an experience, only one-fifth of consumers provide that feedback directly to the company. We also looked at how consumer behavior differs across age groups.

Six Types Of Experience Data (X-Data)

One of the key building blocks of Experience Management (XM) is X-data, which helps establish an understanding of how people think, feel, and behave. In almost all circumstances, organizations lack the X-data they truly need. So how should organizations go about instrumenting their operations to collect the right data?

To identify the required X-data, it’s important to first understand how data flows from people’s experiences. That’s why you should start with the Human Experience Cycle (HxC). As you can see below, experiences lead to perceptions, attitudes, and behaviors.

1903_HumanExperienceCycle2

Using the HxC model, we examined the components of many XM programs and have identified six distinct types of X-data:

  1. Experience Expectations. How people think and feel about a future interaction with an organization, which can be collected on a regular cycle or periodically (e.g., whether a customer expects a product to be hard to use or believes they can accomplish a service interaction online).
  2. Interaction Perceptions. Feedback on a specific interaction, which can be tracked continuously or periodically (e.g., feedback after an online purchase or after an employee training course).
  3. Journey Perceptions. Feedback on collection of activities around a goal, which can be tracked continuously or periodically (e.g., feedback after an airline customer finishes a trip or after an employee completes her on-boarding).
  4. Relationship Attitudes. How people feel about an organization, including plans for future interactions, which can be tracked on a regular cycle or periodically (e.g., NPS or brand tracking study).
  5. Ad-Hoc Diagnostics. How people think or feel about a problem or opportunity, which is collected as needed based on other findings (e.g., pulse employee survey about a leadership issue or qualitative study into why a brand message didn’t work).
  6. Choice Preferences. How people would rank different alternatives, which is collected periodically (e.g., product feature selection or employee benefits optimization).

XM programs need to collect these six types of X-data for all human beings in their ecosystem (e.g., suppliers, employees, customers, prospects, stakeholders, etc.). This effort embodies what we call the “Experience Monitoring” skill within the XM Competency of “Enlighten.”

We’ll use this taxonomy in future posts and research to help organizations assemble the right XM programs. For now, think about where you might collect and how you might use these different types of X-data.

The bottom line: Every organization needs these six types of X-data.

Thankful For A Decade Of Great Experiences

Happy New Year!

Wow, it’s 2020… the start to a new decade. I’m really looking forward to what’s ahead. My previous post discusses how 2020 will be the Year Of Insightful Actions, but I also wanted to zoom out and share a broader perspective.

Appreciating The Past 10 Years

Before focusing on the 2020s, I’d like to pause and express my gratitude for the 2010s. It was a great decade! I’m very thankful for all of the wonderful friends, family, colleagues, and clients that I’ve been privileged to spend time with during the previous 10 years.

It’s been a fantastic decade from a personal standpoint. My kids graduated college and have started their paths towards highly productive careers. My Boston sports teams won many championships, and I was able to attend three Super Bowls. I adopted a healthier lifestyle, with better eating habits and more exercise. I expanded my worldview, traveling to many new countries.

I would never have had such an amazing decade if it weren’t for YOU. If you’re reading this post, then thank you! You’re one of the people who has motivated my work. I’ve always felt that my team’s primary audience are the many people who follow what we write, whether or not we’ve ever had the opportunity to meet or work with you.

And most of all, I’m thankful that I’ve been able to go on my personal and professional journey with my best friend, my wife Karen.

A Decade of Professional Changes

It’s also been a fantastic decade from a professional standpoint, full of interesting shifts and turns. Here are some of the highlights:

  • Forrester Research. I began the 2010’s as a VP and Principal Analyst at Forrester Research, introducing the world to the practice of customer experience. It was a great opportunity, as I built a wide range of new skills over my 12-year stint. In particular, I learned to be a strong researcher, writer, and storyteller, which enabled me to be the most-read analyst for my final 13 quarters at Forrester. This experience also provided me with the platform to establish a large community of people who followed my work.
    • Special thanks to the the many people across Forrester who helped me hone my skills, especially Bill Bluestein (R.I.P.), Bobby Cameron, Chris Charron, George Colony, Waverly Deutsch, Stan Dolberg, Bill Doyle, Harley Manning, John McCarthy, Chris Mines, Mary Modahl, and Ted Schadler.
  • Temkin Group. In April 2010, Karen and I founded Temkin Group. I still remember a meeting with my friends Ingrid Lindberg and Steve LaValle who convinced me not to name the company “CX Institute” (which is where we were heading), but instead to name it “Temkin Group.” It was a great decision. Over the next eight years, we built a fantastic team and worked with an amazing array of clients—all from our basement. Our little company built a large global brand, as our research and content was used by practitioners around the world. We never had to make any sales calls, as we were very lucky to build our business based on our reputation and word of mouth.
    • Special thanks to the Temkin Group employees who joined us on this journey. It started with Andrea Fineman who was brave enough to be the first to join us in the basement, followed by Aimee Lucas, Isabelle Zdatny, Denise Bahil, Julia Jaffe, Jen Rodstrom, Laura Wells, and Maggie Mead. Also, thanks to Mike Flint and the team at Metropolis Creative who built our websites.
  • CXPA. During the Summer of 2010, Karen and I started developing a plan to build a community of CX professionals, along with Andy Freed from Virtual (an association management company). We recruited Jeanne Bliss to co-found what became the Customer Experience Professionals Association (CXPA). And in April 2011 we launched the CXPA. We hired the amazing Lesley Lykins in early 2012 as the CXPA’s Director of Member Engagement, and she became the heart and soul of the community. I had the immense pleasure to chair the CXPA and to shepherd its growth into a thriving 4,000+ member non-profit association. Over those five years we established the CX profession and created many industry-defining things such as CX Day and the first professional CX certification, CCXP.
    • Special thanks to Karen, Andy, Jeanne, Lesley, and the entire staff at Virtual (especially Janice Carroll, Shannon Taylor, and Megan Cannon who managed the relationship). I also want to thank the initial CXPA board members who trusted our vision and helped bring it to life: Brian Andrews, Parrish Arturi, Lior Arussy, James Bampos, Jeanne Bliss, Erica Bullard, Ginger Conlon, Chris Davey, Kim Edmunds, Karyn Furstman, Ian Golding, Dorsey McGlone, Jason Mittelstaedt, and Karl Sharicz.
  • Qualtrics. In October 2018, Qualtrics acquired Temkin Group. While we were happy to keep going as-is with Temkin Group, Karen and I saw that Qualtrics was becoming the dominant market leader and we felt that its XM message aligned directly with our point of view. Joining forces provided us with the opportunity to amplify our impact on the market. So our entire Temkin Group team joined Qualtrics to create the XM Institute. Over the last year we’ve had the opportunity to work with a great team across Qualtrics and deliver new thought leadership around the world (including in-person sessions in Toronto, London, Dubai, Dublin, Madrid, Brussels, Stockholm, Helsinki, Singapore, Sydney, Melbourne, Kuala Lumpur, Paris, Berlin, and Munich).
    • Special thanks to the Qualtrics team that helped complete the acquisition at a very fast pace, especially Austin Bankhead, Cate Isert, Iris Ng, Zig Serafin, Jeff Shaw, Ryan Smith, Tucker Stockman, and John Torrey. And I’m also thankful for the entire XM Institute team, Moira Dorsey, Ben Granger, Aimee Lucas, Maggie Mead, David Segall, Karen Temkin, Laura Wells, and Isabelle Zdatny.
  • SAP. Three weeks after Qualtrics acquired Temkin Group, SAP acquired Qualtrics. Talk about a crazy month. Luckily, I’ve known SAP since my days at Forrester, and Temkin Group had worked with many large enterprise software companies. So we know that world. While it’s been somewhat dizzying to try and respond to requests from across our 100,000 new teammates, SAP provides the XM Institute with an even larger platform to bring XM to the world. Thanks SAP.

I feel great about all of my professional accomplishments over the past decade except for one gap… a book. I started to write one in 2011, but had to put it aside as the CXPA ended up taking up just about all of my time. While I’ve been too busy to get back to it, I’m committed to writing a book at some point during this current decade.

Comparing Three Exciting Decades

I’m even more excited today about the future then I was a decade ago. Over the past 10-years we’ve established the foundation upon which organizations will transform into the future. Here’s how I see the connection between this new decade and the previous two:

  • 2000s: The Decade of Process And Technology. While the phrase “people, process, and technology” has been around for decades, the 2000s were all about enterprise technology and process management (no real focus on people). It was a very internally-focused period. Laws such as Sarbanes–Oxley put pressure on organizations to establish enterprise wide control and visibility. This propelled the importance of CIOs, as they led programs to centralize and rearchitect the core infrastructure within most large organizations. The dominant form of transformation, business process re-engineering, was also very internally and cost focused. At the same time, the Internet started to penetrate technology and process boundaries, with companies enabling customers to start self-serving for simple purchases and a handful of basic service interactions.
  • 2010s: The Decade of Customers And Digital. With customers starting to directly touch enterprise technologies/processes and fueled by momentum from the end of the “Great Recession,” organizations not only acknowledged the value of customers in the 2010s, but they also started to focus much more attention on understanding and catering to their needs (thanks in part to the mainstreaming of academic domains such as neuroscience and behavioral economics). We defined and established customer experience management as both a critical capability and as a thriving profession. Disruptive online businesses such as Amazon, Uber, and Airbnb forced organizations to rethink how they interact with customers. At the same time, the rapid growth of mobile along with Cloud/SaaS models made every interaction—internal and external—fair game for digitizing. This customer/digital movement led to the rise of experience design, mobile-enabled processes, and the shift in customer research from a one-off activity to a more continuous process. At the end of the decade, the CX movement started spreading to other areas, most noticeably employees (which started the rise of XM).
  • 2020s: The Decade of Humanity And Intelligence. During the upcoming decade, we’ll build upon what we’ve learned from customer experience and apply it to every part of an organization. Driven by the momentum from the 2010s along with an emerging view among leading executives that the purpose of a corporation is to serve humanity, we’ll focus more on the needs and feelings of all human beings in our ecosystems (e.g., suppliers, employees, customers, influencers, etc.). Organizations will deploy more advanced and automated analytics on top of their growing digital/mobile infrastructures. This will make it much, much easier to discover and distribute tailored insights from increasingly larger and more diverse datasets. In this environment, organizations will infuse Experience Management—the capability to continuously learn, propagate insights, and rapidly adapt—throughout their entire operating rhythm. Using the distributed insights, enterprises will provide more individualized interactions and actively decentralize more decision-making.

I’m excited about where all of this is heading, and believe that the XM Institute is well positioned to keep helping organizations navigate through the change.

A Look Back At 2010 CX Recommendations

I thought it would be fun to close out this post by sharing content from a 10-year-old post that I wrote to prepare people for the start of the previous decade. It’s pretty cool that the recommendations are still relevant today. So here were my 7 keys to customer experience in 2010:

  • 1) Drop the executive commitment facade. It’s very easy for executives to say “customer experience is important.” But it’s much more difficult for them to dedicate the time and energy required to make it a real priority. So in 2010, executives should either get actively involved in customer experience transformation or drop it from their agendas.
    • Start here: Develop a customer experience dashboard and manage the results with the same energy that you manage financial results.
  • 2) Acknowledge that you don’t know your customers. When market research teams require long lead times and expensive projects to answer questions about customers, too many organizations go without this insight. But the path to customer experience success requires significantly deeper customer insight. So in 2010, companies need to develop voice of the customer programs that provide ongoing and continuous access to customer insights.
    • Start here: Create a voice of the customer program with a cross-functional team that focuses on four “LIRM” components: listening to customers, interpreting the feedback, reacting to the insights, and monitoring results from actions over time.
  • 3) Keep from getting too distracted by social media. Twitter, Facebook and other social media sites may seem sexy, but they aren’t the only channels for customer feedback. Other channels like comments on surveys and calls into the call center can often provide even richer insight. So in 2010, companies need to learn from social media feedback, but not overreact to it.
    • Start here: Treat social media as one of many listening posts in a comprehensive voice of the customer program that examines both structured and unstructured feedback.
  • 4) Stop squeezing the life out of customer service. My research shows that consumers care more about good customer service than they do low prices. It also turns out that many customer service interactions are critical “moments of truth” that drive customer loyalty. But companies often treat customer service an unwanted stepchild; focusing almost exclusively on aggressive cost-cutting. So in 2010, companies need to start viewing customer service as a strategic asset.
    • Start here: Measure customer service organizations based on how effectively they help customers instead of efficiency metrics like average handle times.
  • 5) Restore the purpose in your brand. True brands are more than just color palettes, logos, and marketing slogans, they’re the fabric that aligns all employees with customers in the pursuit of a common cause. They represent a firm’s raison d’être. Unfortunately, many companies have lost this sense of purpose in their brands. So in 2010, companies need to redefine their brand and embed it in the hearts and minds of all employees.
    • Start here: Translate your brand into promises you will make (and keep) with customers across every key touch point.
  • 6) Don’t expect employees to get on board. Employees are often the most critical element of any customer experience effort. But firms can’t just hope that everyone will participate in these change initiatives. So in 2010, companies need to actively focus on engaging employees at every level across the organization in their customer experience efforts.
    • Start here: Communicate (a lot) about “why” customer experience is important and allow employees to participate in defining “how” to make improvements.
  • 7) Translate customer experience into business terms. My research uncovered a strong correlation between customer experience and loyalty. An average $10 billion company can generate $284 million of additional revenues from customer experience improvements. But most companies don’t fully understand the link between customer experience and business results. So in 2010, companies need to identify how customer experience impacts their financial results.
    • Start here: Engage the CFO to develop a model which shows the impact that customer experience has on customer loyalty.

The bottom line: The 2010s were fantastic, but the 2020s will be even better!

New Research Shows Strong ROI of CX

The XM Institute has published new research that examines the impact that customer experience has on the loyalty of U.S. consumers across 20 industries. You can download these reports for free:

  • The ROI of Customer Experience. This research examines the correlation between customer experience and the likelihood of consumers to exhibit the following behaviors: purchase more products or services, recommend a company, forgive a company, trust a company, or try a company’s new product or service.
  • Data Snapshot: What Happens After a Bad Experience, 2019. This research shows how often consumers run into bad experiences, and then examines how consumer spending changes based on those miscues.

The graphics below from The ROI of Customer Experience show a strong correlation between good customer experience and improved levels of consumer loyalty. While these graphics cover some of the overall findings, the report also includes data showing the impact of CX on loyalty for 20 industries.

1912_ROIofCX_v2.png

The graphics below are from the Data Snapshot: What Happens After a Bad Experience, 2019. As you can see, the percentage of consumers reporting bad experiences ranges from a high of 17% for TV/Internet service providers to a low of 3% for retail and streaming media. We also found that the impact that a bad experience has on spending is greatest in fast food and smallest in health insurance and utilities.

AfterBadCX_v1

Remember, you can download these research reports and many, many more for free from the XM Institute.

The bottom line: If you improve CX, you’re very likely to improve customer loyalty.

Stop Employees From Asking For Good Ratings

Over the last few weeks, I’ve run into a couple of examples of a common problem with some Experience Management (XM) programs… “gaming.” Here’s what I found…

During dinner with a friend who is an executive at a large bank, our discussion made its way to XM (no surprise). He mentioned that his bank has an employee engagement study and that leaders are compensated based on the results.

Sounds like a good thing, right?

My friend then shared a conversation that his boss had with the leadership team. This senior executive told my friend and the rest of his direct reports that they needed to give him better ratings, because the current scores were negatively impacting his compensation.

Now for the second example. I’m a frequent flier, and regularly receive requests from airlines to provide feedback after a flight.

Sounds like a good thing, right?

During a recent trip on Delta, the flight attendant announced that we’d be receiving a survey and that she hopes they exceeded our expectations and will give them a 5 (see note about Delta below).

Do these two situations sound like a path to better employee experience (EX) or customer experience (CX)? Of course not! Both of these examples represent inappropriate behaviors. Whenever a person is pressured to give a specific score, the integrity of the measurement system is broken. We call this type of behavior “gaming the system.”

Gaming is a common problem. It happens when an organization puts too much emphasis on specific measurements — at the expense of the overall XM program.

The goal of XM is not to achieve some number, but to create a discipline to continuously learn, propagate insights, and rapidly adapt. This enables an organization to consistently deliver experiences that meet the needs of its key audiences. When an organization overly focuses on a number, often by attaching strong incentives to individuals based on the data, the system is bound to create these types of counter-productive “gaming” behaviors.

To help discourage this type of behavior, consider adopting these five rules to stop employees from gaming that I’ve described in a previous post:

  1. Don’t mention or refer to a score
  2. Don’t mention specific survey questions
  3. Don’t mention any consequences
  4. Don’t say or imply that you will see their responses
  5. Don’t intimidate customers (or employees) in any way

The bottom line: Make sure you’re not encouraging gaming behaviors.

Note: I regularly fly with Delta and this is the only time that I’ve run into this type of gaming behavior.

The State of CX Management, 2019

I’m particularly happy to announce a new research report, The State of CX Management, 2019. In the past, Temkin Group published similar research and we charged for the reports. One of the great things about now being a part of the XM Institute is that we can give it away for free.

To understand the current state of customer experience (CX) management, we surveyed 212 CX professionals around the world from companies with at least $500 million in annual revenues. Respondents at these large firms not only answered questions about their organizations’ CX efforts, they also completed our CX Competency & Maturity Assessment, which evaluates the Six Experience Management (XM) Competencies: Lead, Realize, Activate, Enlighten, Respond, and Disrupt.

Since you can easily download the report, I won’t provide a full summary. Instead, here are some of my favorite data points along with additional commentary:
  • The focus on CX is growing. Eighty-one percent of respondents plan to increase their focus on CX in the upcoming year, while only 4% plan a decrease. That represents significant momentum for CX.
  • CX and EX make sense together. Seventy-two percent of respondents felt that it was at least moderately important to improve employee experience (EX) while they are improving customer experience. That shouldn’t be a surprise. As I’ve said in the past, CX and EX are inextricably linked.
  • CX professionals are leading the way. About two-thirds of companies have a senior executive in charge of CX and a centralized CX team. And a third of those CX teams have 11 or more full-time employees. This makes me feel great. When we launched the Customer Experience Professional’s Association in 2010, our hope was to create a thriving CX profession… we’re there! Check out my comments about the future of the CX profession.
  • Digital channels need an XM infusion. When we asked respondents to evaluate the experiences they deliver across multiple channels, the two experiences they rated most highly were on the phone with an agent (59% said it was at least good) and in a store/branch (41% said it was at least good). Digital channels fell well behind. Companies not only need to better understand these experiences, but they should also learn from human interactions. Check out our report, Humanizing Digital Interactions (yes, that one’s also free).
  • Companies get in their own way. What challenges do companies typically encounter as they work to improve their CX? At the top of the list is other competing priorities, which was selected by 59% of respondents. This has been the top problem for years. It’s important that CX teams link their efforts to business results that the company cares about and the individual goals of the senior executives. It’s worth taking a look at another free report, Activating Executive Commitment.

Comparing CX Leaders With CX Laggards

The XM Institute has built an XM maturity model based on the Six XM Competencies. Respondents completed our assessment and only 6% of companies ended up in the top two (out of five) stages of maturity. We compared companies with higher levels of maturity (CX leaders) with those who had lower levels of maturity (CX laggards). When compared with CX laggards, we found that CX leaders:

  • Enjoy stronger financial results. Seventy-one percent of CX leaders report that their CX efforts had a positive impact their financial performance over the previous year, while only 38% of CX laggards report the same.
  • Have more senior executive support. Fifty-seven percent of CX leaders consider their most senior leader, such as their CEO, to be a “strong” or “very strong” champion of CX, compared with only 38% of CX laggards.
  • Have more coordinated CX programs. Sixty-four percent of CX leaders report having significant CX efforts underway across the company with significant coordination across these efforts, compared to only 26% of CX laggards.
  • Foster a more empathetic culture. The two groups differ across a number of cultural elements. We found the largest gap in agreement with the statement our organization demonstrates empathy for its customers; 80% of CX leaders agreed, while only 37% of CX laggards agreed.
  • Deliver better digital experiences. As you’d expect, CX leaders report delivering a higher percentage of “good” and “very good” experiences across every interaction channel we examined. Leaders and laggards diverge most when it comes to the experience they deliver in mobile apps, online self-service, and online chats.

As I’ve said, we’re excited to be publishing this research as part of the XM Institute. Make sure to download the free report, The State of CX Management, 2019.

Five Recommendations For De-Emphasizing Benchmarking

Benchmarking, benchmarking, benchmarking… it’s a popular subject.

I’ve been publishing CX benchmarks for more than 10 years, so you might be surprised by my point of view on the topic: benchmarking is often overused and misinterpreted. I’m not saying to give up on the entire activity, but people often spend too much time and energy focusing on industry comparisons that aren’t necessarily an accurate reflection of the genuine customer experience.

Let me start by saying that benchmarking is a perfectly good activity. It makes sense to periodically evaluate your performance relative to competitors, especially as an input to your strategy. And it’s also healthy to look at your performance relative to companies from other industries.

While benchmarking provides value, people often let it distract them from more important activities. So here are five recommendations on how to think about benchmarking:

  1. Focus on improving, not comparing. When it comes to the use of your insights activities, it’s critical that an overwhelming majority of your efforts are aimed at finding opportunities to improve — not scorekeeping. Many executives seem to feel as though a benchmark provides a security blanket of sorts—one that shows their remit within the business is in line (or better than) the competition. Whether it’s from internal metrics or external benchmarks, knowing where you are and where you’ve been is not nearly as valuable as knowing where you should be heading. Companies often use up a lot of their feedback capacity to ask customers (and employees) questions solely for the purpose of fueling a benchmark. My advice: Optimize everything you do on driving improvements, even if it means dropping some benchmarking questions.
  2. Obsess about customers, not competitors. One of the risks of relying too much on benchmarking is that it can mask your performance when there are shifts in the market, such as new competitive options or evolving customer requirements. You may be doing well against current competitors and with existing customers while the market is slipping away from you. Your critical strategic question should be are we delivering the right experiences to the right customers?, not how are we doing versus our competitors?
  3. Compare data within studies, not across them. Every industry benchmark is based on a specific methodology, with it’s own target audience, sampling approach, timing, collection mechanism, questions, and calculations. Each of these items has an impact on the results. As I often say, sampling patterns really, really matter. It’s often ineffective to compare results across different studies unless you control for all of those items, which can be very difficult. So don’t spend too much time trying to reconcile an industry benchmark with internal results.
  4. Set goals around key drivers, not necessarily industry benchmarks. As you think about setting goals for your organization, don’t fall into the trap of relying on benchmarked metrics just because the data exists. You should be setting goals for the items that drive the overall performance of your business, which may or may not look anything like the industry benchmarks. What’s unique about your brand and what creates a loyal customer? We recommend following five steps for creating a CX metrics program, starting with higher-level goals and working your way down to metrics on key drivers.
  5. Rely on internal insights, not external data. While external benchmarks can provide a high-level snapshot of relative performance, they lack the depth and adaptability to dig into critical company-specific topics such as the needs of target customer segments and your performance during key moments of truth. The additional value of internal insights are also dramatically amplified when you combine experience data (X-data) with operational data (O-data). The ability to dig into key questions and find more meaningful insights makes building internal insights capabilities a much more valuable endeavor than digging into external benchmarks.

The bottom line: Choose actionable insights over competitive comparisons… everyday!

Is NPS A Dubious Fad?

Okay, it’s that time again. Every few years someone ignites the debate about whether Net Promoter Score® (NPS®) is a great or terrible thing. A recent article in the WSJ (The Dubious Management Fad Sweeping Corporate America) has sparked the discussion this time.

Rather than write something entirely new, I decided to share something I wrote in 2015 that addresses the issue. Before I share that post, I also suggest you take a look at these:

Below is the 2015 post, Is Net Promoter Score A Savior Or A Demon?

**********

Every couple of years, I get a resurgence of questions about Net Promoter® Score (NPS®). These surges typically coincide with research that shows how NPS is either an excellent predictor or a terrible predictor of company performance. That data often ignites a religious battle between the NPS lovers and NPS haters.

Well, it’s one of those times.

Let me start by saying that I’m an atheist in this NPS battle. We’ve had the opportunity to study and work with hundreds of companies that use NPS. I’ve recommended to some companies that they adopt NPS, to others that they stop using NPS, and to others that they start with a totally different set of metrics (see our VoC/NPS resource page).

Let’s look at what we know for sure about NPS…

The reality is that the metric itself is much less important than how it is used. I’d rather use a sub-optimal metric in a way that drives positive improvements across an organization, than have a perfect metric that doesn’t result in as much impact.

Here are some quick answers to key questions:

  • Is NPS the best indicator of customer loyalty and business performance? In many cases, no.
  • Can other metrics be used to drive positive change? Yes.
  • Does NPS provide an easy to understand metric that can be widely adopted? Yes.
  • Can NPS be used to make an organization more customer centric? In many cases, yes.
  • Will a company improve if it increases promoters and decreases detractors? In many cases, yes.
  • Can NPS be used inappropriately? Yes.
  • Can any metric be used inappropriately? Yes.
  • Would I ever recommend NPS for every touch point? No.
  • Should companies consider their specific business when selecting metrics? Absolutely.
  • What’s more important, the metric or the improvement process? The improvement process.

The bottom line: NPS is neither a savior nor a demon.

P.S. In case you didn’t know, NPS® and Net Promoter® are registered trademarks of Fred Reichheld, Satmetrix, and Bain & Company.

 

Six Categories Of X&O Data Insights

Last week I attended SAP’s SAPPHIRE and CX Live events in Orlando. It was great to see 35,000 or so of my new friends. As you might expect, Experience Management (“XM”) was a dominant theme. Just about every SAP or Qualtrics keynote speech discussed XM, and it was a topic at many of the concurrent sessions. I really enjoyed seeing the XM message come to life in so many different ways.

One of the cornerstones of XM is the combination of operational data (“O-data”) and experience data (“X-data”). While each type of data can provide valuable insights on its own, the combination can unlock new levels of intelligence across an enterprise. These more inclusive datasets will increase in value as organizations expand their use of predictive analytics, as the combined data is inherently more insightful.

To help you think about where you can find valuable opportunities to combine X- and O-data within your organization, we identified the following six categories of use cases:

  • X Why: Find something happening in O-data and look for an explanation in X-data
  • O Drivers: Find something happening in X-data and look for operational situations that are causing the situation
  • X&O Predict: Build projections based on an analysis of X- & O-data
  • X&O Personalize: Adjust how you treat people based on a combination of X- & O-data
  • X&O Alert: Send alerts and other proactive information based on a combination of X- & O-data
  • X Value: Measure the value of improving experiences by examining the impact that those changes have on business results

1905_CategoriesOfXODataInsights_v2

The graphic above provides some customer experience (“CX”) and employee experience (“EX”) examples, but it’s not meant to be an exhaustive list of use cases. Hopefully the table provides you with a good sense of the insights that can be unlocked with the combination of X- and O-data.

Now that you understand some of the ways for gaining insights from X- and O-data, think about how the combination can impact your organization. If you have some ideas or examples of how it’s worked for you, leave them in the comments section of this post.  I’ll try and highlight some of the most interesting items.

The bottom line: Combine your Xs & Os to unlock more insights.

 

CX to XM: Propelling Humanity & Intelligence

As you have hopefully seen, I’m now running the Qualtrics XM Institute, where we will be producing easy-to-consume, compelling content and training that both inspires business leaders with experience management (XM) possibilities and helps them drive value from their programs. Many people have asked me recently about why we’re now focusing on XM instead of on customer experience (CX).

The quick answer is that we are still focusing a lot on CX. It will continue to be a critical component of our work. The longer explanation for this CX-to-XM transition requires me to first break down how these two domains work together.

I’ve had the opportunity to lead the CX movement for many years now, and I’m very proud of what we’ve been able to accomplish together. While CX still has a lot of room for improvement, the discipline now has a robust set of repeatable skills and practices, which are being used by a growing—and increasingly capable—community of CX professionals. We’ve come a long way over the last decade!

When I take a step back and think about how CX has changed the way leading organizations operate, it’s really reshaped their behavior along two key dimensions:

  • They have made human beings the center of focus
  • They continuously generate and act upon insights

We unlocked something powerful in CX. By combining an intensified understanding of how people think, feel, and behave with our dramatically improving capabilities to uncover and act on those insights, we’ve created an entirely new set of best practices. In fact, I believe that this combination of humanity and intelligence will form the basis of how organizations compete in the future. It will be the fundamental component that defines success or failure.

But the power of humanity and intelligence is valuable beyond just our interactions with customers. We need to take what we’ve learned in CX and extend it across the entire enterprise, from suppliers, to employees, to partners, to customers. Every part of our organization should be built on a platform of humanity and intelligence.

That’s what XM is all about—Propelling humanity and intelligence across an enterprise.

Think of CX as the initial use case of XM. Yes, there’s still a lot to do in CX, but there are many other use cases that we should be thinking about as well, such as employee experience (EX), product experience (PX), and brand experience (BX). And all of these different experiences should be built upon the same XM foundation.

Our CX efforts have already been extending to XM. Customer journey mapping has led the way to employee journey mapping, voice of the customer programs have defined the model for voice of employee programs, and the understanding of behavioral economics and the use of experience design is being applied across many new areas.

If you’re a CX professional, I hope you’re just as excited about XM as I am. Not only will it generate even more demand for your skills and capabilities, but it also gives us the opportunity to take all we’ve learned from CX and apply it in a myriad of interesting new ways.

The bottom line: XM expands the humanity & intelligence uncovered by CX.

Debriefing My Qualtrics X4 Experience

X4_ImageLast week I joined more than 10,000 XM enthusiasts at the Qualtrics X4 Summit in Salt Lake City. This was my fourth X4, and the first one since joining Qualtrics. I really enjoyed seeing old friends and meeting many new ones. We have some really awesome clients!

My head is still spinning from the amazing event. Over two days, we were treated to the most incredible line-up of speakers, including President Obama, Oprah, Sir Richard Branson, Ashton Kutcher, NBA Commissioner Adam Silver, and Imagine Dragons’ lead singer Dan Reynolds. Add to that an Imagine Dragons concert, skateboard exhibition by Tony Hawk and his friends, and a dance contest to support 5 for the Fight (including tWitch). And yes, there were also a bunch of fantastic industry speakers.

There were so many extraordinary experiential elements around the event, including the environment for my two speeches. One of my talks was in a very large open space where attendees listened through headsets and the other was in an informal setting that was part of a private lounge for senior leaders. (Note: I’ll write another post to share some of that content).

Here are some of my favorite X4 moments:

  • Oprah was just purely amazing and inspiring. She talked a lot about the importance of “intention,” having clarity of your personal purpose (I am totally bought into the power of purpose). Some other lessons from her include, “your legacy is every life you touch,”  “notice what you have, not what you don’t have, and you will recognize the abundance around you,” and you need to acknowledge and validate other people. Her closing question challenged all of us: How do you use your true self in service of the world? And, I’m still chuckling about her discussion with Ryan Smith about Barnaby.
  • President Obama was so chill. He looked calm and loose, which made it very entertaining. He discussed his approach for making difficult decisions: “setup a process to figure the thing out with facts, data, and reason.” He made sure that the people in his administration were there for the right reason; not personal gain, but achieving their common mission. He required everyone to have integrity at their core. One of my favorite moments was when Obama quoted from The Departed. He discussed a scene where Mark Wahlberg’s character is asked who are you? and answers “I’m the guy doing my job. You must be the other guy.” Obama said that his staff would often use the phrase “Don’t be the other guy.” He also left us with an important charge, “focus more on our common hopes, dreams, and values, not on the things that pull us apart, and we can accomplish great things.
  • Adam Silver really surprised me. I’m a big fan of his work with the NBA, and have seen him speak at the MIT Sports Analytics Conference. But I never knew he was such a data guy. He discussed XM, like a pro. He clearly articulated how the combination of SAP and Qualtrics would help the NBA. He even discussed X-and O-data!
  • Sir Richard Branson was truly authentic. He seems like a great person to work for. He discussed how you purposely help more and more people as you get successful, expanding the circles from yourself, to your family, to your community, to the world. He called the American holiday system “a total disgrace” for not allowing workers to have more time off.  Branson believes that “every day is a fantastic learning experience,” and he also believes in promoting from within and delegating. This is what he had to say about brand, “you are only as good as your reputation, and you will need to zealously protect it.” He will only get into a new business if employees will be really proud and customers will sing its praise.
  • Bill McDermott explained why SAP & Qualtrics makes so much sense. He described SAP as a company with ‘a great brand and a good heart.’ Not only is that the type of company I want to work for, but it’s also how I would love to be personally viewed by other people. McDermott labeled XM as “the ultimate category” for enterprise software. He summed up the acquisition with a quote from Jerry Maguire, “Qualtrics completes us.” You can see a lot of what he said in this really good article.
  • Qualtrics employees delivered awesome content. Ryan And Jared Smith did a great job sharing the XM vision and highlighting amazing new capabilities in our XM platform. I was really proud of all of the Qualtrics speakers that I was able to see. The overall storyline at the event was that organizations often fail because they get blindsided; they lack good instrumentation. In order to deliver breakthrough experiences, you need more XM instrumentation.
  • Our new offerings are incredible. We announced a crazy number of game-changing additions to the Qualtrics XM Platform. We’re using AI in many areas across the platform, including to analyze data and create automated alerts about potential problems and opportunities. And our new mobile experience is pretty cool as well. Here are links to some of the other announcements:

I’ll end this post with a shout out to our XM Breakout Artist Winners:

  • CX: American Express
  • EX: Coca-Cola
  • PX: Belkin
  • BX: Sofi
  • XM: L.L.Bean

The bottom line: X4 was amazing; I’m already looking forward to next year.

The Evolving Role of CX (& XM) Leaders

Last week I spoke at a local CXPA meeting in Boston. We had a great turnout, thanks to the great work of the planning committee and the wonderful space provided by Education First.

image1

I led a discussion about the future of CX, which I believe was applicable to all experience management (XM) leaders. One of my key messages was that we need to think of our roles differently as we push our organizations to even higher levels of CX/XM maturity. Here’s how the role of CX/XM leaders need to change:

  • Early stages of maturity: WHAT WE DO. In the early stages of maturity, you need to build a strong team, a clear message, and a solid work plan. You need to enlist a few external supporters, but a large majority of the effort is driven by your team.
  • Middle stages of maturity: HOW WE INFLUENCE. Once you have some momentum and clarity around priorities, your team needs to shift focus from being doers to being facilitators. You need to build a much broader coalition of supporters and collaborators, and support them as they make changes within their organizations.
  • Advance stages of maturity: HOW CX/XM THRIVES. Once you’ve hit the larger stages of maturity, you need to make sure that good CX/XM practices are not only being deployed, but they’re being embraced. You should be helping leaders across the organization to embed the new practices within their core operations, and find ways to continuously improve on them. Deploying good CX/XM approaches isn’t good enough, as those activities must be nurtured so they don’t get stale over time.

I hope you are able to lead your organization to the advanced stages of maturity. If you do, you’ll likely need to change your approach many times along the way.

The bottom line: CX/XM leaders’ job description shifts from doing to nurturing.