how customer experience transforms and defines …• customers who had a good experience invested...

How Customer Experience Transforms and Defines Luxury Brands

Harley Manning, VP & Research Director

January 16, 2013

© 2012 Forrester Research, Inc. Reproduction Prohibited 2

Why customer experience? Why now?

“Louis Vuitton Closes eLuxury End of June”

Outside In

The power of putting customers at the center of your business

How customers perceive their interactions with your company

Enjoyable

Easy

Meets Needs

© 2012 Forrester Research, Inc. Reproduction Prohibited

“Even if they’re more expensive and I have to pay the difference in the ticket price myself, it’s worth it.”

Willingness to consider for another purchase

Likelihood to recommend to a friend

Likelihood to switch business to a competitor

Customer experience correlates to loyalty

• Customers who had a good experience

invested 4.5x more money with Fidelity

• Their investments added up to billions of

incremental dollars per year

Two U.S. stock portfolios

Top 10 publicly traded

companies in the Customer

Experience Index

Bottom 10 publicly traded

companies in the Customer

Experience Index

CX Leaders CX Laggards

CXi Leaders 22.5%

S&P 500 Index,-1.3

CXi Laggards-46.3%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Cu

mu

lati

ve t

ota

l re

turn

5-year stock performance

Source: Watermark Consulting


Comprehensive

Best Practices

for Creating a

Great Luxury

Goods

Customer

Experience

Strategy Customer

Understanding Design

Measurement Culture Governance


Discipline 1:

Strategy


Angela Ahrendts

CEO

Burberry

“Burberry Regent Street brings our digital

world to life in a physical space for the first

time, where customers can experience every

facet of the brand through immersive

multimedia content exactly as they do online.

“Walking through the doors is just like

walking into our website. It is Burberry World

Live.”

Discipline 2:

Customer Understanding


Customers would not download and install a mobile app for this infrequent task

They often plan their next exotic vacation during downtime in a limo

Discipline 3:

Design

33

Repeatable problem-solving process that incorporates the needs of customers, employees, and other business stakeholders

Strategy Customer



Discipline 4:

Measurement

Perception What customers think happened

and how they feel about it

Descriptive What happened in the real world

Outcome What business result you expect

from what happened


Porsche uses NPS to gauge the health of the overall customer relationship but…

Dealers started rigging the system by offering incentives to customers for higher NPS scores

Dealers’ inconsistent behavior and “pandering” to customers was damaging the brand image

Porsche is now planning to de-emphasize NPS

38


“Really the NPS doesn’t have much

business value, it’s just an indication of the

customer’s view at that moment in time. The

real business value comes from the words

people use in their verbatim answers.”

Nina Jones

Head of Customer Experience

Porsche Cars Great Britain


Discipline 5: Governance


Governance practices

Standards

Policies and processes

Project portfolio management

Role-specific responsibilities

41


Rise of the chief customer officer

Emerging role: 550 identified in 2012

Average tenure: Two years

Typical background: Executive-level position (not customer experience)

Notable: Cleveland Clinic, Fidelity, GM

42


“If I can't differentiate

and make you feel

special about the

experience, then it is all

about price, and then

we're no different than

any other commodity

product in the car

business."

Steve Canon

CEO

Mercedes-Benz USA

Discipline 6:

Culture


Culture practices

Hiring

Onboarding and Training

Rituals and Routines

Rewards

45


Service Values: I Am Proud To Be Ritz-Carlton

I build strong relationships and create Ritz-Carlton guests for life

I am always responsive to the expressed and unexpressed wishes and needs of our guests

I am empowered to create unique, memorable and personal experiences for our guests

46

Strategy Customer



What should you do next?

Take our CX maturity assessment

40

individual

practices

52

http://forr.com/cxmaturity

Thank you

Harley Manning

@hmanning

blogs.forrester.com/harley_manning

#outsidein

outsidein.forrester.com

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