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Linking Employee Satisfaction, Employee Engagement, and Employee Ambassadorship Session 2: Connecting the Dots: Ambassadorship, Customer Experience Optimization, and Customer-Centric Culture

Driving A Successful Customer-Centric Culture

Through Employee Commitment to the Company,

the Value Proposition, and the Customer


Session 2 Outline

Commitment: Moving the Enterprise from

Passive to Active, Naïve to Natural

Seven S Framework

Focus on Sills, Style, Staff, and Superordinate

Goals

Customer Centricity and Advocacy Behavior

2014 Customer Management Pyramid

Customer Life Cycle and Line of Sight

Role of Employees in Customer Decision Drivers

Advocacy in Auto Industry: Highly Dependent on

Dealer Staff and Culture

Beyond Philosophy © All rights reserved. 2001-2014


Corporate Paradigm Objectives

Optimum customer loyalty, advocacy and value

Value is the sum of tangible/intangible benefits received and solutions

provided minus what is required to get them

“Success is getting the right customers - and keeping them” -

Statement from 1991 Annual Report of Major Credit Card Company

with that industry’s highest cardholder loyalty level


2004: The Customer Loyalty Pyramid

3

2

1

Market Position Stage

Commitment-Based

Performance-Based

Satisfaction-Based

The Leaders <5%

The Advanced 15%-20%

The Rest 75%-80%


Satisfaction-Based Companies

Largely passive and reactive customer relationships

Tactical thinking about stakeholders, and belief that

stability exists

Traditional bureaucratic hierarchy – top-down management

Processes for performance measurement are rudimentary

Internal and external communication processes not

advanced; information and insights rarely shared

Staff have minimal empowerment


Performance-Based Companies

Greater awareness and sensitivity regarding

customers

Management still tends to operate from traditional

hierarchy

Formal systems in place for measuring performance

and collecting/acting on complaints

Some evaluate customer needs, train staff to be

more proactive with customers, and/or have

customer process teams

Frequently compensate on customer satisfaction

scores and new customer acquisition


Differentiators of Commitment-Based Companies

In-depth relationship with customers/understand needs

and priorities

Target desirable, high purchase customers

Retain/cross-sell their customers

Create barriers to exit; minimize defection

Have loyal, creative/innovative, contributory staffs

Create tangible/intangible value Tangible/Functional - Time, money, quality, reliability,

convenience

Intangible/Emotional - Information, personal interest,

reputation/image, relevance, trust


Twelve Common Attributes of Commitment-Based Companies

Culture

1. Total Company Involvement in Customer

Loyalty

2. Active Internal Communication and

Listening

3. Strategic Improvement, Staff Proaction, and

Continuous Learning

4. Visible and Involved Senior Management


5. Customer Segmentation/Fragmentation/Insight

6. Hands-On Research/Customer Communication Skills

Training

7. Regular Direct Customer Contact By All Levels

8. Customer Partnership

9. Advanced Customer and Employee Behavior

Research

10. Full Inventory Complaint Gathering, Evaluation and

Responsiveness

Action

11. Customer/Competitive Data a Foundation For

Improvement

12. Internal and External Customer Teams


Seven S Customer-Focused Direction

Structure Systems

Strategy Style Shared

Values

Skills Staff


Loyalty STRUCTURE

Architecture committed to customers?

Characterization of organization chart

Cross-functional/decentralized/lattice, or hierarchical,

command and control/fiefdoms

Example - Customer Services/Consumer Affairs or

Customer Relationships, Customer Partnerships

Minimal levels between customer and senior

management

Encourage ‘flow’


Customer Services as a Marketing Entity

Emerging proactive role: profit center

Supports or leads performance measurement

Complaint systems: latent and registered

Outbound/inbound multi-channel communication

Cross-selling

Product/service development and enhancement

Reduces/eliminates customer attrition

Customer recovery


The Integrated Customer Team

Combines all customer ‘touch’ activities (CRM

and CEM) and systems into one functional area

Objective: Optimal customer loyalty and value behavior

Customer commitment/customer value driven

Economic reality/necessity

Innovative/forward-thinking

Synergy of effort/communication

Builds on engagement concepts

Makes sense to the customer


Loyalty SYSTEMS

Generating/using customer data for retention and

loyalty

Actionable measurements/metrics

Meeting structure - Is customer loyalty the

driver?

Proactive and reactive data in C.I.S.

Needs, problems, expectations

Latent and registered complaints

Customer-staff perceptual gap profiling

Benchmark/competitive data

Importance/loyalty/defection modeling


SOCAP/Maritz Study Findings

High level of product/service undifferentiation and

commoditization; few branded experiences

Changing customer needs/expectations for contact

More contact, but more value, consistent with CRM and CEM

trends

Customers directly involved in building value

Employees have a critical relationship-creating role

Proactive customer support/relations infrastructure

required

70% of loyalty driven by CRM and CEM factors

Satisfaction and engagement processes create status quo


Need/Value Identification

Basic Needs - Failure to perform will result in

almost immediate customer loss

One-Dimensional Needs - Performance to

competitive levels

Exciting/Unexpected Needs - Positive,

strategically differentiated

• Kano Model, originally created in TQ era


Loyalty STRATEGY

The plan of action on corporate, department, group

basis

CRM and CEM strategy includes Marketing, Sales,

Customer Service, Operations, Finance, etc.

Use of scarce resources: Time, money, people,

facilities, technology

Leveraging traditional and emerging methods for

building relationships and bonding between groups

How are all resources and communication methods

targeted to optimize customer loyalty and value?


Loyalty SKILLS

Do key personnel/all staff have customer loyalty

contribution capabilities, irrespective of level, function,

or location?

Importance of hiring and orientation

Training and cross-training- relationships, data

gathering, authority/empowerment, career pathing

Reward and recognition programs

Awards based on contribution to customer loyalty and value


Commitment-Driven Cross-Training Example

Synergy/increased customer value by exposing

Marketing and Customer Services to -

Each other

Operations

Finance

Intermediate/external customers

Must be ongoing and continually broadened - built into

systems and structure

Measurement systems must flex to assure that this is

understood so that it can be embedded in DNA


Staff Reward/Recognition Based on Customer Loyalty

Reward and recognition based on customer

satisfaction metrics less appropriate - not based

on bottom line

Reward and recognition for customer loyalty is

value based

Reward and recognition for customer save and

recovery

Recognition should include increased exposure,

training, empowerment

Should support greater interface between

company functions


Loyalty STYLE

Horst Schulze (Ritz-Carlton), Sam Walton (Wal-

Mart), Herb Kelleher (Southwest Airlines), Jack

Welch (General Electric), Tony Hsieh (Zappos)

Key individuals’ behavior in helping the

organization reach optimum customer and staff

loyalty/value - ‘Walking the Talk’

The living culture and fabric of the organization -

what is seen by internal, intermediate, and

external customers

Information flow

Alliances

Strategic and competitive stance

Staff action, reward, recognition


Loyalty STAFF

Functions - Scope, proaction/empowerment/action

Active cross-communication

Innovation

Focused on both the internal (systems and processes)

and external (customers/reputation-building)

Descriptions - Exist in commitment-based companies

Customer Relationship Leader

Customer Listening Team Champion

Customer Knowledge Specialist

Service Coach


Loyalty SUPERORDINATE GOALS/SHARED VALUES

Guiding meanings and concepts of the

organization, i.e. Why is the company in

business?

As understood by staff and customers

Are they Commitment-Based?

Can they be spoken in one breath?

Do customers participate?

Are they strategic?


Organizing and Managing for Optimum Customer Loyalty and Advocacy

Commitment-based culture and processes

Rotated responsibilities/synergies between

groups/cross-training

Use of C.I.S. to customize contact

Incentive/recognition based on level of customer

loyalty/recovery

Team contact/communication

Customer partnering/inclusion (advisory councils) -

stronger customer relationships


Differences Between Customer Satisfaction, Loyalty, and Advocacy

Satisfaction – Tends to be passive and reactive, addresses

attitudes and most recent transactions

Loyalty – More proactive and anticipatory, addresses strategic

effect on behavior (frequency, cross-sell, referral, future purchase);

‘barrier to exit’ and large segment oriented

Advocacy – Combines attitudes, perceptions and behaviors

(voluntary information provision, positive word of mouth

communication, etc.), addresses process, culture, equity, stakeholder

impact


Customer Management Continuum Map

Strategic/

Enduring

Marketing/Corp

Management/

Sales

Operations Tactical/

Transactions

Passive, Reactive Active

1.

Satisfaction

2.

Loyalty

3.

Advocacy


2014: The Customer Management Pyramid

3

2

1

Market Position Stage

Advocacy-Based

Commitment-Based

Satisfaction-Based

The Leaders <5%

The Advanced 15%-20%

The Rest 75%-80%


Life Cycle Big Three: Acquisition, Retention, Win-Back

Objective: Loyal, Committed Customers

Regular/repeat purchases

Purchase across product/service lines

- Provide information

Refer others, voluntary and positive communication

Immune to pull of competition

Can withstand occasional performance lapses

- Supported by loyal, committed employees and

customer-focused processes


… and linking strategic

value delivery planning

with implementation

Identifying the customer “line of sight”…


Customer Engagement and Involvement

Loyalty/advocacy driven by what customers value in relationship

and experiences over time

- Majority of companies continue to be passive and reactive

Current customer situation

- Only 40% – 45% of customers consider themselves loyal

- Most using supplier out of habit

- About 10% - 15% at high risk for churn

Overuse of loyalty programs and other programs as surrogate for

creating engagement perceived value

- Some effect, but 40%+ have never redeemed points

- Programs being commoditized or eliminated


Understanding Dynamics of How Customers Make Supplier Choices

Is there a mutually beneficial relationship and can

value be demonstrated?

How ‘invested’ are customers in product or service?

How willing to communicate in positive ways?

What types of alternatives exist, and how are they

perceived?

Is role of employees understood and built in, i.e. is

there a branded experience?

Do alternatives possess positive, strategic

differentiation?


Next Generation Approaches for Understanding Decision Dynamics

Keying on verbal and non-verbal communication

(touch, gestures, posture, etc.) where up to 80% of

message conveyance exists

Much of customer thinking occurs in unconscious

mind, using non-linear images

Getting to the why of preference means using

methods such as metaphor elicitation to uncover

psychological and emotional factors

Active inclusion of employees as ambassadors

Growing importance and influence of online and

offline social communication and employee

interaction


2007: Word-of-mouth valued far more

Word-of-mouth

Advertising

Editorial

92

50

40

1977: Word-of-mouth valued somewhat more

Word-of-mouth

Advertising

Editorial

67

53

47

WOM: One Of This Era’s Key Marketing Trends


Getting to Commitment and Advocacy

It’s about –

- Customer attitude and emotional attachment toward a supplier; also, how others feel about supplier - Level of preference and conviction for product/service - Consistency of delivery; effectiveness of processes - Aligning of customers’ values with those of supplier - Perceived positive differentiation from alternatives - Making employees, in all functions and areas of responsibility, core to value delivery - How well supplier can persuade, influence, and leverage customer thinking and behavior (purchase and communication) over long-term


20%

30%

40%

50%

60%

70%

80%

90%

100%

Used brand most

recently

Used brand most

frequently

Share of spend Word-of-mouth

Extremely satisfied (9-10 ratings)

Extremely likely to recommend (9-10 ratings)

Active brand advocates

Source: Proprietary study . Based on

between 685 to 925 rated brands.

A comparison with highly satisfied and highly likely to recommend customers


Auto Industry Example

Advocacy is critical to the automotive sector – there are almost

twice as many active advocates in this sector when compared to

others

Much of what drives owner behavior occurs at dealership

Global benchmarks are shown for two automotive brands to

contrast advocacy levels and the elements that create active

brand advocates

Ford

Mercedes

Emotional and social elements are clearly fundamental to creating

advocates

Illustrations are based on the “defining” brand associations

for brand owners


Indifferent Fulfilled Committed Advocates

Difference between the advocacy segments…share of spend

0%

10%

20%

30%

40%

50%

60%

70%

80%

Base: 903 respondents

Average

Brand 1

Brand 2


Automotive Brand Benchmarks: Global Data Comparing Two Brands

59

41

0 20 40 60 80

Mercedes

FordActive BrandAdvocates

Source: Based on a sample of 2,470 for Ford and 1,065 for

Mercedes drawn from Roper Reports Worldwide,


Making an Active Advocate—Ford

2%

23%

13%

8%

8%

13%

2%

17%

Makes my life

feel enriched

Makes me feel

like a trendsetter

16%

31%

26%

27%

37%

47%

26%

44%

Active Brand Advocates Indifferent

Cutting-edge technology

High quality

Makes me feel pampered

Cares about how

satisfied I am

Makes me feel my life is open

to new possibilities

Helps me strengthen bonds

with other people

Source: Based on a sample of 2,470 drawn from Roper Reports Worldwide,


Making an Active Advocate—Mercedes

43%

29%

0%

14%

0%

0%

0%

29%

Makes me feel part of a

special group

Helps me strengthen bonds

with other people

Has a vision I admire

Support social issues that

matter to me

A brand I trust

57%

43%

17%

20%

23%

40%

27%

63%

Active Brand Advocates Indifferent

Source: Based on a sample of 1,065 drawn from Roper Reports Worldwide

Makes me feel happy

Cutting-edge technology

Reliable


Where, And How, Customer Service Fits In the Mix

Creating perceived, individualized value for customers,

online and offline

Moving through customer service ‘stages’ to achieve

divisibility and advocacy, per Greg Gianforte

- Rudimentary – Answering phones; manually responding

to emails

- Responsive – More communication channels and automated

contact processes; customer contact history/information database

- Proactive – Service monitors and captures information across all

channels; personalized email messaging

- Leader – Service is profit center; cross-sell, upsell, renewal and

recovery; strong interaction and involvement of employees inside and outside

of department; use of individual customer detail for recommendations


The Challenge: Sustaining the Advocacy-Based Focus

“There is nothing permanent except change.”

Heraclitus

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