By Curtis Bingham

If you asked your customers, “How easy is it to do business with us?” what would they say? If you’re like many other companies, they’ll probably say, “Not very.” If you asked customers to compare you with Amazon or Lyft or USAA, they might say, “Not at all!”

How do we make it easier for our customers to buy from us?

Isn’t it just about improving the customer experience?

Turns out, the answer is “No.” Ease of Doing Business trumps CX. As the seminal article “Bad is Stronger than Good” points out, “bad emotions, events and feedback have more impact than good ones. Bad impressions are quicker to form and more resistant to disconfirmation than good ones.” The badness of high customer effort, which ordinarily transcends multiple customer touchpoints, is not easily offset by the goodness of CX improvements, which tend to affect very specific moments. CX is meant to be all-encompassing, but in practice it almost never is. The persistence of rampant Ease of Doing Business challenges in virtually every organization we encounter is proof of that, given the enormous push for CX improvements over the past 10 years.

Ease of Doing Business is on the lips of many CEOs and Board members, and rightly so. The promise of reduced costsis huge. Reducing customer effort can save 37% in operating expenses and induce customers to spend 88% more. Customer effort impairs revenue growth and destroys profits. Ease of Doing Business is the single most important thing for companies to focus on. In earlier articles we listed some of the most common drivers of Ease of Doing Business, but there is a massive disconnect in buyer’s and seller’s perceptions of which drivers are really impacting a given situation.

We’ve watched businesses attempt to become customer-centric for the past decade. Some have succeeded wildly. Others have failed miserably. In an effort to understand why, we interviewed some of the most successful CMOs, CSOs, CCOs, etc. to learn what they did to shape customer strategy.

Based on these interviews and our own experiences, Jeb Dasteel, former chief customer officer of Oracle, and I have developed a Customer Performance Framework. It contains seven leading indicators. Executives who improve these guarantee increased revenue, profits, and job performance. Customer Effort, or Ease of Doing Business, is the #1 most important leading indicator. The Framework also includes 60+ programs that an executive can deploy against those seven leading indicators.

There are five critical steps you should take as you start down the path of making yourself easier to do business with:

1. Establish Ease of Doing Business Metrics
2. Understand Critical Drivers of Ease of Doing Business
3. Develop a Baseline Perception
4. Identify Ease of Doing Business Hotspots
5. Establish a Customer Effort Tag Team

Let’s look at these one at a time:

Establish Ease of Doing Business Metrics

The most critical first step is to develop a set of metrics that measure overall Ease of Doing Business as well as transactional customer effort. We’ve found that many CMOs and CCOs are measuring NPS and CSAT, reading verbatims, polling sales teams, etc. to back into identifying processes that might be causing friction for customers. However, very few are formally measuring Ease of Doing Business or customer effort effectively.

A large energy distribution company in the US recently began measuring NPS. However, their customers are largely captive—they may only gain or lose 1 new customer in any given year. A “willingness to recommend” or other loyalty metric isn’t actually going to inform strategy. However, becoming Easier to do Business With is something that can minimize complaints, rescues, escalations, and complaints to regulatory bodies. And it will do more to protect profits and prevent that one lost customer than most any other activity.

Metrics have to be informed by customers. Our research shows there is zero overlap in the top three things we as sellers think are important to fix vs. what buyers believe is important. Metrics have to help us accurately assess the key drivers from our customer’s perspectives. This is the only way we can ensure we’re focused on impactful initiatives. Furthermore, we need to balance customer desires with strategic imperatives and costs to deliver.

We recommend creating an overall Ease of Doing Business metric rolled up from other measures, as well as a transactional Customer Effort Score.

Understand Critical Drivers of Ease of Doing Business

What do your customers say makes you hard to do business with? Is it the sales process? Contracting? Collaboration? On-boarding? We have identified the 10 most common drivers of Ease of Doing Business. We would love to have you share your drivers and help us expand our repository of benchmarks. Can you take 3 minutes and share?

It is critical to establish these drivers using customer input. That’s the whole point of the exercise. Socialize them within your company and use these as a foundation for your Ease of Doing Business improvements.

Develop a Baseline Perception

At the core of any good change initiative is a solid baseline. The same holds true for assessing Ease of Doing Business. It must measure both internal and customer perceptions. We're using a diagnostic tool that measures perceptions and performance in eight broad categories of our Customer Performance Framework. This diagnostic is completed by specifically targeted line of business leaders, front-line employees, and key customers. The results are rolled up into an overall Ease of Doing Business Score.

Front-line employees often have a very good sense of where customer frustration is the highest. We often find alignment in perceptions between these employees and customers and then find gaps in perceptions between executives and those same customers. If carefully handled, bringing clarity to these different points of view can be a powerful motivator for change.

The overall Ease of Doing Business score should align with each of the critical drivers to allow for granular measurement of improvement.

Identify Ease of Doing Business Hotspots

Customer effort originated in the call center, because customers were 4x more likely to leave those interactions disloyal.

That is no longer enough. Ease of Doing Business has to be measured across the customer journey.

The root causes of increased effort can be found well upstream of the call center. A major insurance company experienced a massive increase in call volume within days of mailing monthly statements. Frustrations were extremely high. This surge of calls was caused by confusing billing statements accompanied by generic and irrelevant inserts.

Creating an Ease of Doing Business Hotspot Map can be very useful in pinpointing customer effort hotspots and prioritizing solutions. Evaluate each customer touchpoint and customer-impacting process through the lens of Ease of Doing Business:

• Perceived ease: how hard do customers perceive the job to be done?
• Actual ease: how much actual time is spent performing the job?
• Competitive ease: how hard do customers perceive it is to do the same job with competitors?
• Returned value: How much value does touchpoint improvement yield?

Even though a job to be done doesn’t actually take long, it can be perceived to be high effort. Filling out a supplier form in the vendor’s portal might take little time. But if it is the fifth time your customer has had to re-enter information it becomes high-effort and a source of friction. This friction is additive across many other interactions.

Establish a Customer Effort Tag Team

Customer effort is typically a result of decisions and processes far upstream from where customers say, “You’re hard to do business with!” A single executive rarely has complete span of control over all the drivers of Ease of Doing Business. Therefore, successful customer executives create a cross-functional team. They ensure the team has the explicit permission to examine all processes across the organization.

While at Oracle, Jeb orchestrated cross-functional teams to address the top 10 sources of customer friction. Members of his own team served as consultants to passionate employees from business units that owned the sources of friction. Members were trained and emboldened to make change. Group membership changed based on the initiatives underway.

The Tag Team provides leverage as they work within their respective organizations to address the biggest obstacles to Ease of Doing Business. As well, they help their organizations adhere to standard best practices along the drivers of Ease of Doing Business.

Summary

Ease of Doing Business is one of the most important (and overlooked) components of business success. If you’re hard to do business with, customers don’t care that you have made point-in-time or transactional CX improvements.

Armed with the metrics, critical drivers, a baseline customer perception, and Ease of Doing Business hotspots, you and your team have all you need to establish priorities and create an action plan to engage employees in resolving real issues. We just wrote about how critical it is to create a business case to demonstrate and then measure value—even for something as seemingly obvious as Ease of Doing Business.

If you Want Help

If you’d like assistance in developing these and additional capabilities, we’ve created an Ease of Doing Business Accelerator. You can attend a public accelerator and benefit from cross-pollination with other non-competing companies or you can bring it in-house to work exclusively on your own strategies.

If you’d like to learn more or join us at the accelerator, please select a convenient time for a brief call.

Curtis Bingham

Jeb Dasteel, Former chief customer officer, Oracle

By Curtis Bingham

Customers with the best experience generate 140% more revenue. Digital transformation enables greater customer engagement, and therefore greater revenue.

What is the business value of an improved customer experience? CEOs have never responded well when chief customer officers (CCOs) say “Trust me, this is the right thing to do.” In fact, the average tenure of a CCO is only 27 months (recent CCO Council research). Why is this so low? One reason is that some customer executives struggle to demonstrate quantifiable ROI for customer initiatives. When the CEO and CFO are making priority decisions they simply can’t compare the returns for investing in CX improvements with hiring another salesperson.  Or worse, when the company hits a revenue road bump, the CCO’s initiatives and sometimes even the CCO herself are the first to be cut because their value cannot be quantified.

According to research published in HBR by Medallia, customers with the highest CX scores generate 140% more revenue than those with the lowest.

Medallia examined in depth two companies, one transactional and one subscription based. Transactional companies typically measure return frequency and average spend per visit. Subscription-based companies typically measure duration of repeat business, typically through retention, cross-sell, and upsell. They examined customer feedback and experience scores at a point in time, and then actual behavior for the subsequent year. This is important, as one of the downfalls of NPS measurement is that it measures nebulous intent and not actual behavior.

After controlling for other factors that drive repeat purchases such as affinity or natural consumption cycles, Medallia found a strong correlation between CX and revenue. Revenue generated by each customer increased significantly with higher CX scores. The customers with the best past experiences generated 140% greater revenue than customers with the worst past experiences.

For the subscription business, customers having the poorest experience stood only a 43% chance of being a member a year later, and were only likely to remain a member for a little over a year. Conversely, those with the best experiences were 74% likely to remain a member a year later, and were likely to remain a member for six years.

Done right, digital transformation promises improved customer engagement, a better experience doing so, and decreased costs to serve. And that’s a compelling argument.

How are you demonstrating the ROI of your customer initiatives and CX programs to your CEO?

P.S. Next question: Would it be valuable to have a discussion about where you need to go next in your digital transformation?

I've created a comprehensive digital assessment that benchmarks against the world's leading companies in six critical dimensions and gives you a prioritized roadmap going forward. I've partnered with Bob Taylor, former CCO of Samsung SDS and present CDO of from.digital, a digital transformation agency to bring this to you.

If you'd like to discuss, please call me at 978-226-8675 or email curtis@ccocouncil.org.

By Curtis Bingham

Last week, I described recent research conducted by the CCO Council into the impact of the chief customer officer on company financials. This week, I discuss the findings in detail and provide recommendations for managing them.

1. Customer Centricity is a two-year investment

Developing and improving customer strategy is a profitable but longer-term investment. It takes at least two years for the CCO's activities to flow through the company and make a significant impact on top- and bottom-line results. Once these results materialize, however, they appear to continue to grow commensurate with the investment. B2C industries tend to see results more rapidly than B2B. Industries with intense competition show heightened impact from the CCO.  

Recommendation: CEOs and Boards must commit from the outset to support and invest in the CCO and his/her initiatives for a minimum of two years to ensure the highest ROI. In turn, CCOs must manage the expectations of the CEO and Board to allow for this two-year probationary period. 

2. The CCO must show contribution to long-term revenue and profitability improvements 

Companies have demonstrated measurable improvements in revenues and profits while employing a CCO. In some cases, overall revenue drops after the CCO's departure. This research shows that the CCO can and should be accountable for improving top-and bottom-line results, although the impact may not be measurable on a quarterly basis.

Recommendation: CEOs should expect the CCO to provide, in addition to intermediate metrics, quantifiable impact on revenue and profits, and ensure the systems are in place to properly track the CCO's contribution. The CCO should begin by providing a clear line of sight from his or her actions to revenue and profitability. In some cases, the CEO and CCO may need to begin by agreeing upon an intermediate goal of driving loyalty and accept academic research proving that loyalty drives revenue and profit. However, this can only be temporary. 

3. In absence of growth, the CCO may help prevent a slide 

In some industries that experienced negative growth, the presence of the CCO helped stem the decline suffered through competitors and maintain revenues/profits through stronger customer relationships and trust.

Recommendation: The CCO must "bank" customer trust and loyalty to protect customers against hard times. CEOs need to take a less transactional view of activities that may pay dividends at a later date. 

4. Everyone says they are customer centric... 

Every company claims to be customer centric, but fewer actually are. Many publicly-stated company policies remain company centric rather than customer centric, and in the end, those whose actions are aligned with their customer needs are more successful.

Recommendation: The CCO should, with the support of the CEO, examine the policies, actions, and restrictions to ensure that customer needs are met on balance with business needs.

This study clearly shows one thing: CCO's are adding value to the bottom line. While growing steadily from fewer than 30 in 2003, CCOs are the newest, and by far the smallest, component of the C-suite. Many companies look at the CCO position and question if they can afford to add it to their C-Suite team, but the numbers turn that question on its head and ask how they can afford NOT to do so.  

Whether you are a company looking to create a CCO position or currently a CCO looking for resources, we invite to you to explore the CCO Council (www.ccocouncil.org) to give you and your company a true competitive advantage.

*This article is the second in a two-part series excerpted from The Impact of the CCO, available for free download from the CCO Council website here.

By Curtis Bingham

Customer engagement needs to be a disciplined strategy with ownership, accountability, broad reach, goals, accountability, measures, and a marketing plan of its own to communicate with employees, customers, and other stakeholders. Here are six essential components to a successful customer engagement strategy:

Purpose
In order to devise an effective strategy, you must first identify what you want engaged customers to do for you. Do you want them to help resolve problems, inspire innovation, co-develop new products or services, generate market insights, improve operational efficiency, enable greater sales velocity, or something else? You need a purpose to give your strategy focus.

Engagement Opportunities
What are the most important collaboration activities that support the engagement strategy? What are the most important advocacy activities that support the engagement strategy? How do you determine each activity’s importance and priority? Once identified, what resources do you have to support these activities?

Customer selection and enticement
How do you identify the ideal customers to participate in an activity that achieves your business goals? What opportunities are best suited to the customers and the pursuit of your goals? How do you entice customers to participate? For some, it’s simply a matter of asking. But others may need incentives or a clearly articulated mutual benefit that makes participation worth their discretionary time.

Measurement and impact on business metrics
You need to find a correlation between the measure of engagement by activity and its impact on the business. How do you measure engagement and how do you demonstrate that correlation? Without it, investment in your strategy is not defensible or sustainable.

Organizational alignment to customer direction
While it’s great if you have customers collaborating and advocating, if the organization is not aligned around delivering improvements or outcomes from these activities, engagement will be short lived. Customers will realize, “Oh, they’re asking me for help but they’re not really doing anything about it, therefore, it’s not worth the investment of my time and energy.” 

Employee engagement
Similar to the process of selecting customers, how do you identify the ideal employees to participate in an activity that achieves your business goals? What opportunities are best suited to the employees and the pursuit of your goals? How do you entice employees to participate? Rewards and incentives, both intrinsic and extrinsic, may be appropriate and necessary to successfully engage employees in the business of engaging customers.

By Curtis Bingham

Customer crises strike without warning, and the chief customer officer must act swiftly and decisively to address root causes and begin rebuilding damaged customer relationships. Over my years of experience working with scores of chief customer officers, I've found three steps that are crucial in successfully managing any crisis:

Build Strong Customer Insight Before Crisis Strikes
As owner of the customer you know the value of thorough customer research, but having detailed data is particularly vital when crisis strikes: your unique customer insight must form the basis of a successful response strategy. Relying on that insight you will be able to specifically target touch points that will resonate with your customers, identify areas of the organization's plan that may exacerbate negative opinion, and determine the best strategies for mitigating that negativity. Have a comprehensive customer research program in place before you're faced with crisis to ensure that the information is there when you need it most.

Focus the Organization on Customer Impact
It's all too common for the wider organization to focus on damage control-acting in self-defense, laying blame, or stonewalling. But this will only worsen already injured customer relationships. Instead, it's imperative for you to lead the organization to focus on customer impact at every step along the road to recovery. This is not to say that every action must have a positive impression; we know there are times the organization must act despite negative impact. Your job is to ensure that at every step someone is asking the question: how will this affect customers? If it's positive, highlight it in a way that strengthens customer relationships, and if it's negative, use your customer insight to mitigate the damage.

Rebuild Damaged Trust
Incorporating high customer touch into routine operations allows you to rebuild trust while creating sustainable customer centric change. Seek opportunities for reassuring customers not only within the recovery, but throughout the organization. Look for functions that can be updated or repackaged to highlight positive customer impacts. Share information with customers by updating call center scripts, or devise high touch outreach programs to provide understanding about particular actions or operations of the organization. Customer trust will return only when customers feel they are receiving honest and forthcoming communication about the problems affecting them and the steps you are taking toward resolution. 

By Curtis Bingham

Customer executives are regularly challenged to prove the value of their initiatives. To demonstrate value, executives must speak the language of business so as to allow business leaders to make comparisons and tradeoffs. Executives are primarily interested in increasing revenue, decreasing costs, and mitigating risk. To effectively demonstrate value, customer executives need to show how their customer initiatives impact one or more of these key factors. In my previous post I described the historical retrospective approach whereby incremental per-customer or per–segment revenue gains are correlated with increasing loyalty and engagement. Expected change in customer value is another valuable means of demonstrating ROI.

Many companies use lifetime customer value to justify marketing and customer acquisition efforts. Similarly, positive changes in lifetime value are a result of increased preference, decreased price sensitivity, increased consumption, and greater advocacy. Conversely, lifetime value plummets in response to negative experiences as consumption drops and referrals cease.

A number of years ago, JetBlue analyzed NPS results correlated with passenger behavior and found that each detractor converted to promoter is worth $40 additional profit and each 1-point overall NPS gain yields a $5-8M increase in annual revenue. Highly satisfied customers increase their use of ancillary services such as seat upgrades, box food purchases, etc. Converting a detractor to a promoter yields an additional $100-140 per customer annually, or the equivalent of another flight traveled each year plus ancillary service purchases. Conversely, negative word of mouth costs the company $104 per detractor per year in missed revenue: $72 in lost referrals and $32 in unpurchased ancillary services. 

Put another way, every 25 customers actively promoting JetBlue to friends, family, associates, and on social media equates to one new customer flying JetBlue, whereas only 16 detractors would dissuade an existing customer from flying.  By the same math, it might take 36,000 promoters to increase revenue by $1M, but only 14,000 detractors to realize a revenue loss of $1M.  Every customer value quantification effort must begin with a tangible understanding for each key segment of the length of average customer relationships, costs of new customer acquisition, average customer value, and retention rates. 

Enrich these data by examining how your most loyal and engaged customers within critical segments behave differently than your least engaged. Examine factors such as overall profitability, repeat purchase frequency and volume, longevity, share of wallet, breadth of product portfolio purchased (i.e. the ancillary services mentioned above), the number and value of new customers acquired through references and referrals provided each year. For many companies the annual value of these computations are significant and become even more so when extrapolated over the average lifetime of a customer. 

Similarly, the cost of dissatisfied customers can be computed to measure the cost of status quo.  What is the cost of each call into the call center? How many callbacks are required to address the same issue as a result of an inappropriate focus on average call handle time? What are the most common customer dissatisfiers and what does it cost to address them?  How many credits are being offered to correct billing mistakes?

Armed with tangible proof of the ROI of investments in customer centricity, customer executives can have meaningful conversations with top leadership, enabling them to compare such investments against other priorities and make the best decisions for the company. Without these measures, “doing the right thing” will only happen in the best of times and most certainly not in the worst of times when it is most needed.