Previously we discussed that today business should understand and satisfy its customers’ needs like never before. In addition, it is important to keep the right balance between complete satisfaction of all customers’ needs and corporate profit.
The assertion that you must work with your clients is not usually challenged. Difficulties arise when you put this principle into practice: where to begin, what to focus on, where to invest limited resources, what to expect from an improved customer experience, and whether it will improve at all.
Today we would like to discuss four simple questions, which if answered sequentially will help entrepreneurs structure their activities to improve customer experience.
Question 1: How can I segment my customer base?
Customer needs, expectations, and capabilities differ from one other. Segmentation, or grouping customers by certain factors, is the first step towards improvement of customer experience.
If you neglect this step, all clients will be treated equally. Such an approach may lead to overcharges if, for instance, value-added services are provided to those who only require basic service.
Although there is no ”one size fits all” solution, we suggest beginning with three widespread (however not less effective) criteria for customer segmentation:
- needs (including expected quality, price, service level),
- share of revenue and profit,
- quantity and complexity of services consumed or goods purchased.
Experience shows that the optimum number of client segments varies between 4 and 6. If there are less than 4, the difference in service levels will be insufficient, if more than 6 – unnecessary complication may arise.
Picture 1 illustrates 2 of 5 segments emphasised by a telecommunication operator.
Question 2: What is your customer journey when interacting with your company?
Each customer-company interaction – be it a call, a visit to the website or to your office – is a chance either to “lose” or strengthen their loyalty.
If you record all such communications, describe needs and feedback at each interaction, you will obtain a way called “customer journey”. Needs and feedback will differ for different customer segments.
The most common mistake at this stage is incorrect determination of the starting or ending points of the “customer journey”.
A Russian electronics retailer built up its customer service from the moment clients enter the store: it conducted staff training, channelled significant investments to interior improvements, etc. However, the company’s revenue and market share continued to decline. As it found out, 7 of 10 clients chose another store based upon Internet search. Customer relationships before they come to the store – the corporate website, its popularity and structure, content, user friendliness – these are to be emphasised first.
In the process of determining the “customer journey”, it is necessary to take into consideration all sales and service pipelines, both online and offline. It is common for modern customers to use several channels at the same time: for example, surf the online store while shopping in the conventional one.
Burberry luxury brand integrated its “bricks and clicks” by providing its sales managers with IPads. Using the device, a customer can consider a range of products that are not displayed or are out of stock in a specific store location. In the meantime, managers can provide consultations and recommendations. As a result, IPad orders generated more than 25% of online sales in 2014, and all in all the online revenue grew by 10% - customers ordered products online while visiting the store. According to the surveys, other brands are planning to follow the lead.
Picture 2 shows a simplified example of the first three steps in the customer journey. Customer requirements and wishes can and should be more numerous at each step.
Question 3: What satisfies and what does satisfy the customer in his journey?
At the next stage, we identify where the customer is satisfied with the company interaction and where is not (so-called “pain points”).
Picture 3 illustrates a simplified example of the customer journey with highlighted “pain points” and moments of customer satisfaction.
Identifying the root cause for customer dissatisfaction is the most complicated at this stage.
A survey conducted by a Kazakh Internet provider has revealed that dissatisfaction arises when customers contact the call centre. The company began to invest in reducing the time-to-answer , hold time, and communication skills training for call centre operators. However, customer satisfaction remained almost the same. As it emerged later, the true “pain point” was not long time-to-answeror the communication style of operators. They needed the option to change settings, check balances and carry out other simple operations without the call centre through, for instance, using their personal accounts on the operator’s website.
Question 4: What to improve first, and how to measure such improvement?
There is no company that is able to eliminate and transform all customer “pain points” into a source of positive customer experience. Financial capacities, time of top management and personnel are limited, so you have to make a choice.
For customer experience, we advise addressing issues of the most important customer segments as a first priority. In other words, you should eliminate the root causes that make your key clients turn their backs on your company forever.
Nevertheless, working on “pain points” will only make you “less worse”, but never turn you into the best. When filling your main gaps, you should understand what is the most valuable to representatives of your most important segment, and focus on it.
To measure the current level and movements of customer satisfaction, companies usually apply a Net Promoter Score (“NPS”). NPS is calculated as the difference between those would recommend a service to their friends/colleagues and those who would not.
Improvement of customer experience is not a one-time campaign: customer preferences change just as the company itself does. Without an established, continuous process of customer experience evaluation and improvement of, progress achieved will soon become useless.
Please see the attachment of how to measure the customer experience effect on the company’s revenue.
Olga Korzheva, Customer Experience Expert, Kcell:
“Declining growth of the telecommunication market and increase competition incited telecommunication companies to bring customer experience management to the new level. Regardless external challenges, in 2014–2015 Kcell actively implement the process of internal transformation. One of the key steps towards the new client focus philosophy was introduction of NPS (Net Promoter Score) in performance indicators of the Company and its key employees.
As long as CEM methodology evolves and first NPS results are obtained, Kcell set up a whole range of processes of customer feedback management. We select feedbacks left through our service and call centres. Based on the received data, initiatives are developed to address issues and improve customer experience. The remarkable fact is that customer experience matters are discussed at the highest level – every 2 weeks we arrange initiative meetings with the CEO and top management of our company to consider further steps of Net Promoter Score improvement. As a result, in spite of relatively challenging times for the telecommunication industry, in Kcell we observe stable positive dynamics of NPS.
Stable index dynamics suggest the most important: we have chosen the right approach to change in our client focus. We are planning to pursue actively development of the customer experience management in our company since knowledge level and, accordingly, insistence of our subscribers on high standards grow day after day.”
Askar Atagulin, Press Service Chief Manager, Kazpost JSC:
“As needs of the Kazakh population grow and information technology develops, the list of postal products and services is continuously modernised and updated. In addition to conventional postal services, modern Kazpost provides financial, logistic, agency, and brokerage services.
For us, customer centricity is convenience and minimized time of our clients to receive one or another service. Our efforts are aimed at improvement of customer relations, that is we strive to ensure that our clients will have access to necessary information, and online or offline services, yet at such time and in such place that will be appropriate for the customer.
Sample projects aimed at improvement of customer experience.
Postmarket.KZ – online trading platform with an option of delivery to any point within Kazakhstan. Thanks to cooperation with consumer electronics manufacturers and distributors, villagers do not need to go to the city for shopping.
Post.KZ – national portal of postal and financial services. One of the services to enhance client convenience – preliminary fill in of data for bulk mail-out. For example, there is no need for employees of public administrative offices to fill in details manually at hundreds of letters.
@KazpostBot in Telegram – Kazpost services beyond the company’s resources. Given that the less clicks/downloads/instalments the more convenience, Kazpost invented the most popular service – parcel tracking – in Telegram. The customer only needs to find KazpostBot in his messenger and use necessary services. And that is just the beginning, bot will be updated with other relevant services – how to book a visit, call ЕМС courier, and others.
Parcel terminals (postamats/smart terminals) - automated terminal to receive goods ordered via Internet stores or catalogues, created as an alternative delivery service. Parcel terminals are located in the most crowded places (shopping and recreation centres, stations, around-the-clock Kazpost offices). Since the launch, September 2015, until Q1 of 2016, more than 75 thousand parcels have been delivered through smart postal terminals”.