John Ragsdale is vice president of technology research for the Technology Services Industry Association. Ragsdale spoke with DG Associates‘ Dennis Gershowitz, a customer loyalty expert. Gershowitz explained different strategies that service businesses can use to boost customer loyalty and retention. Republished with permission from Ragsdale’s Eye on Service.

John Ragsdale: Let’s talk experience. I sometimes see companies that are so focused on transactional customer satisfaction surveys that they lose sight of the overall customer experience. Could you talk about the difference between CSAT and CEM?

Dennis Gershowitz: From a pure definition standpoint, CSAT is part of an overall CEM Strategy. CSAT is the measurement of the degree of satisfaction to which a product or service meets a customers expectations. CEM is a business strategy for acquiring-retaining-growing and winning back customers. Imbedded in this over all CEM business strategy is the component of CSAT. CSAT can often be looked upon as a one time occurrence. For an example, a company might conduct an annual survey to its customer base. This effort certainly fits the definition of CSAT. CEM on the other hand, is not project driven but rather a life-long journey that a company commits to making, whose objective is to continuously exceed the customers expectations and to achieve the ultimate end goal-customer loyalty. In fact, as Tom Peters used to say … to continually deliver that WOW experience to your customer. As I always say to senior level executives, every touchpoint with your customers, prospects and employees is of importance and has an effect, positively or negatively, on satisfaction and loyalty. Make them all count.

Transactional surveys are a great way to measure satisfaction with the service and support your organization is providing the customers. It provides a good look into the day-to-day interactions with customers, but it only tells part of the story. A holistic, actionable CEM Strategy includes transaction surveys, relationship surveys, employee surveys, CEM communications, in-depth analytics, CEM training for customer-facing personnel as well as management and, most importantly, and buy-in from the executive suite. When a company has embraced the concept of CEM and runs their business with the customer experience as vital piece of its success, then it has moved beyond CSAT and begun the journey of CEM.

Ragsdale: We [TSIA] just did a webcast on gaining executive buy-in and support for customer loyalty initiatives, and it was a very popular topic. I thought most sales and marketing organizations were onboard with customer experience and loyalty programs, but turns out that is not the case. How can service organizations get cross-enterprise visibility for the work they are doing, especially with the long-term profit implications?

Gershowitz: The question you ask is at the root of a company’s commitment to customer experience and loyalty. I work with hundreds of service organizations during the course of the year and find that many of them are very proficient at getting the message of customer satisfaction and loyalty through the organization. There are many ways for this to be accomplished. A mission and vision statement relating to the service organization and entire company’s commitment to continuously exceed customer expectations is a good starting point. Company-wide communication tools are great ways for the service organization to continually gain visibility across the company. We have, for example, worked with clients to implement a CEM communications strategy. This strategy includes disseminating customer satisfaction and loyalty results electronically via LCD display units throughout the company in places such as the corporate lobby, customer service area and the cafeteria. Also tools such as short State of the Union video promoting satisfaction and loyalty levels within key accounts, marketing pieces that help differentiate your company from direct competitors based on level of service provided, a customer satisfaction annual report that highlights the state of customer satisfaction and loyalty within your customer base, are excellent ways to get the message across the company. One thing is certain, product revenues have slowed over the years but service revenues remain a good point of growth and profit for many companies.

Ragsdale: Is a CEM program only for $10B+ companies, or can small and mid-market firms benefit as well?

Gershowitz: This question reminds me of a story. A few years ago I had an associate who used to frequent a small pizza shop, whose owner became increasingly concerned about losing customers to a new pizza parlor in town. He wondered how satisfied his customers were, how loyal to his restaurant they were, what was important to them regarding the product and service he was providing and were they recommending his place to friends and colleagues. Knowing my profession, he asked me about the possibility of conducting a one-time market research project for him that would provide him with the answers he was looking for. Remember, this was a five man pizza and sub shop in New Hampshire. Compare that story to the work that done for a multi-billion dollar medical manufacturing company who was worried about very similar problems. Were their customer’s loyal? Would they recommend them to others? How susceptible were they to the competition? What was important to their customers? CEM is a concept that any company/business with a customer base must be concerned with and take on.

Ragsdale: In your course abstract you touch on one of my favorite topics — mining customer interaction data for valuable insights. Today’s analytic platforms are enabling some exciting and sophisticated reporting. Could you give some examples of insights companies have gained by analyzing the oceans of customer data they usually ignore?

Gershowitz: There are really two ways for companies to look at customer satisfaction and loyalty data. They can look at it from a quantitative perspective and they can look at it from a qualitative perspective. Both are important and will provide in-depth analysis and both can tell you a pretty good story about the overall health of your customer base. Mining of customer insights and feedback is critical when determining what actions should be taken after the analysis of the data is complete. Quantitative data tells you the “what” of satisfaction and loyalty but qualitative data tells you “why.” It allows you to look at key drivers and root causes of satisfaction and loyalty. It allows you to drill down to the real issues that are either driving loyalty or making your company vulnerable to the competition. Are there particular issues that continually appear when mining customer feedback? Is time to resolve a continuous function that your customers complain about? Is professionalism and courtesy of your service organization a problem that is eliciting negative feedback from your customers? Are you able to slice your data to focus on the feedback and comments from your key accounts, the ones that provide your company with the bulk of revenue and profit? These questions can be answered by mining customer interaction data.

Ragsdale: In your course, you explain the 12 basic building blocks of a best in class CEM strategy. Would you be willing to give us a sneak preview of some of those building blocks?

Gershowitz: The premise of the entire strategy is that companies really have two sources of revenue: new accounts and existing accounts — and both are important. We center our 12-step methodology around the core belief that this approach helps companies with customer acquisition, retention, growth and the ability to win back lost customers.

The 12 steps are broken down into four distinct phases; 1) Measure 2) Analyze 3) Act 4) Assess. Within each of these phases are modules that help you to accomplish the goals of each phase. We begin with helping companies outline a road map to CEMDNA and end by looking at the ROI of successful CEM programs. In between, we look at areas such as the importance of account management, enterprise feedback management reporting tools, benchmarking, building corrective action plans, employee engagement as it relates to customer loyalty, communications to stakeholders and the importance of executive briefings. The objective of a CEM strategy is to evolve a business’ DNA to the point where every employee is on board working together to continuously exceed customer expectations. This accomplishment results in a major competitive advantage for the business and ties in directly to increased revenue and profit from both new and existing customers. In the end, the company has e a customer centric philosophy and journey and culture.

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About John Ragsdale

John Ragsdale is vice president of technology and social research for the Technology Services Industry Association. He writes a regular blog, Eye on Service, for the TSIA.

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