Five tips for improving customer profitability from Harvard Business Review


Right now, customers are experiencing your company. They may be interacting with your mobile app, company website, on the phone, by email, in person and possibly multiple ways at once. The question is: Are those experiences forging a bond – or driving your customers to look for alternatives?

Acquiring new customers is expensive, so keeping the ones you have and increasing wallet share is critical to survival. It’s a multifaceted challenge, but there is one silver bullet solution: Customer experience management.

Customer Experience Management - Figure 1
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Customer Experience Management - Figure 2
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Customer Experience Management - Figure 3
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Customer Experience Management - Figure 4
Figure 4

Anyone who’s left a store after rude and careless treatment – or gotten a kind and helpful customer service rep on the other end of the line – knows one thing: customer experience matters. And the companies investing in customer experience management (the processes an organization uses to manage customer interactions across the enterprise) are far outperforming the ones that don’t, according to a recent report from Harvard Business Review (HBR).

The report, Lessons From the Leading Edge of Customer Experience Management, is an in-depth study of more than 400 customer experience management executives worldwide. The results show a distinct divide between the leading companies and the laggards in profitability, revenue, market share and customer retention (see Figure 1).

So, which best practices will help your organization manage customer experience and increase customer profitability?

1. Create a customer-centric culture

And the best way to pay for it is to reward employees for superior customer service. Though only one in four respondents say they connect compensation to customer experience performance, this tactic was rated more effective than any other customer experience management strategy.

“Tying compensation to customer experience metrics creates a customer focus from top management down. The results are shared with everyone, and it’s top of mind for everyone,” said one of the executives interviewed.

Other customer experience practices that were rated “most effective” include: sharing customer experience metrics and models with all employees; reviewing customer experience projects and metrics regularly to monitor progress toward business goals; and screening candidates for customer-centric attitudes during the hiring and selection process.

Despite being highly rated, these practices are not always commonly used (see Figure 2).

2. Give the lines of business control of customer experience

A coordinated approach to customer experience management – one that is built from the ground up – is more likely to take root. “You don’t want customer experience to sound like just another corporate initiative,” said one customer experience director interviewed by HBR. “We had to make it clear that it’s not another initiative. It’s part of what we do. We achieve our sales goals via solid customer experience.”

3. Tame channels and data

Systems integration, channel complexity, organizational structure and data issues all make providing a consistent customer experience challenging for any company. However, leading-edge companies recognize multichannel management as a strategic imperative.

More than half of leading-edge companies say that multichannel management is extremely important, versus one in five of lagging companies. In addition, leading-edge companies are more likely to embrace new channels such as social media, mobile and video.

4. Apply analytics

Leading-edge companies are embracing new technologies and processes (see Figure 3), and are more effectively applying analytics to:

• Create organizationwide customer experience standards.
• Analyze cross-organizational customer insights.
• Map customer interactions within the organization.

The leaders also recognize the importance of emerging analytics technologies, including systems that analyze online behavior, social media sentiment and text, as well as tools that can deliver real-time analysis of large data sets.

5. Expand the definition of customer experience success

Measuring the impact of customer experience efforts is difficult. Most respondents struggle to tie customer experience investments to the bottom line.

The more traditional measure of customer success – customer satisfaction scores – are widely used, yet a variety of other metrics rated highly important (such as Net Promoter and customer-effort scores) are not as widely established.

Leading-edge companies use a wider range of metrics to report their customer experience management progress, including measures such as customer lifetime value, indirect traffic, social media sentiment and up-sell rates (see Figure 4).


Customer experience efforts need enterprisewide visibility and focus to last. “You have to be clear about what you’re trying to accomplish and take it a step at a time,” says one customer experience director, “from marketing the program to employees to developing new processes to rewarding people for customer experience behavior to reporting on results.” Ultimately, however, when customer experience becomes a strategic agenda item for the whole company, it results in improved business outcomes across the enterprise. And with ample room for improvement, financial services firms that embrace analytically driven customer experience management can get an edge on the competition by enabling better customer experiences, which in turn create value for their organization.

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