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Managing the Total

Customer Experience
A consortium benchmarking study
BEST-PRACTICE Report

APOC

P U B L I C A T I O N S

M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Project Personnel
Study Personnel

Rachele Williams, project manager

Steve Huynh, project support

Kimberly Lopez, project support

Peggy Newton, project support

Gerry Swift, project support

Steve Wright, project support

Angelica Wurth, project support

APQC
Subject Matter Expert

Patricia Seybold, CEO

Patricia Seybold Group
Editor

Krystl Campos

Designer

Connie Choate
membership information
For information about how to become a member of the APQC and to receive publications and other
benefits, call 800-776-9676 or +1-713-681-4020 or visit our Web site at www.apqc.org.
copyright
2005 APQC, 123 North Post Oak Lane, Third Floor, Houston, Texas 77024-7797. This report
cannot be reproduced or transmitted in any form or by any means electronic or mechanical, including
photocopying, faxing, recording, or information storage and retrieval.
Additional copies of this report may be purchased from the APQC Order Department at
800-776-9676 (U.S.) or +1-713-685-7281. Quantity discounts are available.
ISBN 1-932546-57-x
Statement of Purpose
The purpose of publishing this report is to provide a reference point for and insight into the processes and
practices associated with certain issues. It should be used as an educational learning tool and is not a
recipe or step-by-step procedure to be copied or duplicated in any way. This report may not represent current
organizational processes, policies, or practices because changes may have occurred since the completion of
the study.

Managing the Total Customer Experience 2005 APQC

M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Contents of Study Report


4 Sponsor and Partner Organizations
A listing of the sponsor organizations in this study,
as well as the best-practice (partner) organizations
that were benchmarked for their excellence in
managing the total customer experience.

7 Executive Summary

A birds-eye view of the study, presenting the


study focus, the methodology used throughout the
course of the study, key findings, and a profile of
the participants. The findings are explored in detail
in the following sections.

15 Study Findings

An in-depth look at the findings of this study.


The findings are supported by quantitative data
and qualitative examples of practices employed
by the partner organizations.

69 Partner Organization Case Studies


Background information on the partner
organizations, as well as their innovative research
and development practices.

113 Index

Managing the Total Customer Experience 2005 APQC

M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Sponsor Organizations

Bank of America Corp.

Servicemaster

BT Group

Sun Microsystems

Citigroup

TIAA-CREF

City Public Service of San Antonio

USAA

Deere & Co.

USPS

Direct Energy

Verizon Wireless

Eastman Kodak Company

Washington Mutual

Sears

Wells Fargo Home Mortgage

Managing the Total Customer Experience 2005 APQC

M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Partner Organizations

Air Products and Chemicals


Caterpillar Financial
Cisco Systems
Harrahs Entertainment
Lands End

Managing the Total Customer Experience 2005 APQC

M a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Executive Summary

e are all customers. Each day, we interact with numerous organizations


through a variety of access channels such as phone, fax, e-mail, and face to
face at the storefront. As consumers, we know firsthand the frustration when
the information that is delivered to us via various access channelsnot to mention
by different employees or messages conveyed via different mediais conflicting or
inconsistent. Similarly, as business customers, we engage in daily interactions with
vendor representatives and encounter similar challenges. Regardless of whether we are
business or consumer customers, we desire one version of the truth in information
and message and a seamless customer experience in any access channel and throughout
our customer life cycle.1
At the same time, we are employees. As employees of self-proclaimed customerfocused businesses, we crave the tools, technology, information, and empowerment
in order to be able to provide excellent customer service. We want easy access to
information about our customers and about our products and services so that we can
deliver one version of the truth to our customers.
The Managing the Total Customer Experience Best-practice Report is, in a nutshell,
about how organizations provide one version of the truth to their employees serving
customers and to customers serving themselves and/or in their interactions with
customer service representatives, across access mechanisms and the customer life
cycle. Over the years, APQC has conducted a number of consortium benchmarking
studies on related topics such as call centers, customer value measurement and
management, and customer satisfaction. This study sought to fill a research
gap in best practices in the holistic customer experience. The study scope was
comprehensive, covering everything from organizational cultures and structures that
foster a total customer experience mindset, to the technology that supports it and
serves as the foundational backbone, to the metrics and performance measurement
systems that monitor organizational success. Some topics were covered in more
depth than others, depending on the relative strengths of the best-practice partners
studied. The study teams hope is that readers will learn valuable high-level insights
and best practices about the variety of factors that impact and contribute to the total
customer experience.
1 Source: Harrahs site visit.

Managing the Total Customer Experience 2005 APQC

m m aa rry y
s suu m

STUDY SCOPE

Drawing on input from the subject matter expert and secondary research, the
APQC study team identified four key areas for research. These areas guided the design
of the data collection instruments and were the basis on which the study findings have
been developed:
1. understanding the business case for concentrating on the total customer
experience;
2. organizational structure and support implications of improving the total
customer experience;
3. investigating the technology enablers to create a seamless, transparent customer
experience; and
4. measuring the impact of managing the total customer experience.
OVERVIEW OF FINDINGS AND ORGANIZATION OF REPORT

This report is about managing the total customer experience. The total customer
experience, in this context, means ensuring a consistent, positive customer experience
across access channels/customer touch points and across the customer life cycle. How
do organizations accomplish this? The study team found a number of key findings,
or themes, illustrated by the best-practice partners. These findings are organized into
chapters centered around four key questions about how organizations manage the
total customer experience.
1) How do organizations that are leaders in customer experience operate? This includes
considerations of the organizational culture that facilitates a total customer
experience, the organization structure and accountability mechanisms that foster
it, employee training and empowerment, provision of information to dealers
and other third parties that influence the customer experience, provision of
information to customers and customer self-service, capturing customer feedback,
and understanding customer needs and processes.
2) What do best-practice organizations do to deliver a total customer experience? This chapter
addresses the mechanisms that best-practice organizations have put in place to
understand customers and customer knowledge management, to measure and
monitor what matters to customers, to deliver a consistent experience across
channels and the customer life cycle, and to streamline customer interactions
with the organization.
3) What are the results from investing in the total customer experience? This chapter discusses
how some best-practice partners have demonstrated the return on investment
from their efforts to manage the total customer experience.
4) How is technology used to provide a good customer experience? This includes how
best-practice partners leverage technology to facilitate a positive and consistent
customer experience.

Managing the Total Customer Experience 2005 APQC

s u m m a ry

Greater detail on the practices at Air Products and Chemicals, Cisco Systems, and
Lands End can be found in their case studies.2
In general, the findings from this benchmarking study are no surprisethey are
practices that most companies would expect to be prevalent in an organization that
successfully manages the customer experience. This point was succinctly put by one
of the site visit hosts at Lands End, a company well known for its great customer
service, who stated, It is not rocket science, but you can make it rocket science.
Admittedly, some best-practice partners were stronger in certain areas than others,
and the study team did not find any one single organization that excelled in every
aspect of managing the total customer experience. In addition, since the study scope
is very comprehensive, coverage of any particular topic is broad rather than in-depth.
However, across the portfolio of organizations studied, a collage of best practices to
manage the total customer experience emerged. The learnings and the value from
this benchmarking report, as with any benchmarking report, originate from the
observation of how the best-practice partners address these challenges, the examples
and stories that they provided at their site visits, and ultimately the demonstration
that their efforts to manage the total customer experience have paid off for both the
customer and the company.
The following key findings, or themes, emerged.
Chapter 1How Do Organizations That Are Leaders in Customer
Experience Operate?

Best-practice organizations establish and nourish a customer-centric culture.


Best-practice organizations empower employees to understand and anticipate
customers needs and to delight customers.
Best-practice organizations ensure that employee recruitment, training, and
performance management all focus on customer experience delivery.
Best-practice organizations empower dealer/channel partners to understand and
anticipate customers needs and to delight customers.
Best-practice organizations empower customers to provide valued input and to
help shape company priorities.
Best-practice organizations enable customers to manage their own relationships.
Best-practice organizations bathe their organizations in actionable customer
information.
Best-practice organizations align the company and culture around customers
needs and customers processes.
Best-practice organizations make customers priorities their priorities in
monitoring and managing performance.
2 Please reference the Baldrige application summary available on the Caterpillar Financial Services

Corporation Web site for greater detail on their processes for customer and market knowledge.
Many of the practice examples described throughout this report derive from this Baldrige
application summary.

Managing the Total Customer Experience 2005 APQC

summary

Best-practice organizations have visionary customer-centric leaders who believe


that high-quality customer experience engenders customer loyalty and improves
customer and company profitability.
Best-practice organizations have integrated customer experience into the
framework of their organizations operations at every level.
Chapter 2What Do Best-Practice Organizations Do to Deliver a Good Total
Customer Experience?

Best-practice organizations understand customers deeply; they segment customers


to anticipate and meet their needs.
Best-practice organizations know who their customers are and what interactions
and transactions they have had with the organization.
Best-practice organizations understand what different types of customers need in
different phases of the customer life cycle and tailor the customer experience for
those life cycle stages.
Best-practice organizations understand what customers care about in different
contextswhat outcomes are they trying to reach and what context they are in.
Best-practice organizations identify and anticipate customers moments of truth
what the make or break points are in customers processes.
Best-practice organizations take proactive steps to anticipate customer-impacting
critical issues and to avoid them.
Best-practice organizations measure, monitor, and improve what matters
to customers.
Best-practice organizations deliver a consistent and seamless branded customer
experience across channels and touch points and all stages of the customer
life cycle.
At best-practice organizations, employees work together to create a one-stop
shopping environment designed to streamline customers interactions with
the organization.
Best-practice organizations strive for single-contact problem resolution.
Chapter 3What Are the Results from Investing in a Total Customer Experience?

The business case for investing in the customer experience is based on competitive
differentiationthe quality of the customer experience is viewed as a competitive
differentiator by best-practice organizations.
Investing in delivering a brand-consistent, high quality, end-to-end customer
experience across interaction channels and throughout the customer life cycle
generates higher customer lifetime value and a growing number of loyal, profitable
customers, which translates into profits and greater company value.
Investing in streamlining customer-critical processes decreases customers timeto-decision and increases revenues.

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Managing the Total Customer Experience 2005 APQC

s u m m a ry

Investing in streamlining customer-critical processes decreases costs-to-serve and


increases profitability.
Investing in improving employee experience to improve customer experience
results in greater employee and customer loyalty and lower costs-to-serve.
Chapter 4How Is Technology Used to Provide a Good Customer Experience?

Best-practice organizations use technology to identify and to understand


customers and track customer behavior.
Best-practice organizations use technology to provide customers the ability to
serve themselves throughout their customer life cycles. Customers are willing and
able to serve themselves to accomplish most of their desired outcomes.
Best-practice organizations use technology to provide customers with a consistent
view of their accounts across channels and touch points. Customers can manage
their own accounts.
Best-practice organizations use technology to provide customer support and
service personnel with the information that they need and provide a consistent
view of the customers account across channels and touch points.
With the exception of Caterpillar Financial and Harrahs, case studies explore the
partners best practices in more detail at the end of the
report.
Participant Background

Fifteen sponsors 3 and all best-practice partners


completed the detailed questionnaire.
Figure E.1 depicts the industry breakdown for the
organizations participating in the detailed questionnaire.
Other industries indicated by respondents included
gases/chemicals, gaming, consumer packaged goods,
and machinery/equipment.
Two of the five best-practice partners responded
on behalf of their entire organization; two on behalf of
their division, agency, or business unit; and one partner
provided information for both.
The best-practice partner organizations studied
sell to both businesses and consumers, as indicated by
Figure E.2.
The best-practice organizations interact with
customers through a variety of touch points and access
channels, as shown in figures E.3, page 12 and E.4,
page 13.

FIGURE E.1: Industry Representation


Industry Categories Industry Representation
Financial services

30%

Telecommunications

10%

Networking/Computer/
Telecommunications equipment

10%

Retail

10%

Utility

10%

Other

30%

Primary Customers
Consumers

40%

Business end

40%

Both

20%

0 10 20 30 40 50 60 70 80 90 100

Partners (n=5)

Frequency of Response
Figure E.2

3  USAA did not complete the detailed questionnaire.

Managing the Total Customer Experience 2005 APQC

11

summary

Sales/Service Channels
Partners

20%

Dealers

20%

Agents

20%

Resellers

20%

Retailers

20%

Integrators

20%

Franchisees 0%

Consultants 0%
Other

Other includes banking


centers, direct sales,
realtors/builders,in-house
sales, and online through
company Web site.
40%

0 10 20 30 40 50 60 70 80 90 100

Partners (n=5)

Frequency of Response
Figure E.3

APQCs Benchmarking
Model: The Four-phased
Methodology

12

The APQC consortium benchmarking study


methodology was developed in 1993 and serves as one
of the premier methods for successful benchmarking in
the world. It was recognized by the European Center
for Total Quality Management in 1995 as first among
10 leading benchmarking organizations models. It
is an extremely powerful tool for identifying proven
successful practices and for facilitating the transfer of
these practices.
APQCs Four-phased Methodology
Phase 1: Plan

E-tailers 0%

Brokers 0%

APQCS CONSORTIUM BENCHMARKING METHODOLOGY

The planning phase of this study began in


the summer of 2004. During this phase, research
conducted by APQC was used to help identify
successful organizations to participate as best-practice
partners. In addition to this research, APQC staff
members, the subject matter expert, and sponsoring
organizations identified potential participants based on
their own experiences and knowledge. Each recognized
organization was invited to participate in a screening
process. Based on the results of the screening process, as
well as organization capacity or willingness to participate
in the study, a list of 12 potential partner candidates
was developed (eight initial plus four more generating
from additional contacting and screening post-kickoff
per sponsor request).
The study kickoff meeting was held November 18,
2004, during which the sponsors refined the study scope,
gave input on the data collection tools, and rank-ordered
the top four potential partner organizations, which were
asked to host a site visit: Air Products and Chemicals,
Cisco Systems, Harrahs Entertainment, and Lands End
(Caterpillar Financial was selected as partner no. 5 after
the subsequent contacting and screening to fill a gap in
service-company partners).

Managing the Total Customer Experience 2005 APQC

s u m m a ry

Phase 2: Collect

Three tools were used to collect information for


this study:
1. screening questionnairequalitative and quantitative
questions designed to identify best practices within
the candidate partner organizations;
2. detailed questionnaire quantitative questions
designed to collect objective, quantitative data across
all participating organizations; and
3. site visit guidequalitative questions that parallel the
areas of inquiry in the detailed questionnaire and
serve as the structured discussion framework for all
site visits.
The five partner organizations selected for continued
participation in the study responded to the screening
questionnaire as well as the detailed questionnaire.
Additionally, four of the five partner organizations
hosted half-day site visits attended by sponsors, other
partners, members of the study team, and the subject
matter expert (Cisco Systems hosted a virtual site visit
since key participants in the visit are located in Europe).
The APQC study team prepared case studies of the site
visits and submitted these to the partner organizations
for approval or clarification.
Phase 3: Analyze

The subject matter expert and APQC analyzed both


the quantitative and qualitative information gleaned
from the data collection tools. The analysis concentrated
on examining the challenges organizations face in
the study focus areas and key themes and enablers in
managing the total customer experience.
An analysis of the data, as well as case examples based
on the site visits, is contained in this report.

Customer Access Mechanisms


and Touch Points
Customer service call center

100%

Web site

100%

Marketing/Advertising

100%
80%

E-mail
Mail

60%

Sales force (direct)

60%

Store, branch, dealership, etc.

60%

Interactive voice response

40%

Fax

40%

Field service

20%

Sales force (telesales)

20%

Catalog

20%

Kiosk/ATM 0%
Wireless handheld device 0%
Other distribution channels

20%

Other

20%

0 10 20 30 40 50 60 70 80 90 100

Partners (n=5)

Frequency of Response
Figure E.4

Phase 4: Adapt

Adaptation and improvement, stemming from


identified best practices, occur after readers apply key
findings to their own operations. APQC staff members
are available to help sponsors create action plans
appropriate for the organization based on the study.

Managing the Total Customer Experience 2005 APQC

13

summary

SUBJECT MATTER EXPERTISE


Patricia Seybold, author and founder and CEO of the Patricia Seybold Group

With more than 24 years of experience consulting to businesses in a variety


of industries, Seybold assesses and predicts the ways in which both business and
consumer customers will make new demands on companies. Her clients include
National Semiconductor Corporation; Wells Fargo & Company; L.L. Bean, Inc.;
the International Monetary Fund; Cisco Systems Inc.; Monster; The Toro Company;
Sabre Holdings Corporation; Snap-on Incorporated; KeySpan Corporation; Symantec
Corporation; and Orient Overseas Container Lines (OOCL).
Seybolds book, Customers.com (Times Books, 1999), provides insight into
how 16 still-thriving companies designed their e-business strategies to improve
revenues, increase profitability, and enhance customer loyalty. Seybolds second book,
The Customer Revolution: How to Thrive When Customers Are in Control (Crown
Business, 2001), describes how 13 global businesses in a variety of industries manage
by and for customer value while they continuously improve the quality of the
customer experience they deliver. Her books have been translated into more than
10 languages.
ABOUT APQC

A recognized leader in benchmarking, knowledge management, measurement, and


quality programs, APQC helps organizations adapt to rapidly changing environments,
build new and better ways to work, and succeed in a competitive marketplace. For
more than 25 years, APQC has been identifying best practices, discovering effective
methods of improvement, broadly disseminating findings, and connecting individuals
with one another and with the knowledge, training, and tools they need to succeed.
APQC is a member-based nonprofit serving more than 500 organizations around the
world in all sectors of business, education, and government. Learn more about APQC
by visiting www.apqc.org.

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Managing the Total Customer Experience 2005 APQC

m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Study Findings

17 Chapter 1: How Do Organizations That Are Leaders


in Customer Experience Operate?
37
Chapter 2: What Do Best-Practice Organizations

Do to Deliver a Good Total

Customer Experience?
53
Chapter 3: What Are the Results from Investing

in a Total Customer Experience?
61
Chapter 4: How Is Technology Used to Provide

a Good Customer Experience?

Managing the Total Customer Experience 2005 APQC

15

m a n a g i ng the total customer experience

Ch a p t e r 1

How Do OrganizationsThat
Are Leaders in Customer
Experience Operate?

he study team was interested in understanding the operating characteristics


at organizations successful in managing the total customer experience
ranging from the corporate culture that fosters a customer experience mindset, to
how the customer experience is factored into the framework of an organizations
operating environment. Some of the findings at best-practice organizations are more
tangible, like bathing the organization in actionable customer feedback; others, like
fostering a customer-centric culture, are much harder to emulate. All, however,
were found to be important influencers of and contributors to a positive, consistent
customer experience.
Key Finding:
Best-practice organizations establish and nourish a
customer-centric culture.

Greatest Contributors to a
Customer-centric Culture
(Rank-ordered, with 1 being the least contributor)

Best-practice partners indicated that a strong


organizational history in customer-centricity, visionary
leadership, and executive support are the greatest
contributors to a customer-centric culture at their
organization (Figure 1).

Strong organization history in


customer-centricity

The best-practice partners have deeply ingrained


customer-centric cultures. In a customer-centric
culture, the business revolves around customers needs.
Customers needs are taken seriously and acted upon.
The partners demonstrated that a customer-centric
culture is not necessarily one in which the customer
is always right, but it is a culture in which customers
needs and contexts are deeply understood. Every effort
is made to align the companys values and business

Enabling technology

Managing the Total Customer Experience 2005 APQC

5.2
4.8

Visionary leadership

4.5

Executive-level support
3.7

Employee compensation/
incentives

3.3

Employee training

2.2

Competitive landscape
1

Partners (n=5)

2.2
2

Frequency of Response
Figure 1

17

chapter 1

processes with the right thing for the customer. For example, Lands End accepts
returns with its Guaranteed. Period. credo. The company accepts any return for
any reason at any time. Air Products and Chemicals has trained employees to recognize
and deliver services and experiences that customers need and value. Harrahs employees
greet customers with, Good luck! and take every opportunity to make their valued
customers feel special, and Cisco takes pains to empower customers to be able to serve
themselves. Caterpillar Financial deeply understands its customers business processes
and aligns its processes and metrics around those of its customers.
Each companys founder and/or current leader also believes in putting customers
priorities at the top of the corporate strategy agenda, in bathing the organization in
continuous customer input and feedback, in empowering and supporting employees
and channel partners to meet and exceed customers expectations, in investing in
customer-impacting technologies, and in monitoring and improving the quality of
customers experience with the brandin people, products, services, and processes.
All partners exhibit a culture and values based on the principle that a customer-centric
companyone that cares about the quality of the customer experiencedelivers
higher value to customers, employees, and shareholders.
Linking of Customer Experience to Brand Promise

There is a strong correlation in most organizations between the brand image that
the organization wants to project to its customers and prospects and the customer
experience the organization delivers. The customer experience/brand marriage is
reflected in the corporate culture. Organizations that are successful in delivering a
great customer experience have strong brands that are supported by corporate cultures
in which the customer experience is recognized as part of the brand differentiation.
In an era of tough competition, the customer experience/brand linkage combined
with a strong customer-centric culture provide the competitive differentiation that
todays organizations seek.
Lands End provides a good example of establishing
and nourishing a customer-centric corporate culture.
Founder Gary Comer put customers at the center of
FIGURE 2: The Lands End Principles of Doing Business4
corporate strategy from the beginning.
Lands Ends customer-centric culture has survived
1.We accept any return, for any reason, at any time. Our
products are guaranteed. No fine print. No arguments. We
the departure of its founder and its merger with giant
mean exactly what we say: GUARANTEED. PERIOD.
retailer Sears. The current management team and its
2.We ship faster than anyone we know of. We ship items in
employees have the Lands End customer-centric culture
stock the day after we receive the order. At the height of
the last Christmas season the longest time an order was in
so deeply ingrained in them that it has already permeated
the house was 36 hours, excepting monograms, which took
parent company Sears.
another 12 hours.
Figure 2 shows three of the Lands End Principles
3.We believe that what is best for our customer is best for all
of Doing Business, which demonstrate the companys
of us. Everyone here understands that concept. Our sales
and service people are trained to know our products and to
customer- and employee-centric culture.
be friendly and helpful. They are urged to take all the time
necessary to take care of you. We even pay for your call,
for whatever reason you call.

18

4 1992, Lands End, Inc. All rights reserved.

Managing the Total Customer Experience 2005 APQC

Ch a p t e r 1

provides another example of an organization that has established


and nourished a customer-centric corporate culture at the highest levels. As stated
by John Chambers, CEO, the company views customer success as the foundation of
its culture:
Cisco Systems

Customer success is not only a personal passion of mine, but our first priority
as a company. No matter how good we are, the one thing that can bring us down is
getting too far away from our customers. Ive seen it happen time and time again,
which is why we take a fanatical approach to customer success and view it as the
foundation of our culture.
John Chambers, CEO
Cisco really walks the talk when it comes to customer experience: 100 percent of
Cisco badged employees annual bonus is dependent upon meeting Ciscos customer
satisfaction goal (the criteria may vary by grade level, however). Performance-to-goal is
accessible to all employees 24 hours per day, seven days
per week via the intranet.
FIGURE 3: Customer-centric Values at Best-Practice Partners
Figure 3 summarizes the customer-centric values
Products
Consistently provide the customer only the
discussed by the best-practice partners at their site visits. Air
and Chemicals products and services they truly value.
Key Finding:
Best-practice organizations empower employees to understand
and anticipate customers needs and to delight customers.

Caterpillar Delight customers by understanding and


Financial
exceeding their expectations.
Cisco Systems

We take a fanatical approach to customer


success and view it as the foundation of our
culture.

Harrahs

Focused on building loyalty and value with its

Employees at study best-practice organizations Entertainment valued customers through a unique combination
are empowered, both to take actions on behalf of their
of great service, excellent products, unsurpassed

unsurpassed distribution, operational excellence,
customers and with information about customers

and technology leadership.
in order to more efficiently serve them. Lands End is
Lands' End Believe that what is best for our customer is best
an example of a company that encourages employee
for the company.
empowerment to understand and anticipate customer
needs and delight customers. The companys culture
is based equally on customer service and an employee
focus. Employee input and involvement is relied upon heavily in corporate decisions.
Lands Ends employees are true customer advocates: They are encouraged to take
whatever time necessary to resolve a customers question or issue. They understand
their customers so well that customer service representatives serve as proxies for
customers needs and reactions during any new product design and/or process
improvement effort in the company. In addition, Lands End invests heavily in
employees so that they can anticipate and address customers needs. For example,
the companys detailed product training enables a sales associate to fit the correct
polo shirt to the lifestyle needs of each customer and/or to anticipate which style of
clothing will be most appropriate. Employee empowerment and a collaborative work
environment are key factors contributing to the resulting high employee tenure/low
turnover at Lands End.
Managing the Total Customer Experience 2005 APQC

19

chapter 1

At Caterpillar Financial, employee empowerment begins with the Shared Values


statement of the Business Excellence Model, freedom and responsibility to exceed
expectations of those we work with and serve, and is translated into action by:
agility in serving customers,
financial authority, and
flexibility in employee policies and freedom in daily management.
Empowerment in serving customers at Caterpillar Financial is reflected in
the authority given to employees to develop flexible customer solutions. Also, the
performance development process cascades responsibility for serving customers
and accomplishing the strategic plan to every employee. Caterpillar Financial cites
authority given to employees for credit approval, documentation, and funding as
examples of financial empowerment.
At Harrahs, approximately 350 personal hosts are assigned to the best customers
and are empowered to ensure that these customers have a VIP service experience.
Hosts are specially trained for their interactions with these customers and are
supported by software that provides a complete customer view. Harrahs is taking this
to the next level with operational customer relationship management. The purpose of
this initiative is to (1) integrate historical and current data in real time using an active
data warehouse and real-time information (customer history, current play data, Total
Rewards tier, VIP code, available offers, location, etc.); (2) develop event monitors
and real-time triggers (possibly including a real-time business rules engine, lucky and
unlucky triggers, approaching profile play, and VIP interaction alert); and (3) deliver
offers and interactions to the gaming floor. In essence, Harrahs employees will be able
to leverage all the data captured on its most important customers in real-time in order
to surprise and delight customers on the gaming floor.
The role of the agent in Ciscos Customer Interaction Network is to take ownership
of calls on first contact; agents are empowered to achieve one-call resolution. To drive
that goal, a metric shift from time on the call to the value of the call has taken place.
For example, how long a customer stays on the line is no longer a metric; what is
important is the agent going the extra mile to get the customers problem resolved, as
well as to show the customer how they can self-serve to handle the same kind of issue
in the future.
In addition to being empowered to take actions on behalf of their customers,
employees at the study best-practice partners are empowered with information
about customers and their contexts. For example, Air Products employees maintain
comprehensive customer account plans that are managed on an ongoing basis
and that detail information on important customer accounts. In addition, a sales
force automation tool provides contact information and other background data for
customer-facing employees to use to learn more about customers.
At Harrahs, a customer-focused, data-driven approach is core to the organizations
strategy. The company uses a Teradata warehouse to provide one view of the customer
and one account to its employees for a seamless, consistent customer experience across
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properties and across access channels. Access to the data warehouse is provided to all
key customer contact employees. Comprehensive customer information is housed
in the data warehouse, including which offers that a customer has received, which
properties they have visited, what restaurants they have patronized, and what comps
they use.
Lands End employees have a comprehensive view of the customers account
(purchase history, behavior, customer survey results, etc.) as long as it is within their
job responsibilities.
Caterpillar Financials philosophy is that, as a service organization selling the
most generic of commoditiesmoneythe effective use of information allows the
organization to add value to the basic commodity they provide to their customers. To
accomplish this, Caterpillar Financials systems fully support the key core processes
and support processes and allow access to users, dealers, employees, and suppliers. For
example, CustomerExpress, Caterpillar Financials customer relationship management
software, provides employees and dealers one convenient portal to the full array of
customer information.
Cisco customer service agents use a knowledge-based Web portal called ISAAC,
which streamlines access to information documented through many years of operation
at Cisco, to leverage previous answers and solutions and resolve customer issues
and questions.
More information about the specific software used by the best-practice partners
to facilitate a consistent customer experience is detailed in Chapter 4 of this report.
As will be further discussed in Chapter 3, best-practice partners have made a
strong linkage between employee satisfaction and customer satisfaction. Employees
are surveyed regularly to ensure that they are feeling satisfied, empowered,
and supported.
Key Finding:
Best-practice organizations ensure that employee recruitment, training, and performance
management all focus on customer experience delivery.

Good customer experience starts with empathetic employees who are naturally
inclined, trained, and motivated to understand customers needs and who are
empowered to help customers achieve their desired results.
Recruiting and Retaining Customer-Friendly Employees

Study participants list the top factors considered in recruiting employees to


deliver a positive total customer experience as communication skills, empathy/ability
to relate to customer issues, risk taking/willingness to go the extra mile, and sense of
humor (Figure 4, page 22). Recruiting new hires with the right customer service
skills is important. For example, Air Products has created internal job competency
profiles to identify the necessary skillsfrom a behavioral perspectivefor its
employees to effectively execute their job responsibilities. These competencies are
Managing the Total Customer Experience 2005 APQC

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chapter 1

divided into commercial experience, communication


skills, and technical skills. Harrahs hires people able
to provide excellent service. Decision makers in the
hiring process rely on personality tests, and they test
communication skills, levels of empathy, and the ability
100% to relate to customer issues. At Cisco, quality customer
Communication skills
service begins with creating an appropriate job profile
Empathy/Ability to relate to
100%
customer issues
for the CIN agent, whether in-house or outsourced.
The job profile should clearly articulate the necessary
Risk-taking/Willingness to
60%
go the extra mile
job skills and requirements to provide a good customer
Sense of humor
60%
experience. The recruiting function was very involved
in ensuring the profile was effectively created as well as
Personality tests
20%
utilized. Once candidates are identified and hired, they
complete a comprehensive training program.
Intelligence tests 0%
Factors Included in Recruiting Employees to Deliver
Psychometric tests 0%
a Positive Total Customer Experience
In addition to employee empowerment discussed
Other
20%
earlier, best-practice partners endeavor to retain their
No response 0%
customer-friendly employees through an investment
in training, open communication with employees,
0 10 20 30 40 50 60 70 80 90 100
Frequency of Response
Partners (n=5)
an open door culture with senior management,
and various employee recognition programs. At
Figure 4
Lands End, for example, recognition, collaboration,
and communication are a focus to foster customerfriendly, empathetic employees. Management has an
open-door policy and is committed to meeting with an employee within 24 hours
when they have an issue that they need to discuss. Lands End utilizes multiple
communication channels to keep employees informed and address any concerns;
these include quarterly meetings with the CEO, communication meetings for both
hourly and salaried personnel, distributing information via the company intranet
(LEnet), department meetings, and the company newsletter (Common Threads). The
company advocates both formal and daily employee recognition. For example, longer
tenured employees are formally recognized (such as through 10-, 20-, and 25-year
celebrations and the 20+ club); on a daily basis, Lands End leadership recognizes
high-performing employees through leader recognition kits (thank you, congrats,
birthday), the Leaders Corner, celebrations of key milestones/completion of projects,
and spot bonuses. As a result of stressing the importance of employee relationships,
Lands End was able to re-enter the 100 Best Companies to Work For, as ranked by
Fortune magazine in 2002.

Factors Included in Recruiting


Employees to Deliver a Positive
Total Customer Experience

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Cisco encourages teamwork and collaboration in its employees in order to deliver

the best solutions to customers. The Teamwork across Cisco recognition program
is one of several programs that reinforce cross-functional employee collaboration.
The purpose of this program is twofold.
1. It provides opportunities for high-level exposure (theatre- and organization-wide)
for teams that have produced successes for Cisco.
2. It highlights cross-functional teamwork and collaborative behaviors and provides
a way for all employees to share knowledge, experiences, and successes.
The CEO and senior leadership recognize teams through different media and
at various events during the year including the company and all-hands meetings.
The experiences of the quarterly finalists are shared with the entire organization
through the Cisco Employee Connection, the Teamwork across Cisco Web site, and
senior leadership Web sites. These stories are communicated so that every employee
and manager has clear examples of cross-functional teamwork and collaboration.
In addition, each member of the quarterly winners receives a desktop award to
commemorate this event. Then, at the end of each fiscal year a Team of the Year is
selected and a $5,000 charitable contribution is made in the teams name.
Performance management for CIN agents focuses on customer experience delivery by
rewarding agents on their cross-functional ability, on the number of skill sets they posses,
their availability, and overall customer satisfaction. These agent measures are important
for Cisco as they focus on value add and the contribution of quality feedback.
Cisco has also been formally recognized by an independent party for its employeefriendly practices. The company was No. 28 on Fortune magazines 2004 100 Best
Companies to Work For list.
Training Customer-Friendly Employees

Eighty percent of partners state that they engage in formal customer experience
training for their employees. Types of customer experience training listed by
participants included:
customer segmentation training,
soft-skills training,
customer issue training,
new hire training,
customer satisfaction training,
customer role-play,
role-specific skill-based training,
sales training,
technical/internal operating system training,
one-to-one coaching,
training on first-time resolution,
direct customer observation, and
company-specific special training programs.
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Employee training and motivation at the best-practice partners focuses on


customer experience delivery. For example, Harrahs engages in two types of training
to ensure employees deliver a consistent and positive customer experience: (1) focus
training that is centrally developed and consistent throughout the company and (2)
daily buzz sessions that communicate just-in-time information to the employees such
as which customers will be arriving on property each day and what types of questions
they can expect customers to ask during the days shifts. Buzz sessions also include
updates on the groups performance ratios. (Front-line employees have performance
ratios that link behavior, measurement, and reward.) In addition, every employee
at Harrahs receives a basic education about the Total Rewards loyalty program. The
customer service director educates the front-line employees about customer tiers so
that they can deliver on the desired customer experience for each tier (for example,
Diamond customers are more valuable customers to the company and therefore receive
a better customer experience) but not necessarily about the specifics of customer
segmentation, as this is detailed and might be confusing.
Employees play a pivotal role in managing the branded customer experience at
Air Products and Chemicals. Therefore, the company stresses the importance of training
employees to support the goal of implementing the customer segmentation strategy
and to deliver against the company brand. Segmentation training for customer-facing
employees includes up to eight hours of classroom training combined with learning
applied on the job. The size of the training session does not exceed 20 participants,
and Air Products provides job aids to support the application of role-appropriate
behaviors. Branded customer segmentation training teaches the desired behaviors
for segmentation champions and role models in the new segmentation strategy.
In this training, subject matter experts are sometimes utilized to support materials
development.
Lands End also believes in the criticality of employee training to deliver a consistent
customer experience, regardless of which customer service representative a customer
speaks with, and to ensure employees have the necessary product knowledge to assist
customers with their orders. Employees are encouraged to wear, touch, and feel the
clothes so that they can convey product expertise to customers. New employees receive
approximately 77 hours of training. The training is conducted daily for six to seven
hours a day, over two to three weeks. Approximately 10 hours are spent on product
training, 17 hours on service training, 20 hours on systems and process training, and
23 hours of handling live calls along with a trainer to provide support if needed.
In order to keep current employees updated and in the know, two to three hours
of continuing training are provided on a monthly basis to anyone with customer
contact. This training covers anything new appearing in catalogs, as well as systems
training. Additionally, company leadership also receives continuing training on a
monthly basis. Approximately one and a half hours per month is spent developing
consistent leaders by focusing on coaching techniques, preserving the company
culture, and aligning communication with strategic initiatives.

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Importance of Employees in Managing the Total


Customer Experience Reinforced Through Performance
Management Systems

Mechanisms for Fostering


Accountability for the
Customer Experience

Study best-practice organizations not only hold


executives accountable for the customer experience via
Linked to positive
20%
a link to compensation, but also hold other employees
recognition
93.3%
accountable in this fashion (Figure 5). For example,
at Cisco Systems, the incentive compensation for all
40%
Linked to role-specic
employees (not just customer-facing) is influenced by
objectives
86.7%
customer satisfaction results.
20%
At Harrahs, the results of the customer satisfaction
Linked to compensation
46.7%
surveys also impact employee compensation directly.
Although 75 percent of the corporate bonus is based
Linked to employee rewards 0%
on operating income or revenue, 25 percent of the
(non-monetary)
46.7%
property bonus and 10 percent of the corporate bonus
0%
is determined by the customer service scores. The reward
Other
13%
for high customer satisfaction is tangible to front-line
employees: Each can earn up to $200 per quarter
0 10 20 30 40 50 60 70 80 90 100
Individuals (n=5)
Frequency of Response
based on his or her propertys performance. Each week,
Executives (n=15)
employees receive a detailed customer service scorecard
Figure 5
broken down by tier and type of service (e.g., food
and beverage, reception, etc.) showing the companys
performance.
To foster employee camaraderie and ensure that
the total customer experience is positive, employees
receive bonuses based on the entire propertys performance, not on their individual
performance. However, the company can analyze customer satisfaction results on a
department-by-department basis and compare across departments.
In general, 60 percent of partners indicate that executives are held accountable for
the customer experience through a direct link to compensation (Figure 5).
Key Finding:
Best-practice organizations empower dealer/channel partners to understand and anticipate
customers needs and to delight them.

Some study participants sell and service their products/services through thirdparty avenues, such as partners, dealers, agents, and resellers (Figure E.3, page 12).
It can sometimes be challenging to ensure a consistent customer experience via these
third-party channels, especially if the third party sells and services other brands and if
your organization has little to no control over the third party. Best-practice partners
have attempted to overcome this challenge by empowering their dealer/channel
partners to understand and anticipate customers needs and to delight them.

Managing the Total Customer Experience 2005 APQC

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Air Products and Chemicals has formed a Distributor Advisory Council to help
ensure a consistent customer experience with its distributors. The purpose of the
Distributor Advisory Council is to improve the relationship between Air Products and
the distributors in order to accelerate mutual profitable growth. The council consists
of managers from the distributors, a sales manager, the distributor manager, a senior
representative from the technology department, and a marketing representative. This
council is an advisory council, not a policy making council. The council provides input
into the definition and implementation of work processes, services provided, and the
brand experience. This council meets twice a year and provides a forum for the sharing
of best practices. Air Products also utilized the council meetings to ensure a consistent
brand experience for all customers through the network of distributors. Distributors
are expected to share the same tenets of the company brandunderstanding, integrity,
and passionas well as the same commitment to the product line. The company wants
customers to associate the Air Products name with all their distributor interactions.
Dealers are at the heart of Caterpillar Financials service delivery. Having the territory
manager co-resident in each dealers location ensures that the company can support its
dealers in listening to, understanding, and even anticipating customers needs along
with the dealer.
Lands End was purchased by Sears in 2002, and Lands End clothes can now be
purchased in Sears retail outlets. To facilitate the Lands End customer experience
in Sears stores, Lands End began an Ambassador program, whereby Lands End
employees were placed in select Sears stores to train Sears personnel on the product
lines. This has resulted in positive feedback from customers, as well as an increase
Cisco Systems surveys both direct customers and indirect customers (customers that
access the companys products via resellers) to measure satisfaction with the customer
experience and to facilitate a consistent customer experience. Ciscos resellers and
system integrators are heavily supported and empowered through both self-service and
employee-assisted channels such as Ciscos innovative ISAAC knowledge base and its
global Customer Interaction Network.
While Harrahs does not deliver its services through channels per se, the corporate
philosophy is that when engaging in acquisitions (such as the recent acquisition of
Harveys), one of the first activities that the organization undertakes is to implement the
underlying technology so that the new properties are tied into the existing properties
customer knowledge and loyalty program. Customers have one account, which is
linked to one customer database, so that their treatment at different properties is
consistent, and they are encouraged to visit multiple properties in order to continue
to earn rewards points (cross-market play).

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Key Finding:
Best-practice organizations empower customers to provide valued input and to help shape
company priorities.

The study team found that the best-practice partners are not just customercentric; they are customer-driven. Customers priorities around products, service
delivery, and the customer experience shape the companys strategy.
For example, in response to feedback from customers in focus group sessions,
Harrahs revamped its Total Rewards customer loyalty program in June 2003. The new
rendition of the program remains profitability-based and is called Total Rewards II.
Company leaders researched extensively before making the changes to Total Rewards.
They conducted focus groups and created sophisticated models for each segment.
They determined that customers wanted control of their accounts and visibility of
the program; it was mysterious and complicated before. Total Rewards II gives the
customers complete insight into how they earned a reward credit and how much they
have in their accounts. Now the program is completely bankable and portable. The
change has been well received by customers.
Caterpillar Financial also serves as an example of an organization that considers
customer priorities as a key factor in corporate strategy setting. From a corporate
strategy-setting standpoint, all strategies, action plans, and individual goals are
evaluated based on their impact on customers and linked to specific critical success
factors in Caterpillar Financials Business Excellence model (one of which is customer
satisfaction: We must delight our customers by understanding and exceeding their
expectations) in order to ensure that key stakeholder needs are deployed through
every level of the organization. At a more granular level, the needs and expectations
of Caterpillar Financials three key customer groups (users, dealers, and Caterpillar
business units) are systematically captured through a variety of customer listening
posts (such as surveys, focus groups, industry councils, etc.) and used as a key input,
along with key core process performance data, to divisional SWOTs and planning
workshops at the Annual Leadership Conference. (The Annual Leadership Conference
is a week-long session conducted each June in which overall corporate strategies are
translated into preliminary division and support department strategies.)
Key Finding:
Best-practice organizations enable customers to manage their own relationships.

In addition to being customer-driven, best-practice organizations empower


customers to manage their own relationships with the organization and to self-serve.
Prospects and customers interacting with best-practice organizations are proactively
empowered through a variety of self-service and tightly integrated assisted-service
channels to transact business, track status, answer questions, and resolve problems.

Managing the Total Customer Experience 2005 APQC

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Types of Customer Information


Available to Customers

As illustrated by Figure 6, best-practice partners


provide customers access to a variety of information,
most notably unique account identification, access to
Unique account identication
100% current orders and transactions, access to and update
of customer information, and access to past orders and
Access to current orders/
80%
transactions
transactions.
As illustrated by Figure 7, three out of five bestAccess to and update of
80%
customer information
practice partners indicated that they are able to
provide real-time, self-service capabilities to customers
Access to past orders/
80%
transactions
regarding product/service purchase; product usage,
Access to product/account
60%
training, or guidance; and product delivery status.
information across product lines
Lands End, as an innovator in online retailing,
Unique contact identication
60%
provides a variety of support mechanisms for customers
to self-serve, including the ability to change the
Access to bills and invoices
60%
customers account profile, ship to addresses for all
Customer preferences and
60%
permissions
of a customers family members and giftees, status
Consistent view on all
tracking, and the ability to change or cancel an order
60%
interaction channels
in progress. Customer self-service at Lands End is
Access to customer
60%
supported by Lands End Live, a collaborative Web
service incidents
chat feature whereby online customers work with a
0 10 20 30 40 50 60 70 80 90 100
Frequency of Response
Partners (n=5)
Lands End representative through live text chat.
Customer self-service at Lands End goes a step
Figure 6
further than the traditional through a program called
Lands End Custom, whereby online customers can
easily design their own clothes and have them custom made to their specific size
requirements. Lands End Custom is powered by smart sizing software, which
compiles consumer size data, self-assessment information, and garment choices to
produce a fit prediction. The software then uses this information and tests it versus the
historic consumer size database. The result is then a pattern generated for the specific
selection. The cost range for this service is $49 to $79, which the company feels is very
competitive. The overall result of Lands End Custom has been profitable growth
through new consumers, deeper relationships, and higher customer lifetime value.
Lands End has a rather unique philosophy regarding customer self-service:
to meet the customer in their channel of choice, be it online, in a face-to-face
retail environment, or over the phone. In other words, the company does not
push customers to the less expensive (for the company) online environment and,
furthermore, makes a live customer service representative easily accessible to Internet
customers. (The companys toll-free phone number is visibly placed on each page of
its Web site.) This is a refreshing attitude in an online atmosphere, where customers
are often routed to the companys channel of choice.
Examples of customer self-service opportunities abounded at the site visits to the
best-practice partners (and more detail can be found in their site visit summaries);
for example, Caterpillar Financials FinancExpress allows users and dealers to initiate
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their own quotes, credit application, and documents 24


hours per day, seven days per week, and AccountExpress
provides users and dealers the ability to access and
maintain their account records online.
Key Finding:
Best-practice organizations bathe their organizations in
actionable customer information.

Percentage of Organizations
Able to Provide Real-Time,
Self-Service Access
Product/Service purchase

60%

Product usage, training, or


guidance

60%

Product delivery status

60%

Best-practice organizations gather, analyze, and act


Product/Service information
upon customer feedback on an ongoing basis from a
60%
wide variety of customer touch points. They also strive
Account status inquiry
40%
to integrate disparate sources of customer input and
Product/Service selection
feedback into a holistic customer experience measurement
40%
and management framework that is integrated into a
Change of customer information
40%
balanced performance management scorecard. They
bathe their organizations in focused customer input
User prole management
40%
and feedback.
0 10 20 30 40 50 60 70 80 90 100
Detailed questionnaire responses from partner
Frequency of Response
Partners (n=5)
organizations indicate that the most used mechanisms
Figure 7
to capture customer feedback are satisfaction and loyalty
surveys (used by all five partners); followed by logging of
customer support and service calls and incidents (four
out of five); focus groups; regular debriefs of frontline customer personnel; input into a shared repository by field sales; and reviewing
e-mails, regular mail, and/or suggestion cards and categorizing issues (three out
of five).
Three out of five partners collect feedback from non-customers as well, primarily
via focus groups and satisfaction and loyalty surveys. Not surprisingly, all partners and
route customer feedback information back to the appropriate organizational process
owner for continuous improvement of the process, in summary and raw data form.
All partners have taken steps to link this customer feedback to behavior.
Caterpillar Financial has a very holistic, integrated framework for gathering and
reporting voice of the customer information. The company uses a variety of customer
listening postsfrom e-mail to phones, from executive sponsors to territory managers
to dealers, from incident-based surveys to annual surveyswhich are linked, analyzed,
and reported back to the appropriate process owners in order to take action for
process improvement.
Harrahs sends out 1 million customer surveys each year (and gets 350,000 back)
after customers visit a property and/or interact with the company. Harrahs feeds
customer feedback and input to each property manager, who, in turn, shares that
information with all employees and sets priorities daily. All customer surveys are
centrally coordinated and analyzed and correlated directly to the individual customer.
Managing the Total Customer Experience 2005 APQC

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Harrahs can monitor very precisely the relationship between customers survey
responses and feedback on a variety of interaction touch points and life cycle stages,
with customers actual spending and referral behavior.
Cisco has a holistic and comprehensive customer information gathering and
application framework. Cisco uses both general/comprehensive customer loyalty
and satisfaction surveys to calibrate how the company is doing overall, as well as
incident-based customer surveys that are administered after customers interact with
the company to resolve an issue, buy a product, get information, and/or manage their
accounts. Customer feedback and input is fed directly back to employees based on
their jobs and roles in the company. Customer feedback and input is updated and
reported continuously. Employees can see how their team/role/function is doing on
customer satisfaction and loyalty 24 hours per day on the intranet. Employee rewards
and recognition (including performance-based pay) are linked to meeting or beating
customer loyalty goals.
Key Finding:
Best-practice organizations align the company and culture around customers needs and
customers processes.

Process Redesigned to Improve the


Quality of the Customer Experience
Problem resolution

80%

Customer hand-off/transfer

80%

Product development and


packaging and/or launch

80%

Product repair

60%

Returns handling

60%

Billing

40%

Quote-to-cash

40%

Lead-to-order

20%

Process classication
framework

20%

Other

20%

All partners have defined what their core processes


are, and four out of five have mapped these core processes
against the customer experience. Almost all have
redesigned business processes to improve the quality
of the total customer experience. The most common
processes redesigned include problem resolution,
customer handoff/transfer, and product developing and
packaging and/or launch (Figure 8). Eighty percent of
partners have instituted a process to continually monitor
the impact of redesigned processes on the total customer
experience. Sixty percent of partners have implemented
an employee suggestion program designed to feed
customer experience changes.
For example, Caterpillar Financial aligned its internal
processes around its customers processesthese are
referred to in the companys Baldridge application
summary as Key Core Processes (KCPs).5 In order
to accomplish this, the companys business process
improvement team began by mapping out the life cycles
for customers in all of its industry segments. The team
discovered that although customers financing needs,

0 10 20 30 40 50 60 70 80 90 100

Partners (n=5)

Frequency of Response
Figure 8

30

5 See companys Baldrige application summary for listing of Key

Core Processes.

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equipment usage, and context varied greatly by industry, the actual life cycle stages
and the processes within each stage were very similar.
At Cisco, the first step taken to improve the customer experience was to identify
key business processes (Figure 9). In order to make the company more efficient,
streamlining processes was a priority. To accomplish this goal, the Business Process
Operations Council (BPOC), a corporate council made up of select executives,
identified necessary key processes. The council has representatives from all
Cisco service lines who are tasked with analyzing processes across the enterprise.
Additionally, the company created a common front-end support organization across
all customer-facing functions. The main questions that Cisco had to answer were how
to streamline the customer interface to ensure that the key processes were going to
work and how the customer interaction at the first level would be aligned with the
optimization of the processes.

Cisco Customer Experience: Common First-Line Support


Customer

Common Front End Support Organization Across Customer Facing Functions


Idea
to
Offering

Market
to
Sell

Research to concept

Research to market
identification

Concept to commit
Design to prototype
Validate to ramp up
Monitor to improve
Improve to EOL

Quote
to
Cash

Forecast
to
Delivery

Quote to order entry

Source to buy

Order validation to
commitment

Forecast to plan

Campaign to lead

Delivery to revenue
recognition

Ship to receive/install

Lead to order

Invoice to cash

Account strategy to
relationship

Contract to renewal

Market identification
to plan

Plan to build
Commit to deliver
service

Issue
to
Resolution
Issue detection to
problem identification
Develop solution to
resolution
Return to replace
Closed loop feedback

Figure 9

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Key Finding:
Best-practice organizations make customers priorities their priorities in monitoring and
managing performance.

Best-practice organizations use voice of the customer input and their own
understanding of customer-critical processes to pinpoint areas for improvement. For
example, Caterpillar Financial identified key metrics to meet or exceed for each of its
customer-critical processes.
Lands End monitors the time from order placement to product delivery; turnaround
time on customer questions received via e-mail; and metrics that revolve around the
customer experience at the contact center, such as service level, occupancy rate, call
volume and handle time, and call abandonment rate.
A common customer-driven priority for all partners is first-contact resolution.
No matter how the customer chooses to interact with the organizationby phone,
Internet, e-mail, direct sales, telesales, dealer representativeand no matter what
stage of the customer life cycle, a top customer priority is to get the right answer or
resolution in a single interaction.
While 80 percent of the best-practice partners track first-contact resolution, few
organizations were willing to share their actual first-contact resolution numbers in
their detailed questionnaire response, so general observations about the actual rates
are hard to make. Average first-contact resolution rates at the three partners who were
willing to share this information in the detailed questionnaire were in the low- to
mid-90 percentage range.
Best-practice organizations strive to provide first-contact problem resolution.
No matter what touch point or channel the customer chooses or what stage of the
customer life cycle (planning, exploration, decision making, purchasing, usage,
upgrades, renewals, account management, problem resolution)the partners goal
is to answer their question or resolve their issue satisfactorily in a single interaction.
For example, a primary goal of the Cisco Systems Customer Interaction Network is to
create a one-stop shop for customers to answer their questions on their first contact
with Cisco.
In another example of a company making its customers priorities its priorities,
Caterpillar Financial identified its customers most critical scenarios and a handful
of key customer experience moments of truththe rubber-meets-the-road
points that are most important to customers, along with the particular attributes that
customers cared about for each one. For example, the company set and monitored
specific metrics for turnaround times for the moments of truth that mattered most
to customers such as: receive a finance proposal promptly, receive credit approval
promptly, receive accurate documents and correct funds in a timely manner, receive
requested modifications quickly, and complete payoff promptly.6

6 Source: Caterpillar Financial MBNQA Application Summary. www.cat.com

(retrieved April 2005).

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Key Finding:
Best-practice organizations have visionary customer-centric leaders who believe that a high
quality customer experience engenders customer loyalty and improves customer and company
profitability.

I will never be critical of any action you take on behalf of a customer.


Gary Comer, founder, Lands End
This study found that the CEO and/or founder at best-practice organizations is
a prime supporter of the customer experience. For example, Gary Loveman, current
president and CEO of Harrahs Entertainment, was the original driver of Harrahs
customer loyalty and tiered customer experience program and strategy. Before joining
Harrahs in May 1998, Loveman was associate professor at the Harvard University
Graduate School of Business Administration, where he taught service management
in the M.B.A. and executive programs and worked with James Haskett, author of
the service profit chain. Loveman worked as a consultant for Harrahs during the
preceding seven years, helping to design and execute its executive development
and education programs. The arrival of Loveman to Harrahs catalyzed changes in
the corporate marketing group, where critical pieces of the customer experience
(including the loyalty program, customer promotions, and direct mail campaigns)
are owned. He brought on a new vice president of relationship marketing (now senior
vice president of relationship marketing). A key metric that Loveman and his reports
rallied around in 1998 was consolidating play: At the time, customer satisfaction data
revealed that Harrahs was earning only 36 percent of its customers gaming budget.
Harrahs effort to consolidate its customers play through its customer loyalty program
and other initiatives has resulted in the company earning a 10 percent increase in
share of gaming budget in 2004.
Air Products and Chemicals founder Leonard Pool based his company on providing
a value-added service to customerson-site provisioning of gases to its industrial
clients, a breakthrough service in the industry at the time.7
Lands End founder Gary Comer codified the companys commitment to excellent
customer service from the beginning in The Lands End Principles of Doing
Business and instilled this commitment as an integral piece of the corporate culture.
These eight principles shape the way business is conducted throughout the various
departments in the organization, including the fundamental belief that what is best
for the customer is best for everyone. While the founder was a great supporter of the
customer experience at Lands End, all employees throughout the organization are
tasked with the responsibility of promoting a positive customer experience, so there is
no champion specifically responsible for driving change toward a customer-oriented
culture within the organization.

7 Source: www.hoovers.com (retrieved November 2004)

Managing the Total Customer Experience 2005 APQC

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Chapter 1

While CEOs at best-practice partners are prime supporters of the customer


experience, the customer experience champion tends to be a high-level executive who
reports to either the CEO, president, or an executive or senior vice president.
Key Finding:
Best-practice organizations have integrated the customer experience into the framework of
their operations at every level.

Best-practice organizations have integrated the customer experience into the


framework of their organizations operations. The executive team sets the tone,
priorities, and culture. Voice-of-the-customer information arrives from all touch points
and is fed back into operations at various levels in the organization: to employees,
to business unit managers (on a frequent basis), to division managers (usually on
a monthly basis), and to the operating committee (who review these performance
metrics quarterly or semi-annually). Customer feedback, satisfaction, customer loyalty,
and key metrics are usually incorporated into the companys performance management
systems. An operating committee or steering committee reviews customer issues,
customer metrics, and customer satisfaction and loyalty scores and trends.
The Role of Executive Steering Committees and Other Executives in the
Customer Experience

Executive steering committees/business councils at several best-practice partners


provide a forum for a high-level discussion of the customer experience/customer
service. For example, at Harrahs, the CEO, as the champion, discusses the customer
experience in monthly meetings. The chief operating officer, who is ultimately
accountable for the customer experience, hosts weekly meetings on the customer
experience scores with the operations leaders. Finally, each individual Harrahs
property has its own customer service director, and these individuals meet daily to
talk about customer experience issues. The customer experience is also discussed at
weekly and quarterly executive committee meetings. Each quarter, the companys
marketing council meets. It is chaired by the CEO and comprises marketing leaders
from throughout the company. Harrahs has models to identify individuals with the
potential of becoming very profitable gaming customers, and marketing leaders from
throughout the company discuss how to provide them with differentiated service
within the Total Rewards program. The senior vice president of relationship marketing
manages the Total Rewards customer experience program, while the vice president of
brand operations is responsible for the quality of the service experience.
At Caterpillar Financial, customer satisfaction is one of the six critical success factors
discussed at the monthly Business Excellence Council meetings. (The council is a
cross-functional decision-making body represented by high-level corporate executives
and chaired by the president.)

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The Importance of the Customer Experience Recognized at the Highest Levels


The commitment of Lands Ends founder to customer experience and

the
organizations recognition of the importance of the customer experience at the
highest levels has already been discussed. In another example, at Caterpillar Financial a
discussion of the results from the various customer listening approaches is conducted
on the first day of the Business Excellence Councils semi-monthly meetings. At
Harrahs, the vice president of service operations reports on customer satisfaction and
how the company is rallying to serve the customer at quarterly operating committee
meetings.
In general, study participants indicated that the customer experience is most often
talked about at monthly executive committee meetings and through sharing customer
stories and sharing and discussing customer experience surveys.
Central Coordination/Planning; Distributed, Field-Level Implementation
At Harrahs, customer segmentation and segment-specific marketing

campaigns
and reporting is centralized, but the customer experience is delivered at the property
level. Some marketing campaigns are also handled out of the property. There is a
property customer service director at each casino that monitors the quality of the
customer experience delivered at that property. These property customer service
directors report to the general managers of their properties, with a dotted line to the
vice president for customer satisfaction.
Lessons Learned About How Customer Experience Leaders Operate

Lessons learned about the organizational structure and visionary leadership to


foster a positive total customer experience at best-practice organizations include the
following.
Customer experience is how you deliver your brand. It is your main competitive
differentiator.
Employee empowerment, partner empowerment, and customer empowerment
are fundamental values in a customer-centric culture.
Best-practice organizations understand and streamline business processes and
policies that impact customers.
Visionary leadership and top-down support are critical.
Having a holistic operational framework around the customer experience is
important (e.g., the customer experience is monitored and acted upon at every
level of the organization)this comes from receiving customer input at all levels
and frequencies and acting upon it at all levels and time intervals, as well as from
making customer metrics part of organizational key performance indicators.
Titles are not so important. Most best-practice partners do not seem to need
formal customer experience roles and titles because the customer experience has
been operationalized within the company and its culture.

Managing the Total Customer Experience 2005 APQC

35

m ANAGING THE TOTAL CUSTOMER EXPERIENCE

c h a p t e r 2

What Do Best-Practice
Organizations Do to Deliver a
GoodTotal Customer
Experience?

n Chapter 1, the study team presents a picture of how best-practice partners are
focused and organized to provide the total customer experience. It discusses the
conditions that exist in such organizationstop management support, well-equipped
channel partners, and well-trained employees bathed in customer information.
This chapter sets the frame in motion at a tactical level. It demonstrates what an
observer would see in the daily operations as teams segment and serve customers. It
highlights the decisions that customer-facing employees make one at a time as they
live out the organizational strategies. It shows how employees are tearing down silos
to provide seamless service. The following is what happens when customer-centric
strategies are acted upon.
Key Finding:
Best-practice organizations understand customers deeply, and they segment customers to
anticipate and meet their needs.

Best-practice organizations invest in understanding and segmenting their


customers, then they design and execute customer experiences to address the specific
issues that matter most to each customer segment.
Harrahs, Air Products, Caterpillar Financial, and Lands End segment customers to
provide a customer experience that is tailored to the needs of each group. This study
highlights two drivers for customer segmentation: (1) to anticipate the needs of each
segment and (2) to deliver products and services differently to each segment. Some
partners are driven by both.
To Anticipate Needs

Partners use segmentation to understand and anticipate various customer needs and
requirements in order to better tailor experiences for each segment. In this context, the
point is not to provide increased service or perquisites to the most valuable customers
but to provide the product or service that best meets customer requirements.

Managing the Total Customer Experience 2005 APQC

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chapter 2

In 1998, Caterpillar completed a distribution study that included research for its
distribution network, users, and industries where Caterpillar products are used. From
this study, Caterpillar Financial defined its industry criterion as 13 industry segments
within the two primary markets that Caterpillar serves: equipment and engine.
The equipment market includes mining, general construction, heavy construction,
industrial, waste, quarry and aggregates, forestry, and paving. The engine market
includes industrial engines, marine, oil and gas, electric power, and OEM
truck engines.
Once the industry segments were identified, industry councils were created to
provide a deep understanding of the customer needs, market opportunities, and
industry-specific success factors for the various industry segments.
Other customer segmentation criteria include application, customer
demographics, and transaction size.
Air Products customer experience program is based on customer segmentation by
customer value analysis and customer profitability analysis (Figure 10). By carefully
studying the needs and expectations of different types of customers across product
lines, the company has been able to segment customers based on a combination
of their potential for profitability, their strategic fit with Air Products, and what
attributes they value, such as technical focus and innovation. Air Products was able to
lower its costs-to-serve while still providing acceptable levels of service to companies
in different market segments.
Air Products describes its customer moment of truth as revolving around
understanding what each customer segment truly values at each touch point. Because
the company deals business to business, customers are not just the end-users of the
product: They are employees in different rolespurchasing agent, plant managers,
engineers, chemists, etc. Air Products may have between 20 and 30 contacts in up to
five to six functions in the client company. The organization must understand what
each of these customers value and render a solution that is appealing to customers and
fits within prescribed service levels for that customer segment.
Lands End uses customer segmentation in its catalog marketing to promote
childrens apparel only to customers with children or grandchildren and to promote
warm clothing to people who live in cold climates. Representatives suggest lightweight clothes to customers in warmer climates and high-end items to customers who
have purchased more expensive items in the past. When a representative receives a
call from a high-end customer, he or she receives a prompt to inform that customer
of other luxury items such as cashmere.
To Deliver Products and Services Differently to Each Segment

Some partners use segmentation to deliver different levels and types of services
to customers and to market effectively. They deliver consistent, managed levels of
customer experience to different customer segments based on their current and future
value to the company.

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Customer Segmentation Deployed Through a Branded


Customer Experience at Air Products
Customer
Feedback
Analysis

Price and
Profit
Management

Customer
Segmentation

Best
Practices

Profitability
Analysis

Operational Targets
Levers
Product Services
Hierarchy

Profitability
Analysis

Segmentation Plan
Customer categories
Offerings
Business rules
Channel strategy
Work level activities by category
Targets by category

Business
Strategy
Development
Customer
Feedback
Analysis

Customer
Value
Analysis

Service Level
Agreements (SLA)
Supply Chain
Requirements

Competency
Profiles

Score Card
Results vs. KPIs
Business Performance

Deployment
Brand
Promise
SalesForce.com

Behavioral
Training

Performance
Management

Figure 10

uses tiered levels of customer experiences to influence customer loyalty


and repeat buying behavior. The more customers participate in the Total Rewards
loyalty program, the greater their level of rewards and perquisites. Total Rewards
identifies tiers of card holders, and the company uses the tiers to differentiate service.
The Gold tier is the entry level; Platinum is the middle tier, and Diamond is the top
tier. (In 2004, the company successfully created a fourth tier for extremely highvalue customers, but the general public knows about the three tiers.) Harrahs creates
different levels of experiences for each; for example, Diamonds have access to a special
Diamond lounge, designated lines for check-in, preferential treatment at restaurants,
and faster payout if they win a jackpot. Customers aspire to reach the next level of
rewards and experience.
Harrahs

Managing the Total Customer Experience 2005 APQC

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chapter 2

In addition, Harrahs uses detailed segmentation for its relationship marketing


program, segmenting customers by age, pocketbook, type of gaming (slots versus
table-play), location, and psychological profiles.
Air Products manages its various customer segments by established business rules
that outline what services or technical support customers receive, according to their
segmented category. The company simplifies its offerings, reduces complexity, and
manages the customer segments by these established business rules.
Lands End uses marketing segmentation to win back customers who havent
shopped in a while, to send the correct catalogs to the people for whom certain
products would be of interest (e.g., people with children or grandchildren, men,
women, shoppers interested in linens vs. apparel, and customers in warm climates or
cold climates).
Key Finding:
Best-practice organizations know who their customers are and what interactions and
transactions they have had with the organization.

Best-practice organizations have detailed customer profiles, customer transaction


information, and interaction histories. When customers call the company, they
are speaking with an old friend, even if the employee who handles the interaction
has been employed by the company for only a month. When customers self-serve,
they find that the company remembers more about their transactions than they do.
Acting as historians of the relationship, best-practice organizations create intimacy
and increase productivity because the parties do not have to repeatedly introduce
themselves to one another.
Harrahs targets its most valuable customersand they like it. Customers enjoy their
service experience with Harrahs and understand that its offers are customized based on
their play level. Total Rewards provides rich incentives for customers to play.
Harrahs customers insert their cards into a slot machine, and the system tracks
how long they play and whether they win or lose. Customers hand their cards to the
employees at the gaming tables, and the system tracks the average bet and length of
play. Using Web Book-It, Total Rewards members can make hotel reservations
online with their offer codes already filled in for them.
Harrahs is investing in making transactional information even more real-time
than it is today. They intend for gaming customers who walk across the street from
one establishment to another with a changed status to be fully recognized.
Lands End has a complete history of everything that customers have purchased
for as long as they have been customers. It knows to whom it has sent specific
catalogs and whether the customer bought from the catalog. It knows about
customer issues and how they were resolved. Its customer-facing employees access
the following information as they are speaking with the customer: (1) a unique
account identification, (2) unique contact identification, (3) customer preferences
and permissions, (4) product/account information across product lines, (5) current
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orders/transactions, (6) past orders/transactions, (7) bills and invoices, (8) customer
service incidents, and (9) updated customer information.
In some mature core businesses at Air Products, 20 percent of customers contribute
80 percent of revenue and volume purchased. Therefore, difficult choices must be
made regarding how to best segment the customer base. The number of customer
segments varies from business to business. Air Products distinctly separates what does
and does not qualify as segmentation. The underlying philosophy is not to treat all
customers in the same way but rather to treat each segment in the same way.
Key Finding:
Best-practice organizations understand what different types of
customers need in different phases of the customer life cycle
and tailor the customer experience for those life cycle stages.

Stages in the Customer Life Cycle in


Which Effectiveness Is Measured
Maintain

80%

Partners recognize that customers needs vary at


Buy
80%
different points in their life cycle. The study team asked
partners and sponsors to name the stages in the customer
Retire/Replace
60%
life cycle during which they measure how effective
their organization is at providing a high-quality total
Use
40%
end-to-end customer experience. Results are shown in
Renew/Replenish
40%
Figure 11.
Harrahs highly segmented direct marketing approach
Select
40%
is predicated upon the customer life cycle. Customers at
Explore
different stages of the life cycle receive different messages
40%
and offers from the company to increase the value of
Plan
20%
that customer to the company. For example, a direct
marketing message to a new customer would focus on
Not applicable
20%
welcoming him or her and explaining Total Rewards.
0 10 20 30 40 50 60 70 80 90 100
The company uses different outreach programs
Frequency of Response
Partners (n=5)
and promotions for customers after their first visit to
Figure 11
a property to create an incentive for them to return
for the second and third time. Once customers have
returned two or three times, their needs change again,
and Harrahs wins them back differently.
The company has discovered that attracting a customer to a Harrahs property a
second or third time is critical to solidifying the customer relationship. Therefore, the
companys offer to a newer customer may be more aggressive than an offer to a more
established customer (as long as the newer customer fits into a future-value profile).
Conversely, when a customer changes a pattern of behavior, comes less frequently,
and then visits once, he or she is recognized immediately, and the company responds
aggressively to increase loyalty.
Lands End takes special care of its first-time customers by calling them back two
weeks after their purchases. During the call, the representative ensures that the
Managing the Total Customer Experience 2005 APQC

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chapter 2

customer is satisfied with the order. The call-backs have proven to be successful in
increasing customer retention and re-purchasing.
The customers of at least two partners (Air Products and Caterpillar Financial)
are businesses, and the companies recognize that their relationships with the various
roles within the customer organization (such as receiving clerk, accountant, sales
representative, chief financial officer, and product consumer) are important. They have
processes in place to address the needs of each person with whom they interact.
Key Finding:
Best-practice organizations understand what customers care about in different
c ontextswhat outcomes are they trying to reach and what context they are in.

Examples abound of partners who adjust their products and services based on the
outcome that the customer is trying to reach.
Harrahs understands that many of its customers have an expectation about how
long they want their money to last during a gaming session. The company carefully
monitors the time spent and money wagered in order to respond appropriately if the
customer isnt falling within his or her entertainment profile.
Caterpillar Financial understands that customers in different industries and in
different sizes of companies have different goals and parameters.
Understanding the context within which customers are contacting the company
calls for an exceptional type of employee. Cisco has transformed its representatives,
who were laboring to meet customer needs one-by-one in a necessary evil call center,
into highly skilled and knowledgeable agents who add value to each call. Through
training, these agents recognize the big picture presented by the customers and the
outcomes they are trying to reach. They add value to every call by educating the
customer and documenting the answer for future use. In addition, they add value by
selling a unique solution that, in the past, customers would have to seek out through
contacting the company multiple times.
Key Finding:
Best-practice organizations identify and anticipate customers moments of truth
what the make or break points are in customers processes.

Figure 12 lists a variety of metrics that organizations use to track improvements


in the customer experience. Most partners measure the effectiveness of the customer
interaction at the moment of truth, which is the key point of contact in which the
customer can either be pleased or frustrated.
Ease of doing business with the company is important to customers at the
moment of truth, and 60 percent of the partners measure customer steps reduced
and customer time saved, which reflect ease of doing business. In addition, 40 percent
of partners measure and manage the interactions during which the customer feels
frustration and aggravation.
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The senior vice president of relationship marketing at FIGURE 12: Metrics Used to Track Improvements in the
Harrahs noted in their site visit that sometimes customers Customer Experience
Partners
go to other companies just to change their luck. In
Participant
(%) n=5
other words, the company has done nothing specifically
Customer loyalty/retention
100
wrong, but the customer is tempted to distance himself
80
just because he can. Best-practice companies catch the Customer satisfaction
80
customers during these vulnerable moments and give Cost-to-serve
Customer complaints/compliments
60
them reasons to increase their loyalty.
60
If a Harrahs customer is losing money at a rate Time-to-resolution
60
that disappoints her, Harrahs operational customer Moments of truth, key points of contact
60
relationship management system will compensate by Customer steps, reduced
60
issuing special perquisites or by triggering a visit by a Profits per customer
Luck Ambassador who can stop by to chat.
Customer time saved
60
The company purposefully identifies the customers Number of customers/market share
40
that it wants to make more loyal and targets them Employee feedback
40
through direct marketing. For example, it knows that if Number of products per customer
40
it can attract a customer for a third visit, the customer is Share of wallet
40
likely to become loyal.
Additional business
40
Caterpillar Financial concentrates its efforts on the few
Customer frustration/aggravation reduced
40
key moments of truth that customers have made clear Customer renewals
20
are the most important to them. For example, in the loan
Customer churn
0
origination process, moments of truth include receiving
Customer lifetime value
20
a prompt and appropriate finance proposal, receiving
Customer referrals
20
credit approval promptly, and receiving accurate
documents and correct funds in a timely manner.
During the loan modification process, customers want to receive their requested
modification quickly. During the loan termination stage of the life cycle, customers
want to complete their payoff promptly. Throughout their life cycle, customers want
a timely and complete response to requests.
Lands End realizes that if customers cannot see and feel the material that a product
is made from, they cannot decide whether to purchase it. The company offers swatches
of every fabric (except leather, cashmere, and quilts).
Key Finding:
Best-practice organizations take proactive steps to anticipate customer-impacting critical
issues and to avoid them.

As previously discussed, study best-practice partners understand their customers


deeply, including their customers critical success factors. Often times, these
organizations are able to take a proactive stance with regards to any anticipated
customer issues and design processes to mitigate them. Lands End, for example, realized
that customers are often frustrated by the fact that one size does not fit all (i.e., a size
6 purchased at one retailer may be different than the same size purchased at another
Managing the Total Customer Experience 2005 APQC

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chapter 2

retailer). In response, the company created Lands End Custom clothing, powered
by smart sizing software, to allow online consumers to easily and affordably design
their own clothes. Customer feedback to this program has been very positive, and it
has resulted in profitable growth for the company through new customers, deeper
customer relationships, and higher customer lifetime value.
One of Air Products three brand tenets is understanding: The company promises
that it will consistently anticipate customer needs and provide what the customer
truly values. For example, in one business discussed during the site visit, supply chain
performance is critical, but some commodities are resource-constrained. Air Products
was able to proactively offer a no run outs value proposition to certain customers,
who were willing to pay more to be protected.
In another example, since a significant percentage of employee incentive
compensation is tied to customer satisfaction at Cisco, transactional customer
satisfaction surveys (bingos) are proactively analyzed to allow the corporation to
resolve any customer issues identified in the bingos ideally before they affect the
organization-wide customer satisfaction score (and thus, employee compensation).
Key Finding:
Best-practice organizations measure, monitor, and improve what matters to customers.

Organizations have the capability to measure almost everything, and they can
be paralyzed from taking action unless they know to focus on the attributes that
customers value. Partners learn what customers value in a variety of ways but rely
greatly on frequent and regular survey programs to educate them about customer
needs. Following are examples of companies who have researched what customers
really require to remain loyal and have concentrated on them.
Harrahs customer survey asks a key question: Would you recommend Harrahs?
The answer is tracked not only overall but also after any organizational or procedural
change that affects the customer. This loyalty metric is linked to two organizational
attributes: wait time and employee helpfulness and friendliness. Personnel from
the chief executive to the front line focus laser-like on the two. The company knows
how long customers have waited on the phone and at the front desk and whether
they are greeted appropriately. The company generates reports by property and touch
point. For example, reports can show how the Total Rewards center at Harrahs Las
Vegas is performing in terms of friendly/helpful versus wait time. The metrics
are also assessed by customer segment, and an appropriate wait time for a Platinum
customer may not be acceptable for a Diamond customer.
To better serve its customers and improve procedures, Harrahs measures play
time, play winnings, and rewards received. It captures metrics on customer time
saved, customer steps reduced, cost-to-serve, customer loyalty, and share of wallet.
Lands Ends measured goals include high first-contact resolution, time to answer
the phone (20 seconds or within the first ring), and delivery time (within 48 hours).

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comprehensive customer listening approaches yield both


quantitative and qualitative information, which is used to determine key user and
dealer requirements and their relative importance in making purchase decisions.
The chief focus of the Customer Interaction Network is first-call resolution, which
is a key metric for Cisco. Cisco wants its customers to receive answers quickly without
the need for transfer. Agents have ownership from the first contact, not from when
they receive the last transfer and not when the issue becomes more complex.
Several partners (notably Air Products and Caterpillar Financial) benchmark their
customer experience measures to compare their performance to others.
Best-practice partners measure customer satisfaction and loyalty in the
following ways.
1. They perform continuous incident-based customer
satisfaction and loyalty surveys at customer-critical
moments of truth, so they can tell how well they are
doing at these customer-critical points.
FIGURE 13: Sample Customer Experience Measures
2. Partners tend to retain the identity of the customers
Company
surveyed for these incident-based surveys in order to
Air
Customer loyalty index
take rapid remedial action and to correlate customer Products Turnaround time for samples
satisfaction at customer-critical points with Caterpillar Key core process metrics, such as
customers actual buying and referring behavior.
Financial Response time to customer request for quote
3. Partners identify a few customer-critical metrics and Turnaround time for credit approval decision
Turnaround time to fund the loan
educate employees about their importance so that Response time to requested customer modifications
everyone works together cross-functionally to meet First-contact resolution

Customer satisfaction index
or beat customers expectations.
Caterpillar Financials

Dealer satisfaction index

The table in Figure 13 summarizes some of the


customer experience measures that the partners discussed
during their site visits.
The keystone of the customer experience is
customer satisfaction data. All partners collect customer
satisfaction/loyalty data, though they do so at intervals
ranging from weekly to annually to as-needed.
Study participants recognize that measuring
employee satisfaction is also important in providing
a great customer experience. For example, Harrahs
recognizes the intrinsic link between employee
performance and customer satisfaction, and Lands
End believes that a synergy exists between employee
satisfaction and customer satisfaction. It believes that
the one way to ensure a consistent positive customer
experience is to maintain a positive employee experience.
All study participants capture employee satisfaction
information, primarily via surveys.
Managing the Total Customer Experience 2005 APQC

Cisco Dashboard of metrics by call type (first-contact


resolution and taking advantage of cross-selling
opportunities are included):
Calls escalated
Calls handled
Calls resolved
Calls transferred
Calls dropped


Value per transaction for CIN agents


Customer satisfaction by call type
Customer loyalty by call type

Harrahs



Consolidated play/Share of gaming budget


Cross-market play
Customer satisfaction
Customer loyalty
First-contact resolution

Lands End Answer 90 percent of incoming calls in less than


20 seconds
Occupancy rate of between 86 percent and 92 percent
Call abandon rate of less than 1.5 percent
First-contact resolution (currently 94 percent)
Cost per call
Call handling time
Delivery time

45

Chapter 2

Key Finding:
Best-practice organizations deliver a consistent and seamless branded customer experience
across channels and touch points and all stages of the customer life cycle.

Providing a seamless end-to-end customer experience across touch points and


throughout the customer life cycle has become a major goal for partners. Linking
their brands to the customer experience comes naturally for some of the partners.
Lands End, for example, has always had a reputation for excellent customer service
service is a part of its identity, its brand. Harrahs has always realized its dependence on
its loyal customers and uses its brand to build loyalty as it expands its holdings. In the
early 1990s, Caterpillar Financial made a commitment to pursue business excellence,
which required the organization to be customer-centric, so an explicit business case
for managing the total customer experience was not required or necessary. Since
1998, Caterpillar Financial has used industry segmentation to ensure that customer
and market focus is aligned with its business units.
Other partners recently transformed their companies to provide a branded
customer experience. For many years, Air Products viewed the customer as king and
perceived itself as being all things to all customers. The approach to customers has
evolved over time to a new one company approach involving segmentation deployed
through a branded customer experience.
The study team asked both partners and sponsors how well they link the quality
of the customer experience to their brands. Partners see their customer experience
definitely linked to the organizations brands: On a scale of one (not linked) to five
(highly linked), the partners average rating was four.
Following are some examples of partners aligning the customer experience with
the corporate brand.
Harrahs has a unique relationship with each of its customers, but all customers
can access the company through carefully branded touch points including phone
(both inbound to customer service call centers and outbound via telesales), e-mail,
the Web site (www.harrahs.com), on-site (at the casinos), and marketing initiatives
(direct mail).
Most customers experiences involve Total Rewards. Customers sign up at no cost
and earn rewards credits toward meals, rooms, entertainment, and merchandise. They
can view their rewards balances and tier scores online, at a Total Rewards center in
each casino, and on the slot machines as they are playing. In the casinos, customers
will soon be greeted by Luck Ambassadors at key points in their life cycle and based
on customer experience triggers (for example, if they have lost their cards).
In order to deliver a consistent branded customer experience, Air Products uses
multiple customer touch points to reinforce its one-company approach to customer
service. It realizes that a single customer may interact with direct or indirect sales,
customer service, technical service, credit and collections, marketing and product
management, manufacturing, and Web ordering.

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Managing the Total Customer Experience 2005 APQC

Ch a p t e r 2

To ensure that customers have a seamless and consistent branded experience, the
company created a brand architecture around the three tenets of Understanding,
Integrity, and Passion. This architecture is referred to as the Brand Bulls Eye
(Figure 14). Air Products conducted a significant amount of worldwide research
to create the model and solicited input from many customers throughout various
segments. The interview results legitimized the brand of the company.

APCIs Brand Bulls Eye


The Bulls Eye

Our commitments
to our customers

How it makes me feel


as a customer
We give customers
proposals which say
up front how we can
lower costs

We put great effort


into communicating
clearly about
technology
We anticipate
customer needs
with innovative
products
We push quality
standards higher
and higher involving
customers and
suppliers
When we say
something we do it

They give me big


company support with local
company commitment
They increase
my knowledge and
my business capability

Brand Aim

To settle for whats best for our


customers both in terms of
technology and value

Knowledge

Determination

Brand Essence

Relationships Lasting relationship built


on understanding
Honesty

Enthusiasm

Commitment

Our best practice


operates wherever
we operate in the
world

Dedication

Openness

Substantiators

They think about


my business and
treat my money as
if it were their own

They look after


me well and get
things done right

They help me
stay ahead

Brand Characteristics
Understanding, integrity
and passion

Figure 14

Managing the Total Customer Experience 2005 APQC

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Chapter 2

Air Products links managing the branded customer experience with the brand.
From a customer perspective, each principle of the brand comes with a promise from
the company. For understanding, the company promises that it will consistently
anticipate customer needs and provide what they truly value. For integrity, Air
Products promises that it will always be true to its word. If the company commits to a
promise, they promise to deliver and to do so in a safe manner. The company has been
identified as one the safest chemical companies in the United States over the last five
years. For passion, Air Products promises to strive to exceed customer expectations to
achieve a mutual benefit. As discussed previously, the company culture now focuses on
achieving a win-win result for the company and customer. Company commitment
is predicated on the customers value to the company and what that customer will
truly agree to purchase.
When utilizing the branded customer experience for deploying customer
segmentation, Air Products has the following objectives:
delivering a consistent experience across all customer touch points (people,
Web sites, literature, etc.);
managing customer expectations by consistently delivering as promised;
creating brand equity, or preventing the brand from eroding;
creating customer loyalty and perceived value;
mitigating the risk of becoming too internally focused; and
preventing employee indifference.
The Web site for Air Products, www.airproducts.com, is a touch point for the
customer and has also been part of the evolution toward providing customers with a
branded customer experience.
Key Finding:
At best-practice organizations, employees work together across job functions to create a
one-stop shopping environment designed to streamline customers interactions with the
organization.

One of the most significant findings among best-practice partners is the degree of
cross-functional cooperation that has been institutionalized in order to make it easier
for customers (and the partners and employees who serve them) to do business.
Harrahs invests significantly in technology to power its customer database and
relationship marketing; one of the first activities that the organization undertakes
when it acquires another company is to implement the underlying technology so that
the new property is tied into the existing properties customer knowledge and loyalty
program. Customers have one account, which is linked to one customer database, so
that their treatment at different properties is consistent, and they are encouraged to
visit multiple properties in order to continue to earn rewards points.

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When Harrahs implemented its Web Book-It initiative to allow Total Rewards
members who receive an e-mail offer to make hotel reservations online, they pulled
together a task force of cross-property and cross-functional participants. This crossfunctional, cross-property team met regularly to provide consistent answers online, in
the call centers, and at the hotel properties; ideally this team handles complimentary
offers, casino rates, and support rate calendars.
Because Lands End customers use various media simultaneously to make purchases,
the employees cannot operate in silos. Managers estimate that approximately 50
percent of its business is conducted via the Internet. Even though the Web site has
been designed to be user-friendly and capable of completing purchases, customers
choose to take additional steps. If a customer decides to contact a representative
after exploring the Web site, 63 percent of the time the customer will make contact
via telephone, 25 percent via e-mail, and 12 percent via Lands End Live. (Lands
End Live is a feature that was introduced to customers in 1999 that allows Internet
customers to work with a representative through live text chat or by clicking a button
on the site that asks a representative to call back.)
Lands End contributes to a streamlined customer experience by making every
one of its employees responsible for the customer relationship. No single person is the
champion of the customer relationship. All employees are responsible for promoting
a positive customer experience.
The company focuses on training with the understanding that employees must
have the necessary product knowledge to assist customers with their orders. Training
for new hires is extensive, but the company feels that ongoing product training is
necessary in order to keep customer service consistent. During the training process,
trainers ensure that the front-line customer service representatives literally hold the
products so that they can learn about the product features and better convey product
details consistently to customers.
The goal of training is for customers who contact the call centers to have the
same experience, regardless of the representative who answers that call, whether the
question has to do with fit or style, with billing or shipping, or with refunds or
returns.
Cisco has developed the Customer Interaction Network to provide one-stop
shopping to customers. Before the CIN, customers would receive a different
experience depending on where in the company they called in. The CIN provides a
seamless and consistent experience; its purpose is to transform the front-line contact
centers into a cross-functional virtual organization that increases customer satisfaction
and showcases Cisco products, best practices, and the power of the Internet.
The concept of CIN has developed over time. The company looked at its various
call centers; they had one agent acting reactively to the request of one customer. The
call centers evolved into contact centers that empowered the customers to use other
access channels. The contact centers focused on serving many customers with one
answer. It educated the customer to solve his or her issues.

Managing the Total Customer Experience 2005 APQC

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Chapter 2

The next evolution was CIN, the preventative cross-functional collaboration in which
a customer reaches a wider spectrum of resources with a single call (Figure 15).

Migration to a Customer Interaction Network at Cisco


Cross-Functional
Customer Interaction
Value to the Customer
Contact Center

Call Center
One: One
Reactive / Responsive
Silo by Organization

Tools for Best Practice:


Stand alone media
ICM, Global / Follow the Sun

Teach the Customer


Promote the Web
Merge Call / Web
Tools for Best Practice:
Interconnected Media
Web / Phone Collaboration
E-mail Manager
IPCC Foundation

Teach Across Contact Centers


Feedback on the Web
Seamless Experience

Tools for Best Practice:


Intelligent Infrastructure
IPCC Media Blending / ICM v5
Shared Contact Portals
Shared Web Tools

Productivity

Answer the Question


Teach the Agents

Many: One
Proactive
Silo by Organization

All: All
Preventative
Cross-Functional
Collaborative

Time
Figure 15

Best-practice organizations consider their channel partners as important as


their cross-functional employees in the creation of a satisfying one-stop shopping
experience. Channel partners who are poorly prepared and supported can ruin a
companys effort to provide a seamless customer experience.
While it is important to empower various channels to serve customers, bestpractice partners go above and beyond empowering. Through their ongoing
support, they make interacting with channel partners a seamless part of the customer
experience.
Whether customers interact with Air Products directly, through local distributors,
by going online, or by calling the company, Air Products strives to provide a completely
consistent experience. Because all customers are organized into segments with service
levels established and understood by both Air Products employees and its channel
partners, customers receive the same answers and the same service levels.
Air Products has a network of distributors and agents that play a critical role in
facing customers; they become part of the customer experience. To ensure that the
experience is good, the company (1) selects its distributors carefully and (2) supports
them through an advisory council.
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Air Products evaluates and selects the distributor best suited for a relationship with
the company. In one highly technical global business, it ensures that the distributors
sales forces are also highly technical and consist of chemists or chemical engineers.
This scientific background increases the understanding necessary to sell products to
customers. Distributors who can sell products that complement the Air Products
product line are also viewed as beneficial channels to market.
As discussed in Chapter 1, Air Products established the Distributor Advisory
Council to foster relationships with its distributors so they can provide a branded and
consistent customer experience, thereby accelerating mutually profitable growth.
For Caterpillar Financial, independent dealers represent a primary distribution
channel. The dealers are protective of their long-term relationships with the users and
want high user satisfaction, quick turnaround, fast funding, and easy-to-use processes.
They rely on Caterpillar to work by their side, and they are not disappointed. Through
territory managers who office on-site, dealers are well supported to represent the
Caterpillar brand experience.
Key Finding:
Best-practice organizations strive for single-contact problem resolution.

As discussed in Chapter 1, 80 percent of the partner organizations measure onestop shopping through their level of first-contact resolution. They ensure that the
customer has to make only one contact to have a question answered, order a product,
or lodge a complaint. Fifty percent of the partners report that their levels of firstcontact resolution are trending upward.
High levels of first-contact resolution not only mean satisfied customers but also
increased productivitytransferring customers from one area to another consumes
resources. Those with high levels of first-contact resolution have improved their work
flows and torn down their silos. They have created an environment in which the
company is transparent to the customer, that is, the customer can easily understand
how to do business with the company. As previously discussed, four of the five bestpractice partners measure first-contact resolution.
In addition to striving for first-contact resolution, best-practice organizations
do not leave customers wondering what happened to their product, suggestion, or
complaint. The study finds that all partners have a formal process for closing the
loop on outstanding issues. Partners realize that reconnecting with customers to
answer questions, notify them of changes, or inform them of progress is essential to
an excellent customer experience.
All of the partners use verbal communication to keep the customer up-to-date;
80 percent use written communication.
Lands End has specific customer support representatives who are tasked with
closing the loop with customers on issues such as out-of-stock items and follow-up
calls to first-time buyers.

Managing the Total Customer Experience 2005 APQC

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Chapter 2

Eighty percent of the partners have the capability of letting the employees know
how the loop was closed with the customer. When agents know how issues are
resolved, they are more capable of solving the same issue with a different customer
more quickly and efficiently.
Harrahs first-contact resolution is tracked at the call centers and is currently above
90 percent and trending upward.
To streamline a customers interaction with Lands End, call centers operate 24
hours a day, seven days a week. Operators are encouraged to spend as much time with
the customer as necessary, which allows them time to converse with the customers to
give them advice, cross-sell, and make sure their orders are complete. For example,
if the customer on the phone or chat line needs someone to measure a garment, that
employee is able to walk quickly to a central closet, locate the article of clothing, and
measure any dimensions the customer needs.
Lands End also closes the loop proactively. The company concentrates on
delivering quickly. If the company is unable to deliver an item, an operator personally
calls the customer back to let him or her know. (The call-back program works to
increase sales because the customer typically orders one or two more items to replace
what is not available.)
Additionally, having associates that are well trained and can easily access requested
information lends itself to achieving first-call resolution. Currently, the companys
first-contact resolution level is at 94 percent.

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m ANAGING THE TOTAL CUSTOMER EXPERIENCE

c h a p t e r 3

What Are the Results from


Investing in aTotal Customer
Experience?

hile it theoretically makes sense that providing a consistent, positive customer


experience would logically lead to increased customer satisfaction and thus,
increased profitability for the organization, the bottom line is that many organizations
are struggling with quantifying this relationship and with proving the explicit value of
their investments (people, process, and technology) in the total customer experience
to management. One of the critical scope areas of this benchmarking study was
exploring what results best-practice organizations have been able to demonstrate as a
consequence of their total customer experience initiatives and how they proved the
business case to their management, if required.
Key Finding:
The business case for investing in the customer experience is based on competitive
differentiation: The quality of the customer experience is viewed as a competitive
differentiator by best-practice organizations.

The surplus society has a surplus of similar companies, employing similar


people, with similar educational backgrounds, coming up with similar ideas,
producing similar things, with similar prices and similar quality. So what is
different? The difference is customer segmentation deployed through a
branded customer experience.
Air Products site visit representative (quote from Kjell Nordstrm
and Jonas Ridderstrle, Funky Business)
Good customer service can be a double-edged sword in the battle for market share:
not only is it a key differentiator (especially if the product provided is a commodity),
but, like organizational culture, it is often hard to emulate. This is well-recognized
by study participants: The primary impetus for study participants to concentrate
on the total customer experience is marketplace competitiveness (100 percent),
followed closely by executive-level directive (80 percent). Forty percent cite customer

Managing the Total Customer Experience 2005 APQC

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chapter 3

feedback as the impetus for change. The biggest business drivers for improving the
total customer experience are competition and commoditization.
Air Products believes that the best way to differentiate its products and services in
a commodity marketplace is customer segmentation deployed through a branded
customer experience.
For Caterpillar Financial, being a captive lender does not mean that customers,
including Caterpillar dealers, are required to use the companys services; therefore, the
company recognizes that strong customer relationships are critical to its success.
Instilled in Lands Ends culture of customer service is the idea of building close
customer relationships as a competitive differentiator, and the rest will take care
of itself.
Key Finding:
Investing in delivering a brand-consistent, high quality, end-to-end customer experience across
interaction channels and throughout the customer life cycle generates higher customer lifetime
value and a growing number of loyal, profitable customers, which translates into profits and
greater company value.
Good Customer Experience Increases Customer Loyalty, Which Drives Profitability

Best-practice partners believe, and several can explicitly demonstrate, that their
efforts and initiatives to manage the total customer experience have resulted in
increased customer satisfaction and loyalty, which in turn correlate into increased
organizational profitability. Three of the five best-practice partners have created an
economic model that objectively links the impact of their efforts to manage the total
customer experience on revenues and profits. Two out of three partners indicate that
this model was internally developed (the third used a consultant/vendor for model
development).
Harrahs can track customer satisfaction scores to profitability at an individual
customer level and has been able to demonstrate that changes in customer satisfaction
drive changes in revenue. The results of its analysis demonstrate the importance of
keeping loyal customers satisfied and of moving target customers satisfaction scores
upward. A migration in a customers satisfaction score from a B to an A, for example,
translates to an increase in revenue from that customer by 10 percent to 15 percent.
Likewise, when a customer moves from a C to an A, this increase is even more
dramatic. On the other hand, if a customer moves from an A to a B, or a B to a C,
his or her revenue declines dramatically. Therefore, a key focus of marketing and
IT at Harrahs is to enhance the customer experience. In 2004, Harrahs achieved
approximately 50 percent A scores across all properties and programs.
Harrahs Total Rewards customer-loyalty program has enabled Harrahs to
assemble a database of more than 28 million players who accumulate cash, comps,
and other benefits by playing at any of their casinos.

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Caterpillar Financial measures customer expectations, repeat business, and loyalty

via the comprehensive customer listening approaches. By combining satisfaction data


and actual repeat business volume for multiple years, the company can statistically
validate that highly satisfied customers finance more equipment with Caterpillar
Financial, thus creating a link between satisfaction and profitability.
Lands Ends culture is such that the inherent link between employee satisfaction,
customer satisfaction, and profitability is taken for granted (although an explicit
economic model has been created).
While there are many factors that feed into an organizations overall financial
performance and results (of which customer service is just one), the publicly traded
benchmarking partners have generally been doing well financially over the last several
years, and one would like to assume that these organizations efforts to manage the
total customer experience have played a part in this. For example, in 2004, Harrahs
Entertainment generated $4.5 billion in revenues (an increase of 10 percent8), and its
stock price has been on the increase over the last several years.
Air Products stock price has also been generally increasing over the last several
years. The stock price of Caterpillar, parent company of Caterpillar Financial, has also
been increasing: Caterpillars sales and revenues in 2004 were up 33 percent from the
previous year (the best in company history).9
Key Finding:
Investing in streamlining customer-critical processes decreases customers time-to-decision
and increases revenues.

Three out of five study best-practice partners can quantify the impact of their
efforts to manage the total customer experience on revenues.
At Air Products, using profitability analysis to drive customer segmentation to
tailor customer experiences for different types of customers has served as a key tool to
more than double profits. By focusing on providing the tools and information that
its smaller business customers needed in order to decide whether or not a customdesigned product would fit their needs, Air Products was able to lower its costs to
provide custom samples, to shorten the time to adoption, to dramatically increase
the adoption of custom products, and dramatically improve the cycle time for
break even.
Caterpillar Financial is able to correlate specific customer metrics with increased
profitability. For example, by shortening the total time to loan approval by industry
segment, Caterpillar Financial was able to increase equipment sales by its dealers
without sacrificing loan quality. By improving the turnaround time on loan
modificationssomething customers cared about a lotCaterpillar Financial was
able to improve collections.
8 Source: www.hoovers.com (retrieved April 2005)

9 Caterpillar Inc. Investor Summary (retrieved April 2005)

Managing the Total Customer Experience 2005 APQC

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chapter 3

Lands End tracks the recency, frequency, and order size by customer. The company
correlates catalog drops to customers buying behavior and shortens customers timeto-decision by providing tools and resources to help customers make up their minds,
such as good decision-making tools on their Web site (e.g. sizing charts and product
comparisons). For example, Lands End offers a free swatching service to its customers,
whereby customers request swatch cards of different fabrics for products that they are
considering buying that are then mailed to the customer within 24 to 48 hours. While
this generates a cost to Lands End, the company has found that a high percentage of
these customers (in the 70 percent range) call the company back to place an order.
Lands End also carefully monitors the payback on customer experience initiatives
taken at other stages in the customer life cycle. For example, once customers have
made an initial purchase, Lands End customer service representatives are involved
in a first-time buyer call-back program whereby representatives call these first-time
customers back within two weeks of purchase to ensure that everything is all right with
the order (no upselling involved). The company has found this program to increase
customer retention and rebuying. Similarly, the item unavailable call back program
(representatives call a customer back personally if an item is unavailable) has also
been rewarding for both customers and the company because it typically results in the
customer ordering other items as a result of the call.

Key Finding:
Investing in streamlining customer-critical processes decreases costs-to-serve and
increases profitability.

By focusing on monitoring and improving what matters most to customers, bestpractice partners are beginning to show lower costs-to-serve (and therefore increased
profitability).
Air Products and Chemicals reported that by aligning customer experience with
customer segments, it was able to reduce its cost per project by 50 percent, while
increasing project adoption rates by 70 percent and shifting its break-even on one
product line from 3 years to four months.
Caterpillar Financial has dramatically reduced its costs to support its end-customers
and its dealers by empowering both through the use of technology (for example,
the introduction of FinancExpress to automate loan processing for dealers in 2001
increased dealer self-service, thereby reducing Caterpillar Financials costs-to-serve
dramatically, at the same time that more loans are processed more quickly and more
products are sold).
Cisco has reduced the cost and complexity of managing separate voice and data
networks and increased its ability to deliver much higher first-contact resolution to
customers, partners, and employees, with greatly reduced costs-to-serve. By moving
to a single, cross-functional, 24 by seven follow the sun customer/partner/employee
support model, Cisco is able to lower its costs-to-serve and deliver much more
complete single-contact resolution.
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Key Finding:
Investing in improving employee experience to improve customer experience results in greater
employee and customer loyalty and lower costs-to-serve.

A similar story is told by the detailed questionnaire with regards to the ability of
study participants to go one step further in the service-profit chain and quantitatively
link employee satisfaction to customer satisfaction/loyalty and in turn to organizational
profitability: Three out of five best-practice partners have been able to quantitatively
prove this linkage.
Lands End recognizes the pivotal role that employees play in delivering on the total
customer experience to the extent that the corporation has implemented a heavily
employee-centric (in addition to customer-centric) culture through a significant
investment in training, an open-door environment with leadership, and an open
communication policy with employees, which has resulted in high tenure and low
employee turnover.
APQC conducted a recent secondary literature search to explore the explicit
quantitative relationship between employee satisfaction and customer satisfaction.
This concept is an entrenched one over the years, and a number of studies
have demonstrated this relationship. Below are some sample statistics from the
literature search.
A five-point improvement in employee attitudes will drive a 1.3 point improvement
in customer satisfaction, which in turn will drive a 0.5 percent improvement in
revenue growth.10
A 5 percent increase in employee commitment results in a 2 percent gain in
customer loyalty, which in turn drives a 2 percent gain in profit.11
Correlation of customer satisfaction and employee satisfaction is 0.86.12
Correlation of employee satisfaction and patient satisfaction is 0.89.13
Taco Bell identified outlets with the lowest levels of staff turnover as generating
up to double the sales of those at the highest end.14

10Source: The Employee-Customer-Profit Chain at Sears. HBR. January-February 1998.


11Source: Hill, Nigel. Does Customer Satisfaction Pay.
12Source: Dr. Dale Lake of the University of Michigan, cited in article Linking Organizational

Characteristics to Employee Attitudes and Behavior by James Oakley.

13Source: What Goes Around Comes Around. The Satisfaction Monitor. Mar/Apr 1999.
14Source: Putting The Service-Profit-Chain to Work. HBR. Mar/Apr 1994.

Managing the Total Customer Experience 2005 APQC

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chapter 3

Business Results from Customer Experience Investments

We have gone about creating a business that seeks to envelope customers in as


many reasons to be loyal as we can findThe results of this exercise has been truly
unbelievable.
Gary Loveman, CEO Harrahs (Source: The Service Profit Chain
and Building Customer Loyalty, Taking Knowledge and Best Practices to The
Bottom Line, APQC, 2001 )
The following examples discuss the overall business results at several of the bestpractice partners from their customer experience investments.
Our acquisitions have received considerable attention, but they are only one part
of Harrahs growth story, CEO Gary Loveman said. Over the past 6 years we have
contended with recession, a post-9/11 travel slump, new competitors in multiple
markets and the longest strike in the history of the Atlantic City gaming industry.
Despite this litany of challenges, our company has posted same-store sales growth in
all but one of the last 24 quarters. This remarkable record of consistent organic growth
is a tribute to the effectiveness of our marketing and technological capabilities and
our focus on delivering superior customer service. Cross-market playgaming by
customers at Harrahs properties other than their home casinorose 15.3 percent
from the fourth quarter of 2003. More than $1 billion of Harrahs revenue is crossmarket. Tracked playgaming by customers using the companys Total Rewards
player cardsincreased 10.8 percent from the year-ago fourth quarter. And fourthquarter 2004 same-store revenues increased 7.5 percent over the year-ago period.15
Seventy-six percent of Harrahs revenues can be directly tied to members of Harrahs
Total Rewards loyalty program with tiered customer experience levels.
Harrahs measures its share of walletwhat percent of its customers gaming
budget it has. Since 1998, share of wallet has increased from 36 percent of customers
gaming spend to 46 percent. At a customer level, Harrahs knows what score the
customer gave, what marketing and offers the customer has received over time, what
score the customer gave last year, and his or her projected revenue.
For Caterpillar Financial, the Business Excellence journey (which includes the
companys processes to manage customer and market knowledge) has had very
positive effects for Caterpillar Financials business, including managed assets, customer
satisfaction, and efficiency. In addition, over the past six years, the percentage of dealer
deliveries financed to end users (PODD, the companys measure of market share) has
increased by 11 percentage points.
Cisco Systems site visit representatives readily admit that the business case for the
Customer Interaction Network was based on pure customer satisfactionCisco
employees listened to customer suggestions and created a one-stop shop to address
all front-line queries and processes with a single contact. Cisco has strong beliefs
15Company press release: Feb. 2, 2005Harrahs Entertainment Reports Record 4th Quarter and

Full Year Results.

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that it can increase revenue (through capturing lost revenue opportunities, increased
customer satisfaction and loyalty, and increased share of customer spend) and
decrease expenses in the process, but this was not a driving factor in the business case.
While it is too early in its implementation to discuss the ultimate business results
from the Customer Interaction Network, preliminary input from customers has
been favorable. In addition, not only is the CIN anticipated to increase customer
intimacy and satisfaction, but a positive byproduct will also be its favorable impact on
operational efficiencies through increased Web self-service and resolution, increased
resource utilization, reduced cost for communications infrastructure, and reduced
agent attrition. In general, over the past year (fiscal 2003 to fiscal 2004), the company
experienced approximately a 17 percent growth in sales.16

16 www.hoovers.com (retrieved April 2005)

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m ANAGING THE TOTAL CUSTOMER EXPERIENCE

c h a p t e r 4

How IsTechnology Used to


Provide a Good Customer
Experience?

n essential complement to the people and processes in place to manage the


total customer experience is the technological backbone that facilitates it. How
is technology used at best-practice organizations to provide a consistent, positive
customer experience? The study team was interested in understanding the various
touch points available to customers in order to interact with these organizations,
including self-service touch points, as well as interactions with customer service
representatives through various mechanisms. Additionally, this study focused on how
these organizations create strong relationships and connections among the various
touch points and how these transitions were made seamless to the customer. In some
instances, technology enablers had the common goal of providing the customer with
real-time access to the status of customer orders or requests. Overall, best-practice
organizations actively use technology to empower customers, employees, and partners.
The most dramatic finding regarding technology enablement was not around which
types of technologies were used, but rather the extent to which customers were
encouraged to engage in self-service.
Key Finding:
Best-practice organizations use technology to identify and to understand customers and track
customer behavior.

All of the best-practice partners have mature customer information systems that
maintain accurate records of customer accounts, transactions, and customer history.
While all of the partners felt that they could do even better in managing their own
view of customer information and in analyzing that information, they all have robust
customer information systems.
Lands Ends mainframe-based customer information system tracks all present
and past Web and catalogue orders. Customer profiles and family members profiles
are maintained in a centralized database that is used as the source for segmented
marketing campaigns.
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chapter 4

In 2004, Harrahs invested approximately $16 million in marketing IT projects.


The organization currently has approximately 500 IT professionals, with more than
half of these in corporate IT, while the remainder are located at local properties. There
is a significant concentration of IT staff members at the corporate level, which is very
different from Harrahs competitors.
Harrahs is using innovative technologies on its database platform to drive
loyalty, lower costs, and deliver a significant competitive advantage in every market.
Total Rewards, tiered cards, relationship marketing, national promotions, the Web
site, revenue management, reinvestment optimization, and operational CRM are
capabilities that rest on the platform.
Technology is also utilized at Harrahs to segment customers and track customer
behavior through direct marketing. The majority of direct marketing occurs around
campaigns that target segments. Segments are created centrally and cannot be
modified. (In a few programs, segments can be filtered.) When customers accept
offers, the bar codes on the redemption slips are scanned with an electronic wand to
capture the code. Harrahs knows explicitly that the offer has been redeemed and by
whom.
The marketing team then studies the responses to offers and analyzes a behavior
change report. It determines whether the customer who accepts the offer becomes
more loyal. Currently, approximately one half of the trips to Harrahs properties are
offer-driven, which is both good news and bad news (the company does not want
every customer trip to be associated with an offer). Marketing looks at offer layering
to understand the true profitability of an offer.
Caterpillar Financial has a customer relationship management system that is used to
track and manage customer relationships, as well as a set of financing and accounting
systems and tools that impact customers. CustomerExpress, the companys customer
relationship management software, provides employees and dealers a single view of
the customer including individual satisfaction and loyalty data.
Air Products and Chemicals equips its customer-facing personnel with a customer
contact management application (salesforce.com). Most of customers transactional
history and records are contained in the new SAP system that is currently being
rolled out. In addition, employees have access to a customer loyalty dashboard, which
provides detailed feedback on customer survey results and a red alert tracker for
resolving customer issues.
Cisco Systems has a number of different CRM systems to keep track of different
customers and product lines. The company is currently in the process of moving to a
single cross-functional CRM database.

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Key Finding:
Best-practice organizations use technology to provide
customers the ability to serve themselves throughout their
customer life cycles. Customers are willing and able to serve
themselves to accomplish most of their desired outcomes.

Effectiveness of Customer
Self-Service Capabilities
(1 - Not effective, 5 - Very effective)

Problem resolution
The most significant finding in the technology realm
is the degree to which best-practice partners have enabled
User prole management
their customers to serve themselves via the Internet and/
Product delivery status
or IVR (Figures 16).
As can be seen from Figure 16, partner organizations
Renewals or replenishment
have made it a point to enable customers to perform a
wide variety of tasks, from checking on the status of a
Service/Approval work ow
product delivery, to setting up a product, to resolving
Product set-up
a problem or issue, scheduling an appointment,
managing a service contract, paying or contesting a bill,
Appointment scheduling
changing the customer profile or account information,
Billing questions
purchasing products or services, getting help or
guidance, and receiving alerts and notifications. This
Change of customer
information
outside in approach to customer self-service is a key
differentiator for best-practice organizations. Partners
Product usage, training,
or guidance
expect customers to serve themselves and want to enable
Account status inquiry
customers to do so.
Air Products and Chemicals offers its customers
Product/Service purchase
self-service functionality via its AP Direct suite of
applications. This is a customer portal that enables
Alerts and notications
customers to customize their own views into a variety
Product/Service selection
of applications (such as orders placed via EDI, real-time
pricing information, and auctions).
Product/Service information
At the core of Caterpillar Financials success are the
1
dealer self-service and customer self-service applications
Partners (n=5)
that enable both dealers and customers to serve
Figure 16
themselves. End-users and dealers can use FinancExpress
to initiate their own quotes, credit applications, and
documents 24 hours per day, seven days per week.
AccountExpress provides users and dealers the ability to
access and maintain their account records online.
Cisco has long been a strong proponent of enabling customer self-service
throughout the customers life cycle by providing self-service tools to both endcustomers and dealers that enable them to configure their own systems, place orders,
change orders, track shipments, get technical support, and renew maintenance
contracts. With the advent of the Customer Interaction Network, customers who
have difficulty using the Web site to accomplish their desired outcomes will be able
to get directly to an empowered contact center representative who can handle any

Managing the Total Customer Experience 2005 APQC

5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
4.8
4.7
5.0
5.0
4.0
4.6
4.4
2

Average

63

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question the customer has at any point in the customer life cycle and then co-browse
with the customer to show him how he can find the solution online the next time.
Lands End provides a best-in-class Web site that more than 50 percent of its
customers use to place and manage their orders. The Web site is seamlessly integrated
into Lands End contact center operations. Sales associates can assist customers via live
chat (Lands End Live) or by pushing particular Web pages to the customer and/or
enabling co-browsing.
Harrahs provides customer self-service via the Internet site as well as via IVR for
customers to manage their Total Rewards accounts, to book reservations, to avail
themselves of special offers, and to redeem rewards.
Key Finding:
Best-practice organizations use technology to provide customers with a consistent view of their
accounts across channels and touch points. Customers can manage their own accounts.

Study best-practice partners not only enabled customers to serve themselves


via the Internet and via other self-service technologies, but they also give customers
complete control over and access to their own account information (Figure 17).
Harrahs uses technology in order to provide selfservice tools to its customers. For example, Harrahs
customers use their loyalty cards at the gaming machines
Types of Customer Information
to identify themselves. As a result, Harrahs is able to
Available to Customers
track play in real-time and to provide players real-time
updates on their account balances and on points earned
Unique account identication
100% and redeemed to date through print outs on the slot
Access to current orders/
machines. Harrahs is also able to make real-time offers
80%
transactions
to customers through the gaming machines. Customers
Access to and update of
feel in control because they have up-to-the-minute
80%
customer information
information about their accounts.
Access to past orders/
80%
On September 20, 2000, the company relaunched
transactions
its Web site as part of the integrated customer
Access to product/account
60%
information across product lines
experience. A significant portion of Harrahs strategy is
to migrate some of its relationships with its customers to
Unique contact identication
60%
the online medium but not lose face-to-face interaction.
Access to bills and invoices
60%
The company has a two-pronged Internet strategy.
Customer preferences and
1. Relationship management adds functionality
60%
permissions
that will enhance the profitability of customer
Consistent view on all
60%
relationships through:
interaction channels
a. self-service through a less-expensive channel (view
Access to customer
60%
service incidents
offers, book online),
0 10 20 30 40 50 60 70 80 90 100
b. dynamic marketing such as last-minute offers, and
Frequency of Response
Partners (n=5)
c. deeper knowledge of the customer to leverage
Figure 17
customer information.
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2. New customer acquisition increases awareness of Harrahs among prospects


through strategic partnership; an exciting, memorable Web site; and strong
online advertising.
Additionally, in September 2001, Harrahs launched Web Book-It so that Total
Rewards members can make hotel reservations online with their offer code already
filled in for them. Subsequently, Yield on the Web was launched, which enables
online reservations to be yielded.
Caterpillar Financial leverages different types of technology to successfully handle
high monthly volumes of customer contacts. Users and dealers demand accurate,
timely, complete, and responsive service. This requires substantial investment in
information management systems and hardware. The primary Web-based support
technology is Express Track, a suite of online services including FinancExpress,
AccountExpress, and CustomerExpress.
FinancExpress is Caterpillar Financials proprietary e-commerce solution and is
used to transact most equipment financing. It gives users, dealers, and Caterpillar
Financial employees varied access to the same information. Users and dealers
may initiate their own quotes, credit applications, and documents 24 hours a day,
seven days a week.
AccountExpress provides users and dealers the ability to access and maintain their
account records online.
CustomerExpress, Caterpillar Financials customer relationship management
software, provides employees and dealers a single view of the customer.
In addition to Web-based self-serve technology, Caterpillar Financial provides
Interactive Voice Response (IVR) technology for access to buyouts/contract balances,
interest paid information, payment history information, ordering an invoice, and
paying online via Western Union.
Providing Customers with a Consistent View of Their Account Information

Regarding the availability of comprehensive account information, the best-practice


organizations felt that they provided an in-depth view of account information to both
their employees and customers.
Additionally, best-practice organizations ranked themselves at an average 4.2
out of five on the completeness and consistency of customer and product/service
information across access channels.
Total Rewards customers at Harrahs have a comprehensive view of their account
information across access channelscustomers can view their rewards balances and
tier scores online, at a Total Rewards center in each casino, and on the slot machines
as they are playing.
Cisco created a common front-end customer support organization across customerfacing functions using the Customer Interaction Network. An objective was for a
customer to be very autonomous in accessing answers through Ciscos Web site with
Managing the Total Customer Experience 2005 APQC

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the ability to launch a collaboration agent to assist if needed. The end result consisted
of having all access media well blended, whether via e-mail or telephone call.
Lands End provides customers with an industry-leading Web site that enables
customers to handle virtually any kind of transaction they want or need to do.
Customers have access to their complete profile (including stored personal profiles,
stored address books, and reminders).
Key Finding:
Best-practice organizations use technology to provide customer support and service personnel
with the information that they need and provide a consistent view of the customers accounts
across channels and touch points.

Best-practice organizations also rely on technology enablers to provide their


customer service personnel with the necessary information to perform their job duties.
The best-practice organizations rank themselves fairly high on the level of ease for both
their employees and their customers to find necessary information (4.2 out of five).
At Cisco, a customer service agent routes customers to the right tools using the
ISAAC portal. ISAAC is a knowledge-based tool containing information documented
through many years of operation at Cisco. With ISAAC, agents view the knowledge
base to try to answer customers questions. This functionality enables agents to leverage
previous answers and solutions. Agents are also able to provide an end-to-end solution
to callers and consequently resolve their issues.
The ISAAC tool enables Cisco to capture knowledge that can be accessed by
multiple agents. In addition to streamlining processes, the ISAAC tool enables agents
to build up their knowledge base so that they can take more second line calls. For
example with the ISAAC tool, an agent in Germany is able to access knowledge
and information created by an agent in another location. This tool enables agents to
instantly expand their own knowledge and skill set. Agents use a red flag system to
document customers feedback and offer opportunities for improvement.
Ciscos use of ISAAC also contributes to the companys goal of maintaining a
positive morale among its agents. If an agent is unable to resolve a customer issue,
he or she may feel a sense of dissatisfaction as a result. In order to address that issue
and avoid future instances, agents can use Ciscos red flag system to inform the
organization about the details of the customer interaction, what steps the agent tried
to take, and how the agent could have solved the issue better (i.e., with additional tools
or information). This red flag system makes a big difference in how agents feel they
can impact future solutions. There is a team at Cisco that takes this feedback from the
system and updates the tools. The next time the agent should be able to close out the
call, bringing more value not only to the customer but to the organization.
Harrahs uses a Teradata warehouse to provide one view of the customer and
one account to its employees for a seamless, consistent customer experience across
properties and across access channels (hotel front desk, Total Rewards center,
reservations center, marketing, etc.). Access to the data warehouse is provided to all
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key customer contact employees. Comprehensive customer information is housed


in the data warehouse, including which offers that a customer has received, which
properties they have visited, what restaurants they have patronized, and what comps
they use.
At Air Products, a number of technology enablers contribute to the overall
customer experience. One such enabler is the Customer Loyalty Dashboard. This
tool is an internal Web site that has been in place since 2001 and can be accessed
by any employee with a password. The employee can then click on a given area and
find loyalty information sorted by business, region, customer, segments, etc. The
areas on the dashboard include customer loyalty, business overview, key loyalty
drivers, survey results, and individual reports, among other factors. Other technology
enablers for customer management capabilities include the Air Products portal on
the Internet, intranet sites designed for specific business units, the digital war room
for customer value analysis, and SFA for use by the sales team in gathering customer
data. Technology is also utilized to gather data from
employees.
Lands End provides employees with access to even
Technologies Used to Make
more information about customers than the customers
the Customer Experience a
themselves can see. For example, Lands Ends sales
Seamless Process
associates can view customers complete purchase
histories, so that if a customer would like to reorder
Call center automation
clothing in the same style, the employee can easily locate
the past purchase.
E-business/E-commerce
The best-practice partners place a heavy emphasis on
Customer relationship
investing in technology such as call-center automation,
management
e-business and e-commerce, customer relationship
80%
Customer contact management
management, customer contact management, knowledge
management, and e-enabled products and services to
Knowledge management
80%
facilitate a seamless customer experience (Figure 18).
E-enabled products/services
80%
As Figures 18 illustrates, all of the best-practice
partners place significant emphasis on the use of
Content management
40%
technology to improve the overall experience for their
customers. Figure 19, page 68 summarizes the specific
Customer/Partner portals
20%
software used by the best-practice partners to facilitate
Mobile/Wireless handhelds
20%
the customer experience.
Search technology
While various technologies were utilized for different
20%
objectives, each best-practice organization realized the
Application integration with 0%
value of investing time, resources, and capital into IT
customers applications
and other leading-edge capabilities to help facilitate a
Other 0%
seamless, transparent customer experience.

100%
100%
100%

0 10 20 30 40 50 60 70 80 90 100

Partners (n=5)

Frequency of Response
Figure 18

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FIGURE 19: Facilitating Software


Type of Technology Software
Customer relationship
Teradata, SAS, Cognos, E.Piphany,
management Siebel
Customer contact Right Now, Siebel
management
Knowledge Infolease, FinancExpress, Siebel,
management
Cognos
Call Center automation ICM, IVR
E-business/E-commerce
Elemica, AP Direct, EDI, Rosetta Net,
IPT, AccountExpress
Customer/partner portals SAP, Jetspeed
Mobile/wireless handhelds

AT&T Mobile, Wireless not supported

E-enabled products/services SAP R/3, Account/Express


Content Management SAP, Siebel
Search technology Google

68

Lessons Learned

Best-practice organizations use technology to


empower customers to serve themselves and to
empower employees and partners to better service their
customers. Although each organization begins with
a strong foundation of customer information, none
of the partners designed their customer relationship
management systems from the inside out. Instead, they
opened up access to customers and partners to enable
them to reach in from outside the organization in order
to help themselves to the information and transactions
they needed.
As discussed earlier, partners have gravitated
toward providing cross-functional, one-stop shopping
customer service behind the glass in order to help
customers accomplish their outcomes without having
to make several hops or phone calls. The technology
infrastructure that employees use to provide singlecontact resolution and to help customers and partners
takes advantage of the technology that was already in
place to enable customer self-service.
Best-practice partners also provide employees with
portals or dashboards that let them see how they are
doing on customer loyalty and satisfaction and let them
track issues to resolution.

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m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Partner Organization
Case Studies

71 Air Products and Chemicals

85 Cisco Systems

97 Lands' End

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m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

air pro ducts

Air Products
and Chemicals

ir Products provides gases such as argon, hydrogen, nitrogen, and oxygen to


manufacturers, health care facilities, and other industries. The company also
produces chemicals, including catalysts, surfactants, and intermediate chemicals used
to make polyurethane intermediate products, amines, and emulsions derived from
vinyl acetate monomer. It also makes gas containers and equipment that separates air,
purifies hydrogen, and liquefies gas. Headquartered in Allentown, Pa., Air Products
has operations in more than 30 countries around the world. European headquarters
are at Hersham, near London, and Asian headquarters are in Singapore, with offices
in Tokyo and Hong Kong.
The company is recognized for its innovative culture, operational excellence,
and commitment to safety and the environment and is listed in the Dow Jones
Sustainability and FTSE4Good Indices. The company has adopted ISO 9000 as its
model for quality assurance and has obtained multiple ISO 9001 certifications.
Air Products has built leading positions in key growth markets such as
semiconductor materials, refinery hydrogen, home health care services, natural gas
liquefaction, and advanced coatings and adhesives. The company ranks 295th in sales
and 277th in total assets among Fortune magazines April 2004 list of the 500 largest
corporations in the United States.
Air Products was founded in 1940 in Detroit, Mich. by industrial district manager
and entrepreneur Leonard Pool. The companys value-add was based on what, at the
time, was considered a breakthrough servicethe provision of on-site gases to its
industrial clients (e.g., building oxygen-generating facilities near large-volume users
and then leasing them to the users). By building and operating its own air separation
plants and supplying gas over the fence to customers on a take-or-pay basis, Air
Products became the first company to put into practice what would later become the
marketing norm for the industrial gas industry. The company went public in 1961.

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a i r p r od u c t s

This case study looks at the work of one business within Air Products. The
process and experience depicted in the case study are works in process and are being
replicated globally throughout all applicable businesses within Air Products.
The Customer Experience at Air Products

Air Products describes the customer experience at its organization as focused,


deliberate, and consistent. While the company used to have a cross-selling approach,
where a customer was a specific customer of one of the business units, such as the
Chemicals Group or the Gases and Equipment Group, the company is now moving
toward a one company approach. The vision of one company at Air Products is that
a customer experiences consistent service across all business units and all touch points.
Touch points include any interaction between Air Products and the customer; this
includes people, collateral brochure material, and systems interaction.
The company describes its moment of truth in adopting this new approach
as realizing the need to understand what each customer segment truly values at
each touch point. Air Products realizes customers are not just the end-users of
the product, but people and functions within a customer organization that either
influence or support the buying decision. Air Products may have 20 to 30 contacts
in up to five to six functions for a single customer on an ongoing basis. The
company strives to understand the value of each of these touch points and render
an appropriate solution.
Transitioning to a one-company approach and changing company has been
a challenging task. Air Products performs customer segmentation as an umbrella
approach and delivers segmented offerings through a branded customer experience,
meaning that the customer experiences Air Products in a fashion consistent with the
companys brand promise, characterized by understanding, passion, and integrity.
These values will be defined later in this case study. Driven by business strategy,
segmentation allows the company to focus on which customers have increased
importance to Air Products. The deployment of this process through a branded
customer experience sets the standard of behavior for customer-facing employees.
Customer segmentation is the unifying theme in managing the branded customer
experience at Air Products. This process can be divided into the What, the How,
and the To.
The What of Air Products customer segmentation process is a tactical
deployment, not a strategy. The desired end result is to operationalize the overall
business strategy, integrate and coordinate actions in order to have the same face for
the customer regardless of the touch point, understand the values of the customers,
and deploy resources appropriately.
When describing the How in deploying the segmentation effort, Air Products
indicates that it begins by separating the customers into categories contingent on
criteria that assess the value that Air Products provides to the customers, as well as the
value that the customer provides to Air Products. In some mature core businesses at

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Air Products, 20 percent of customers contribute 80 percent of revenue and volume


purchased. Therefore, difficult choices must be made regarding how to best segment
the customer base. Air Products also simplifies its offerings, reduces complexity, and
manages the customer segments by established business rules. These rules outline
what services or technical support customers receive, according to their segmented
category.
The purpose, or the To, of this customer segmentation is to ultimately reduce
the cost to serve across the business units, as well as increase the perceived value of Air
Products to the customers. The number of customer segments varies from business to
business and is not the same as a sales channel or channel to market.
Air Products distinctly separates what does and does not qualify as segmentation.
The underlying philosophy is not to treat all customers in the same way, but rather
to treat each segment in the same way. The company stresses that its customer
segmentation is tactical rather than strategic, dynamic and ongoing, and intended
to increase perceived value and decrease the cost to serve. It is also an essential
prerequisite to performing other margin enhancement projects and does include
treating individual customers differently.
Conversely, segmentation is not a substitute for strategy, which is synonymous
with reducing full-time equivalents, or allocating dollars directly to the bottom line.
When utilizing the branded customer experience for deploying customer
segmentation, Air Products has the following objectives:
delivering a consistent experience across all customer touch points (people,
Web sites, literature, etc.);
managing customer expectations by consistently delivering as promised;
creating brand equity, or preventing the brand from eroding;
creating customer loyalty and perceived value;
mitigating the risk of becoming too internally focused; and
preventing employee indifference.
Evolution/History of Managing the Branded Customer Experience

For many years, Air Products viewed the customer as king and perceived itself as
being all things to all customers. The approach to customers has evolved over time
to a new philosophy. The customer focus has remained intact during this evolution,
and the current culture at Air Products is now to consistently provide the customer
with only the products and services that they truly value. This is also the focus of the
segmentation theme discussed previously. Value is defined by the company as what
the customer is willing to pay for, and the companys current stance is to strive for
more of a win-win situation for the customer and the company.

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a i r p r od u c t s

Customer Touch Points/Access Mechanisms

In order to deliver a consistent customer experience, Air Products utilizes multiple


customer touch points to reinforce its one company approach to customer service.
Within the sales realm, there are both direct and indirect sales staff. The direct sales
personnel consist of sales associates who have technical knowledge that they can easily
articulate; indirect sales refers to the technically oriented niche distributors. These
resources are technologically competent in their particular market segment in order
to facilitate business dealings with buyers.
Another touch point is customer service personnel, who handle the incoming
order entries, as well as any other customer-related issues that arise. Other points of
contact for customers include:
technical service and applications developmentthis includes technical support
resources who impact sales by establishing technical credibility;
credit and collections department;
marketing and product management;
manufacturing;
AP Directhis is the companys Web site for electronic orders, as well as a method
to check the status of orders; and
miscellaneous signage, Web sites, etc.
www.airproducts.com

The Web site for Air Products, www.airproducts.com, is a touch point for the
customer and has also been part of the evolution toward providing customers with
a branded customer experience. Air Products initially invested in the Web site, AP
Direct, with the belief if you build it, they will come. At first, the site manually
entered orders into an ERP (enterprise resource planning) system. In addition to order
entry functionality, AP Direct also contains a suite of other applications that promote
effective and efficient customer self-service.
Presently, AP Direct has effectively integrated ERP into the order entry system.
Additionally, the current online service is continually adding functionalities to target
specific audiences and provide improved online customer self-service.
UNDERSTANDING THE BUSINESS CASE FOR MANAGING THE TOTAL
CUSTOMER EXPERIENCE
Linking the Customer Experience to the Organizations Brands

The Air Products brand is characterized by understanding, integrity, and


passion. Customer surveys have demonstrated that these are the characteristics
that customers associate with the company. This branding is reinforced visually
throughout the companys facilities via posters. Figure 20 outlines the brand essence
that is focused around the three tenets of understanding, integrity, and passion. This
architecture is referred to as the Brand Bulls Eye. A significant amount of worldwide
research was conducted to create this model, including many customer interviews

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APCIs Brand Bulls Eye


The Bulls Eye

Our commitments
to our customers

How it makes me feel


as a customer
We give customers
proposals which say
up front how we can
lower costs

We put great effort


into communicating
clearly about
technology
We anticipate
customer needs
with innovative
products

They give me big


company support with local
company commitment
They increase
my knowledge and
my business capability

Brand Aim

To settle for whats best for our


customers both in terms of
technology and value

Knowledge

Determination

Brand Essence

They think about


my business and
treat my money as
if it were their own

We push quality
Relationships Lasting relationship built Dedication
on understanding
standards higher
and higher involving
customers and
Honesty
Enthusiasm
suppliers
They look after
me well and get
Commitment
Openness
things done right
When we say
something we do it

Our best practice


operates wherever
we operate in the
world

Substantiators

They help me
stay ahead

Brand Characteristics
Understanding, integrity
and passion

Figure 20

throughout different business segments. The interview results legitimize the brand of
the company.
Air Products has linked managing the branded customer experience with its
brand. From a customer perspective, each principle of the brand comes with a promise
from the company. For understanding, the company promises that it will consistently
anticipate customer needs and provide what the customer truly values. For integrity,
Air Products promises that it will always be true to its word. If Air Products makes a
commitment, it promises to deliver and to do so in a safe manner. Safety is a core value
at Air Products. The company has been identified as one the safest chemical companies
in the United States over the last five years. However, within a customer segment, the
company will only commit to whatever is in the customer offering. For passion,
Air Products promises to strive to exceed customer expectations to achieve a mutual
benefit. As discussed previously, the company culture now focuses on achieving a
Managing the Total Customer Experience 2005 APQC

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a i r p r od u c t s

win-win result for the company and customer. Company commitment is predicated
on the customers value to the company and what that customer will truly agree
to purchase.
ORGANIZATIONAL STRUCTURE AND SUPPORT IMPLICATIONS OF MANAGING THE
TOTAL CUSTOMER EXPERIENCE
Structure and Accountability

Air Products has created a structure of processes and tools to achieve its objective
of deploying customer segmentation through a branded customer experience. The
management of this process begins with the business strategy. In this stage, Air
Products attempts to develop additional capabilities by performing profitability
analysis and customer feedback analysis, largely around loyalty studies and customer
value analysis research.
From this strategy work, the company determines operational targets, business
levers, and the product-services hierarchy. This then leads to the customer
segmentation phase. In this first phase of the process, several tools are used. Price and
profit management is one such tool. Customer feedback analysis is also performed in
the segmentation phase, and includes a complaint resolution process. This process is
currently being examined further to identify areas for improvement.
The customer value analysis portion of this section has been conducted on three
previous occasions with positive results. Here, the company looks at what offering
attributes the customer values, how the company performs against those attributes,
and how competitors perform. This is a more sophisticated tool, requiring surveying
beyond the customer base. Additional interviews must be conducted with competitors
customers to assess Air Products value performance relationship in the market relative
to its competition.
Profitability analysis is another crucial portion of the structure. It is important that
the company understand the profitability implications at the business and customer
levels. In addition, the company performs a competitive analysis by finding and
analyzing industrial best practices. This relatively new effort is evolving into a formal
program and includes internal and external benchmarking.
Within Air Products, internal service level agreements are utilized as the move
toward a multi-tiered approach within the customer service organization takes place.
Agreements are reached between the Air Products business units and support groups,
so that the business units clearly understand what level of service each customer
segment will receive. Customer service levels are determined by business predicated
on the segmentation.
These tools and programs lead to the segmentation plan, which includes:
customer categories;
offerings;
business rules;
channel strategy, direct or indirect;

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work-level activities by category (Segmentation is largely behavioral and systems,


so activities are defined by category of customer [e.g., for sales calls, the frequency
of calls allowed is determined by each segmentation category of customer].);
and
targets by categories.
This leads to the deployment phase, where the initial contact with the customer
utilizing the branded customer experience occurs. External consultants and the
literature indicate that segmentation often fails because of poor execution in the
deployment phase.
Another part of the deployment effort is the use of a sales force automation tool
(SFA) as the communication vehicle for customer-facing employees. This resource
provides contact information and other background data for customer-facing
employees to use to learn more about customers.
Air Products also performs internal job competency profiles to identify the
necessary skillsfrom a behavioral perspectivefor its employees to effectively
execute their job responsibilities. These competencies are divided into commercial
experience, communication skills, and technical skills. Additionally, the business area
leadership provides all customer-facing employees behavioral training in order to drive
a consistent experience at the customer level.
Senior management is critical to building the impetus, momentum, alignment,
and buy-in for the branded customer experience. Key senior management for the
business specifically addressed in this case study include the group vice president
of the affected group and vice president of customer engagement. In addition, in
order to successfully shift the company culture to the one-company approach for
customers, there must also be business unit leadership and engagement from middle
level managers in the customer segmentation process.
During the customer segmentation process, Air Products consistently links
segmentation criteria to the business strategy. The company has identified four
prerequisites in order to sustain a branded customer experience:
communications,
training,
job aids, and
performance monitoring.
Role of the Employee in the Branded Customer Experience

Employees play a pivotal role in managing the branded customer experience at


Air Products. Therefore, the company stresses the importance of training employees
to support the goal of implementing customer segmentation and to deliver against the
company brand. Segmentation training for customer-facing employees includes up
to eight hours of classroom training combined with learning applied on the job. The
size of the training session does not exceed 20 participants, and Air Products provides
job aids to support the application of role-appropriate behaviors.
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a i r p r od u c t s

Leading customer segmentation training involves front-line managers who manage


customer-facing staff in order to understand the customer-facing role. Branded
customer segmentation training teaches the desired behaviors for segmentation
champions and role models in the new segmentation strategy. In this training, subject
matter experts are sometimes utilized to support materials development.
Customer Support Processes

In addition to receiving customer-facing behavioral training, employees at Air


Products also receive customer support tools in order to facilitate the delivery of a
branded customer experience. In addition to receiving scenario-based skill practice
training, employees also receive guidelines for dealing with emotional customer
behavior. These guidelines include:
managing the response to the situation,
empathizing with the customers concerns,
identifying the customers problem,
clarifying the problem,
working toward a solution, and
thanking the customer.
Another set of guidelines involves how to effectively handle objections. When
dealing with objections from a customer, the sequence of events is:
promoting dialogue, probe to understand;
checking understanding;
responding to the issue; and
verifying satisfaction.
INVESTIGATING THE BUSINESS PROCESS CHANGES REQUIRED TO CREATE A TOTAL
CUSTOMER EXPERIENCE

In order to create a branded customer experience, Air Products faced the


challenges of having resources that were not focused on customer segments by value
or return and creating a significant opportunity to improve profits by reallocating
customer investments. The response to these challenges was to create and implement
the customer segmentation process driven by business strategy as the critical tool to
achieving aggressive growth strategies. This would allow the company to align key
customer attributes to its own strategic imperatives. The four components of the
segmentation strategy were:
1. customer segmentation process as a key work tool to execute business growth
strategy;
2. customers evaluated, scored, and segmented according to financial value, growth
potential, and strategic fit with the Air Products strategy;
3. stringent rules created to govern the cost to serve each segment across all customerfacing functions; and

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4. the economic impact of segmentation analyzed and embedded into business line
operating targets.
In order to implement this strategy Air Products had to first create a core, crossfunctional segmentation team. This team developed the segmentation criteria to align
with overall business strategy elements. It also developed an attributes matrix for
segmenting customers in order to determine what criteria a customer had to possess
to drive the strategy forward. Within each category, the team listed attributes that
would determine potential, such as the customers growth rate and market share.
The attributes were determined as part of a large group function across Air Products
teams. After three iterations, the list of attributes was narrowed down to the final
objective list. Often, the segmentation team would interview customers to validate
information. Customers received a number of points based on their position in the
market. For instance, if a customer was within the top five in their market, then they
would be a candidate for the top-level customer segment.
After segmenting the customer base, the company created a master list of services
that they offered and ranked these activities by function and importance. The services
could be divided into four categories: technical services, sales services, commercial
services, and supply chain services. These services were then prioritized by asking if
Air Products could provide varied levels of service for different customers and which
customers had the highest potential for creating additional value based on the strategy.
If a customer met the established criteria, then Air Products would provide the product
or service. After these service levels were developed by segment, the segmentation team
created channel strategies and customer account plans. This was critically important
as it linked day-to-day actions with the segmentation plan, and thus ensured that the
strategic goals of the business would be implemented.
Air Products segmentation team validated services with customers, trained
customer-facing employees, created tracking metrics, established profit impact goals,
and began implementing the process to institutionalize the change.
COMPLETENESS/CONSISTENCY AND EASE OF ACCESS
Information/Content Repositories and Accessibility

Regarding information access, Air Products utilizes both direct and indirect
channels to create a branded customer experience. In the indirect channel, the
company has a network of distributors and agents who play a critical role in facing
customers. Additionally, Air Products has formed a Distributor Advisory Council to
foster the relationship between the organization and its distributors.
In some business units within the company, Air Products chooses to work with
distributors, and in other cases the company enters into agreements with sales agencies
or a field sales person. This decision is considered the first phase of the process to
determine channels to market. When making this decision, the first factor considered
is the cost to serve model. The costs of a field sales person to sell to a particular

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a i r p r od u c t s

customer on a direct basis, including order processing, invoicing, etc., is analyzed


when making the decision to use a distributor or sales agent.
When evaluating channel partners, Air Products must determine the facilitator
that best mirrors Air Products values and capabilities. In this highly technical field,
the sales force typically consists of chemists or chemical engineers, so one of the
first criteria for choosing a distributor is also to have a technically oriented sales
team. This background will increase the understanding necessary to sell the product.
Additionally, distributors who can also sell products that complement the product
line of Air Products are also viewed as beneficial channels to market.
When using distributors, the company requires them to take at least a truckload of
materials. Distributors perform the functions of shipping, warehousing, receivables,
etc., so utilizing them can be a valuable strategy.
Under a sales agency agreement, there is an agency selling the product to customers,
and Air Products pays a commission to these agencies. In these arrangements, Air
Products still performs tasks such as shipping, invoicing, order processing, and
receivables.
The second phase of reaching the market is to establish the plan of action. Air
Products utilizes the segmentation process to do this, in order to understand the
customers value equation and how to best reach them.
Phase three is the implementation portion of the plan. Air Products does not want
any customer to feel underappreciated because of how they are segmented. Customers
require different servicing needs based on their segment, and distributors are skilled at
further segmenting customers and assessing additional customer needs. Air Products
relies on distributors for this assessment and at times gains additional customer insight
from this service.
The fourth and final phase is management of the distributors and sales agents.
Management includes establishing the underlying contract; communicating
expectations, roles, and responsibilities; and overseeing the Distributor Advisory
Council.
The purpose of the Distributor Advisory Council is to improve the relationship
between Air Products and the distributors in order to accelerate mutual profitable
growth. The Council consists of managers from the distributors, a sales manager,
the distributor manager, a senior representative from the technology department,
and a marketing representative. This Council is an advisory council, and not a policy
making council. The council provides input into the definition and implementation
of work processes, services provided, and the brand experience. This Council meets
twice a year and provides a forum for the sharing of best practices. Air Products also
utilized the Council meetings to ensure a consistent brand experience for all customers
through the network of distributors. Distributors are expected to share the same tenets
of the company brand of understanding, integrity, and passion, as well as the same
commitment to the product line. The company wants customers to associate the name
of Air Products during their interactions with distributors.

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INVESTIGATING THE TECHNOLOGY ENABLERS TO CREATE A TOTAL CUSTOMER


EXPERIENCE
Role of IT in Delivering the Branded Customer Experience

A number of technology enablers contribute to the overall customer experience


at Air Products. One such enabler is the Customer Loyalty Dashboard. This tool is
an internal Web site that has been in place since 2001 and can be accessed by any
employee with a password. The employee can then click on a given area and find
loyalty information sorted by business, region, customer, segments, etc. The areas on
the dashboard include customer loyalty, business overview, key loyalty drivers, survey
results, and individual reports.
Other technology enablers for customer management capabilities include the Air
Products portal on the Internet, intranet sites designed for specific business units, the
digital war room for customer value analysis, and SFA for use by the sales team in
gathering customer data. Technology is also utilized to gather data from employees.
MEASURING THE IMPACT OF MANAGING THE TOTAL CUSTOMER EXPERIENCE
Customer Measures

When measuring the outcome of managing the branded customer experience,


Air Products relies on both internal and external benchmarking, as well as a variety
of other sources. The companys benchmarking efforts have taught Air Products that
unless they deliver what the customer wants from a service perspective, they will not
be able to achieve long term business results.
Analyzing customer segment goals and results has shown the company that there
is more to achieve through customer segmentation than decreasing the cost to serve
the customer. Increasing profit and growth are the ultimate benefits that Air Products
hopes to attain through its segmentation efforts. From 2002 through 2004, the
organization has increased its customer margin by 30 percent.
Additionally, during this time period, this business has realized a 50 percent
decrease in cost per project because of increased effectiveness in focusing on identifying
customers that would deliver results, as well as no longer performing technical work as
a sales tool. Instead, this type of work is now more of a value deliverable.
Customer Feedback

Air Products also utilizes mechanisms to collect customer feedback and analyze
customer loyalty. Through benchmarking efforts, the company has realized the
importance of understanding the voice of the customer (VOC). This has been the
crucial first step in shifting the company toward a customer-focused culture. The
cross-functional team at Air Products selected Burke, Inc. to assist in the creation of
an ongoing VOC process.17 The ongoing customer loyalty process at Air Products
includes gathering information through surveys of customers around the world via

17 Ricci, Robert. Move from Product to Customer Centric. Quality Progress. November 2003.

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telephone and the Internet, disseminating survey results throughout the organization,
and tying the information to the business strategy to highlight critical improvement
needs.18 Members of the different business units have been involved in both the
survey creation and the identification of customers to contact. This involvement at
the business unit level has been critical in obtaining overall support for the changing
culture. Eventually, the company began surveying customers on a regional basis with
different business units each quarter, which helped the customer loyalty processes
evolve into an ongoing listening post for the entire company.19
Air Products acknowledges that although measuring customer loyalty is valuable,
it is merely a measurement of itself. The company realizes the need in the future
to move beyond just measuring customer loyalty and also focus on a market value
analysis, including comparisons to competitors.
SUMMARY AND LESSONS LEARNED

Regarding lessons learned in managing the branded customer experience, Air


Products acknowledges that in the past they have done the following:
overestimated the organizations ability to change;
overestimated the data quality and availability of information;
overestimated the infrastructures capabilities;
underestimated the challenges of global segmentation and deployment, such as
cultural differences and language barriers;
underestimated the time to go through one iteration;
underestimated the power of the brand when attempting to change the company
culture; and
underestimated the need for having firewalls, resulting in data leaks.
From these lessons learned, Air Products points to the following as critical
factors contributing to an organizations success in managing the branded customer
experience:
having the business own the outcome,
meeting the business where it is,
having an Executive Leap of Faith (E.L.F.),
having a business champion,
having accurate information,
having a capable infrastructure, and
having a process for performance management.

18 Ibid.
19Ibid.

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Looking ahead, Air Products has established goals to further its effectiveness in
this area. First, it is working to integrate tools in managing the branded customer
experience that will create a consistent touch and feel for the customer. Additionally,
the organization plans to develop new capabilities across the various businesses.
For example, a tool chest is being developed from a marketing perspective to be
integrated across the businesses. Also, Air Products will be finalizing segmentation
efforts for customers who have not yet gone through the process. Furthermore, the
organization plans to revisit businesses that have already been segmented. This is done
to review the results of the business, how customers responded, and any business
strategy changes and how that might impact the segmentation and offering. It also
serves as a refresher course and again reinforces the commitment to the branded
customer experience at Air Products. Finally, the company drives the branded
customer experience into everyday work. Air Products believes the branded customer
experience manages customer expectations, creates customer loyalty and perceived
value, mitigates the risk of becoming too internally focused, and short-circuits
employee indifference. In summary, Air Products believes that the branded customer
experience has equity for the company.

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m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

cisco systems

Cisco Systems

isco Systems develops and markets hardware, software, and services for Internet
solutions. Its products include routers and switches, remote access servers,
Internet Protocol (IP) telephony equipment, optical networking components, and
network service and security systems. Cisco sells its products and services directly
through its own sales force and indirectly through a network of channel partners,
including resellers and integrators. The company primarily sells its products to
large businesses and telecommunications service providers (switchers and routers
account for about 65 percent of sales) and also markets some products to small
businesses and consumers. Cisco faces many competitors in all of its market segments.
Key competitors include 3Com, Extreme Networks, Juniper Networks, and
Nortel Networks.
Founded in 1984, Cisco sold its first product in 1986, and the company went
public in 1991. Since 1993, Cisco has used acquisitions to broaden its product lines.
These acquisitions also enabled it to acquire engineering talent in short supply due
to a highly competitive industry environment. In 2001, as a result of the technology
industry downturn, it faced multiple challenges. The biggest challenge was that Cisco
had invested heavily in IP telephony equipment and services, and customer purchases
slowed dramatically. Therefore, Ciscos CEO John Chambers decided to change the
structure, aligning the business by core technologies instead of customer segments.
The Customer Experience at Cisco

Customer success is not only a personal passion of mine, but our first priority
as a company. No matter how good we are, the one thing that can bring us down
is getting too far away from our customers. Ive seen it happen time and time
again, which is why we take a fanatical approach to customer success and
view it as the foundation of our culture.
John Chambers, president and CEO

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Customers experience Cisco through marketing and advertising, Web presence,


Interactive Voice Response (IVR), and customer service contact centers. Cisco
customers evaluate their experience based on ease of use and access. Ease of use and
access refers to how customers are able to get to needed answers by navigating through
the organization, either through people, IVRs, the Web site, or e-mail. The companys
goal is to ensure that its customers feel they can count on Cisco to provide them with
immediate value-added service. As a result, Cisco established its Customer Interaction
Network (CIN) to provide consistency across multiple business lines as part of its
total customer experience. Management of the total customer experience process is
overseen by multiple steering committees and champions.
UNDERSTANDING THE BUSINESS CASE FOR MANAGING THE TOTAL CUSTOMER
EXPERIENCE

For 20 years, Cisco has grown at an extremely rapid pace, mainly through
acquisitions. Because of its growth, multiple contact centers were established to handle
the large number of customers needing service. As a result, customer interaction
was siloed, and customers were getting lost in Cisco processes. The customers
perceptions were that Cisco was very bureaucratic and solutions were too difficult
to access. For example, Web tools had been implemented without regard for ease-ofuse functionality. Customers attempting to use Ciscos Web tools often got lost and
confused. This situation prompted Ciscos problem statementto make changes in
the way customers were serviced and improve the overall customer experience.
Identifying Customer-centric Processes

As Figure 21 indicates, the first step taken to improve the customer experience
was to identify key business processes. In order to make the company more efficient,
streamlining processes was a priority. To accomplish this goal, the Business Process
Operations Council (BPOC), a corporate council made up of select executives,
identified necessary key processes. The council has representatives from all Cisco
service lines who are tasked with analyzing processes across the enterprise. Additionally,
the company created a common front-end support organization across all customerfacing functions. The main questions that Cisco had to answer were how to streamline
the customer interface to ensure that the key processes were going to work and how
the customer interaction at the first level would be in line with the optimization of
the processes.
The strategic objective for Cisco was streamlining the customers first contact via
the Web site to ensure that value-added actions were taking place. Cisco acknowledges
that it is more typical for its customer to go to a Web site than to use a phone number.
Therefore, Ciscos goal was to ensure that customers would be able to find answers
easily by navigating its site. To achieve that goal, Cisco had to ensure that its Web
pages were easy to navigate and that Web collaboration was effective. A scenario Cisco
kept in mind was if a customer navigating through its Web site was unable to obtain
support or even create a service request online, then the customer might quickly
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Cisco Customer Experience: Common First-Line Support


Customer

Common Front End Support Organization Across Customer Facing Functions


Idea
to
Offering

Market
to
Sell

Research to concept

Research to market
identification

Concept to commit
Design to prototype
Validate to ramp up
Monitor to improve
Improve to EOL

Quote
to
Cash

Forecast
to
Delivery

Quote to order entry

Source to buy

Order validation to
commitment

Forecast to plan

Campaign to lead

Delivery to revenue
recognition

Ship to receive/install

Lead to order

Invoice to cash

Account strategy to
relationship

Contract to renewal

Market identification
to plan

Plan to build
Commit to deliver
service

Issue
to
Resolution
Issue detection to
problem identification
Develop solution to
resolution
Return to replace
Closed loop feedback

Figure 21

leave the site and move to a competitors site. The thought of competition was a key
motivator for ensuring that the Web site would satisfy customers needs.
The Customer Interaction Network (CIN)

Since Cisco customers access services through various media, it was imperative
that customers have meaningful and useful contact the first time. To accomplish
that goal, Cisco created a common front-end customer support organization across
customer-facing functions. This change resulted in the creation of the CIN, powered
by Ciscos own technology. In the beginning, the call center experience was made up
of captive interaction in a one-to-one scenario. One customer spoke to one agent, and
consequently, one question resulted in one answer. Some Web interaction existed but
mostly internally through the agents access, browsing for documentation. With the
arrival of the contact center, some media blending took place, and customers had some
interaction via the Web site. Cisco decided to take the next step in completing media
integration by leveraging its full suite of technologies. This would allow customer
autonomy in accessing answers through Ciscos Web site and the ability to launch a
collaboration agent to assist if needed. The end result consisted of well-blended access
media, whether via e-mail or telephone call. The initial contact center went through
an evolution to become the CIN as depicted in Figure 22, page 88. Cisco approached
and presented its ideas for the CIN to customers, and the ideas were well received.

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cisco systems

The Evolution of the Contact Center


Customer Interaction Network

Why This Is Important to Cisco

CIN showcashes the largest business


transformation impact for call centers in over
20 yearsand it does so using our technology.

CIN integrates the Internet, phone, and shared


corporate-wide knowledge for a dramatically
enhanced customer experience.

CIN resonates with our largest customers:


It offers a new value proposition to call centers
and addresses many of the CXO care abouts
around customer interaction.

The driver for establishing CIN was to increase


customer intimacy, but the byproduct was having a
more efficient operation. From an internal stand point
depicted in Figure 23, the new CIN took advantage
of operational efficiencies. For example, if customers
were able to access the Web site instead of an agent
via telephone, then IT support, vendor support, and
administration costs would diminish. The benefits to
the company were clear and tangible. By increasing
customer intimacy, Cisco could capture customers
wants and needs and ensure that no opportunities
for sales would be lost. To achieve that objective, the
presales departments involvement was critical so that all
inbound activities would be clearly identified.
ORGANIZATIONAL STRUCTURE AND SUPPORT
IMPLICATIONS OF MANAGING THE TOTAL CUSTOMER
EXPERIENCE
Migration to a Customer Interaction Network

Cisco created a more effective customer experience


by assigning the responsibility of champion of the total
customer experience effort to the director of IP telephony.
Figure 22
Along with the champion, the manager of customer
service is directly accountable for CINs effectiveness
and success. These individuals meet on a regular basis to
review operations as well as performance.
CIN resulted from bringing all the Cisco call centers
together and having agents input customer information into a single, shared Web
portal based on Cisco proprietary technology. CIN was completed in March 2004
and piloted for three months in Europe and the United States. The goal of the pilot
phase was to see if new agents would be able to resolve the customers problem,
escalate properly, or get the customer on his or her way to resolution. The result of
the pilot was that 80 percent of the calls were either resolved, escalated, or on the
way to resolution. CIN has since been fully launched in Europe, and it is slated to be
implemented in the remainder of the United States and Asia Pacific.
Prior to CIN, agents answered questions from callers in the one-to-one scenario.
With CIN as the next step, Cisco has empowered customers to leverage other access
points in a many-to-one scenario. In the many-to-one scenario, agents are more
proactive in educating customers about how to solve their own issues. Educating
customers is accomplished, in part, by informing them how to access answers via the
Web site.

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Key Business Levers


Organization
Value
High

Differentiated
Services
CIN

Customer
Value

Low

Contact
Center

Operational Efficiencies
Increased Web self-service and
resolution
Increased resource utilization
Reduced TCO for communications
infrastructure

High

Reduced agent attrition

Call
Center

Revenue Growth
Capture lost revenue opportunities
(Cross-sell/up-sell)

Necessary
Evil

Increased customer satisfaction


and loyalty

Low

Increased share of customer spend


Figure 23

In the establishment of CIN, the next phase was cross-function collaboration,


where a customer could call in and obtain answers to a wider spectrum of questions.
Ciscos desire was to empower its customers to be more self-sufficient. The main
objective of the CIN rollout was first-call resolution, which is a key metric for
Cisco. First-call resolution means that customers can get their questions answered or
issues resolved by the first agent on the line without having to be transferred to an
additional agent.
Figure 24, page 90 shows the workflow of CIN starting with a customer request
through to resolution. The intelligent routing provided by Ciscos Internet Protocol
Contact Center (IPCC) solution sends customers to support in their native language.
An agent routes customers to the right tools using the ISAAC portal, a knowledgebased tool containing information documented through many years of operation
at Cisco. With ISAAC, agents view the knowledge base to try to answer customers
questions. This functionality enables agents to leverage previous answers and solutions.
Agents are also able to provide an end-to-end solution to callers and, consequently,
resolve their issues.
Employees Role in the Customer Experience

The role of the agent in Ciscos CIN is to take ownership of calls on first contact.
Ciscos goal is to achieve one-call resolution, thus becoming a one-stop shop. To
achieve that goal, a metric shift from time on the call to the value of the call took
place. For example, how long a customer stays on the line is no longer a metric; what
is important is the agent going the extra mile to get the customers problem resolved.
The agents goal is not to flood customers with multiple questions, but to empower
them and give them ownership of their own success.
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cisco systems

How Customer Interaction


Network Works
Request
resolved

Breadth of knowledge allows


for escalations to tier 2

Leverage the
Internet
Allow agent to take
customer to the
Internet hands free
Web collaboration

Core
customer expert
CiscoLive!

Cisco.com / CEC

ISAAC web
portal

Allows for feedback


on documents

GEM agents
Contact Center
Technology

Customer
request

Intelligent
routing

Customer interaction
network agent

Figure 24

The role of the agent becomes more strategic as he or she becomes the voice of
the customer. Agents are the ears of the company since they are the entry point for
customers. Agents identify the type of relationship Cisco has with specific customers,
in terms of support contracts (e.g., gold level support) and must effectively follow
processes and document pertinent information.
INVESTIGATING THE TECHNOLOGY ENABLERS TO CREATE A total CUSTOMER
EXPERIENCE
The Vendor Model

The CIN was established based on an outsource model for the front line as shown
in Figure 25. With traditional processes, Cisco had silos in the organization. It was
very difficult for a customer to go from an incorrect department to the right one. The
ISAAC tool enables Cisco to capture knowledge that can be accessed by multiple
agents. In addition to streamlining processes, the ISAAC tool enables agents to build
up their knowledge base so that they can take more second line calls. For example with
the ISAAC tool, an agent in Germany is able to access knowledge and information
created by an agent in another location. This tool enables agents to instantly expand
their own knowledge and skill set. Agents use a red flag system to document customers
feedback and offer opportunities for improvement.
In 2004, Cisco conducted a rigorous request for proposal (RFP) process lasting
approximately six months. An RFP team was assembled to review the possible vendors.
The RFP team of 30 employees had representation from existing call centers, the
second line call center, and also from cross-functional groups with representation from
areas such as procurement and HR. GEM was selected as the vendor in Belfast.
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New Outsource Model for Front Line


Traditional Process:
Silo (within organizations) negotiations.

$
Satisfaction

Little investment on tools, automation


once outsourced. High learning curve.

$$$

Difficult to switch and ramp up.


Volume or time based measurements.
Resources

New Process:
Ongoing streamline of operation tools

Ongoing taking on more level 2 functionality


depth
Ongoing growth across the company
expanded skills breadth
Measure VALUE, not just volume.
BECOMES STRATEGIC ARM OF CISCO
strong voice of the customer experience.
Figure 25

In 2005 Cisco will select other site-specific vendors. A key criterion for selecting
site-specific vendors is a good culture match. Other criteria in vendor selection are
that the vendor must have a local look and feel and operate 24 hours per day, seven
days per week. Cisco wants to ensure that vendor-managed agents are offered a career
path as they contribute to the value-added customer experience.
As shown in Figure 26, page 92, agents are cross functional and not organized by
business line. Agents are rewarded on their cross-functional ability, on the number of
skill sets they posses, their availability, and overall customer satisfaction. These agent
measures are important for Cisco as they focus on value add and the contribution
of quality feedback. Although Cisco is engaged in outsourcing, it wants to continue
to capture knowledge utilizing the ISAAC tool as its mechanism to obtain quality
feedback. The feedback can then enable the company to improve processes.
Cisco has three basic call types: a simple call hand-off, a typical front-line request,
and a call with a request that may require a more complex level of support. Ciscos
goal is to continue to build the ISAAC tools capability so that agents are able to take
more of the second level support calls, thereby increasing value. The goal is to reduce
the amount of calls that are transferred and have the first agent resolve issues and close
out the call.
Cisco is concerned with maintaining a positive morale among its agents. If an
agent is unable to resolve a customer issue, he or she may feel a sense of dissatisfaction
as a result. In order to address that issue and avoid future instances, agents can use

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cisco systems

Quality, learn, and improve:

Quality,
Learn,
Improve

Representing the voice of the customer


agents can identify and flag suboptimal
customer experiences.

Quality,
Learn,
Improve

Web collaboration:
Using Web collaboration to help customers
find and learn to use our online resources
Three basic call types identified:
Simple call hand-off
Typical front-line requests
Requests that traditionally require
second level support

Quality,
Learn,
Improve
Pure
Transfer

Web
Collaboration
Handle
or Resolve
First Line

Web
Collaboration
Handle
or Resolve
Beyond
First Line

Value Add Pricing for the Vendor

Outsourcing the Common Front Line and


Incenting the Right Behavior

Value Add for the Customer


Figure 26

Value of New Vendor


Management Model
Pay for Value
Reward for Value

Benchmarking

CIN front line

Cost
Impact

Customer
says . . .

Idea and
improve

Old, now second time

Process
and change
Global Standards
ISAAC
ICM
Collaboration
IPCC
Web portal to
CRM systems

Single, Global SOW


and Vendor Management

Organization independent
Utilize ISAAC
Capture experience
Capture barriers
Figure 27

92

Ciscos red flag system to inform the organization about


the details of the customer interaction, what steps the
agent tried to take, and how the agent could have
solved the issue better (i.e., with additional tools or
information). This red flag system makes a big difference
in how agents feel they can deliver future solutions.
There is a team at Cisco that takes this feedback from the
system and updates the tools. The next time, the agent
should be able to close out the call, bringing more value
not only to the customer, but also to the organization.
Figure 27 shows Ciscos vendor management model.
The value-added pricing model is an integral part of
vendor selection, and value is determined by adhering
to or exceeding the service level agreement (SLA).
SLAs consist of a single statement of work along with
clearly articulated and established global standards. All
current and future Cisco vendors will have a consistent
statement of work on a global basis.

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MEASURING THE IMPACT OF MANAGING THE TOTAL CUSTOMER EXPERIENCE


Customer Tracking

Cisco tracks the reasons customers are calling to ensure that it is adding value.
Some calls must be escalated immediately, such as a network being down. The ISAAC
tool enables agents to select the right category to request action and subsequently
finish out the call. The action class in ISAAC will indicate what the agent did. The
Cisco.com registration scorecard shows not only why a customer is calling, but also
what the agent did to assist them. The following list of action codes are commonly
used to track interaction with customers.
Dropped Call
Escalated: ISAAC Info Inadequate
Escalation Only Process
Handled: Follow Up Initiated
Last Resort: No Process Found
Resolved: No Further Contact Required
Sales Lead or Marketing Form Submitted
Transfer to Named Employee
Figure 28 shows the survey methodology Cisco uses to measure customer
satisfaction. The sources for the survey are customers who have experience with Cisco
products and services. According to its latest numbers, Cisco reports that out of 64,000
people who replied to a survey, 47 percent of the respondents were staff. This is a good
indicator for Cisco because it wants to obtain feedback and information from people
who actually touch its product and deal with its services. Primary and secondary
surveys are conducted in order to pull information from multiple sources.

Survey Methodology
Source
Customers with experience with Cisco
products and services

Segment Distribution of Survey Sample


Consumer 3%
Enterprise
37%

Commerical
27%

Survey: August 1 - July 15


The date in this report represents
feddback captured August 1, 2003 April 30, 2004
100% Online Web Survey

BP 33%
Theatre Distribution of Survey Sample

Customer Profile
63,998 customer replies

APAC
18%

9% CxOs/Execs, 8% directors,
27% managers, 46% staff, 10% other
EMEA
30%

AI 8%
Japan 4%

U.S.
40%

Figure 28

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CISCO s y s t e m s

On its survey, Cisco asks customers to rank their experience. The company tries
to minimize the use of numeric scales to simplify international data collection. This
approach allows for greater consistency, since numerical rankings may be confusing
depending on the country of the customer. When an agent must escalate a call to a
tier-2 agent, the customer will not be surveyed until the call is closed and resolution
achieved.
Loyalty is another key metric that Cisco measures. The loyalty scorecard is derived
from the customer satisfaction surveys. Cisco has information on the impact on
the bottom line resulting from increased customer loyalty. Cisco measures value,
marketing, competition, and account teams. The account teams are measured because
of their direct contact with the customers; they obtain feedback related to product
satisfaction. Also, Cisco operates through a large reseller network. It is important that
they know how the resellers are doing with the end customer.
Some of the data sources Cisco uses in its measurement analysis include:
global customer satisfaction survey,
U.S. customeroutbound transactional survey, and
USA brand marketing research brand equity.
Agent Compensation

Agents are compensated in accordance with customer satisfaction. There is


a hotlink, Customer Satisfaction, on Ciscos internal Web site accessible by all
employees. Employees are able to view customer satisfaction at any time on a dayto-day, hour-to-hour basis. When an agent clicks on the button Customer Loyalty
Analyzer, he or she will get a screen showing the loyalty chart. Trapped is a category
in which customers are using Cisco products but may not have the option of using
other products because there is no competition. For example, it may be a Cisco
customer who made a sizeable investment in their network, and they do not wish to
introduce a new product that will not be compatible.
When time for bonuses approaches, Cisco considers the base salary, the incentive
target percentage, and the companys financial performance. The company has a focus
cycle where employees are reviewed, and a formal evaluation is conducted. This event
is a face-to-face meeting between managers and employees to assess performance.
Cisco creates an overall customer satisfaction scorecard annually drawing from
various data sources.
The Customer Interaction Network Quality Control Center

Ciscos quality control center for the CIN will be moving into a new building in
May-June 2005. This building is referred to as the connected building because the
entire building has wireless capabilities using IP connected telephones, and there are
no hard-wired telephones. The building is able to accommodate up to 400 people, and
it is part of the executive briefing tour for customers. Within the control center, Cisco
will have a set of agents testing new documents, software, new releases of ISAAC,
and various other Cisco products. The center enables the agents to test in a real time
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environment. These agents will be tasked to ensure that products are well-designed
and that documentation is effective.
Internal Benchmarking

The quality control center currently enables Cisco to conduct internal


benchmarking, and the key objective of the center is to find real-time improvements.
For example, the company can compare call handling times across geographic
locations: An agent in San Jose, Calif. may be able to successfully close out a call and
resolve customers problems in 3.5 minutes on average, and he or she can be compared
to an agent in Australia who is taking seven minutes to do the same task. Cisco sees
an opportunity to improve. The causes for the difference might include that the agent
needs a refresher course in a particular area or category or perhaps it is the country of
origins culture. There are many areas that can be investigated and benchmarked.
SUMMARY AND LESSONS LEARNED
Quality, Communication, and Technology Enablement

One of the key lessons for Cisco was the need to focus on quality. Quality
begins with creating an appropriate job profile for the CIN agent, whether inhouse or outsourced. The job profile should clearly articulate the necessary job skills
and requirements to provide a good customer experience. The recruiting function
was very involved in ensuring the profile was effectively created as well as utilized.
Once candidates are identified and hired, they complete a comprehensive training
program including basic information, such as who is Cisco. Outsourced agents must
understand that they work for Cisco and not the vendor. This is the first step in
ensuring quality.
The second step in quality assurance is effective training. Once agents get on the
floor, their calls are monitored. Cisco has people shadowing agent actions on live calls
to ensure that they are providing the right answers to the customers. Surveys are used,
and feedback is provided to ensure that the perception of quality matches among the
agent, Cisco, and the customer.
A critical success factor is having a successful communication plan. Cisco noticed
that once there were any deviations from its communication plan, the roll out was
delayed. A clear communication plan is necessary, and changing the interaction model
with each country is imperative.
Additionally, the customer experience teams relationship with the IT organization
is critical. Technology enablement allowed Cisco to unify its contact centers to
provide a helpful single access point. The ISAAC tool provides ways for agents to
find answers to customer issues by capturing information and reusing solutions.
Another example of effective IT support took place in Europe. Cisco had many phone
numbers its European customers could use, and IT was able to successfully route calls
to the appropriate areas with comparative ease. The technology components are a
differentiator in Ciscos total customer experience.

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m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

lands' End

Lands End

ands End was launched in 1963 by Gary Comer as a mail-order supplier of


sailing hardware and equipment. Responding to customer inquiries, the
company gradually added clothing and accessories. By 1977, sailboat hardware had
been eliminated from the companys product line. Lands End went public in 1986
and was purchased by Sears in mid-2002 to enhance Sears apparel division.
Lands End offers traditional, casual apparel for men, women, and children via
catalogue (The Lands End Catalogue; Lands End Men; Lands End Women; Lands End
Women, The Plus Size Collection; Lands End Kids; Lands End for School; Lands End
Home; Lands End Business Outfitters) and retail outletsthe company runs about
30 retail and outlet stores in the United States, United Kingdom, and Japan, and its
products can also be found in parent company Sears stores. Lands Ends primary
customer base is middle-aged, married professionals. In addition to clothing, the
company also markets accessories, home goods, luggage, holiday items, and corporate
gifts to consumers.
Lands End operates 16 outlet and inlet stores in four statesWis., Ill., Minn.,
and N.Y.plus three outlet stores in the United Kingdom and one in Japan. The
company primarily markets to consumers via its catalogues and mails out more than
270 million catalogues annually worldwide.
Lands End was a successful early entrant to e-tailing. (It began selling products
online in 1995.) Today, Landsend.com is the worlds largest retail Web site (in business
volume) and offers such innovative features as:
a My Virtual Model service that allows customers to create a 3-D model of
themselves and try on clothes before they buy online;
a My Personal Shopper service that suggests products to customers based on the
preferences that they provide; and
Shop With A Friend, which allows two customers to browse the Web site together,
communicate with one another, and add items to a single online shopping cart.

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Lands End has a reputation for excellent customer service. Some examples of its
customer-friendly policies are listed below.
The Guaranteed.Period. return policy allows customers to return any items at
any time for any reason for refund or replacement.
Specialty shoppers are available to help customers with sizing questions, gift ideas,
and wardrobe coordination from 7:30 a.m. to midnight every day.
The company will hem and cuff trousers free of charge for customers and supplies
swatches of fabric (as well as additional buttons or luggage parts or repairs) to
customers who request them.
The Lost Mitten Club will replace any childs mitten lost in the same season at
half the price of a pair, with free shipping.
The Customer Experience at Lands End

The underlying philosophy at Lands End is that what is best for the customer is
best for the entire company, and the organization strives to provide each customer
with a personal experience that builds a lasting relationship. The founder of Lands
End, Gary Comer, summarized Lands Ends work ethic and dedication to customer
service in The Lands End Principles of Doing Business.20 These eight principles
shape the way business is conducted throughout the various departments in
the organization.
1. We do everything we can to make our products better. We improve material and
add back features and construction details that others have taken out over the
years. We never reduce the quality of a product to make it cheaper.
2. We price our products fairly and honestly. We do not, have not, and will not
participate in the common retailing practice of inflating mark-ups to set up a
future phony sale.
3. We accept any return, for any reason, at any time. Our products are guaranteed.
No fine print. No arguments. We mean exactly what we say Guaranteed.
Period.
4. We ship faster than anyone we know of. We ship items in stock the day after we
receive the order. At the height of the last Christmas season the longest time an
order was in the house was 36 hours, excepting monograms which took another
12 hours.
5. We believe that what is best for our customer is best for all of us. Everyone here
understands that concept. Our sales and service people are trained to know our
products and to be friendly and helpful. They are urged to take all the time
necessary to take care of you. We even pay for your call, for whatever reason
you call.

20 1992, Lands' End, Inc. All rights reserved.

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6. We are able to sell at lower prices because we have eliminated middlemen, because
we dont buy branded merchandise with high protected mark-ups, and because
we have placed our contracts with manufacturers who have proved that they are
cost conscious and efficient.
7. We are able to sell at lower prices because we operate efficiently. Our people are
hard working, intelligent, and share in the success of the company.
8. We are able to sell at lower prices because we support no fancy emporiums with
their high overhead. Our main location is in the middle of a 40-acre cornfield in
rural Wisconsin.
To contribute to these principles, the Lands End customer call center is staffed
24 hours a day, seven days a week. During the off-peak times of year, the call center is
staffed with approximately 2,300 sales representatives, while during the peak season,
this number increases to about 3,100.
Lands End has four primary call centers through which customers can experience
the organizations customer service. The first center is located at the companys
headquarters in Dodgeville, Wis. This was the first call center for Lands End and
began in 1979 with only nine telephones. The Dodgeville center is the only location
that is open 24 hours a day and also handles incoming calls from the United Kingdom
and Canada. There are between 600 and 900 representatives at this center that focus
exclusively on customer sales. These representatives handle various types of calls
including sales for Lands End for Men, Lands End for Women, Lands End for
Kids, Lands End for School, and calls received from the 800 number provided on
the Lands End Web site. In addition, this call center receives incoming calls on behalf
of the Wisconsin Board of Tourism organization.
Some of the more specialized services provided by the Dodgeville call center
include the first-time buyer call-back program. The company has been providing this
service since 1999. Two weeks after a customer has made his or her first purchase from
Lands End, a customer service representative will call that customer to ensure that
he was satisfied with the order. This practice has proven to be successful in increasing
customer retention, as well as re-purchasing in the future.
Another similar service provided by the Dodgeville representatives is the call-back
program for unavailable items. Representatives personally call a customer to let him
know that an item that he ordered is unavailable. As with the first-time buyer callback program, this service has proven to have positive results with customer retention,
as well as adding money to the overall order since the customer usually orders an
additional one to two items to substitute for the unavailable item.
Another call center is located in Cross Plains, Wis. This center was added to
the organization in 1988 and is open from 6:00 a.m. until midnight, seven days a
week. There are approximately 600 to 800 representatives working at this center,
including half of the group that handles calls originating from the number posted
on the Internet. (These calls are divided between the representatives at this center

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and the Dodgeville center representatives.) Additionally, this center receives all calls
originating from Sears locations.
Reedsburg, Wis. is another call center location for Lands End. This is one of the
organizations larger centers, with approximately 700 to 1,000 representatives. The
Reedsburg location was built in 1992 and is open seven days a week between the
hours of 7:00 a.m. and 11:00 p.m. This center, as with the other call centers, receives a
variety of calls for different areas of Lands End merchandise. Similar to the Dodgeville
center, this center was approached by an external organization, Weber, the grill
manufacturer, to handle its incoming calls as well. Lands End officers have indicated
that these external partnerships have proven beneficial to all parties involved.
The most recent addition to the call centers is located in Stevens Point, Wis.
This center was opened in 2001 and is staffed by approximately 250 representatives
during the peak customer season between the hours of 8:45 a.m. and 2:00 a.m.
Approximately 150 of the representatives handle Lands Endrelated calls, while the
remaining 100 representatives handle calls from Sears Direct.
Evolution/History of Managing the Total Customer Experience

There was no particular impetus that caused Lands End to concentrate on the
total customer experience. Providing a positive customer experience has always been a
crucial part of everybodys job function and the overall company culture. Even when
the company has gone through significant changes in its environment, leadership has
stressed the need for there not to be a resulting change in the customer experience.
Since Lands End believes that a strong synergy exists between employee satisfaction
and customer satisfaction, they feel that one way to ensure a consistent positive
customer experience is to maintain a positive employee experience as the company
undergoes periods of transition.
One of the significant changes was the companys first restructuring in 1999,
which resulted in a number of layoffs. Naturally, the remaining employees experienced
a mixture of fear and decreased morale as a result of the restructuring. Lands End
leadership reinforced its strong commitment to the employee base to ease the
resulting anxiety. To do this, the company has an open-door policy when it comes
to communicating with employees. If an employee requests to meet with a member
of management, the organization has committed to meeting with that employee
within 24 hours of the request. Employees are encouraged to speak with the person
with whom they feel comfortable, regardless of that persons title. This has allowed
employees to feel as if they are being listened to and that their concerns are not
being ignored.
Additionally, Lands End utilizes multiple communication channels to keep
employees informed and address any concerns. These channels include quarterly
meetings, communication meetings, distributing information via the company
intranet, and utilization of the company newsletter.
Another significant change for Lands End was becoming part of the Sears
organization three years ago. To assist in this transition, Lands End began an
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Ambassador program, where Lands End employees have been placed in select Sears
stores to train Sears personnel on the product lines. This has resulted in positive
feedback from customers, as well as an increase in sales. Fortunately, Sears has
given Lands End a significant amount of autonomy and has not changed its unique
culture. This has been instrumental in not causing a sense of culture shock for Lands
End employees.
As a result of stressing the importance of employee relationships, Lands End
was able to re-enter the 100 Best Companies to Work For, as ranked by Fortune
magazine in 2002. The leadership at the organization points to the tenets of respect,
pride, camaraderie, trust, and fairness in employee relations as crucial factors in
making this list.
Customer Touch Points/Access Mechanisms

Customer Sales and Service

Figure 29 below illustrates the various elements of the


customer sales and service division.
Speciality
Customer
Shoppers
Sales
A brief description of some of these touch points
follows.
Business
Learning and
Business techThis section is the group that assists with
Tech
Development
performing analytic processes.
ACEThis stands for Achieving Customer Excellence
and encompasses customer management. Lands End
believes that it is not only technology that provides
ACE
Promotions
quality customer service but also the people and
processes that are put into place.
Customer serviceThis small group handles secondary
Internet
Order
Services
tier calls, which cover issues such as lost packages, etc.
Customer
InternetThis is a small group that handles incoming
Service
e-mail messages from customers.
Figure 29
PromotionsThis group conveys to employees what
promotions have been created by the marketing
department that they should be aware of.
Learning and developmentThis group provides employee training, which is a
primary focus of the company.
Specialty shoppersThis product group of about 40 individuals has a high degree
of product knowledge to assist employees when needed.
Some other significant touch points for customers include those listed below.
Order editingThis group is tasked with correcting all orders that have been placed
on hold, including orders where the items were not available and orders where a
credit card had been placed on hold.
Return specialistsThese specialists, located on the Dodgeville campus, review,
research, and resolve more complex returns where contact needs to be made with
the customer.
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Mail openingThis team opens orders that have been physically mailed to the
company. This accounts for a small percentage of orders, but some customers still
prefer this method.
Gift certificatesThese representatives are tasked with the daily processing and
mailing of all gift certificates. The first electronic gift certificate was ordered
February 4, 1999, and gift cards were introduced in spring 2004.
PartsThrough this service, customers can get a needed part for an ordered item,
such as shoelaces or buttons. Additionally, if a customer loses an item, such as one
mitten, they can receive a replacement for one-half of the original cost through
the Lost Mitten Club.
SwatchingThis is a free service that has grown tremendously over recent years.
Currently, the company is sending out over 300,000 swatches a year for all items
except leather, cashmere, and quilts. After performing an audit, Lands End has
found that 73 percent of the time a customer who has requested a swatch will call
back to place an order.
Landsend.com

Lands End estimates that approximately 50 percent of its business is conducted


via the Internet. Even though the Web site has been designed to be user-friendly, if
a customer decides to contact a representative after shopping on the Web site, 63
percent of customers will make contact via telephone, 25 percent will contact via email, and 12 percent use Lands End Live.
Lands End Live is a feature that was introduced to customers August 30, 1999.
This feature allows Internet customers to work with a Lands End representative
through live text chat or by clicking a button on the Web site that asks a representative
to call them back. Within the 12 percent of Lands End Live contacts, 87 percent are
text chats, while 13 percent select the call me back feature.
UNDERSTANDING THE BUSINESS CASE FOR MANAGING THE TOTAL
CUSTOMER EXPERIENCE

We believe what is best for the customer is best for all of us.
Lands End business operating principle no. 5
As discussed previously, there was no explicit catalyst for Lands End to focus on
the total customer experience. Providing customers with a positive experience and
building lasting relationships has always been the mission of the company.
Lands End has taken this commitment to a culture of customer service and
aligned it with its commitment to the employee base. The overall philosophy is that
strong employees will create a strong customer experience. The company takes pride
in customer feedback, and various customer letters and testimonials decorate the
hallways of the company facility.

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In order to foster a positive culture for employees, and consequently the customers,
Lands End encourages employees to provide input and become involved in decision
making. This collaborative work environment includes a casual dress code every day;
having everyone be on a first-name basis with everyone else; and modern, state-ofthe-art facilities. The goal is to make the company atmosphere similar to a family
atmosphere. The fact that the various facilities are all located in small town settings
has made this objective even easier to attain. It is not uncommon for employees to see
each other when shopping or during other activities outside of the office.
ORGANIZATIONAL STRUCTURE AND SUPPORT IMPLICATIONS OF MANAGING THE
TOTAL CUSTOMER EXPERIENCE
Structure and Accountability

In managing the total customer experience, Lands End has created a structure
that they believe will best deliver a positive customer experience. Figure 30 outlines
the corporate structure. Some of the executives listed in this chart have been employees
for more than 20 years and are, therefore, also a tribute to the companys strong
commitment to its employees.

The Lands End Customer Sales and Services and


Lands End Business Outfitters Organizational Chart
Vice President CSS and LEBO
Joan Conlin

Executive Assistant
Amy Gordon

Director
LEBO Operations
Jackie Johnson-Caygill

Senior Manager
Special Services
Mary Judkins

Senior Manager
RB Contact Center
and Promotions
Rhonda Clerkin

Senior Manager
DV and CP Contact Centers
Diane Huza

Director
Business Operations/ACE
Kurt Van Dyn Hoven

Figure 30

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lands' end

The vice president of CSS and LEBO reports directly to the executive vice
president of employee services and customer sales. The senior manager of the special
services department, indicated above, oversees the handling of all incoming mail,
Internet inquiries, and the quality program. The senior manager of the Reedsburg
(RB) contact center manages customer service at this center, as well as promotions
and the specialty shoppers group, while the senior manager of the Dodgeville
and Cross Plains contact center oversees a portion of the Internet group and
employee services.
As discussed previously, all employees throughout the organization are tasked
with the responsibility of promoting a positive customer experience, so there are no
champions specifically responsible for driving change toward a customer-oriented
culture. The importance of the customer experience is evident at many levels,
including the executive level, as illustrated by the founders creation of the Lands
End principles of doing business, cited previously.
Contributors to a Customer-centric Culture

Leadership at Lands End is one of the more impactive contributors to the


customer-centric culture. Company leaders spend a significant amount of time
fostering this culture. The customer sales and service department has certain
expectations of its managers and therefore encourages them to:
be innovative in order to stimulate progress,
be accountable for their people,
communicate with their employees,
have the courage to see reality and then act on it,
show integrity and build trust, and
set a good example.
As mentioned in the above list, effective communication with employees is a
critical factor in promoting a positive working environment, especially since Lands
End has experienced organizational changes. Although the company believes faceto-face communication is the most advantageous method, several other channels are
utilized by company leaders to keep employees updated as to company developments.
These channels include the company newsletter, Company Threads; quarterly meetings
with the CEO; regular department meetings; anniversary luncheons; and birthday
meetings, among others.
Role of the Employee in the Customer Experience

As discussed, employees play a pivotal role in managing the total customer


experience at Lands End, and the company views its employee loyalty as unique. The
average length of service for regular employees is 11 years. There are 2,600 employees
who have more than 10 years of service and 250 employees with more than 20 years
of service. Lands End recognizes this kind of service by giving service awards to
employees at the 10-, 20-, and 25-year mark.
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Lands End believes that employees cannot be recognized frequently enough, so


there are also other forms of day-to-day recognition for employees. These include
celebrations of key project milestones, spot bonuses, leader participation in employee
events, and leader recognition kits that serve to convey appreciation, birthday wishes,
etc. Additionally, there are a number of pieces of recognition at the division level,
including peer-to-peer recognition, cook-outs, ice cream socials, pot-luck lunches
before the peak season, and Bravos. The Bravo is an example of recognition
between employees, where one employee recognizes another in writing and highlights
how that employee has provided excellent customer service.
Since the employees at Lands End are crucial to providing a beneficial customer
experience, the company also stresses the importance of training to ensure a consistent
customer experience. Without adequate training, employees will not have the
necessary product knowledge to assist customers with their orders.
The learning and development department of Lands End is in charge of providing
employees with the necessary training. Although this department is housed at the
Dodgeville campus, there are also representatives at the other centers for the sake of
consistency. The expectations of the learning and development department are to
support the eight principles of doing business at Lands End, while upholding the
company culture, serving as a role model, and focusing on quality and teamwork.
The training process for new hires is extensive, but the company feels it is necessary
in order to keep customer service consistent. The goal is for customers who call the
call centers to have the same experience, regardless of the representative who answers
that call. Additionally, having associates that are well-trained and can easily access
requested information lends itself to achieving first-call resolution. A new employee
will receive approximately 77 hours of training. The training is conducted daily for
six to seven hours a day, over two to three weeks. Approximately 10 hours are spent
on product training, 17 hours on service training, 20 hours on systems and process
training, and 23 hours on handling live calls along with a trainer to provide support
if needed.
In order to keep current employees updated and in the know, two to three
hours of continuing training is provided on a monthly basis to anyone with customer
contact. This training covers anything new appearing in catalogs, as well as systems
training. Additionally, company leadership also receives continuing training on a
monthly basis. Approximately 1.5 hours per month is spent developing consistent
leaders by focusing on coaching techniques, preserving the company culture, and
aligning communication with strategic initiatives.
When selecting trainers, Lands End uses veteran sales representatives who
can provide personal experiences to help new employees learn the process.
In 2004, 119 trainers were used for basic training, continuing training, and
individual mentoring.

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Customer Support Processes

As previously discussed, Lands End has specific customer support representatives


who are tasked with closing the loop with customers on issues such as out-of-stock
items and follow-up calls to first-time buyers. Additionally, the call centers in both
Dodgeville and Reedsburg provide Tier 2 support to the front-line representatives
for calls that need to be escalated, such as replacement and special orders. These
representatives also provide service to international customers through mailings to
180 countries outside of the United States.
INVESTIGATING THE BUSINESS PROCESS CHANGES REQUIRED TO CREATE A
total CUSTOMER EXPERIENCE

In order to enhance the overall customer experience, Lands End has redesigned
certain business processes to improve the quality of the total customer experience.
These processes include:
customer transfers,
product repairs,
product packaging,
problem resolution, and
returns handling.
Continuously improving product quality and offering new services with the
customer in mind is another crucial ingredient in managing the total customer
experience at Lands End. Lands End designers add numerous features into the
products to add quality, as well as distinguish them from those of competitors. For
example, the locker loop is included on the back of shirts, which is a unique feature
rarely seen elsewhere. All features like this one are also added to the products for
children as well. During the training process, trainers ensure that the front-line
customer service representatives literally get their hands on the products so that they
can learn about the product features and better convey product details consistently
to customers.
To further enhance the customer experience, the customer service representatives
make suggestions or offerings based on past customer orders. One such example is
the Great Go-Togethers program, which has been in place for the past 4 years.
Under this initiative, if a customer orders a pillow, a prompt will appear to the sales
representative reminding him or her to also offer the customer the opportunity to
purchase a pillow protector. This is considered a natural pairing. Similar procedures
are in place for ensembles; if a customer buys a swimsuit, then the representative will
also inquire if that customer also needs sandals or towels. Not all customer service
representatives were comfortable with this approach at first, so the change was made
to only have the representative make these offers if it feels comfortable to them.
Lands End estimates that approximately 30 percent of the sales representatives feel
comfortable enough to use this technique.

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Another service aimed at enhancing the customer experience is the Smart Service
program, which is currently in the pilot stage of development. The idea behind this
program comes from collaboration between customer service and the direct marketing
group. An example of this service is when a customer has purchased an item in the
past that has later been updated or improved, that customer would be notified of the
improvement the next time they contact the company to place an order. Another
marketing approach is to emphasize certain products to a customer based on their
geographic region, such as more light-weight clothes to customers in warmer climates.
One other technique includes identifying customers who have purchased high-end
items. When a representative receives a call from one of these customers, he or she will
receive a prompt to inform that customer of other luxury items, such as cashmere.
Again, the customer service representative must be comfortable with this approach
and have a seamless, natural approach to offering these items to the customer.
COMPLETENESS/CONSISTENCY AND EASE OF ACCESS
Information/Content Repositories and Accessibility

Regarding information access, Lands End indicates that the following is


information that is available to customer-facing employees as they communicate
with customers:
unique account identification,
unique contact identification,
customer preferences and permissions,
access to product/account information across product lines,
access to current orders/transactions,
access to past orders/transactions,
access to bills and invoices,
access to customer service incidents, and
access to and update of customer information.
With regard to the customer, the company categorizes it as very easy for
customers to locate any product or service information that they need in their
preferred access channel. The companys philosophy is one of meeting the customer
in their channel of preference, rather than forcing them to use any particular
(less-costly) channel, like the Web site.
Customer Self-Service Tasks

The following is a list of the customer self-service tasks that Lands End classifies
as very important to offer:
product/service information;
product/service selection;
product/service purchase;
product delivery status;

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product usage, training, or guidance;


problem resolution; and
customer feedback.
Additionally, Lands End is able to provide real-time, self-service access to the
customer tasks of:
product/service information;
product/service selection;
product/service purchase;
alerts and notifications;
change of customer information (e.g., change of address); and
product usage, training, or guidance.
INVESTIGATING THE TECHNOLOGY ENABLERS TO CREATE A
total CUSTOMER EXPERIENCE

A number of technology enablers contribute to the overall customer experience


at Lands End. One such enabler is Lands End Custom Clothing, which is one of
the more recent uses of technology for customer needs. This system was founded
on the premise that one size does not necessarily fit all. Lands End realized that size
availability of apparel and how well it fits are primary sources of customer frustration.
For example, a size six article of clothing from one store may fit differently than
the same size from a different maker. The Custom Clothing idea was created to
address this issue. The idea of this service is for customers to design their own clothes
and have them custom made to their size requirements. This solution provides an
infinite selection for the customer and zero inventory for Lands End. The result of
this initiative was increased customer satisfaction and the establishment of deeper
customer relationships for the company. At first, this service was exclusively provided
via the Internet, but because of good response, it is now a multi-channel option.
To assist customer service representatives in this endeavor, Lands End utilized
Smart Sizing software. This software compiles consumer size data, self-assessment
information, and garment choices and produces a fit prediction. The software then
uses this information and tests it versus the historic consumer size database. The
result is then a pattern generation for the specific selection. The cost range for this
service ranges from $49 to $79, which the company feels is very competitive. This is
one example of how Lands End has used technology to provide a positive customer
experience. To date, this service has also proven to be an effective mechanism for
increasing profits.
Technology is also important for staffing and scheduling of employees, since the
highest expense in the call centers is agent wages. Staffing for call centers is done in
four week intervals. Forecasting and scheduling are particularly important. Historical
data assists with this type of forecasting. For example, if the direct marketing group
estimates that a catalog will generate a certain amount of revenue, then the historical

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data will translate that figure into a number of calls, which will enable the department
to accurately staff the center at the relevant time. Aspect technology is the primary
system used for forecasting. Lands End finds this system reliable, calling it the bread
and butter of forecasting.
Once the schedules have been established, they are managed on a daily basis.
Centerwide floor supervision provides the needed management. This type of
supervision looks at the entire enterprise, as well as the specific centers. Within the
individual centers, supervisors constantly monitor activity by the half-hour, and then
make staffing recommendations after predicting activity for future half-hours.
In order to do this accurately, supervisors need real-time staffing information.
As a result, the Intra-day team process was created as a form of exception reporting.
Any exception to the schedule should be reported, so a manager can then look at the
report to determine if the necessary staff is present. For example, if 100 customer
service representatives should be on the call center floor at a certain time, and there
are only 80, then the difference should be reflected in the exception report. If there is
a deviation, then that means a staffing issue must be immediately addressed.
Call routing is another area where technology plays a major role in the customer
experience. Lands End must route calls from 375 800 numbers, with 95 percent of
those calls coming in on the companys 12 main numbers. For its call routing needs,
Lands End uses the CISCO ICM 4.6.2 and Spectrum 8 systems.
All calls are supervised from Command Central at the Dodgeville campus. From
here, there is remote access to all the call centers, as well as a live, real-time view of all
calls received at all the sites. To ensure consistency, all call routing or scripting changes
are handled at the Command Center.
Some of the other call center products and solutions used include:
Aspect Series 6.11 WFM (workflow management),
Witness Systems e-Quality,
Cisco Collaboration Server (allows for the Web chat feature),
Sprint (Lands Ends inbound/outbound interexchange carrier), and
Nortel-Meridian PBX (Private Branch Exchange) for office phones.
Various modes of Web collaboration also contribute to Lands Ends use of
technology to serve the customer who decides to access the company through the
Internet. In addition to the live text chat feature, which allows a customer to avoid a
voice call when placing an order or requesting information, there is also a page-sharing
feature that allows one party to push a Web page for the other party to view. Another
useful tool is the Form Share feature, which allows a customer to complete a Web form
jointly with a sales agent. Of all these Web features, Lands End indicates that the text
chat feature is the most used Web tool by customers.

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lands' end
MEASURING THE IMPACT OF MANAGING THE TOTAL CUSTOMER EXPERIENCE
Customer Measures

When measuring the customer experience, Lands End has a number of service
goals. The first is to answer 90 percent of incoming calls in 20 seconds or less.
Additionally, the company strives for between 86 percent and 92 percent occupancy
rate, which refers to how busy the representatives are during the work day. The
company also has a goal of maintaining less than a 1.5 percent call abandon rate. In
2004, the service results for the contact centers were a service level of 90 percent, an
occupancy level of 88 percent, and an abandon rate of 1.85 percent. Additionally,
Lands End tracks first-contact resolution and has a current performance level of
94 percent.
Examples of financial measures that Lands End analyzes are the cost per call and
the total variable expenses for the customer sales and services division as a percent of
net sales.
The Linkage Between Employee Satisfaction Information and Customer Satisfaction

Although Lands End does not have concrete metrics to correlate employee
satisfaction to customer satisfaction, one of the original guiding principles of the
company is that what is best for the customer is best for the company. Lands End
believes that a simple approach is best when measuring customer satisfaction (or, as
stated by one of the site visit hosts, It is not rocket science, but you can make it rocket
science.) and that it is fruitless to attempt to quantify areas that are more qualitative.
As the Lands End staff describes it, they look at calls and numbers, but they talk more
to behaviors.
To capture employee satisfaction, the Great Place to Work survey is administered
by the company once a year to a random sample of employees. This survey, which
is the employee survey that the company spends the most time monitoring, is also
administered to the entire employee population every three years. The survey gauges
employee feelings and perceptions in areas such as recognition, company policies, the
work environment, and empowerment.
Customer Feedback

To Lands End, customer satisfaction is not enough; they also want to achieve
customer loyalty. Empowering the front-line employees to do whatever is necessary to
please a customer is a major contributor to fostering customer loyalty and developing
lasting relationships. To measure customer satisfaction, customers are surveyed
on a quarterly basis. Additionally, focus groups are also conducted on a monthly
and quarterly basis to collect customer feedback. Daily efforts to collect customer
feedback include the logging of customer support and service calls; reviewing
e-mails, regular mail, and suggestion cards; and debriefing sessions with front-line
customer personnel.

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SUMMARY AND LESSONS LEARNED

The site visit to Lands End illustrated the following best practices in managing
the total customer experience:
building a truly customer-centric culture does not happen overnightit can take
decades;
having knowledgeable personnel that customers can contact by telephone, e-mail,
or live chat is critical, even for customers who prefer using the Internet;
investing in training and retaining employees is a key ingredient in managing the
customer experience;
make the sales associates into customer advocates by encouraging them to bring
customer ideas to the forefront;
a truly customer-centric culture will enable sales representatives to naturally do
the right thing for the customer; and
building customer loyalty through quality products and service can alleviate the
need for separate tiers of service for different types of customers.
To summarize, Lands End points to the following as necessary steps to successfully
manage the total customer experience:
empower front-line employees,
invest in employee training,
maintain the quality of the products,
be a great place to work,
put the customers first,
focus on creating repeat customers,
make it easy for customers to contact a live person 24 hours a day, and
measure what matters to the customer.

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m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

Index

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m a n a g i n g t h e t o ta l c u s t o m e r e x p e r i e n c e

i n d e x

Index
(Includes sections headings
and figure titles)

Air Products and Chemicals, pages 7183

Completeness/Consistency and Ease of Access, pages 7980


Investigating the Business Process Changes Required to Create a Total
Customer Experience, pages 7879
Investigating the Technology Enablers to Create a Total Customer Experience,
page 81
Measuring the Impact of Managing the Total Customer Experience, pages 8182
Organizational Structure and Support Implications of Managing the Total
Customer Experience, pages 7678
Summary and Lessons Learned, pages 8283
Understanding the Business Case for Managing the Total Customer Experience,
pages 7476
APCIs Brand Bulls Eye, Figure 14, page 47 and Figure 20, page 75
Business Results from Customer Experience Investments, pages 5859
Central Coordination/Planning; Distributed, Field-Level Implementation, page 35
Cisco Customer Experience: Common First-Line Support, Figure 9, page 31 and Figure 21,
page 87
Cisco Systems, pages 8595
Investigating the Technology Enablers to Create a Total Customer Experience,
pages 9092
Measuring the Impact of Managing the Total Customer Experience, pages 9395
Organizational Structure and Support Implications of Managing the Total
Customer Experience, pages 8890
Summary and Lessons Learned, page 95
Understanding the Business Case for Managing the Total Customer Experience,
pages 8688
Completeness/Consistency and Ease of Access

at Air Products, pages 7980


at Lands End, pages 107108

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i n d e x
Customer Access Mechanisms and Touch Points, Figure E.4, page 13
Customer Sales and Service, Figure 29, page 101
Customer Segmentation Deployed Through a Branded Customer Experience at Air Products,

Figure 10, page 39

Customer-centric Values at Best-Practice Partners, Figure 3, page 19


Effectiveness of Customer Self-Service Capabilities, Figure 16, page 63
Facilitating Software, Figure 19, page 68
Factors Included in Recruiting Employees to Deliver a Positive Total Customer Experience,

Figure 4, page 22

Greatest Contributors to a Customer-centric Culture, Figure 1, page 17


How Customer Interaction Network Works, Figure 24, page 90
Importance of Employees in Managing the Total Customer Experience Reinforced Through
Performance Management Systems, page 25
Industry Representation, Figure E.1, page 11
Investigating the Business Process Changes Required to Create a Total Customer Experience

at Air Products, pages 7879


at Lands End, pages 106107

Investigating the Technology Enablers to Create a Total Customer Experience

at Air Products, page 81


at Cisco, pages 9092
at Lands End, pages 108109
Key Business Levers, Figure 23, page 89
Lands End, pages 97111
Completeness/Consistency and Ease of Access, pages 107108
Investigating the Business Process Changes Required to Create a Total
Customer Experience, pages 106107
Investigating the Technology Enablers to Create a Total Customer Experience,
pages 108109
Measuring the Impact of Managing the Total Customer Experience, page 110
Organizational Structure and Support Implications of Managing the Total
Customer Experience, pages 103106
Summary and Lessons Learned, page 111
Understanding the Business Case for Managing the Total Customer Experience,
pages 102103
Lessons Learned About How Customer Experience Leaders Operate, page 35
Lessons Learned, page 68
Linking of Customer Experience to Brand Promise, pages 1819
Measuring the Impact of Managing the Total Customer Experience

at Air Products, pages 8182


at Cisco, pages 9395
at Lands End, page 110

Mechanisms for Fostering Accountability for the Customer Experience, Figure 5, page 25
Metrics Used to Track Improvements in the Customer Experience, Figure 12, page 43

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Migration to a Customer Interaction Network at Cisco, Figure 15, page 50
New Outsource Model for Front Line, Figure 25, page 91
Organizational Structure and Support Implications of Managing the Total Customer Experience

at Air Products, pages 7678


at Cisco, pages 8890
at Lands End, pages 103106

Outsourcing the Common Front Line and Incenting the Right Behavior, Figure 26, page 92
Percentage of Organizations Able to Provide Real-Time, Self-Service Access,

Figure 7, page 29
Primary Customers, Figure E.2, page 11

Process Redesigned to Improve the Quality of the Customer Experience, Figure 8, page 30
Providing Customers with a Consistent View of Their Account Information, pages 6566
Recruiting and Retaining Customer-Friendly Employees, pages 2123
Sales/Service Channels, Figure E.3, page 12
Sample Customer Experience Measures, Figure 13, page 45
Stages in the Customer Life Cycle in Which Effectiveness Is Measured, Figure 11, page 41
Summary and Lessons Learned

at Air Products, pages 8283


at Cisco, page 95
at Lands End, page 111
Survey Methodology, Figure 28, page 93

Technologies Used to Make the Customer Experience a Seamless Process,

Figure 18, page 67

The Evolution of the Contact Center, Figure 22, page 88


The Importance of the Customer Experience Recognized at the Highest Levels, page 35
The Lands End Customer Sales and Services and Lands End Business Outfitters Organizational
Chart, Figure 30, page 103
The Lands End Principles of Doing Business, Figure 2, page 18
The Role of Executive Steering Committees and Other Executives in the Customer Experience,

page 34

To Anticipate Needs, pages 3738


To Deliver Products and Services Differently to Each Segment, pages 3840
Training Customer-Friendly Employees, pages 2324
Types of Customer Information Available to Customers, Figure 6, page 28 and Figure 17,

page 64

Understanding the Business Case for Managing the Total Customer Experience

at Air Products, pages 7476


at Cisco, pages 8688
at Lands End, pages 102103

Value of New Vendor Management Model, Figure 27, page 92

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