Kim MacGillavry, Vice President Customer Experience at DHL Freight, discusses why to become truly customer-centric you need to start with your people, not your processes.
Companies around the world and across industries are facing similar challenges. Markets are mature, products and services are commoditizing and technology is empowering customers. The question of how to be competitive under these conditions is more compelling than ever before. It turns out that companies that deliver great experiences to their customers grow faster and more profitably than others. The reasons are simple; they are better at keeping their customers and find it easier to attract new ones.
It has generally been accepted that Customer Experience (CX) is overtaking price and product as a key brand differentiator. Many companies have therefore appointed people to look after this area. Under their leadership, they are investing a lot in different Customer Experience Management (CEM) programes. However, it is questionable whether they are having the intended effects. There seems to be a big difference between the effort companies are making in the area of CEM and the impact it is having on their customers. Often the positive impression that companies have of the CX that they are delivering is not shared by their customers.
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What is the The Correlation between KPIs and Customer Satisfaction?
An important reason for this is the way companies are organized. Most organizations are structured in a matrix that is divided by functional silos and country or business unit interests. As a result, the dominant logic of a company is a departmentalized view of the market and the customer. This determines how companies define and measure success. Each department measures its functional performance. There are finance, sales, operations and other scorecards with lots of different KPIs. If these KPIs are good, then everyone assumes that the customer is happy.
It turns out that functional KPIs are not good predictors of customer satisfaction and loyalty. There are plenty of examples where functional KPIs indicate that a company is delivering a great service, but when customers are asked whether they are satisfied doing business with the company or whether they would recommend the company to others they give a different answer. At the end of the day, everyone delivers a service to the customer and everyone is responsible for the CX. It is not something that can be delegated to a specific department or concerns the front line alone.
In practice, it seems to be a real challenge for companies to look at customers from the outside in rather than from the inside out. There are numerous touch-points between companies and their customers. When customers do business with a company they interact in many ways with each other. Each interaction will leave an impression. Some interactions are better than others. However, customers have only one opinion of a company and that is determined by the sum of all of those interactions and their impressions put together. So, to really improve the customer experience it is important to manage all the interactions along the customer journey that cuts across the organization and its departments.
Are Tools and Processes the Answer?
Systems and tools can help, but on their own they are insufficient. A recent survey(1) among customer experience executives in a number of large companies that have well-developed CEM programmes, revealed an apparent contradiction. All of them strongly agree that CEM is considered important in their company. However, when asked if their CEM programs is successful they are not sure. All respondents mentioned the following challenges: insufficient management buy-in, a company culture that is not customer-centric enough and a lack of collaboration across departments.
An assessment of the maturity of the CEM programmes of a number of different companies confirms that along each dimension of CEM there is a gap between where the company wants to be and where it is today. The gap tends to be the biggest in the area of CX tools and processes. Perhaps this is the reason why so many companies believe that investing in customer-centric tools and processes is a priority. The expectation being that closing that gap will lead to a better CX. The right conclusion, however, is that they need to work on all dimensions at the same time.
And if there is a need to prioritize, tools and processes are the last steps and not the first step to take. Tools and processes do not make the workforce more engaged and does not make better leaders out of managers. Hence, on their own, they will not result in a more customer-centric culture that strengthens your brand. Instead, having a clear vision for the company and a well-defined brand is essential for managers to lead according to the company’s cultural and brand values. This will ensure they build a customer-centric culture and an engaging workplace where employees are able to use the tools and willing to follow the processes that make the customer experience better.
What is The Link Between Customer-Centricity and Employee Engagement ?(2)
Take for example the relationship between customer-centricity and employee engagement. DHL Freight worked with Gallup to understand the link in more detail. By measuring the level of employee engagement measured against Gallup’s Q12 questions and the level of customer-centricity against a battery of customer-centricity questions, it became evident that employee engagement is directly and positively correlated with customer-centricity.
In other words, employees that are more engaged tend to have a more customer-centric mind-set and behavior and vice versa. This is all the more significant since Gallup research has shown that the vast majority of employees around the world are not engaged at work. This suggests that most CEM programs will struggle to achieve their objectives unless they also address the happiness, engagement and well-being of the employees.
What are The Responsibilities of the Leadership Team ?
The role of leadership is critical in this context. What distinguishes happy from unhappy employees are things like being encouraged in their development, making their opinions count, getting recognition and praise. These are all leadership responsibilities. This shows that feeding employees’ VOC data will not necessarily make them more customer-centric. Managers need to focus on the engagement, happiness and well-being of their people as these things automatically result in a more customer mindset and behavior of the employees.
Another key point that drives employee engagement is communication and cooperation. Intuitively managers believe that working conditions are the biggest source of discontent among employees, but it turns out that communication and cooperation is equally important. Even if working conditions are perfect and you have the best systems and tools, if people do not work together they cannot do their job properly and they will not be happy at work. All of that rubs off on customers. Good collaboration within an organization is key to making it easy for people to do their job and to ensuring they are able to meet customer expectations. This is how employee engagement is directly connected with customer engagement. Making customers happy is way to make employees happy and vice versa.
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This is summarized in the profit chain that was originally introduced by Ken Blanchard. Great results come from happy customers. To make customers happy, everyone needs to deliver a great customer experience. Employees are able and willing to do so if they are happy at work and collaborate well together. It is the role of the leadership team to ensure there is a customer-centric company culture where people find their happiness by collaborating together and serving customers. At the end of the day CEM is about getting the interaction right between managers and their employees, between people across the company and between employees and their customers.
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What is DHL Freight’s CEM Program ?
It is on these principles DHL Freight built its CEM program(3). First , the CX team talked to thousands of customers to understand what they expect from the company. Based on these insights they determined the cultural and brand values that make DHL Freight relevant to customers and distinguishes them from competitors. Then they focused on converting the leadership team and ensuring they create a customer centric culture around these values. This was done by coaching country managers, delivering classroom training to senior management teams, defining the leadership Must Dos and implementing customer as well as employee Net Promoter approaches. After that was done, the program was cascaded to all employees through various training and engagement initiatives, such as story-telling and flash mob campaigns as well as a host of brand collateral.
Meanwhile the CX team defined the customer-centric processes that complement the operations, finance and sales processes that are already defined, measured and managed. Only after all that was done did the company then start the development of the systems and tools needed to manage those processes.
As customers judge the company on how well it performs along the whole end-to-end journey it is important that the tools are fully integrated so the customer journey is seamless. These processes cut along different functions so the tools impact not only the customer service (CS) department, but also the people in other departments in the organization that the CS department depends on to respond to customers. In this context, it is critical that the systems and tools create transparency for everyone along the journey.
To become truly customer adaptive it is critical to start with your people and not with your systems.
(1) Establishing best practices in customer experience management is a privately commissioned report from the Oxford Strategy Group of Oxford University on behalf of Kim MacGillavry and Alan Wilson in December 2014.
(2) MacGillavry, K., & Pa, S. (2016). Focusing on the Critical Link Between Employee Engagement and Customer Centricity at DHL Freight. Global Business and Organizational Excellence, 35(4), 6-16. Wiley Periodicals.
(3) MacGillavry, K., & Wilson, A. (2014). Delivering loyalty via customer experience management at DHL Freight. Global Business and Organizational Excellence, 33(6), 7-20. Wiley Periodicals.