Kmart and RACQ are two brands leading the CX charge: Forrester

Australian brands need to get better at making an impact around ‘emotion’

Kmart has successfully adopted a customer-centric approach and recognises CX is the company’s engine of growth.

That’s according to Forrester’s A/NZ senior analyst for CX, Tom Champion, who called out the traditional retailer during the annual Forrester CX Sydney 2018 event as a prime example of a company that’s successfully made a customer-centric transformation.

“Kmart is a fascinating one. The company has done so many different things over the past 10 years and it has made such a difference to it delivers customer experience,” Champion told attendees.

“If you look back 10 years ago, by many accounts analysts thought Kmart was bankrupt. The company was not a place you’d go to Instagram and brag about - like you see today. And you can see all of that difference it has made.

“There’s so much that Kmart has done. Operating hours are simple, the company has stripped back its inventory, so it’s a straightforward place to go to, with brighter lights and simpler pricing. The retailer brought in new homewares, and got better at procurement and sourcing so it can put in good items at a low price.”

Champion said Kmart’s transformation didn’t take a lot of time to achieve, which has resulted in customer advocacy and growing customer loyalty.

“It is very much CX-led and tied to business outcomes. This is homegrown. The Australian and New Zealand Kmart is a different entity to the one in the US. This happens here. It works for Australian customers. And we can pull off this kind of innovation here as well," he said. 

Speaking about what makes the companies successful, Champion said the criteria to measure CX quality includes effectiveness, ease, emotion, retention, enrichment, and advocacy. By studying this criteria, Forrester is able to see “what is the lay of the land” and how organisations compare to one another and what the Australian landscape looks like.

“How are companies going about bringing together all of the diverse business units  together for the sake of the customer, to deliver those exceptional customer experiences.”

Champion also revealed what CX leaders are doing, how they’re thriving through influence and restructure, and what’s making them so successful in terms of their thinking and approach. Most Australian brands are in the “OK bracket”, and often stuck in the same place, when it comes to a CX strategy. In comparison in other countries, many brands are in the “excellent” category and there’s lots of movement between categories.

“We seem to be a little more stagnant when it comes to the customer experience, but that’s not what customers think. So it doesn’t mean it’s not working because we certainly see lots of shuffling happening beneath the surface,” Champion said. 

For example, the big four Australian banks did a complete reshuffle in terms of their CX ranking with customers over a one-year period.

“We see these shifts in the rankings happening, but at the same time, there’s not too much cause for celebration - and commiseration - because it’s still a very congested and compact competition,” Champion said. 

Given it is so compact and congested, he said it raises questions of differentiation and how companies can make an impact.

Put more emotion into it  

One area where there’s enormous room to make an impact is around emotion, Champion said. He claimed Australians are pretty good at ease and effectiveness, but not when it comes to emotion and building a strong connection with customers.

In building emotion and a sense of connectedness, Champion explained there are a number of elite brands that are able to differentiate from the pack and are following a number of strategic principles and specific activities - RACQ being a prime example.

“We see how differentiation is so important. They differentiate at the core. One example that comes to mind is RACQ, a general insurer that’s launching a new bank. It is really a radical decision," he said. 

“It's differentiating and playing in new adjacencies at a level with a clear value proposition, as opposed to just thinking about differentiation as a single journey or as a campaign. So they are going deeper and really making these decisions because it’s a long haul play." 

Successful brands are the ones working at building a customer-centric culture, Champion added.

“These companies are doing it very intentionally and very deliberately. They don’t just leave it as a bi-product to something else. The likes of ING really invents customer ways of working. One thing ING has done is come up with this PACE methodology, which is the best parts of design thinking, lean and agile and thought. ‘How can we use that, and really change our culture at the same time?’

“The goal is to have the customer represented in everyone’s work at all times. This means changing the mindset and having those nudges over time, because culture change is not a quick fix.”

Brands that can sew customer centricity into decision making will also do well. As a case in point, Champion noted Bendigo and Adelaide Bank's 2000-strong customer panel.

“It is not reserved as a strategy session, but something people have access to as routine pieces of work," he said. "So the customer always has a say, always has a voice in the decision making on a more regular basis. People can really infuse this in a routine way.”

What Forrester's research did show across Australian organisations was good strengths in quality and quantitative mix.

"They are good at setting up the voice of the customer programs and doing journey mapping more often. They are good at getting design thinking up and running," Champion said. "But where they’re weakest is around culture and enablement."

To get there, organisations need to address behaviour, thinking and overall employee engagement, as well as provide employees with a range of training, information and tools so they are empowered to provide good CX. 

“When people aren’t talking to each other, bad things happen,” Champion concluded. "Many organisations can be too focused on just fixing customer pain points, but need to collaborate to consider the business impact or feasibility impact."

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu  

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