Bain and Company: Treat customer advocacy as a management system
- 02 April, 2015 14:33
Top-performing companies today are the ones that have moved from perceiving customer experience as a metric, to treating it as a management system, according to one of Bain and Company’s Asia-Pacific customer practice leaders.
Speaking at the Customer 360 Symposium, Bain and Company manager, Stan Swinton, said the shift towards customer advocacy often starts with metrics and a specialised business unit within organisations. The problem is, insights and practices aren’t usually disseminated to the wider business. He claimed a number of organisations are still in this camp in Australia and globally.
“From there, it then progresses to a movement, and that’s where we see more experimentation, wider conversations and multiple metrics across the organisation,” Swinton said.
Top performers today, however, go a step further and treat customer advocacy as a management system, Swinton said.
“This is defined as being business as usual, continuous, about people and process and what we do everyday, and it’s a whole-of-business approach,” he said. “Customer advocacy needs to be a system that touches every part of the business. Most of us are at a program level, but it needs to go through to a competency.”
Swinton emphasised a number of trends driving the need for customer advocacy within organisations, including shifting demographics and the rise of millennials; disruptive technologies; changes in customer behaviour around when and how they want to shop; technology-enabled customer focus; regulatory evolution; and new competitive environments.
“Today, it’s not just about retaining customers but being able to keep them engage through ongoing customer advocacy,” he said. “The customer is the most valuable asset not on your balance sheet – their advocacy and loyalty is what determines your future revenues.”
With reference to Bain and Company and industry research, Swinton said organisations that have embraced customer as a management system and have higher Net Promoter Scores (NPS) than their competitors have a growth rate two times that of companies with average customer scores. They also boast of more empowered employees, maintain simpler products and services offerings, have been able to reduce operational costs by up to 15 per cent, get a bigger share of customer wallet, and have higher customer win rates.
In addition, these organisations are using customer advocacy data to fuel not just service, but also product innovation. As an example, Swinton pointed to Telstra’s decision to take advocacy data and apply that to how it engineers its networks.
“It’s not just using engineering data, but overlaying customer advocacy data as well,” he said.
To help organisations better embed customer advocacy as a system, Swinton outlined four key elements:
- Have an unambiguous leadership commitment to delivering a better customer experience and advocacy. “At the top it’s about creating sustained leadership commitment. That should precede everything else – your ability to drive improvement without that alignment will go nowhere,” Swinton claimed.
- Maintain continuous improvement capability at all levels, powered by robust measurement and high-velocity learning and action. “This needs to be linked through to employee accountabilities, learning and action in order to drive further innovation,” he said.
- Motivate and support employees by driving discretionary energy and innovation toward achieving better customer outcomes. “People leaders are great at what they are but they’re not great at customer,” Swinton commented. “You are asking them to do something that requires additional training and capability build to empower employees to own the system and to own advocacy... so you need to reward staff appropriately. That’s not just KPIs - it’s much broader than that”.
To do this, he recommended different layers of measurement to understand end-to-end customer experience. These should include strategic measures against competitors; relationship scores and how well you are delivering on ongoing customer experience; understanding customer ‘episodes’ and meeting end-to-end customer needs; and measurements when needs are met.
- Strategy in uncertainty – prepare for changing customer expectations and the ability to execute when a step change is required. “Yes, you need to have continuous improvement but also an eye on the future,” Swinton said. “Customer experience leaders increasingly have to have view on what might be disrupted, balanced with where they’re at today, so they can stay ahead of the curve. If you own customer value, it requires you to think about how you’ll be relevant 10-15 years from now.”
Swinton also claimed more mature organisations are moving beyond simpler NPS value metrics and using these to produce business and customer lead indicators.
“They’re saying: ‘If I look at my historical data and what’s produced a promoter, what are the thresholds of my experience and how quickly do I have to handle the complaint or claim, or turnaround something, experience in the context sector’? They’re then translating that into lead indicators,” he said.
Swinton’s key success identifiers to transitioning to customer centricity
- Leadership and middle management are aligned and committed to the customer agenda
- Economic cases are in place and customer experience teams are able to talk the language of the business
- Reliable and trusted customer metrics are used
- Customer learning and improvement routines are embedded into the operating rhythm of each team
- Early moment and trust has been established with quick wins – if you’re not publishing it, it’s not real
- Management and staff are focused on behaviours not just the NPS score
- Appropriate investment is being made in training and support of staff
- Financial incentives aren’t tied into customer advocacy programs too early
Nadia Cameron travelled to Customer 360 Symposium as a guest of Ashton Media.
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