Published on: October 15, 2015
Does any business leader seriously question the importance of deeply understanding their customers and delivering consistently satisfying experiences? We’d hope not. Demanding customers—more empowered than ever by technology—long ago made the idea of customer experience management a boardroom priority. Satisfy your customers or your competitors soon will.
There’s an upside to succeeding at customer experience management, too. Work by Forrester Research and others demonstrates that customer experience leaders outperform laggards on revenue growth and shareholder returns.
Leaders seem to understand this combined threat and opportunity:
- Forrester Research further reports that 57% of companies aspire to be the customer experience leader in their industry.¹
- Gartner reports that by 2016 89% of companies plan to compete primarily on the basis of the customer experience.
Unfortunately, many organizations undertake ambitious customer experience management initiatives and fail to see any meaningful benefit. Customer defections continue and revenue growth remains sluggish. And it’s only going to get more challenging going forward. Simple arithmetic dictates that 57% of companies can’t simultaneously lead their industries by competing on customer experience.
The fundamental problem traces to an all-too-common “inside-out” perspective on customers and their expectations. Inside-out thinking mistakenly focuses on what’s important or interesting to the organization, not the customer. It overlooks an essential truth: your customers’ perceptions are your reality. Their internal, personal sense of what they expected and experienced must therefore be at the core of your customer experience thinking.
Customer experience: how customers perceive their interactions with you
At a recent customer experience roundtable hosted by Connective DX in Boston, guest speaker Megan Burns, Forrester Research VP, principal analyst serving customer experience professionals, said that for practitioners, CX can be defined as how customers perceive their interactions with you. She stressed that there’s often a disconnect between customer perceptions and what the organization thinks is important or what should be important. To get CX right companies need to find ways to meet customer goals and business goals at the same time.
Her point is well taken. If you’re measuring and prioritizing things that matter to the business but not to customers you’re likely to have problems. If you’re not doing well in the things that your customers care about, your hopes of increasing loyalty and customer advocacy aren’t great.
At the event, Burns brought this truth to life with a fascinating case study from Delta Air Lines. Respected as a customer experience leader now, Delta struggled badly after a bankruptcy and 2008 merger with Northwest Airlines. Improvement ideas came and went with no real impact.
Top-down customer obsession transforms Delta’s customer experience
Research that Delta did with passengers in 2010 surfaced an interesting insight: Delta’s target customers value schedule predictability more than expected they hate the headaches caused by canceled flights. While neither one is good, it’s better to have a a delay than a cancellation. At least with a delay you’re more certain that you’ll still get to where you need to go.
Armed with a powerful insight about something that truly mattered to customers, Delta sprung into action. “If that’s what customers hate most, let’s not cancel any more flights,” said Dave Holtz, Delta’s vice president of operations control, in a Wall Street Journal interview. “We started twisting our whole model.”
With top-down support, Delta began to obsess about keeping passengers moving toward their destination. They invested in better crew scheduling software, accelerated repairs by stockpiling spare parts at hubs, and proactively handled aircraft maintenance—before breakdowns occurred. They even co-located teams to tighten communications. Most importantly, a no-cancellation mindset slowly permeated the organization, top to bottom.
It took time, but Delta eventually delivered unprecedented, industry-leading performance. The same Wall Street Journal article reported that in 2013 Delta “cancelled just 0.3% of its flights, according to flight-tracking service FlightStats.com. That was twice as good as the next-best airlines, Southwest and Alaska, and five times better than the industry average of 1.7%.” On a full 72 days of 2013, Delta didn’t cancel a single one of its 2,500 flights. “We’re posting numbers that we’ve never seen in our industry,” said Delta President Edward Bastian.
By mid-2014, Bloomberg News noted, “For all practical purposes, the nation’s third-largest airline no longer cancels flights. Delta scrubbed 19 flights in June—that’s out of 69,621 flights in total.”
Delta’s finding about how important it is to avoid flight cancellations was quickly validated by customer feedback. According to the July 2014 Forrester report, “Case Study: How Delta Air Lines Soared In The Customer Experience Index,” the airline shot up in Forrester’s 2014 Customer Experience Index benchmark. The American Customer Satisfaction Index’s 2014 report named Delta the leader in satisfaction among legacy airlines. That performance represents a 27% improvement since its all-time low in 2011. J.D. Power’s 2015 North America Airline Satisfaction study further confirmed Delta’s place as the leader amongst legacy airlines.
Great CX delivers market-leading shareholder returns
But Delta’s improved customer experience does not only make life easier for customers. As this stock performance chart from Jan. 10, 2010 through Sept. 30, 2015, shows, great CX was also a win for shareholders.
We bring this story back to an important takeaway for leaders looking to improve their organization’s customer experience. Delta’s customer turnaround, Burns notes, came only because they took an outside-in mindset. That is, they focused obsessively on what matters to customers, trusting that helping customers achieve their goals is the best way for a business to achieve theirs. As you think about improving your customer experience, we encourage you to challenge yourself to do likewise.
¹ “The Path to Customer Experience Maturity” published by Forrester Research December 30, 2014, and authored by Megan Burns with Michael E. Gazala and Carla O’Connor
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