Companies that rewire their operations around the customer will gain a competitive advantage that adds significantly to the bottom line. And all in a relatively fast time frame, according to McKinsey & Company.
In a report called‘The CEO Guide to Customer Experience’ the management consults argue that customer experience leaders see revenue gains of five to 10 per cent and cost reductions of 15 to 25 per cent, all within two or three years.
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The report identifies where to start and how to get executive backing when improving customer relations.
The success is powered by advanced analytics that are allowing organisations to quickly gain customer insights, make employees happier and build customer loyalty, according to the report. Viewing functions from the customer’s view results in financial gains, the executive briefing said.
McKinsey urges organisations take a holistic view of the customer journey in a more holistic way, rather than focusing on specific touchpoints. While individual touchpoints can perform well, the overall customer experience can still be poor, the report said.
“It means paying attention to the complete, end-to-end experience customers have with a company from their perspective. Too many companies focus on individual interaction touchpoints devoted to billing, onboarding, service calls, and the like,” the report said.
Instead, the report advocates viewing the customer journey as a progression spanning those touchpoints, with clearly defined beginning and end points. Once a business understands this, it can begin focussing on what really matters, the report said.
“Without a clear view of what matters and, importantly, what doesn’t matter it’s hard to actually make any changes,” according to McKinsey director Ewan Duncan, speaking in an associated video.
Today’s customers are better informed and expect more, including better quality, service and price, the report said. Determining which factors are most important to customers and which create economic value helps a company maintain focus and redesign functions around customer needs, the report said.
Training an organisation to become customer focused is a challenge and requires collective commitment and belief, the report said. Early in the process one of the critical factors is an alignment and conviction of executive leaders, according to Duncan.
But the pay off can be significant. “Once you’ve actually rewired the company around the customer, you’ve got a competitive differentiator that others will find hard to match,” Duncan said.
Focusing on the journey over touchpoints gives exceptional results and correlates with business outcomes, the report said. The research found; “Customer satisfaction with health insurance is 73 per cent more likely when journeys work well than when only touchpoints do.”
Large organisational change is always a tough sell and it can be difficult to demonstrate value early on. “Executives, citing the benefits of improved customer relations, launch bold initiatives to delight customers that end up having clear costs and unclear near-term results,” the report said.
The difference with customer experience leaders is they find ways to deliver value very near term, McKinsey director Ewan Duncan said.
“You should aim for traction within the first year of a program,” Duncan said. But fundamental organisation-wide change takes longer. “For most companies this will be a two to three to four year journey.” He attributed the time required to diverse functions, customer segments and geographies.
But those transitioning to becoming more customer-centric shouldn’t be deterred by a lack of timeliness; “You need to start in some place to show impact quickly, it just takes a while to scale,” he said.