In her 2006 book, Chief Customer Officer: Getting Past Lip Service to Passionate Action © (Jeanne Bliss, Publisher Jossey-Bass 2006), Jeanne Bliss introduces the concept of an organization’s “power core.” Bliss believes it is important to understand which department in your company wields the greatest power.
In my experience, organizations with Finance as their Power Core will be Customer Experience challenged. It is not that Finance isn’t purposefully customer-centric; it is just that they often find it hard to quantify its benefit.
Easy to quantify expenses
The expense side of the ledger is typically black and white – it is clear what the impact will be. Here is where Finance tempts chief executives. Chief executives are charged with hitting numbers. It is not uncommon that Finance can deliver short-term dollars by cutting out or reducing aspects of customer service.“If we go from next day to three to five day shipping for the rest of the year we can save $19 million dollars.” Executives charged with delivering their numbers “no matter what” are often tempted by the devil that is short term gain.
The savings temptation may also include longer-term decisions. The classic example is offshoring American call centers to foreign countries. Finance was able to sell this idea based on the expense side saving of 30% on call center costs. Jobs for America reports that in the 1980s and 1990s 600,000 American call center jobs were sent off shore. A challenge is that rarely do decisions involving customers impact just a single side of the ledger.
Did most organizations that off-shored their call centers save 30%? Absolutely. The resulting problem showed up on the revenue side of the ledger. Expenses shrunk, but for some, so did revenues. Customers engaging with call center reps with thick accents who could only respond to an issue by reading a standard response from a script did not create a positive customer touchpoint. These types of touchpoints are an important reflection of the organization. They often impact both Customer Relationship and Transactional Journeys.
ROI includes revenue
Customers complained and some defected from organizations that sent call centers to other countries. While expenses went down, for some, so did revenue. The actual return on investment (ROI) was negative for some organizations that transferred call centers offshore.
Going back to the original decision, while Finance could dot the i’s and cross the t’s on the expenses that could be saved taking the call center off shore, the impact on revenue was a grey area. Impact on revenue couldn’t be accurately quantified or was ignored.
This inability to easily quantify the impact of service reductions on revenue is an ongoing problem that lends itself to poor short-term decisions that, over time, erode the effectiveness of customer touchpoints, experiences and journeys. This is one primary reason for correlating customer experience metrics to financial metrics such as revenue. This provides the customer experience argument with relevant data.
Secret: Don’t bring opinions to a data fight.
Which department is your Power Core?
Understand which department in your organization holds the most power over most executive decisions.
Truth. Most organizations with Finance as its power core are not typically customer-centric and will have trouble becoming customer-centric without correlating customer experience and financial metrics, or changing the power core.
Speak in terms they understand
Whether Finance is your power core or not, they have a seat at the executive table. And as a result, you need to work hard to get CEM into their language.
The language of senior executives – the primary language they understand – is financial. That is their world. When a macro metric like Net Promoter score or customer satisfaction goes from 27 to 31, senior executives typically have one question, so what? How does that impact our financials?
I have seen companies with the best customer experience intentions – where senior executives say all of the right things – however, CEM quickly turns into a passing fad. Why? Because the organization couldn’t put customer experience in the language of their senior executives – financial.
Secret, Truth, and Rule; Quickly correlate your customer experience metrics with financial metrics
Remember, to your customers, you are your touchpoints.
This post an excerpt from my book, TOUCHPOiNT POWER! Get & Keep More Customers, Touchpoint by Touchpoint (William Henry Publishing, 2013). Now available! For information and to order, visit TouchpointPower.com or view the TOUCHPOiNT POWER! listing on Amazon.
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