The Customer Experience Hierarchy
Many of us will be traveling by air this holiday season. Today’s airlines are plagued by bad and really bad customer experiences that go viral on social media. And regardless of which satisfaction or airline quality survey you see, air travel is generally accepted to be a pretty miserable experience. But there’s always hope.
For that hope, I continually look to Continental Airlines for inspiration. Before being acquired by United Airlines in 2010, the airline relied on a winning combination of executive commitment, a dedicated and empowered team, a strong customer focus, and a solid foundation of trusted data to support its overall customer vision.
These lessons can be applied to any industry needing a boost or companies looking to transform the customer experience.
Worst to First, Then First to Favorite in Customer Experience
When Continental Airlines emerged from bankruptcy in 1994, it was 10 for 10. Not only had the airline been through 10 presidents in 10 years, it was at the bottom of the list for the customer service metrics tracked by the Department of Transportation amongst the 10 US airlines (e.g. on-time arrivals, lost baggage, passenger complaints and involuntary denied boardings).
With a commitment to success, then-CEO Gordon Bethune and his executive leadership embraced a scheme that would move the airline from “Worst to First.” The Go Forward Plan, as it was called, laid out a strategy for four critical elements: the markets it served, ongoing financial viability, the customer experience and operations, and its people. Once the airline achieved its goal of being first, it next focused on moving from “First to Favorite.” Underpinning the Go Forward Plan was a focus on data. (To go deeper on the story, read this HBR article.)
Related Article: Have a Bad Customer Experience Reputation? Own It (and Other Advice)
The Magic Is in the Data
Supporting the commitment of the leadership and employees was a foundation of trusted data. The airline IT team pulled together and integrated nearly all of the data the airline collected across its various systems. In doing so, front line and operational employees, executives and management were able to make better, data-driven market, financial, customer and operational decisions. Data was used to extend the role of technology in customers’ relationships and used to uncover new insights, contributing to much of the success the airline attained with customers and profitability.
When applied to the customer experience, for example, the airline implemented several value-based programs. These programs were based on the calculated recency, frequency and monetary contribution of customers. Among them was value-based service, value-based customer recognition, value-based service recovery, value-based product differentiation and value-based operations.
Airline leadership realized that as employees were given the right information for these value-based programs, initially targeting high-value customers, they become empowered to do the right things for all passengers. This provided the boost the airline needed to build relationships, trust, and loyalty with its customer base. The airline was able to go beyond tactical airline loyalty program promises to deliver strategic, high-value interactions that vaulted the airline to the top. Customers noticed.
The results were stunning. The airline achieved, among other metrics, a revenue premium of 113% above industry, decreased attrition by 2% of high-value customers, and attained the lowest flight cancellation rate in the industry.
Related Article: The Jury Is in on the Future of Customer Experience
To Build Customer Loyalty, Every Interaction Counts
Most travelers’ frustration arises because of broken promises, complicated loyalty schemes, and impersonal, uncaring service. It’s no different in other businesses. Companies may be able to connect with a business at a local or singular level, but the struggle is real for brands to connect with customers and deliver individualized experiences at scale. Very few brands achieve this kind of success.
The most common reason for this is they not only lack the context of the last interaction with that customer, but also lack visibility into those customer interactions over time. If you believe that customer experience is the sum of how customers perceive every interaction with the companies do business with, it would be difficult to build customer loyalty without that insight or understanding.
Related Article: Bring Customer Loyalty Under the Customer Experience Umbrella
The Hierarchy of Customer Experience
The Hierarchy of Customer Experience is one way to illustrate the spectrum of how customers engage with a brand while traversing the customer lifecycle. From identifying potential prospects, to acquisition, growth and retention, the goal is to move the customer from indifference and a broad base of interactions to engagement and long-term loyalty.
Companies that focus only on one level of the hierarchy — such as individual interactions, for example — miss the opportunity to create the kind of loyalty that ensures a customer is truly engaged with the brand. According to research, engaged consumers buy 90% more frequently, spend 60% more per transaction, and are five times more likely to indicate it is the only brand they would purchase from in the future. On average, they also deliver 23% more revenue and profitability.
The Problem With Satisfaction
Another point to consider is the satisfaction tier. When companies put too much emphasis on customer satisfaction (and related metrics such as Net Promoter Score and customer satisfaction surveys), the customer experience tends to be only as good as the last interaction or transaction.
When the gauge of how well a company is doing is focused only on the last interaction or transaction, the customer gets stuck in a perpetual state of evaluating how well a company is meeting their short-term needs. This opens the door to customers who continually evaluate other options and alternatives. A solitary focus on satisfaction can be an indicator of how you are improving the processes that support interactions and transactions, which is important to the overall customer experience, but it won’t necessarily encourage long term, customer loyalty.
Related Article: Net Promoter Score Metrics Are Not Enough
Moving Past the Satisfaction Hump
What’s missing when the focus is on satisfaction only is the emotional connection of loyalty that’s created by building relationships supported by trust. To get beyond the “satisfaction hump,” companies must learn to differentiate themselves through the experiences they deliver.
To encourage customers to move beyond satisfaction, the first step brands should take is to recognize, acknowledge and support the relationship that exists with those customers. That is, after all, what customers expect when they join a loyalty program, sign up for a credit card, register for a warranty, opt-in for email communications. They are raising their hand and saying, “Hey there! I’m here.”
Related Article: How to Measure Customer Experience Beyond Net Promoter Score
Trust and Loyalty
Trust is increasingly important in any business relationship and is becoming more complex. The customers who lose trust in a company will not become loyal without a lot of effort on the part of the company to regain that trust. Trust today not only involves ‘companies doing things right’ but also ‘companies doing the right things.’ Tightly coupled with brand reputation, trust grows as companies act responsibly across all interactions and transactions they have directly or indirectly with customers.
At the apex of the hierarchy, there is loyalty. This vision to strive for this top level of the hierarchy must be set by the CEO. This isn’t the tactical loyalty of airline programs, but the strategic loyalty that leads to irrational, emotional bonds with customers. This happens when the customer considers a brand as their first choice, if not their only choice.
Related Article: How to Handle the Crisis of Consumer Trust
Keeping Customers Engaged
Attaining a high level of customer engagement requires a commitment to create advocates, employ authenticity, set realistic expectations, and ensure the best experiences. And as customers become fully engaged, companies encourage them to remain loyal because:
- Experiences are differentiated.
- Customers trust and rely on companies to not disappoint.
- Employees are empowered to do what’s right, both at an individual and at a collective level.
- Customers needs are met consistently.
- Processes are transparent and simple.
Will evaluation of the company continue? Of course it will. Customers will continually look for alternatives that better meet their needs. But as the bond between customer and company grows stronger, the barriers to leaving become higher and harder — and, just maybe, customers will evaluate other options less often.
What’s unfortunate is that Continental Airlines was well on its way to being the industry leader in customer experience when it was acquired by United Airlines. There’s a lesson there too, as sadly, the airline inherited the culture at United and lost the equity and value it had built from its focus to be the industry’s favorite.
Monica Mullen is Solutions Marketing Manager at Informatica®, responsible for Informatica’s customer centricity and customer data strategy solutions. As an experienced tech marketer who’s lived in the data world since 1999, she believes that contextual, trusted data resides at the intersection of the familiar people—process—technology trio.