The Age of Customer Experience

    An Interview with John Quaglietta

    We are all consumers. We participate in the buying and owning of products and services. As consumers, we engage in what is known as customer experience (CX).

    Today’s consumers have more choices regarding the companies with which they do business, and they have the ability to interact with these companies outside of their corporate walls through social channels. Consumers also have higher expectations. They want the ability to order products on smart phones and tablets, find answers to questions on their own, and engage with companies when their experience is enjoyable. In the past, companies took an inside-out look at their customers. Today, as Forrester Research coined, organizations must look “outside in” to meet higher expectations in the customer lifecycle.

    So, does having an enjoyable experience with a company translate to a real economic benefit for an organization? The answer is a resounding YES. As just one example, Watermark Consulting studied the total returns for two model stock portfolios consisting of the Top 10 (“Leaders”) and Bottom 10 (“Laggards”) publicly held companies in Forrester Research’s annual CX Index1 ranking over a five-year period. The results are striking. Companies leading in customer experience saw an average 43 percent return on share price, compared to -33.9 percent for CX laggards. Even compared to the S&P 500 Index, CX leaders saw a nearly three time shareholder return.


    What is your view of how customer experience fits into an organization's overall business strategy?
    Customers in general are at the heart of the organization’s business strategy. Stated another way, an organization’s business strategy doesn’t exist, and the organization itself doesn’t exist, without customers. Therefore, the way customers get treated in both their buying and owning experience, how they experience the brand, and the outcomes that result, are key to an organization’s revenue and growth strategies. Management of the customer experience and the CX strategy addresses both the mission and vision of the organization, including how it will make money today, and what it will be tomorrow. In essence, customer experience is the thread that strings together elements of the overall business strategy, and managing the customer experience and its elements operationalizes the overall business strategy. Given the benefits a well-rounded CX strategy provides an organization, the CX strategy should be viewed first as a revenue and growth strategy, and secondly as a way to improve operating efficiency. A well-rounded CX strategy has the ability to deliver on both revenue and cost objectives simultaneously.

    What are some of the quantifiable business and economic metrics that companies can strive for with a comprehensive customer experience strategy?
    The ultimate, quantifiable economic metric for CX is customer lifetime value (CLV). CLV ties directly to firm profitability, which is expressed in the firm’s income statement. CLV in turn is comprised of five key, quantifiable components that every organization should be managing and measuring. They are: acquisition, spend, cost, retention and advocacy. These five components, when combined, illustrate profit/loss, and in the realm of CX, can be and should be expressed at a customer segment and individual customer level. Each of the five components is then comprised of a host of key strategic and operational metrics. This collection of metrics (conversion rate, average order value, issue resolution rate, resolution cost to name a few) indicate to the firm its performance on an hourly, daily, and weekly level, and in turn are tied through a careful linkage system to the five key components, CLV and the company income statement.

    What is the difference between what we have traditionally called customer relationship management and customer experience?
    Customer relationship management (CRM) is a strategy that directs the operations of the organization around nurturing the customer relationship over time. It is chiefly an “inside-out” strategy, and looks at improving a firm’s operations, process and technology to optimize the relationship with a customer.

    CX is a strategy that has two distinct parts:

    • Customer Experience – This is a look at how the customer experiences the brand through touch-points and interactions, and the expectations, perceptions, opinions and emotions formed as a result of interaction, which in turn drives action and outcomes.
    • Customer Experience Management (CEM) - Like CRM, CEM directs the internal workings of the organization, its strategy, people, process, technology and culture to optimize how the customer experiences the brand.

    One CX leader Perficient partners with is Oracle. How has Oracle approached providing solutions to help companies achieve customer experience excellence?
    Most companies that deliver CX solutions only address a small overall fraction of what is really needed for CX excellence. Oracle takes a comprehensive approach, providing integrated solutions that enable companies to improve CLV, and deliver business results that can be tied to improved acquisition, improved spend, reduction in cost, improved retention and improved advocacy. With various cloud offerings for marketing, sales, service, and social capabilities combined with powerful mobile and business intelligence solutions, Oracle has and continues to provide enterprise and scalable solutions to enable companies to achieve customer experience excellence.

    Perficient couples its consulting know-how with Oracle’s leading CX solutions to deliver repeatable, scalable and measurable CX excellence for companies across a variety of industries.

    How have organizations been preparing to deliver on the customer experience promise?
    Organizations now understand the relationship between firm profitability and how they treat customers. More than 90 percent of senior executives have “improvement of the customer experience” listed as one of their top three business objectives. This is a good start. Preparing to deliver on the CX promise begins with a commitment from the organization. The commitment for many means reshaping the way they do business, how they view the customer and their relationship with the customer, installing a customer-centric culture, and rethinking the way they measure employee performance and reward employees. For many, it means moving away from a transactional relationship to one nurtured over time. CX is both a short- and long-range view, and as a result, the strategy that evolves from it requires both optimization of touch-points and a look at the cumulative customer experience relative to the customer journey. Traditionally, most organizations have been preparing by addressing touch-points first. This is a good start; however, this work must be viewed in a broader context. And as work on touch-points is done, a measurement system that links touch-point effectiveness to the overall objectives of customer experience management must be accomplished.

    How does Perficient's CX practice assist companies with designing and delivering a customer experience strategy?
    Perficient has developed an industry-leading set of CX consultative services called the “CX Blueprint.” The CX Blueprint provides organizations with the necessary know-how to develop a comprehensive CX strategy and set of linked CX metrics, assess the current state of the CX strategy and organizational readiness, develop a CX target state, provide thoughtful recommendations in a phased roadmap; develop a business case, develop a project plan, design the experience and applications, implement, roll-out, train and later optimize. In essence, the CX Blueprint is a soup-to-nuts CX offering that can be utilized by any customer at any point in their CX maturation process based on what they specifically need. Any or all of the elements of the CX Blueprint can be utilized by organizations to forward their CX strategy and accompanying initiatives.

    1 Burns, Megan. “The Customer Experience Index, 2013.” Forrester Research. Jan. 15, 2013

    Published: September 24, 2013

    John Quaglietta

    John Quaglietta is a director in the Oracle CX strategy practice at Perficient. He has worked with hundreds of firms worldwide over the past 15+ years helping to create, implement and optimize customer experience strategy. Quaglietta has specifically helped firms improve the lifetime value of their customers by focusing on customer acquisition, customer yearly spend, customer and employee retention, operating efficiency and customer advocacy.

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