Harald FanderlHarald FanderlMay 1, 2019
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6min1607

“What do my customers want?”

The savviest executives are asking this question more frequently than ever, and rightly so. Leading companies understand that they are in the Customer Experience business, and they understand that how an organisation delivers for customers is as important as what it delivers.

Armed with advanced analytics, Customer Experience leaders gain rapid insights to build customer loyalty, make employees happier, achieve revenue gains of five-to-10 percent, and reduce costs by 15-to-25 percent within two or three years. But it takes patience and guts to train an organisation to see the world through the customer’s eyes and to redesign functions to create value in a customer-centric way.

There are three key management tasks to undertake in order to achieve this shift: Observe, Shape, and Perform.

Observe: Understand the interaction through the customer’s eyes

Technology has handed customers unprecedented power to dictate the rules in purchasing goods and services. Three-quarters of them, research finds, expect ‘now’ service within five minutes of making contact online. A similar number want a simple experience, use comparison apps when they shop, and put as much trust in online reviews as in personal recommendations. Increasingly, customers expect from all players the same kind of immediacy, personalisation, and convenience that they receive from leading practitioners such as Google and Amazon.

Central to connecting better with customers is putting in place several building blocks of a comprehensive improvement in customer experience.

  • Identify and understand the customer’s journey
  • Quantify what matters to your customers
  • Define a clear customer-experience aspiration and common purpose

Customer journeys are the framework that allows a company to organise itself and mobilise employees to deliver value to customers consistently, in line with its purpose. The journey construct can help align employees around customer needs, despite functional boundaries.

Shape: Redesign the business from the customer back

Customer Experience leaders start with a differentiating purpose and focus on improving the most important customer journey first – whether it be opening a bank account, returning a pair of shoes, installing cable television, or even updating address and account information.

Then they improve the steps that make up that journey. To manage expectations, they design supporting processes with customer psychology in mind. They transform their digital profile to remove pain points in interactions, and to set in motion the culture of continuous innovation needed to make more fundamental organisational transformations.

Customer Experience leaders can become even better by digitising the processes behind the most important customer journeys. In these quick efforts, multidisciplinary teams jointly design, test, and iterate high-impact processes and journeys in the field, continually refining and rereleasing them after input from customers. Such methods help high-performing incumbents to release and scale major, customer-vetted process improvements in less than 20 weeks.

Perform: Align the organisation to deliver against tangible outcomes

As Customer Experience becomes a bigger focus of corporate strategy, more and more executives will face the decision to commit their organisations to a broad CX transformation. The immediate challenge will be how to structure the organisation and roll-out, as well as figuring out where and how to get started. Applying sophisticated measurement to what your customers are saying, empowering frontline employees to deliver against your customer vision, and a customer-centric governance structure form the foundation.

Securing early economic wins will deliver value and momentum for continuous innovation.

Delighting customers by mastering the concept and execution of an exceptionally good Customer Experience is a challenge. However, it is an essential requirement for leading in an environment where customers wield growing power, and crucially without it, you lose your ability to meet their needs. And as we all know, in today’s market dissatisfied customers quickly move elsewhere.

The author would like to thank Kevin Neher and Ewan Duncan for their contributions to this article.


Harald FanderlHarald FanderlSeptember 27, 2017
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9min1381

Harald Fanderl, a partner and global leader of the Customer Experience group in McKinsey & Company’s Marketing & Sales Practice, talks about how to avoid the key pitfalls in implementing a customer experience programme.

Customer experience (CX) has emerged as something of a panacea for businesses. And for good reason. When done well, it creates value, reduces costs, and improves both customer and employee satisfaction.

But, building an effective customer experience capability isn’t just about applying some analysis to existing data, or building a great interface for a mobile site. It requires a transformation of the business: its processes, technology, employee mind-set and behaviour.

Working with organisations of all types has enabled me to learn about the differences between successful and failed customer-experience transformations. Broadly, those experiences can be distilled down into seven sometimes fatal mistakes—the “seven deadly sins”:

1. Myopia

Many managers enter a transformation with no real vision for the organisation’s future state. Instead, they have a general desire to improve the customer experience and rush into action very quickly. Targets are often vague, devoid of aspiration, and lacking in specificity—a reflection of an underlying fear of failure. Leaders may also prioritise the wrong areas of focus, wasting time setting targets for parts of the customer journey that don’t have a real impact.

Great organisations instead spend significant time up front to define a clear, compelling and ambitious aspiration, which doesn’t necessarily involve becoming a customer-experience leader. Depending on the context, it may make sense for a company to aim at having a best-in-class customer experience or limit its efforts to improving the baseline experience. They also think about how to translate their vision/aspiration into a common purpose for all employees. Great CX is always linked to strong collaboration across silos. A strong common purpose accelerates the necessary collaboration.

2. Indifference

Many customer-experience transformations fail because they are not a top-three priority for the CEO or the top team. Without their support, securing cross-functional alignment – crucial for any customer experience programme – is difficult, and transformations lose momentum when internal resistance or apathy materialises.

The odds for success improve when engaged leaders make high-profile commitments to customer experience (such as, making customer experience a top agenda item, allocating significant resources, putting top performers into CX roles) and ensure integration across current internal silos.

3.Worthlessness

Many organisations launch customer experience transformation programmes with no sense of what the new experience will be worth. Leaders of such a transformation will find it hard to secure sufficient resources for needed investments if they don’t have evidence that their efforts will generate business value. More than ever, gimlet-eyed chief financial officers demand a business case for even the smallest changes. And if the CFO isn’t on board, your transformation effort will probably come to a halt.

Making a successful business requires using customer research and operational data to link customer satisfaction with financial outcomes, such as customer churn and new revenue. This analysis will provide the foundation to know what each point of satisfaction is worth to the business.

4. Heedlessness

Many customer-experience transformations begin with the top team’s assumptions about what matters. Are these leaders overly weighting the voices of a few dissatisfied, highly vocal customers who are “squeaky wheels.” Are they seeing the world through their own experience as customers?

Successful transformations are treated as an operational problem, starting with a rigorous attempt to identify those things that matter most to customers. Two factors stand out: Measuring customer journeys instead of isolated touchpoints, and using imputed importance to analyse survey responses. These methods allow companies to take a targeted, hypothesis-driven approach to a customer-experience transformation. They can then determine what matters overall by combining imputed importance, the number of customers touched, the priority level of the customer segments involved, and alignment with broader strategic objectives. It is critical to couple these statistical techniques with ethnographic research to build a fuller picture of “what matters,” especially in settings where statistical techniques may come up short.

5. Imbalance

CX transformations can collapse even when executives have correctly determined what matters to customers, defined a good target, articulated a clear link to value, and provided strong support. In these cases, the culprit is often a loss of momentum when the project doesn’t deliver impact in the short term.

Many leaders focus on long-term changes or holistic service redesigns and don’t expect any financial impact from them for two to three years. Employees may become frustrated during this period and disengage, while customers may decide to take their business elsewhere. Moreover, leaders may focus exclusively on the top-line impact—revenue from increased loyalty and reduced churn—to the detriment of equally powerful – often more easily attainable – cost levers, including cost to serve.

Great customer-experience transformations include a balanced portfolio of initiatives (long and short term, revenues and costs) to show success early, sustain momentum, and learn over time.

6. Fractionalism

Many managers tend to think about the customer experience very narrowly. Some excel at designing specific kinds of interactions with customers but ignore the fuller experience, both before and after purchase. Others forget to look at operations through the customer’s eyes. Many focus only on reporting and tracking. The core issue is that they underestimate the importance of the internal cultural changes needed to achieve and sustain a new approach.

Successful cultural change relies on four factors. One of them is formal measurement and performance systems. But employee involvement, role modelling from leaders, and clear explanations of why change is necessary are important, too. Great transformations work across all four at once and spend as much time on the “soft stuff” of culture change and communication as on the “hard stuff” of performance management.

7. Orthodoxy

When companies fail to consider opportunities from design thinking—shorthand for a process that is based on deep understanding of the customer and a test-and-learn approach to problem solving—they may not succeed in transforming identified customer pain points.

Good answers often require looking outside of established practices, in particular, by learning from other experiences and industries. That includes a full accounting of the impact of digitisation, which enables automation and the seamless delivery of processes. Great organisations apply the tools of human-centred design to create distinctive customer experiences. And they follow where the evidence leads even if that means breaking with conformity – it is a path to innovation.

Stay on track

Transforming customer experience can deliver higher profits, more loyal customers, and more engaged employees to name but a few. Knowing and resisting the temptations I have outlined above will help you keep your vision and change programme on track to deliver on those rewards.




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