January 18, 2013
This is a repost of a response we made to a recent “challenge” from Paul Greenberg, writer for ZDNet, author of CRM at the Speed of Light (and known in many circles as the Father of CRM.) We thought we would post it here as well so that our readers, customers, site visitors, etc. will have a chance to see our point of view! Please let us know what you think by commenting below!
By Amy Pressman, President, Medallia & Michelle de Haaff, Vice President of Marketing, Medallia
Thank you for highlighting the importance of Customer Experience in your blog post, “Now You’re All … Customer Experience, Huh? PROVE IT!” We welcome the opportunity to respond to your challenge and explain why we are, and always have been, a customer experience company.
We were thrilled to see you laying down the gauntlet to companies that are “claiming to be focused on customer experience where several months ago they were … something else.” Our feelings exactly.
However, we couldn’t disagree with you more when you lump us in with CX johnny-come-latelys. CX groupies we are not. We have always been, and will always be, a customer experience company!
According to our earliest non-stealth website, “Medallia is a technology-enabled customer experience measurement company, specializing in industry-wide solutions. Our mission is to help companies gain dramatic new insights into their customers and convert those insights into increased sales, customer loyalty, and profits.” That was in January 2003, a full decade ago, which, in Silicon Valley time, may even qualify us for pioneer status in CEM.
To be honest, it’s probably not that you haven’t heard of Medallia in the CX context before—it’s probably that you haven’t heard of Medallia at all. The reason: we bootstrapped ourselves until late 2011, when we took growth capital. Before that, from 2001 until 2011, we spent significantly less on sales and marketing than the average SaaS company. Indeed, we had no marketing at all until 2010. Instead, we relied on word of mouth to grow. With our 98% retention and reference-ability rate, our reputation was stellar, propelling us to grow faster than the industry—and profitably. We serve more than 100 of the largest global brands, including Best Western, Four Seasons, Gold’s Gym, Sephora, Sony, and Verizon. But we still faced a visibility problem that one of our customer fans captured perfectly: “You’re the best company no one’s ever heard of.” We think it might have been our early low profile, not our absence from CX, that gave you the impression that we are a recent convert.
Your blog post also raises another important issue: What, exactly, is Customer Experience Management? In your post, you reference CRM, EFM, and CEM—terms that are often used interchangeably for CX but are different. That indicates the lack of clarity about the category. Here’s how various analysts and thought leaders have characterized these spaces:
- CRM: In your blog, you include a definition of CRM from your first edition of CRM at the Speed of Light: “CRM is a complete system that (1) provides a means and method to enhance the experience of individual customers so they will remain customers for life.” That is a great definition, which captures the early potential of CRM. I remember implementing CRM systems in the mid-1990s, trying to deliver on some big promises made by and on behalf of the industry. We discovered early that CRM was just the beginning. It never got as far as helping figure out the “how do we deliver a great experience to the customer?” because there was so much work to do figuring out “how do we get the customer to buy?” CRM stalled at “Sales and Service Enablement,” and the “C” in “CRM” was limited to the capture, storage, and maintenance of customer and prospect data.
- EFM (Enterprise Feedback Management): Gartner defines EFM as “a system of processes and software that enables organizations to centrally manage deployment of surveys while dispersing authoring and analysis throughout an organization. It consists of data collection, analysis and reporting.” That is, according to Gartner, EFM is a technology play that automates market research. It does NOT necessarily focus on maximizing the customer experience.
- CEM (Customer Experience Management): Gartner defines customer experience management (CEM) as “the practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty and advocacy.” In other words, CEM focuses the work of a company on optimizing the customer experience. Though CEM may leverage technologies, it is not, per se, a technology play.
To add to the confusion, Forrester switched from labeling the category in which it classified Medallia and our brethren from “CEM” to “EFM: Satisfaction and Loyalty Solutions” in its recent Wave report.
We’d like to share what the category has meant to us and to our customers since we started using this terminology in 2003:
Customer Experience Management is a discipline enabled by technology, process, and culture for comprehensively measuring and improving how customers experience a company: its brands, products, and services. CEM software captures feedback about customer interaction points (from pre-purchase to re-purchase), analyzes the data, and drives action to improve customer experiences and business results.
The crux is action, allowing organizations to go from simply understanding issues, to impacting them. Every day, more than 100,000 users across Global 2000 companies use our software to take actions that make a measurable difference not only in the customer experience, but also in company performance. To paraphrase an ex-President, “It’s the action, stupid.”
Two customer examples highlight the point:
Frontline Action at a Software Company
Imagine your word processing application fails seconds before you hit ”save.” Hours after you started writing (and last backed up), Minutes before your deadline. And right before you’re supposed to go to a long awaited dinner with friends?
Now, what would you say—assuming you haven’t already chucked the computer across the room and generated a second “crash”—when a pop-up on your screen asks innocuously enough: “Please tell us about your experience”?
Just such an example happened to the customer of a company that uses Medallia. The customer’s response, after spending hours re-entering data lost in the crash, was emphatic: “you should buy me a steak for all of the QA I do for you!”
The frontline employee who got the response couldn’t immediately fix the underlying software problem that created the crash, but with Medallia he knew, in real-time, what had happened, and what might alleviate the problem. So what did the employee do? He bought the guy a steak.
In the meantime, the Medallia system automatically: 1) notified the development team about the software bug and its impact on the satisfaction of critical users and; 2) informed the service team and created an action plan. Three actions—a steak delivery, a software bug fix, and a service action plan—all in near real-time and, it turned out, with very real results: the customer went from understandably pissed to a raving fan who, transaction records show, spends significantly more with the company today than in year’s past.
Improving the Store Experience at a Retailer
Now imagine entering a store with a specific purchase in mind, needing help to find the item, and not being able to find a sales associate. One retailer received many complaints about just this problem even though the store’s sales associate to customer ratio was well above industry average. How could this be?
The retailer stumbled on the answer, inadvertently – and through Medallia. During the holiday season, when it temporarily made the sales associate uniforms more “festive” (read: LOUD), the Medallia system picked up a spike in satisfaction scores, particularly regarding sales associates.
It turned out that the standard uniform had been so non-descript that sales associates looked like half the customers in the store. They blended so seamlessly with the crowd that they’d become invisible to the customers seeking their assistance. Medallia was the impetus for the “ah, ha.”
Today, not only are brightly colored uniforms the norm year-round, but also every store and every sales associate accesses Medallia on mobile devices (as well as on a big-screen monitor in the back room) and is required to take appropriate actions on the feedback to impact the customer experience. This retailer is pretty private about the details of their financial results from connecting insights to action, but their results are pretty impressive.
To reiterate, the key is action because CX is all just research until someone acts on it. And action is what delivers results, not only anecdotally (as shown in the examples above), but across the board: the ROI our customers see in the first year of deploying our CEM solution is breathtaking – typically at least a 5 percent increase in customer satisfaction metrics and increases in their revenue enhancement metrics.
Below are the key elements of the Medallia solution that we believe encompass the action-oriented core of CEM:
- Unifies the entire organization, large and small, around the customer experience (can a company really act on customer experience if only a smattering of employees or departments take it seriously?).
- Collects comprehensive CX data across all channels—web, mobile, paper, social—often in two-way dialogues with customers. In today’s world, action on CX begins with “hello.” You need to interact with customers as you’re gathering feedback from them, not just collect the data through one-way information grabs.
- Transforms CX information overload (to us a Big Data problem)—from the explosion of customer conversation information in social, online, over mobile phones— to accessible insights and action plans.
- Makes insights about the customer experience actionable by delivering them to the right people across the organization, from the CEO to the frontline, in real time. How actionable is an insight when it’s delivered to the wrong person months after the fact?
- Operationalizes how the organization acts on the insights by baking best practice workflows for responding to CX data into our software. It’s easier to act on feedback when the collective wisdom about CX is at your fingertips.
- Prioritizes customer experience initiatives and innovations by which ones are most likely to have the “biggest bang for the buck” on business metrics, like satisfaction scores and revenue metrics based on relevant benchmarks.
To us, this is what Customer Experience Management means! We hope our response helps your readers understand our point of view and why we place ourselves in the CX space.
Thank you for initiating this challenge. I hope an important debate on the right category definition of Customer Experience results (or shall we say continues). We look forward to the discussion. Now, let’s go out and defeat mediocrity, one customer experience at a time.