The Economist:
Integrated Transformation

How rising consumer expectations are turning companies outside-in

The Economist Intelligence Unit

Integrated Transformation is an Economist Intelligence Unit Report, sponsored by Salesforce. In this paper, The Economist Intelligence Unit explores how companies are adapting to evolving customer expectations and preferences, and how this has affected operations, business processes, decision-making and business models.


Chapter 3: Forging a new culture

Across function and rank, customer experience is everyone’s job

At KLM Royal Dutch Airlines, the Customer Experience Committee meets every two weeks. It is chaired by Boet Kreiken, the airline’s executive vice-president of customer experience, but it also brings to the table a wide cross-section of key leaders from across the business. This group includes the airline’s president and CEO Pieter Elbers and its chief operating officer Rene de Groot; its heads of flight operations and in-flight services; and representatives from the airline’s finance, digital and commercial sales teams.

Topics discussed by this group are wide-ranging, according to Mr Kreiken. At a recent meeting, they included KLM’s social media strategy—in particular, how they were reaching customers on Instagram, where it has 1.2m followers—and plans to introduce immigration pre-clearance at Amsterdam’s Schiphol airport for passengers flying to the US, so they can skip the immigration queues when they reach their destination.

The committee also talked about creating more seamless digital integrations with partner airlines, so that a passenger using the KLM mobile app, for example, could use it to select their seat on a flight operated by Delta Air Lines, and vice versa. Finally, they considered how recent academic research into human behaviour might be relevant in forming strategies for managing different types of customers when they face disruption. “That was a kind of unusual one for us,” Mr Kreiken acknowledges.

While Mr Kreiken has his own management team, which holds its own, more frequent meetings, the Customer Experience Committee ensures a high awareness of the airline’s main customer experience priorities, projects and goals across the entire organisation.

Above all, it sends a powerful message to the 33,000-strong KLM workforce that customer experience is part of everybody’s job, in keeping with the company’s stated mission to be “the most customer-centric, innovative and efficient network carrier in Europe,” says Mr Kreiken.

The survey suggests that senior leaders are generally likely to be interested and engaged in the matter of customer experience. When asked about the biggest internal barriers to optimising the business model for customer-centricity, relatively few respondents (15%) cite lack of executive-level leadership.

A key part of executive leadership should be empowering employees to make decisions for the benefit of the customer, says Greg Jackson, CEO at energy industry challenger Octopus Energy. Although the company is only three years old, it was  chosen last year by UK retail company Marks & Spencer to deliver its M&S Energy business, when the retailer’s previous arrangement with Scottish and Southern Electricity, one of the UK’s “big six” utilities companies, came to an end.

Mr Jackson set up the business in direct response to his own poor experiences as an energy-company customer. “From the start, I knew that employing well-paid, motivated and informed people, who know they are empowered by management to take decisions and actions to improve a customer’s experience, was just a better business proposition,” he says.

“People like that we will solve a customer’s issue on first contact around 95% of the time, which is good for the customer and good for the company. The customer must come first, of course, but there are significant cost savings to be had from having happy customers, rather than dealing with disappointed, frustrated ones, who need to contact you multiple times and, through no fault of their own, end up costing you a fortune.”

Employing well-paid, motivated and informed people, who know they are empowered by management to take decisions and actions to improve a customer’s experience, [is] just a better business proposition.”

Greg Jackson, CEO, Octopus Energy

Conclusion: All change

Keeping up with customers is a process without end

This report has shown that reorganising a business around the needs and expectations of today’s customers involves a great deal of work.

Executives are required to radically rethink internal business processes—how they allocate resources, motivate and reward employees, and measure achievements—in a manner that requires not just system change and technological investment, but significant cultural and mindset change.

Most organisations view this as an evolution, a work in progress. It is arguably work that will never be completed. But what leading organisations share is an understanding and a vision of what customer-centricity should look like. In short, executives at a customer-centric organisation:

See their organisation through the customer’s eyes. They are aware that customers judge companies on end-to-end journeys, not just individual touch points, and work to identify any potholes, roadblocks or detours along the way.

Keep careful watch over what customers say and do. The customer-centric organisation is an avid consumer of customer-related data. It’s used to identify customer needs and build products and services that meet them. It’s used to deliver better experiences: smart, speedy, compelling. It’s used to pinpoint sources of dissatisfaction and tackle them head-on.

Empower employees. While it’s important for executives to model customer-centric thinking and behaviour for the rest of the workforce, employees must have the freedom and scope to make sensible decisions about how customers might be best served by the organisation. Incentives, rewards and bonuses are closely linked to customer satisfaction.

Enact high-level, strategic change. Customer experience efforts confined to frontline staff or left to disparate and siloed departmental initiatives are not sufficient, and risk undermining the larger objective.


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