The power of the operating model in customer experience

The power of the operating model in customer experience

By Matt Dallisson, 22/07/2022

Transforming the customer experience (CX) isn’t about playing hard and fast. To succeed in the long game, companies need to manage it systematically. Doing it well is a game changer, which is why more than 70 percent of senior executives rank CX as a top priority for the coming years. Indeed, companies that effectively organize and manage customer experience can realize a 20 percent improvement in customer satisfaction, a 15 percent increase in sales conversion, a 30 percent lower cost-to-serve, and a 30 percent increase in employee engagement.

In working with hundreds of clients across industries and geographies, we have found that companies that lead successful CX transformations take action in three areas: building aspiration and purpose, transforming the business, and enabling the transformation. One of the most crucial enablers for an effective CX transformation—and one of the biggest roadblocks to greater CX impact if not addressed properly—is integrating customer experience into the organization and operating model.

Of course, organizing the business and operating model around customer experience is easier said than done, and there’s no one-size-fits-all way to go about it. But by establishing clear design principles for a customer-centric organization, creating a CX-organization blueprint, and redefining the operating model with customer journeys at its core, companies can get on track to unlock the full value potential of superior customer experience.

Common pitfalls to avoid

On the journey toward CX excellence, there are pitfalls that prevent many customer-centric organizational transformations from succeeding as planned. Here’s how to avoid the most common:

Aspire, architect, act: three steps to making CX core to the organization and its operating model

This three-step plan can help companies effectively integrate customer experience in the commercial organization and operating model: by formulating clear design principles and capabilities in line with CX ambitions (aspire), translating these design principles into an actionable CX blueprint (architect), and bringing the redesigned organization to life through systematic change management and an effective day-to-day operating model (act).

Aspire: establish clear design principles

Sample systematic assessment questions 

To determine their organization’s current CX maturity, leaders should ask themselves a number of key questions:

Let’s assume a company has successfully formulated a concise CX vision and ambition—for example, to be an industry leader across customer satisfaction, reliability, and convenience. Translating this foundation into implications for the organization and operating model starts with a systematic assessment of the current CX maturity (see sidebar, “Sample systematic assessment questions”).

Based on the assessment, leaders can establish a set of clear, actionable design principles that facilitate the following:

Architect: translate the design principles into the organization’s CX blueprint

Once a clear CX ambition and actionable design principles are in place, leaders are equipped to design the CX target organization and operating model in a way that will allow the company to achieve its unique goals. This design effort can be structured around two considerations: the nature of the dedicated CX function the organization needs, and how to set up the broader organization for customer-centricity. The answers to these questions are company specific and depend on the company’s current CX maturity, complexity, and business archetype (interactive).

Creating a dedicated CX function

For most companies that want to make a step-change in customer-centricity, a dedicated customer experience function is likely to be at least temporarily beneficial. Complex organizations with multiple business units and markets may want one team overseeing the CX effort across groups to ensure everyone adheres to best practices in such areas as CX journey design and CX measurement. A dedicated team will also have an integrated view of which customer experience initiatives to prioritize based on their impact across the organization. Furthermore, world-class customer experience requires distinctive capabilities in design, digital, and analytics that are in great demand. Leaders may also want to pool scarce CX talent instead of dispersing it across units, particularly if customer experience is a new endeavor for their organization.

Finally, a centralized function could be the right fit for organizations that want to create real change in a short amount of time. In the long run, customer-centricity requires continuous improvement; it’s not just a box to check off when it’s done. But companies that want to make significant progress over 12 to 18 months—in launching the transformation effort, tackling redesign, and fielding a handful of high-impact CX initiatives, for example—may need a dedicated team to lead the effort.

Two common archetypes of dedicated global customer experience functions are a CX center of excellence (CoE) and a CX factory. The main distinction between these approaches is the role the CX function plays.

One European insurance company used a CX factory as part of its overall transformation strategy. To enable customer-centricity, it conducted in-depth customer research and redesigned a critical customer journey. Based on these inputs, the CX team piloted more than 30 ideas and created and tested minimum viable products for 11. The company developed intensive capabilities in customer experience, agile, and management and institutionalized the factory with full-time employees. As a result, the insurer increased customer satisfaction and helped board members and employees across departments adopt a customer-centric mindset.

Enabling customer-centricity

In addition to effectively designing a dedicated CX function, companies also need to set up the broader organization and its operating model for customer-centricity. The ideal approach will depend on a company’s business archetype:

Act: bring the CX organization to life through the operating model

Once the guardrails for a customer-centric organization are set, companies can bring the CX transformation to life through systematic change management and an effective day-to-day operating model. To define their target operating model, leaders will need to align on objectives and decide on a rhythm for day-to-day work. With these key building blocks defined, they can manage the change to ensure the entire organization is on board.

Align on objectives

Key stakeholders and owners should consider holding quarterly meetings to align on qualitative CX targets, KPIs, and end products. These targets should align with the strategy and economic plan—for example, prioritizing an uptick in P&L, customer retention, reduction of churn—and provide the basis for determining daily operations.

Some companies have found success by specifying and prioritizing concrete, measurable CX end products on a quarterly basis across the board, N-1 and N-2 levels, and top executives directly feeding into the value levers. They can measure progress toward strategic goals by tracking a clearly defined set of CX KPIs, ranging from financial performance to customer and employee satisfaction.

Establish ground rules

The ground rules relate to the physical or digital work environment, standard work and meeting rhythms, and the overall culture. What does the office space look like? Will the team operate out of a central location? Is there a dedicated workspace for cross-functional work? Leaders will want to embed regular meetings and establish a daily, weekly, and monthly cadence for various tasks and check-ins.

Manage the transition

Almost equally important as defining the new operating model is managing the transition to it. How should the company manage the change and communicate with teams? How should leaders support the redesigned organization? Capability building will not only help develop skill sets, it will help to create and sustain a customer-centric culture. Leaders will likely want to empower the CX team to monitor progress against targeted milestones and metrics, manage talent attraction and retention, ensure business continuity, and make sure employees feel supported and that their concerns are being addressed. Companies that focus on building a customer-centric organization and adopt new ways of working could unlock stacked wins.

Reshaping the commercial organization and operating model with a customer focus is no easy task, but those that do it well stand to reap the rewards. By embedding CX within the entire organization and creating a clear operating model for bringing the vision to life, leaders can get on track to provide superior customer experience and realize tangible CX business impact.

This content was originally published here.