Forrester's Paul Hagen: B2B Customer Experience Scores Are Low and Excuses Ring Hollow

Customer Engagement
Customer Experience
The customer experience for companies doing business with other companies stinks.

The customer experience for companies doing business with other companies stinks. Three independent studies that Forrester Research has conducted over the past year indicate that the business-to-business (B2B) experience is perceived worse than the bottom-of-the-barrel consumer industries, such as TV service providers and health insurance plans in Forrester's 2011 Customer Experience Index. This is not surprising for several reasons. Many B2B firms believe that customer experience is something that only consumer-focused firms like Disney, Zappos, and Ritz Carlton need to consider. Moreover, many B2B companies argue that purchasing decisions are made for a complex set of reasons other than customer experience. Finally, they often say that because of the relatively low number of accounts, they already provide a personalized experience through account management teams. Firms making these rationalizations miss several important points. First, if word of mouth is important to sales, then so is customer experience. Forrester's consumer research shows that only 23 percent of individuals trust radio and TV ads--and only 19 percent trust direct mail--while 73 percent trust recommendations of friends and family. There is little reason to believe that the numbers are much different for B2B. And, while Facebook may not amplify opinions, social media tools used for professional networking in online communities certainly do. Second, firms that have poor experiences with other firms buy less. The experience design company Walker finds that firms whose customers are "trapped" spend significantly less, grow more slowly, and have lower gross margins than those that are "truly loyal." Forrester's research suggests similar outcomes, with strong correlations between customer experience ratings and likelihood to purchase again, recommend, and switch. Third, customer experience is not limited to customer-facing employees, such as account managers and call center representatives, or the contract holders at the client's company. Rather, the end-to-end experience often includes interactions driven by back-office employees that make life difficult and frustrating for important stakeholders who could drive future business at the client firm.

Improving the B2B customer experience from its dismal state is more than a marketing effort. After all, marketing only "owns" as small portion of all the interactions with customers. Companies such as John Deere, Maersk Lines, Fidelity, Philips Electronics, and Intuit understand this and as a result have significant B2B customer experience efforts underway. While in some respects the B2B experience is more complex than the B2C environment (e.g., diverse stakeholders within a "client"), other issues with partners, resellers, agents and other intermediaries that impact or even deliver the experience is very similar. In fact, the best practices that the best B2C firms use apply to B2B firms. Best practices include:

- Defining the intended experience for the target "customer." As experience design firm Beyond Philosophy puts it: "To improve customer experience implies you are somewhere today and you are heading somewhere else. The strategic question is where?" To get started, firms need to define who exactly they mean by "the customer"...something all the more important for B2B companies, which have many stakeholders inside a client. One manufacturer found that it had 26 personas across departments just to describe those maintaining purchased equipment within client firms. Some were upwards of 10 years old and all were at varying states of development. By rationalizing these down to just a handful of well-developed personas based on behavior rather than departmental role, those redesigning the experience--a cross-functional team that included employees as diverse as engineers, contact center staff, and account managers--created a common vocabulary and target to work on. Another B2B firm, in trying to decide for which stakeholder within its client base it should prioritize, realized that concentrating on improving the experience for lower-level logistics clerks would swing much more business its way than improving the customer experience for higher-level contract managers.

- Understanding the customer perspective. The most challenging aspect to improving the customer experience is for firms to shift to "outside-in" thinking in which employees put themselves in customers' shoes, rather than today's "inside-out" mind-set that focuses primarily on narrowly define internal metrics. Common experience design practices, such as behavioral personas, customer journey maps, and a voice of the customer (VoC) programs can help turn this around. Export Development Canada's customer journey map for its insurance group found more than 35 internal handoffs between departments and across 14 customer touchpoints with little consistency in total time to completion. The group used journey (value stream) maps to focus project teams and Lean methodologies for aligning internal business, processes, people, and systems. The result was a 60 percent reduction in processing time with improved predictability, a 24 percent increase in Net Promoter Score (NPS), and reduced waste.

- Aim to change culture. Firms serious about improving the experience realize that a cultural transformation needs to take place. Key practices such as recruitment and hiring, on-boarding and training, internal communications and storytelling, performance metrics, and rewards and recognition systems aimed at changing the beliefs and behavioral norms of internal employees can similarly be applied to partners, resellers, agents, and other third parties that impact the B2B customer experience.

The widely divergent range of customer experience scores that B2B firms achieve in Forrester's studies today suggest there is lots of room to differentiate based on customer experience. And that could translate into big dollars. In the B2C space, Forrester estimates that a 10 point increase in its Customer Experience Index score can amount up to $1.5 billion. But changing culture isn't easy. Those that get the jump will create something that takes time and is hard to replicate.

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About the Author: Paul Hagen is a principal analyst at Forrester Research serving Customer Experience professionals. He blogs at