"The customer experience." It's a widely spoken phrase, often used as a catch-all term for companies' efforts to improve operations and rally employees and consumers. Most companies want to elevate the customer experience, but somewhere between the good intentions and actual implementation, many things can break down. The current state of the customer experience is not ideal.

Forrester Research recently interviewed more than 4,600 U.S. consumers about their interactions with 133 companies across a variety of industries for its 2010 Customer Experience Index. Only 13 firms received "excellent" customer experience ratings, while 45 were rated either "poor" or "very poor." However, 22 companies did make significant improvements over last year. According to Bruce Temkin, vice president and principal analyst at Forrester, there is a considerable opportunity for companies to drive better business results by improving their customer experience management efforts.

Companies first need to define what, in fact, the customer experience is at their firm. Forrester categorizes the customer experience as the sum of three elements: meeting needs, being easy to work with, and providing customer enjoyment. Companies that can do all three well rank highest in Forrester's index and develop loyal customers. According to Temkin, Barnes & Noble, Marriott Hotels, Hampton Inn/Suites, Amazon.com, and Holiday Inn Express top the Customer Experience Index with high marks for all three elements. Conversely, companies like Citigroup, US Airways, and the now defunct Washington Mutual round out the bottom of Forrester's list with low scores from customers in all three categories.

The challenge for these customer experience laggards, and many other organizations, is the many complex internal processes, interconnected technologies, and human obstacles to providing something seemingly simple.

Customer experience pitfalls
Temkin says most companies encounter three common pitfalls when it comes to delivering a good customer experience:

• Lack of cooperation across departments
• Limited understanding of customer needs across the organization
• The general power of inertia within a business

These three pitfalls often share one root cause: a company is too internally focused. "People just don't understand, or spend the time to think about, how their decisions and actions impact customers," Temkin says. "I'd say it's more often an issue with people and process than it is with technology. Good processes and people skills can overcome many technology glitches, if the experiences are designed and delivered appropriately."

Avoiding these pitfalls starts at the top. Company leadership has to not only buy in, but mustactively support, customer experience efforts. However, having a C-level customer executive does not automatically equal customer experience success. Companies also need to prioritize three business areas: cross-channel alignment, customer-focused metrics, and a customer-focused culture.

1. A seat in the C-suite
The customer experience should be the responsibility of all departments, ideally with a C-level executive overseeing the cross-departmental communication and projects. Anna Convery, chief marketing officer at customer experience analytics company ClickFox, says she is beginning to see more chief customer officers and the like who sponsor customer experience projects. But it's not yet commonplace. "There is a lot of talk about the customer experience at the C-level, but not a lot of folks putting their shoulder to the wheel," she says.

Bob Johnson, CCO of Century Furniture, has guided the high-end furniture manufacturer's shift from a product-focused mind-set to a customer-centric one. "Every employee at Century needs to recognize that they are in customer service," Johnson says. "We have had good success through recognition, promotion, and training...we're starting to move the needle so everybody recognizes that something they do is affected down the line. We're also getting the entire organization to recognize that we're selling an experience."

2. Cross-channel alignment

A customer thinks of a company as one entity and today expects alignment across channels. Meanwhile, most companies still think of themselves as a series of departments. They may use technical, hierarchical, or geographical excuses why they don't align their organization. But a breakdown in the customer experience from one channel to another has an impact on the bottom line—something senior management should be acutely aware of. Vodafone's Paul de Laat is.