new reality: new customer relationship€¦ · no experience, and if there is no experience, you...

New reality: New Customer RelationshipU.S. Customer Experience Excellence Report

July 2020

kpmg.com

The world has changed irrevocably in the last six months. Customer needs and expectations have rapidly adapted to the new reality—and so must business.

As the lifeblood of every company, the money customers spend is the oxygen that fuels commerce. Keeping and nurturing customer relationships—especially in times of volatility-- relies on building experiences that allow you to retain relationships with the customers you have in order to build the revenue you need to acquire new ones.

At the core of this relationship is a commercial cadence, a rhythm associated with how the customer and business interact over time.

Our 2020 U.S. Customer Experience Excellence Report brings the need for this commercial cadence to the forefront. When you look at our findings in light of the COVID-19 environment, they clearly show that companies which were able to maintain some form of commercial customer dialogue performed better than those who were constrained from doing so by their business models or government-mandated restrictions.

For many businesses, this new reality required a rethink of their customer engagement approaches and a stronger reliance on digital interaction.

The KPMG Six Pillars of Experience Excellence help explain how companies successfully navigated this unprecedented change and continued to be high-performing customer experience leaders.

Foreword

2 New reality: New customer expectations

© 2020 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Our research shows that their successes were built on “Integrity,” acting ethically and demonstrably in their customers’ best interests; a focus on “Resolution,” proactively addressing customer problems; accurately setting customer “Expectations;” reducing the “Time and Effort” customers expend to achieve frictionless digital and, where possible, physical interactions; and delivering a “Personalized” experience with “Empathy” and compassion.

The leaders identified in the report are purpose-led companies, and purpose has become the cornerstone for deeply connective relationships. Our analysis has shown that we are moving from an age of “buying from,” to one of “buying in.” These businesses seek to make a difference environmentally and socially--and to their customers’ lives. Companies such as USAA, Costco Wholesale, and Wegmans bring their purpose alive every day for their customers, and their passion for meeting customer needs in a sustainable way is such that the world would miss something important if they didn’t exist. That is the ultimate test of purpose.

Over the last few months, COVID-19 has accelerated the digitization of almost all daily activities consumers engage in. They are working, eating, grocery shopping, and entertaining themselves increasingly through digital means, and they are doing most of this from home. Consumers of all ages have discovered that the internet makes their daily routines more efficient and gives them more time to spend on leisure—and these behaviors are likely to stick.

Previous norms are changing to include mobile payments, contactless delivery for food and packages, and e-commerce for non-traditional transactions such as car and furniture buying. These will gain more traction in the U.S. in a post-COVID-19 world. Distance learning and telemedicine are changing how consumers educate and protect themselves and their families.

For some of our historically high-ranking Six-Pillar performers, such as Southwest Airlines, it was difficult to sustain customer relationships when they were not flying. For many of our previously successful retail outlets such as Polo Ralph Lauren and LL Bean, having to close their doors to customers meant that the relationship was put on hold. Where the experience depends on the warmth of a physically present employee, the move to online can disturb the very basis of the relationship.

The simple truth is, if you don’t interact, there is no experience, and if there is no experience, you struggle to maintain the relationship.

The migration to new digital relationships poses something of a challenge for organizations, even those with a traditionally strong digital presence. Online experiences in this changed world should be immersive, emotionally connective, and overtly safe. The emotional connection between humans needs to be replicated online, as does the essence of the in-store experience. They need to be infused with a strong sense of brand purpose.

This demands a connected organization where every capability is symbiotic and digitally aligned, from front to back office, in order to deliver an intentional customer experience.

The simple truth is, if you don’t interact, there is no experience, and if there is no experience, you struggle to maintain the relationship.

3New reality: New customer expectations


U.S. Top 10 companiesThe KPMG research program is conducted annually across the U.S. with 11,000 customers. They rate their experiences with 300 brands against each of The Six Pillars. This information is used to create a league table.

The Top 10 leaders on this year’s league table are listed below. The pillar that customers rated highest for each company is shown in parentheses and represents the company’s highest pillar score against the 2020 market average across the study.

New reality: New customer expectations4


IntegrityBeing trustworthy and engendering trust.Integrity is an outcome of consistent organizational behavior that demonstrates trustworthiness. There are trust-building events where organizations have the need to publicly react to a difficult situation, and trust-building moments where individual actions by staff add up to create trust in the organization as a whole. For all customers, it is the degree to which the organization delivers on its promises that is consistently top of mind.

ResolutionTurning a poor experience into a great one.Customer recovery is highly important. Even with the best processes and procedures, things will go wrong. Great companies have a process that not only puts the customer back in the position they should have been in as rapidly as possible, but also make the customer feel really good about the experience. A sincere apology and acting with urgency are two crucial elements of successful resolution.

ExpectationsManaging, meeting and exceeding customer expectations.Customers have expectations about how their needs will be met, increasingly set by the best brands they have encountered. Understanding, delivering, and, if possible, exceeding expectations is a key skill of great organizations. Some are able to make statements of clear intent that set expectations (e.g. “never knowingly undersold”) while others set the expectation specifically (“delivery in 48 hours”). And then delight the customer when they exceed it.

EmpathyAchieving an understanding of the customer’s circumstances to drive deep rapport.Empathy is the emotional capacity to show you understand someone else’s experience. Empathy-creating behaviors are central to establishing a strong relationship and involve reflecting back to the customer that you know how they feel. Then going that one extra step because you understand how they feel.

PersonalizationUsing individualized attention to drive emotional connection.Personalization is the most valuable component of most experiences. It involves demonstrating that you understand the customer’s specific circumstances and will adapt the experience accordingly. Use of name, individualized attention, knowledge of preferences, and past interactions all add up to an experience that feels personal.

Time and EffortMinimizing customer effort and creating frictionless processes.Customers are time poor and are increasingly looking for instant gratification. Removing unnecessary obstacles, impediments, and bureaucracy to enable the customer to achieve their objectives quickly and easily have been shown to increase loyalty. Many companies are discovering how to use time as a source of competitive advantage. Equally, there are clear cost advantages to saving time, as long as the other Pillars are not compromised.



The two pillars where the Top 10 leaders considerably outperformed the market are “Integrity,” the fundamental basis of all enduring relationships demonstrated by acting in the customer’s best interest, and “Empathy,” showing that they care.

USAA describes itself as a business built on empathy, seeing the world through the eyes of its customers. “We know what it means to serve,” the USAA states, reassuring customers that it is committed to their wellbeing, whilst empathising with the kind of lifestyle that active servicemen, and their families, have undertaken.

Respondents score USAA highly for Empathy but also Integrity.

Based on a steady trend of reduced driving and fewer accident claims by members, USAA recently announced a $520 million dividend for auto insurance policyholders. and plan to return an additional $280 million to members through a second premium dividend.

H-E-B has a strong sense of place which it leverages to create a connection with its customers.

Unique to H-E-B is its Texas branding. Most of its many house-brand products emphasize a Texas connection, from coffee blends dubbed “San Antonio” and “Austin” to Texas-shaped cheese chunks and tortilla chips. Walk into any H-E-B store, and the Texas theme is instantly and continuously apparent.

While focused on price and quality, it wraps these in a Texas customer experience.

For example, during COVID-19, H-E-B launched “Texans Helping Texans” as a community-outreach initiative that’s guided by “digital innovation, compassionate philanthropy, and the generous spirit and strength that brings together all Texans during uncertain times.” The program is aimed at helping the most vulnerable citizens in the areas it serves.

Seeing the damage caused to the Texas restaurant industry, H-E-B sells ready-made meals from local restaurant partners. All proceeds from the sales of these chef-prepared meals go directly to the restaurants.

It is this sense of local pride and belonging that its customers buy into.

01. USAA 02. H-E-B

+18%+18%

versus all markets average


For the fifth consecutive year, USAA (United Services Automobile Association) has been in the top five of the United States’ Customer Experience Excellence (CEE) rankings.



Underpinned by its customer values and a commitment to high-quality food, service, and hospitality, Chick-fil-A has emphasized its approach to “second-mile service.” When he founded Chick-fil-A, Truett Cathy told his employees to treat every customer as if they were the president.

So, the Chick-fil-A difference lies in how customers are treated by its employees. A bias for doing their thoughtful best for customers runs throughout the company’s culture, and employees are encouraged to spot and act on opportunities to surprise and delight them.

Because credit unions are less motivated by profits for the sake of profit, they can put more energy towards meeting the needs of their members.

As Senior Vice President of Marketing and Advertising for Navy Federal Credit Union (NFCU), Pam Piligian explains, NFCU’s success hinges on its ability to understand and serve the needs of a unique member base. When Navy Federal builds a product, a process, or a resource, it ensures that members have “a seat at the table” and that their financial well-being acts as a guiding light.

As a financial institution serving military members, the credit union prides itself on understanding its individual customer’s needs more deeply than other banks might.

It therefore hires veterans and active spouses. Not only does NFCU recognize that these employees have a unique understanding of the needs, expectations, and experiences of credit union members, but it also believes that hiring from this pool of applicants is another way to support the community.

Recruitment is a critical skill for NFCU. It looks for service-oriented team players with strong interpersonal skills, the right attitude, and adaptability to a changing, dynamic environment. It hires for the attitude it wants, then trains employees for the skills it needs.

03. Chick-fil-A 04. Navy Federal Credit Union

+18%+14%



Oftentimes, this is through simple human acts, whether it is holding the door, holding an umbrella so customers do not get wet, or their final sign-off, “my pleasure,” during customer interactions. It is all about how patrons are made to feel.



Edward Jones is completely focused on the client experience and ensuring it adds value at every customer interaction. The company realizes that success requires a commitment to maximizing client empowerment, participation, and confidence. Central to its approach is being able to anticipate client needs before clients even know they have them.

Anticipatory customer service is not a new concept, but data-driven approaches are making it easier to execute.

Successful Edward Jones financial advisers are leveraging data aggregation technologies and on-boarding tools to help facilitate meaningful, trust-building conversations. Prior to assisting with financial decisions, financial advisers help clients clarify priorities and values. In this respect, a better Edward Jones client experience involves not only financial knowledge, but also emotional intelligence.

The company has been able to meet the move to digital with advanced tools and techniques that connect their customers more closely to their advisors.

The core values of In-N-Out Burger are integrity, honesty, and respect. It has long been respected for its approach to staff wages and working conditions. It is a family-owned business and sees its employees as extensions of its family. It’s one of the only fast-food restaurants that pays its employees a salary above the government’s minimum wage guidelines and regularly tops awards lists for “best employer” status. As one employee says,

Purpose driven, the company is more focused on keeping its brand promise to consumers and employees than in growing profit.

05. Edward Jones

06. In-N-Out Burger

+16%+12%



This company is awesome! You will love working here. Everyone is friendly and very appreciative. The company does so much for their employees like picnics, basketball tournaments, softball tournaments, golf tournaments for a charity, and they pick a family every year during Christmas to help out during that time of year. You get rewarded for everything, so your hard work will never go unnoticed.

(Quote sourced from Indeed.com).

We need to think like our clients—not just about themsays their website



Its former CEO Jim Senigal described Costco as having to “get a million small things right every day”. Costco’s business model is to showcase a continuing stream of new and varied products.

In 2019 Costco’s own brand Kirkland Signature products brought in $40 billion in sales.

Publix has over 180,000 employees each one is encouraged to deliver the Publix brand promise of “making shopping a pleasure”.

Earlier this year Publix launched Club Publix a digital app that provides a “personalised experience”. The program includes a number of digital features, including early notifications of offers, the ability to pay with a scan of the Publix app, and the option to receive e-receipts with member offers and personalized content.

07. Costco Wholesale

08. Publix

+9%+10%



Respondents say that shopping at Costco feels like an adventure.

Customers say that it is their employees that make Publix feel different.



With a mission to make its customers’ shopping experiences a genuine pleasure, Wegmans has become one of the country’s most well-known grocery store chains. It brings its purpose alive by pampering its customers with cooking demonstrations, restaurant features, and movie nights.

Wegmans is described by its CEO, Colleen Wegman, as a theme park of food with telepathic levels of customer service. Each store boasts an extensive produce section, bountiful baked goods fresh from the oven, and a collection of some 500 cheeses. You’ll also find a bookstore, child play centers, a dry cleaner, video rentals, a photo lab, international newspapers, a florist, a wine shop, and a pharmacy. A visit to Wegmans is not just shopping, it’s an event.

Wegmans is a store loved by its employees. As a thank you to the team members who are working tirelessly to serve the needs of customers, Wegmans increased their pay by $2 an hour during the months of March and April. While continuing to offer disability and paid sick leave for all employees, part and full-time, it goes above and beyond all statutory requirements.

09. Wegmans

+10%versus all markets average

The reason we have grown slowly is that we want to make sure our people are fully prepared and trained to deliver our model of incredible service.

Colleen Wegman, CEO



Charles Schwab’s mission has long been to make investments accessible to everyday investors. More recently it has put technology at the center of its development of the customer experience by removing barriers to entry and making things simpler.

In 2019 the company led the market in driving zero-commission fee structures and focused on ease of use. It moved from paper to digital, and one-click facial recognition sign in to aid access and make life easier for its customers.

The company has what it describes as a “see through the client’s eyes” approach to all aspects of the experience to ensure that all technical innovations are fit for purpose and meet real client needs.

This accompanied by a “no trade-offs” commitment, ensures clients get access to ever-increasing capability at the lowest cost.

Innovative products such as the “intelligent” product portfolio and income range put the customer in control and equip them to make good decisions about their financial future.

But at the heart of its approach to clients, Charles Schwab uses personalization and fully integrated omnichannel approaches that allow customer access to downloadable, web, or mobile platforms, and every transaction or action is viewable and trackable across each channel.

10. Charles Schwab

+10%versus all markets average



Highest risersThe companies that were able to maintain their commercial cadence, while delivering an outstanding Six-Pillar performance have made a significant improvement to their rankings.

As with the Top 10 companies, their average highest scores versus the market average across The Six Pillars were “Integrity” and “Empathy.”

The highest risers have a strong digital capability. Some of the companies achieving this higher rank are highlighted below.

Sephora, one of the highest risers (+63 places) in our index, has responded to this challenge in innovative and inventive ways. The company has been able, using sophisticated AI-enabled technology, to transfer the in-store experience online and, in some cases, has enhanced it.

It is said that “opportunity favors the prepared mind;” in this changed world opportunity favors the digitally prepared. TD Bank, for example, was already well prepared digitally to not only accommodate new online customers, but to do so with a human touch. The bank saw a considerable jump on the index from #162 in 2019 to #78 in this year’s rankings by empowering customers to take control of their financial lives. As consumers have evolved in accepting digital interaction for more aspects of their banking, the human elements of phone and branch touchpoints is being tailored to offer support and value-adding advice.



Zappos also made significant progress on the index, improving some 68 places as they continue to lead the market on Time & Effort. Through creative marketing and omnichannel experiences, they have become more deeply embedded in their customers lives. For example, the retailer’s Run-on-One campaign is a 30-day program that aims to help runners who sign up for the program stay committed to their training goals by having Zappos customer-loyalty agents call and provide words of encouragement. Additionally, to help its customers overcome the common challenge of getting into the right running shoes, Zappos offered a 30-day return guarantee no matter how many miles were run in the sneakers.

Many essential services such as food providers and grocery stores have evolved new ways of conducting business, keeping staff and customers safe while moving to click and collect, curbside pickup or home delivery. The Ruby Tuesday’s restaurant chain, despite its commercial difficulties, rose 85 places because of its response to the pandemic.

Northeastern supermarket chain Hannaford was in fact our biggest mover, rising 137 places. The chain not only placed its customers and employees first, but also fused smart in-store technology that improved the physical experience with online purchasing and rewards programs to make customers’ lives easier. Many companies look at digital and physical commerce separately, a perspective usually driven by their internal corporate structures; conversely, Hannaford looked at the experience from the eyes of the shopper, where there is no division between the two, and facilitated the easiest and most engaging path to purchase.



Insight-driven strategies and actions

Innovative products and services

Experience centricity by design

Seamless interactions and e-commerce

01

02

03

04

The first rule of customer experience is “know your customer.” It is no longer enough to have a passing understanding of customer needs; it requires a deep understanding of a customer’s life and the translation of that understanding into decision-making, prioritization and experience design. Vital customer knowledge is needed to personalize the experience.

A deep understanding of the customer’s life drives innovation. A problem-solving mindset is required which, when coupled with a strong sense of purpose, provides focus and a test-and-learn mindset that encourages continual refinement.

The experience must be intentional rather than the outcome of multiple internal processes. This is how the brand promise is delivered at each touchpoint, and how the brand is made real for customers each time they interact to form a strong relationship.

Providing a frictionless end-to-end customer journey, with safe, secure payment options, where cyber security is the number one attribute, is essential.

Learning from The Six Pillar leadersSo, what does an examination of our leaders mean for companies looking to emulate their success? First, the experiences they deliver consistently embody The Six Pillars of Experience Excellence. Their response to COVID-19 has brought Integrity and Empathy to the fore.

Second, they are agile, adaptive, and digitally enabled, mitigating the effects of the shutdown and, in many cases, taking advantage of the changes to customer behavior.

They have consistently stayed in touch with their customers and promoted a continuous interaction with their brands.

Specifically, their organizational resilience is built around eight common capabilities that work symbiotically:



Aligned and empowered workforces

Digitally enabled technology architecture

Integrated partner and alliance ecosystem

Responsive operations and supply chains

06

07

08

05

Employees underpin great experiences. The employee experience must enable the target customer experience to emerge, and it requires leaders, employees, and a work culture that are aligned to a brand purpose and a set of values that both inspire and shape behavior. Leaders must seek to enable rather than control, and employees must be encouraged to make judgements and decisions that customers expect at the point of interaction.

Architecture must be built around the customer so it is responsive to their needs and preferences and supported by an agile implementation mindset. This architecture must support the ability to rapidly implement new technologies, products, and services.

This requires the ability to identify and leverage synergies with third parties. It is not always feasible for a company to do everything by itself. The move to platforms is driving wider partnerships that can satisfy related and often interconnected customer needs.

COVID-19 has graphically demonstrated the need for organizational flexibility and responsiveness as companies pivot to maintain customer relationships. Alongside increased online purchasing, traditional supply chains must be extended to the last mile. It is the end-to-end delivery of the experience that drives advocacy and loyalty.

What is particularly interesting about these leading companies is their holistic, integrated approaches. Every aspect of what they do is not only mutually reinforcing, but it makes a clear contribution to the delivery of their purpose. The eight critical capabilities are aligned to support the unique differentiators of the organization.



Future ArticlesWe will continue to provide insight from our Customer Experience Excellence program and will cover the following topics in future articles:

Interactions + Relationships = Customer Experience Excellence.

To build strong customer relationships, our report finds that regular interaction is key. In today’s volatile environment, digital strategies form the path to effective transactions. What digital strategies employed by Customer Experience Excellence leaders performed best? What are the elements of a winning digital customer program?

The biggest risers: What can we learn from the companies that have improved the most?

The data shows companies such as Ruby Tuesday’s, Hannaford, Zappos, Sephora, IHOP and TD Bank all rose significantly in the Customer Experience Excellence Report 2020 rankings. It is rare that success happens overnight; it is a function of careful planning and taking advantage of opportunity. What are the common factors that has driven these companies’ success? What can others learn from their approaches?

Personalization: The Pillar of strength in customer relationships.

In the 2020 Customer Experience Excellence Report, personalization is again the top driver for building enduring customer relationships—and its power grew even strong this year. Why is Personalization the most important of The Six Pillars? How can you use your sales, service, and marketing platforms to help you know your customers even more?

Making the connection: Employee experience drives customer experience.

In a parallel research program 41 percent of respondents said they would be strongly influenced in their choice of provider by how a company treats its employees. The employee experience drives the customer experience. But what aspects of the employee experience really make a difference to customers. How does this play out in the digital world when a customer may never speak to an employee?

Rising tides don’t lift all boats when it comes to performance.

There is a misconception that, because certain sectors have rising profits during the COVID-19 challenge, every company in that sector will succeed. But that has not proven to be the case. For example, not all grocery retailers delivered an outstanding experience during the pandemic. What separated the leaders from the followers? How can differentiation play a part in determining a successful approach?



ContactsJulio HernandezPrincipalGlobal Customer Center of Excellence Lead and US Customer Solutions LeadKPMG LLP

E: [email protected]

Jeff MangoManaging DirectorCustomer Experience LeadKPMG LLP


Jason GallowayManaging DirectorMarketing Transformation and Technology LeadKPMG LLP


Walt BeckerPrincipalSales Transformation LeadKPMG LLP


Mike FlodinPrincipalCustomer Service Transformation LeadKPMG LLP




kpmg.com/US/customeradvisory

The statements made in this report and the related case studies are based on the results of our survey and should not be construed as an endorsement by KPMG LLP of the companies’ goods or services.

Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


The KPMG name, logo are registered trademarks or trademarks of KPMG International.

CREATE. | CRT128502A | July 2020

new reality: new customer relationship€¦ · no experience, and if there is no experience, you...

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