1. March 2011
Delivering a World-Class Customer Experience:
Transformation from the Outside In
by Susan McNeice, Vice President, smcneice@yankeegroup.com and Sheryl Kingstone, Director, skingstone@yankeegroup.com
The Bottom Line
Customers are better connected than ever before, and communications service providers (CSPs), device manufacturers, retailers and even app developers are
under fire to transform the way they envision, analyze and manage customer experience. The requirement is here and the recognition of the need is emerging,
but evolving to the desired state is still a puzzle. Here’s a hint: It takes more than single department, process or software application.
Executive Summary
Customers of the communications industry’s services and wares • Ensure experiences are transparent and consistent while also
buy more than just connectivity. They buy devices, support, service being dynamic.
and feature combinations, third-party apps and even a provider’s
• Develop the appropriate real-time information-sharing
brand. In short, what they acquire is the entire experience. To
infrastructure across all the parties to the experience.
date, however, most transformation efforts have been driven
largely by internally focused cost reduction or time-to-market • Recognize the experience as one of the most powerful sources
goals. Clearly these have benefits, but customers see the entire of competitive advantage.
experience, not just a speedy, efficient provider infrastructure.
Transforming “from the outside in” means all parties to the Make no mistake: This transformation will be neither speedy nor
experience, namely communications service providers (CSPs), simple, but the rewards will be significant for the long term.
device makers, app developers and retailers, need to:
• View the world through the customer’s eyes across all
dimensions of product/service, company and brand, delivery and
operations, and distribution channel.
Table of Contents
I. Defining and Understanding Customer Experience 2
II. Setting Sights on the Ideal Experience 4
III. Requirements for Transformation 5
IV. Conclusions and Recommendations 7
V. Further Reading 8
© Copyright 2011. Yankee Group Research, Inc. All rights reserved.

2. Delivering a World-Class Customer Experience: Transformation from the Outside In
I. Defining and Understanding For the communications industry, Schmitt’s definition applies broadly.
Customer Experience More specifically, the customer experience occurs across four
dimensions representing broad categories of customer interactions:
Every customer has an experience with a CSP, device maker,
software application developer or some other member of the • Company and brand: This includes service provider public
industry ecosystem. The question is: Is it the experience they reputation, as well as individual brand values and attributes.
want? Is it what is intended? The communications industry is • Products and services: These are market-facing offers
undergoing a fundamental transformation due to the availability of representing combinations of services, features, equipment
the Anywhere Network® and the hyper-convergence of Internet, and third-party deliverables. These offers are surrounded by
mobility, and new media and devices. The ability of CSPs and their business rules for eligibility, pricing, discounting and duration, to
ecosystem partners to drive customer loyalty and capitalize on name a few.
new revenue opportunities beyond their traditional markets will
help provide new revenue for growth in mature markets and new • Channel: This is the means by which service providers interact
opportunities in emerging markets. However, a critical reality with their customers before, during and after the sale. This
check for service providers is to transform their strategies around includes direct sales teams, dealer networks, Web portals,
their customers. There is a lot at stake: If service providers get it social networking sites and contact centers.
wrong, they will continue to lose mind share, customer loyalty and
• Delivery and operations: This includes the manufacture,
revenue to competitors.
assembly, delivery, maintenance and repair of the actual products
Before one can transform the customer experience, it is useful and services. It is the “how” of the service providers’ world.
to define what it entails—and what it does not. Much has been
In each of these dimensions, service providers make decisions and
written on the subject of customer experience as it applies to all
subsequent investments to establish and maintain the experience
industries. The seminal work by B. Joseph Pine II and James H.
infrastructure. Likewise, connected users have points of view that
Gilmore, “The Experience Economy,” proffered experience as a
inform and govern their buying decisions. In an ideal setting, these
form of value for which a price may be charged in a post-agrarian
opinion sets match. Where they don’t, there is an opportunity to
society. Later, Columbia Business School Professor Bernd Schmitt
change the experience (see Exhibit 1 on the next page).
coined the term “Customer Experience Management,” or CEM,
in his book “Customer Experience Management: A Revolutionary
Approach to Connecting with Your Customers.” He suggested
that CEM “represents the discipline, methodology and/or process
used to comprehensively manage a customer’s cross-channel
exposure, interaction and transaction with a company, product,
brand or service.”
2 © Copyright 2011. Yankee Group Research, Inc. All rights reserved.

3. March 2011
Exhibit 1: Dimensions of the Connected Experience
Source: Yankee Group, 2011
Dimension Connected User PoV Provider PoV
Company and Brand Who is this provider? Who are we?
Is its name connected with positive feelings? What do we stand for?
Can I trust this provider? What do we want to accomplish?
Does this provider deliver products and services How are we seen in the market?
I value? What do our product brands represent to the buyer?
Does this provider care about customers?
Products and Services What can I buy from this provider? What do we sell?
Does this provider have the right combinations Are our offers compelling?
of services, equipment and pricing? Are they competitive?
Do we have the right network of partner suppliers?
How do our customers behave when they are using a
certain offer?
Channel How and where can I buy from this provider? What selling channels do we invoke, e.g., retail stores,
Is there help available to make purchases? online sites, call centers, catalogs, direct vs. dealer?
If I start a purchase on the Web, can I complete Do the channels have differing levels of support?
it via the call center?
Delivery and Operations How can I receive the products and services, How do we deliver and maintain what we sell?
both initially and on an ongoing basis?
Does the product work anywhere, anytime?
None of these dimensions exists in a vacuum. They are highly the impetus to consider social networking sites as alternate channels
interactive and depend on feedback for improvement (see Exhibit 2). for customer interaction. And of course, there must be alignment
For example, handset-network incompatibilities that result in service between the way the company positions its brand in the market and
degradation must be captured and relayed to product managers for the way it actually delivers—arguably one of the biggest sources of
remedies or product changes. Similarly, analytical data captured by customer discontent in the market today.
operational systems and reviewed by product managers may provide
Exhibit 2: The Connected Experience Fulfills and Maintains
Is Interactive, Informative
Source: Yankee Group, 2011
Delivery and Company and
Operations Brand
Sells To and Designs and
Through Develops
The Customer
Channel Products and
Services
Manufactures and Assembles
© Copyright 2011. Yankee Group Research, Inc. All rights reserved. 3

4. Delivering a World-Class Customer Experience: Transformation from the Outside In
On a day-to-day operations basis, this means service providers • Transparent . The relationship should be evident and in plain
require an information exchange infrastructure to facilitate sight at all times, but “fine print” restrictions and caveats are
understanding across the dimensions, which in turn provides grist almost always present in customers’ experiences with their
for the experience mill. service providers. Similarly, changes to accounts need to be
presented in an easily digestible manner that is both professional
While all of this may seem a bit oversimplified, Yankee Group
and respectful of the customer. Over the last 30 years, far too
believes transformation requires a return to these grass-roots
many telecom “deals” have been marred by service providers
discussions to detect the gaps between the ideal state and the
over-promising and under-delivering, and then hiding behind an
current user reality. Ongoing customer churn, angry Facebook
endless list of user restrictions. Instead, service providers need
posts and annual survey results are all proof of the need for
to be forthright about the boundaries of the relationship. Billing
the communications industry to transform and stop generating
is another huge source of connected user distress. In fact, in
its current bottom-of-the-barrel statistics compared to other
a recent Yankee Group survey of U.S. consumers, a majority
industries. In fact, given the near ubiquity of basic transport
said they would be willing to pay 10 percent more per month to
services and me-too nature of the telecom market, Yankee Group
avoid billing surprises (see our 2011 US Consumer Survey, Wave
believes the connected experience is one of the last remaining
1). Lastly, service providers’ bandwidth-shaping and restriction
opportunities for competitive differentiation.
activities cannot be carried out surreptitiously. Remember the
uproar that followed the revelation that North American cable
II. Setting Sights on the Ideal Experience company Comcast was throttling bandwidth for BitTorrent
There is an abundance of research and anecdotal evidence pointing users? However necessary and important that may have been in
the communications industry toward the need to transform its Comcast’s view, the court of public opinion ruled against it. It is
relationship with connected users. Horror stories abound: Loyal fair to say that much of today’s push for Net neutrality, at least
customers are dropped by wireless CSPs for roaming in excess of in the U.S., was spurred by that event.
allowable amounts; long-time customers experience connectivity • Consistent . When service providers promise customers
losses in urban centers due to aggressive sales of smartphones; and certain coverage, quality, pricing or availability, customers
users call contact centers after hours while using the provider Web expect consistent behavior from the network, customer care,
site only to find out the contact center agent has no awareness billing, provisioning and all other touch points. This is certainly
of or visibility into what they have already tried because the Web difficult for service providers to ensure technically, owing to
site and agent desktop are disconnected. And this is not limited the infinite number of circumstances that can affect coverage
to wireless. Provisioning cycles for bundled offers that stretch in a given location at a given moment. But, like it or not, that is
out to 45 days, require multiple, expensive truck rolls and force their mandate. Consistency also applies to the multiple channels
consumers to accommodate inflexible in-home service schedules available for interaction. When customers begin to learn about
are equally common. The simple fact is the experience isn’t what it or buy offers via a service provider’s Web portal, they must be
should be. But what is the ideal connected experience? able to move seamlessly to other channels, such as the contact
It would be easy enough to dismiss the ideal experience as center or retail store, to learn more or finish their purchase.
“whatever the customer wants” or as something that cannot The service provider’s contact center agents need to be able to
be defined, let alone managed or transformed. But Yankee assist with every customer transaction at any time customers
Group believes connected users expect their relationship with a ask for help, either via a “help” function on a Web portal or
service provider to possess three key attributes. They want their via phone service, which is still customers’ preferred means of
experiences to be: getting help and support, according to our consumer survey.
4 © Copyright 2011. Yankee Group Research, Inc. All rights reserved.

5. March 2011
• Dynamic. Service provider actions that affect the connected • They are too network-centric . A typical occupational
experience must be rapid, personalized, immersive and hazard of service provider network teams and their providers,
competitive. Connected users of all services look for real- this attempt to transform results when teams view most of the
time or at least near-real-time delivery. They also expect world through the lens of network and QoS measurements.
their services and capabilities to be tailored to their interests. These measures are too narrow and capture just one part of
Immersive services serve connected users at work, at play and the experience.
on the go, according to the multiple personas they adopt as they
• They are too CRM- and customer-care centric. Another
move through their day. This is already evident in the emergence
function-specific, inside-out view, this attempt to transform
of service plans that permit “hybrid accounts,” or those with
tends to rely on internal measures of quality, such as average
more than one account profile (e.g., employee and private)
hold time and call abandonment rates. In reality, however, such
associated with one device and service plan. Lastly, prices must
measures have nothing to do with the overall experience; they
be competitive. Connected users have demonstrated through
simply measure service provider transaction response efficiency.
their rapid adoption of premium-priced smartphones, tablets
and other devices that they aren’t necessarily always looking • They are too service provider-centric. These
for the lowest price overall. What they want is the lowest measurements see only those attributes controlled directly by
price available for their desired combination of device, service, the service provider and do not include third-party capabilities
features and guarantees. such as downloads, ring tones, interconnect handoffs,
entertainment content and applications.
The endgame for service providers, of course, is a differentiated
experience that results in improved revenue and customer loyalty. No one of these is necessarily bad or wrong. They are merely
This is no small matter, and the investment will not likely pay off in incomplete and internally focused. It is likely this trend will
a time window short enough to please Wall Street. If it was simple, continue for some time as no real alternatives have been
every service provider would have already done it! But now is presented and, arguably, there is still a lack of sufficient pain (read:
the time to act: Begin the transformation process or watch your competition) to compel service providers to behave otherwise. As
market share and margins continue to thin. In this regard, Yankee service providers move to transform to customer-centric views,
Group defines customer experience transformation (CET) as a they urgently need to not only address technology transformation
commitment to customer interactions that are consistent, dynamic around the customer experience, but also effectively manage and
and transparent across all four dimensions of brand, products handle myriad complex partner relationships and products—all
and services, channel, and delivery and operations. The goal is to of which play a pivotal role in the future customer experience.
achieve competitive differentiation by viewing the world through Consider these fundamental requirements as input to
the eyes of one’s customers and modifying interactions of the transformation initiatives:
experience accordingly.
• Offer rationalization and clarification. Service providers
have long been criticized for moving their own customer base
III. Requirements for Transformation
from offer to offer, driving additional cost and operational
Historically, the communications industry thought of CEM as complexity as they continue to “sell to their own.” This is a
simply the technology systems used to manage either customer signal the service provider may have too many offers in the
relationships or network quality. To date, CEM solutions have market. It is wise to consider simplifying the number and type of
tended to be point solutions for specific customer-facing functions, offers in major market segments to streamline market messaging
such as sales force automation, customer analytics, network QoS and provide a platform to simplify operations. Likewise, offers
or campaign management. communicated to current or prospective buyers require clarity
about what is included (to meet transparency demands), as well
In the industry today, we hear a consistent CEM drumbeat as
as real-time alerts with upgrade options when limits are likely to
service providers struggle to transform their business and adopt
be exceeded.
the “Customer Is King” mantra. Unfortunately, these struggles
suffer from one or more of the following ailments:
© Copyright 2011. Yankee Group Research, Inc. All rights reserved. 5

6. Delivering a World-Class Customer Experience: Transformation from the Outside In
• Cross-channel optimization. To achieve truly personalized • Strategic, predictive intelligence. With feedback from the
cross-channel interactions, service providers must use a intelligence infrastructure as well as outside sources, service
combination of the right tools that can accommodate individual providers must strategically apply insights to their business
behaviors and preferences, integrate interactions across decisions around business model, offer construction, pricing
multiple channels and easily learn from the outcomes of prior and the like. For example, marketing must be able to quickly
communications to achieve business results. Customers today and dynamically define offers, promotions and pricing with
expect companies to be able to interact with them through all intelligence and context around the 360-degree view of the
channels, including retail stores, Web sites and contact centers. customer or customer segment based on psychographics and
These channels—while still dominated by home telephone demographics, customer lifetime value, products and services.
for customer service and support—also include SMS, e-mail, These promotions need to be adjusted based on channel
online chat, Web self-service, voice self-service and social media interaction and usage. Service providers need to guide both
channels. While many companies use Web-based channels the customer using a self-service channel and the CSR in the
to give customers service choices that transcend traditional contact center with relevant products and services based on
phone interactions, the reality is customer experience is needs analysis, policy and eligibility rules. Once an offer is
still very fragmented. Customers may start with the Web to accepted, service providers must quickly identify relevant and
research a new service or troubleshoot a problem, but then personalized additional products or services that add value to
call the contact center to speak to an agent. They may place a the customer. By more accurately identifying trends on brand
new order with an agent or go back to the Web site to place image and loyalty, service providers can create better marketing
an order at a later date. There is no linear relationship to the programs and continually adjust them to meet changing
overall customer experience, nor is there a clear direction for dynamics. A wealth of subscriber information can be used (with
where the customer should turn when trying to get help for the customer’s permission) to understand and learn subscribers’
a product or service in today’s complex ecosystem (see the needs, interests and behaviors in real time. This ensures not
October 2010 Yankee Group Report “The Hidden Jewel of only the delivery of personalized real-time offers, but also that
Personalized Cross-Channel Interactions”). service experience doesn’t negatively affect brand.
• Embedded, real-time, cross-functional intelligence • Consistent service quality. As service providers continue to
infrastructure. Intelligent software will be the most important add more subscribers using newer, network-intensive devices,
differentiator for service providers across the world as they network traffic patterns become more unpredictable and
drive CET. To date, technology investments that create the challenging to manage. This means customers can sometimes
essential backbone for delivering services to customers have experience inconsistent service availability and performance
been designed to either drive out operational cost or manage due to network bottlenecks. These unpredictable turns of
operations. Service provider systems use older technology event negatively impact not only the subscriber but also the
architectures with bolted-on features that result in inflexible service provider, since it is unable to tie service performance
Frankenstein-like systems that can’t meet the needs of today’s to individual customer experience. Unless real-time network
complex world. Yankee Group sees a requirement for an data is mapped to subscriber identity and experience, service
intelligence infrastructure that communicates across internal providers will find it impossible to quickly and proactively
functions such as ordering, billing, care and network operations identify performance and connection issues that must be
simultaneously, in real time, to make the experience more corrected. Addressing QoS issues for the consumers is one
dynamic and responsive. This means applications must have thing, but service providers that deliver services to enterprises
insight-gathering capability embedded in each major function, also run the risk of financial penalties and even significant
be capable of communicating that insight to a master (or at revenue loss if they fail to meet stringent service-level
least coordinating) function that accepts the input and places agreements (SLAs).
it in context, alert appropriate sibling functions or business
processes when action is required, and feed measurement
systems for use by service providers to drive improvements in
all functional areas.
6 © Copyright 2011. Yankee Group Research, Inc. All rights reserved.

7. March 2011
• Social media integration. Contact centers want to IV. Conclusions and Recommendations
improve care, marketing needs to create unique dialogues with
customers and knowledge workers want to improve team The customer experience consists of multiple moments of truth
collaboration. Customers want to be served, not sold, and they across all four dimensions of customer interactions. Any change in one
want their voices heard. Social media can help answer all of dimension has the potential to change one or more of the others.
these needs (see the July 2010 Yankee Group Report “Social
At the same time, the right customer experience is crucial
Media Is Changing the Face of Customer Service”). The social
and is the key to boosting operational efficiencies, building
media revolution has dramatically changed the way businesses
customer loyalty and growing wallet share. The goal is to improve
and service provider employees interact. Contact centers
operations, lower costs, conquer new markets and generate new
must support social connections. They must monitor, filter
revenue streams, all while delivering the right experience that
and respond proactively to resolve issues quickly before they
keeps customers happy and the business profitable. To do this,
turn into catastrophes because of the speed of information
CET endeavors must focus on customer needs, sell on value and
distribution—good or bad—in a social media setting.
proactively provide care. The reality is an increasingly sophisticated
• Network- and customer-focused policy. There is no lack world, with sophisticated expectations. Service providers must
of attention being paid to the subject of network policy. Dozens make CET their reality. Yankee Group recommends the following.
of vendors are busily installing network-centric bandwidth
management products to allow service providers to optimize Recommendations for Service Providers
performance in a resource-constrained environment. They also
• Start now. There is no lack of pressure on service providers,
generally acknowledge and provide the appropriate PCRF/PCEF
especially due to the encroachment on their revenue by legacy-
capabilities to enable real-time, customer-centric application
free over-the-top (OTT) firms. Consider integrating customer
of rules with interfaces to online charging systems (see the
experience into current business and technology improvement
October 2010 Yankee Group Report “4G B/OSS: Oxymoron
initiatives. Also, recognize this is a multi-year, culture-changing
or Mandate?”). This is a great start, but it’s not enough.
endeavor. It won’t be easy and it won’t be swift.
Transformation to a better customer experience requires
delivery and enforcement of not just service provider-initiated • Clarify business models. Since the beginning of industry
rules/policies but also those of the customer. Network- privatization nearly 30 years ago, the business of wholesale has
embedded components must also communicate to repositories been relegated to second-class citizenship, owing to its origins
of customer identity and preference so that user-defined offer as a regulatory mandate. At the same time, wholesale business
components and consumption levels can be captured. unit leaders were saddled with the infrastructure, costs and
measurements used in a retail environment. More recently,
• Customer-centric performance measures. Evolving
wholesalers have done a better job of catering to the needs of
customer service from an operational cost center measured
wholesale customers, and some have become wholesale-only
solely by internal efficiency to a revenue producing center
providers. The message is simply to decide on one’s business
capable of fostering loyalty, repeat business and competitive
model and then pursue that model with the appropriate
differentiation necessitates a retooling of the measurements
infrastructure, operations and measurements. We encourage
or key performance indicators (KPIs) used by management.
service providers to continue to clarify business models,
Although previously used KPIs focusing on agent efficiencies
and even consider spinoffs of wholesale divisions to mitigate
remain important, a new set of KPIs emphasizing the customer
continued internal competition between business units.
experience and its effectiveness is essential. Many business
managers believe in the maxim “What gets measured improves.”
This may not always be true, but history and experience confirm
that what gets measured certainly gets the most attention. Newer
metrics from the voice of the customer must track externally
driven social media mentions, as well as internal measures of call
quality and first contact resolution (FCR) statistics.
© Copyright 2011. Yankee Group Research, Inc. All rights reserved. 7

8. Delivering a World-Class Customer Experience: Transformation from the Outside In
• Identify a customer experience officer. Forward-thinking V. Further Reading
service providers are charging certain members of the executive
team with the customer advocacy role. While often this person
Yankee Group Research
comes from a customer care background, this is by no means
the only choice. This person and their department must be “CSPs Need Proctive Subscriber Intelligence to Improve the
endowed with the organizational clout, operational and market- Customer Experience,” December 2010
facing experience and leadership backing to ensure change is
“The Hidden Jewel of Personalized Cross-Channel Interactions,”
carried out with the customer experience as a leading, if not
October 2010
sole, success measure.
“4G B/OSS: Oxymoron or Mandate?” October 2010
• Build customer-centric performance measures. Consider
merging externally focused measures with internally focused “Social Media Is Changing the Face of Customer Service,” July 2010
measures, as well as “outside-in” measures such as Frederick
Reichheld’s Net Promoter Score, third-party feedback and Yankee Group Data
the voice of the customer. Insist on customer experience
components in all KPIs and provide measurement feedback to all 2011 US Consumer Survey, Wave 1
employees on a consistent basis.
• Reward progress. As a follow-on to customer experience
performance measures, build incentives and employee
performance rewards based on delivering optimal connected
experience. Ensure top executives’ variable compensation is
driven heavily by improvements in customer experience as part
of an overall shift in behavior.
• Coordinate investments with the customer in mind.
Incorporate customer experience measures in all investment
business cases, whether funded via capex or opex. Insist on cross-
functional and cross-unit coordination of investments to ensure
customer experience measures remain the driver for investment.
8 © Copyright 2011. Yankee Group Research, Inc. All rights reserved.

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Susan McNeice, Vice President
Susan McNeice is vice president of software research with Yankee Group’s Anywhere Network team,
driving the company’s research in the areas of telecom marketing, operations and OSS/BSS software strategy.
Her areas of expertise include OSS/BSS, subscriber and policy management, customer care, self-service,
RT charging, dynamic cataloging, business intelligence/analytics, revenue assurance and service assurance.
t ers
q uar
H ead
Corporate European
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