Executive Summary

The digital revolution has permanently changed the global economy. Empowered customers are connected, informed, and full of expectations that companies must meet to stay competitive. As growth opportunities extend to the far reaches of the earth, companies are beginning to understand that they must meet the needs of individuals in each of the countries where they do business - needs that are shaped by linguistic, cultural, and personal factors. To meet this challenge, companies must build and scale their customer experience management practices to meet the needs of customers around the globe.

In May 2012, SDL commissioned Forrester Consulting to examine the challenges that global companies face managing their customer experience and the tools and practices they use to overcome them. Forrester conducted in-depth interviews with 10 business professionals from some of the world's largest firms. This process revealed companies well on their way to building centralized customer experience practices, but only starting to tackle the problem of coordinating customer experience efforts on a global scale. The interviewees shared with us some of the hurdles they have had to overcome, as well as some of the practices that have helped them make strides toward delivering relevant experiences in local markets. Most still have a long road ahead of them, but all agreed that localized customer experiences are critical for global business success.

Key Findings

Forrester's study about the state of customer experience at global companies yielded these key findings:

• Customer experience is local by defmition. In the past, business executives viewed customer experience ( CX) with skepticism, often dismissing it as something fluffy, intangible, and immeasurable. But in the age of the customer, products and services have become more commoditized than ever, leaving companies to compete largely based on the experiences they deliver. What is customer experience? It's the perception people have of their interactions with a company. These perceptions are affected by culture, language, and geography - which therefore makes customer experience local by definition.
• Firms need a global approach to customer experience management. Not long ago, companies felt that they had only two choices for delivering in local markets: strong centralized control that delivered one-size-fits-all experiences or runaway local entities that created experiences and touch points that diverged from the core mission of the brand. Today, neither of these approaches will work. Instead, firms need to establish a framework of repeatable, exportable practices that can be used consistently to determine what the best customer experience should be for a given market.

Localized Customer Experience: Critical In The Age Of The Customer

For years, companies have been keenly aware of the business opportunities available from expanding markets around the world. While some have been successful, others have met with failure as tl1ey've struggled to adapt their products and services to meet local needs.

Today, we have entered a new era. It's one where products and services have become commoditized, leaving companies to compete on new terms. The digital revolution has given consumers and business customers access to more information than ever, enabling them to easily compare product and service options as well as be more selective about the companies they do business with. This new age, in which customers wield more power than ever, is truly the age of the customer.

Now, it's experience that matters. And experience is not absolute- it's the perception a person has of his or her interactions with a company. Firms must deliver what customers need, make it easy for customers to do business with them, and make interactions enjoyable. Doing so requires that companies understand the needs, behaviors, attitudes, and motivations of their target customers. But not all customers arc the same. In fact, how people in one locale perceive their interactions with a firm can differ vastly from how those in other regions do.

What shapes customers' perceptions? Everything from their languages to their cultures to the expectations of a brand within their home markets or population segments. That's why firms can't just design and deliver one-size-fits-all experiences in every market they serve. Executives must realize that customer experience is local by definition.

In a time when customers around the globe have more power than ever, companies that want to become global leaders must understand that:

• Delivering locally relevant experiences is key to competing globally. Back when firms did the bulk of their business in but a few markets, delivering local experiences mostly meant creating local campaigns for marketing the same set of products or services. But the world has changed, and today' s best opportunities for growth are in emerging- and highly disparate - markets such as Brazil, Russia, India, and China. While executives salivate over the potential in these new markets, the only way to effectively compete in these regions is to provide differentiated, localized solutions for launching products, getting them to customers, and maintaining tight relationships with customers over time.
• Customer experience needs to become a global business discipline. The rise of global experience leaders like Apple, Amazon.com, and Starbucks has opened many executives' eyes to the power of delivering great customer experiences. But great customer experiences are not accidents - they require a rigorous approach to business disciplines like strategy, customer understanding, design, measurement, governance, and culture. That's hard enough to do in one country, but it's absolutely critical to delivering locally relevant experiences. Our interviews revealed that successful firms are making concerted efforts to deliver interactions that meet their local customers' needs in easy and enjoyable ways.

Executives Aren't Fully On Board With Localized CX-Yet

Although many executives share a tacit belief that delivering locally relevant experiences is critical to their business success, many don't yet understand exactly what that means or what it takes to make it happen. Even leaders at the firms we interviewed said that, in some cases, they still have to overcome challenges with executives who:

• Only see parts of the picture. While many executives say that customer experience is critical for global success, many equate customer experience with customer service or marketing messages. These are important elements of tl1e experience, but they only represent a small fraction of the customer journey, which starts with awareness and runs through the entire life cycle of repeat business. Unfortunately, most siloed organizations don't have visibility into ilie end-to-end customer journey and therefore don't see the big picture of what customers go ilirough in all of their interactions. Without that view, flrms struggle to get traction for broad-based CX initiatives. As the Head of Customer Services Development at an investment firm lamented, "There are competing business priorities within the same budget. There is no corporate budget for customer experience."
• Think customer experience is a one-off initiative. Our research revealed a dangerous misconception among executives that customer experience is a thing that organizations can do - and then walk away from. A Customer Experience Evangelist at financial services firm put it this way: "My biggest challenge with the executives is that they feel, 'Well, we've taken care of customer experience.' They think that one initiative means that the project is over and we can check that box." While finding and fixing problems is important, believing that customer experience is a static thing that can be fixed and forgotten about is naive in a world where customer expectations are changing more rapidly than ever. It also puts firms in a defensive position in which they react only after the damage to their brand or bottom line is already done.
• Fall victim to the myth of the global experience. Many of our interviewees said that they had to overcome their executives' misperceptions that a single experience can be exported around the globe. These executives think that a good product, store, or interface in their home market will be relevant for all 6.5 billion world citizens with only minor changes to language or imagery. As one interviewee told us, "[Our executives] don't understand that there are broader implications to localization beyond giving widgets different skin colors" (Senior Operations Manager, technology vendor). Providing localized experiences does not simply mean changing signage and web sites - it means adapting the brand appropriately to meet local expectations.
• Fear that localization would inflate costs and dilute the brand. While some executives agree with the idea that local relevance is important, they often fail to properly invest in localization opportunities. Why? Because they focus on the wrong side of the ledger, balking at the costs of conducting local research and delivering localized experiences. This view oflocalization as a cost center neglects the more impactful revenue side of the cost-benefit equation. In addition, many execs fear that, given too much freedom, local offices will mismanage the brand to detrimental effect, creating local derivations that undermine core attributes and messaging.

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Firms Struggle To Adopt CX As A Global Business Discipline

It can be a major accomplishment to get executives to understand that customer experience is not just a slogan or a nice idea. But many of the professionals we interviewed told us that even once they got their executives to see localized customer experience as critical to business success, they still struggled to turn customer experience into a formal business discipline because they had trouble answering three essential questions:

• What do we need to do? Our interviewees confessed that in the early stages of their localization efforts, they lacked a clear understanding of what the brand was trying to deliver to its local customers. Among the biggest challenges interviewees cited was developing an understanding of the experiential qualities of the brand and then matching them appropriately to the right audience. For example, "innovative" is a common brand attribute. But without a clear definition of what it means for customers in different geographies to experience something innovative, it's dittlcult to convey the brand appropriately.
• Who needs to do it? Every employee within an organization plays some role in delivering the customer experience - but ultimately, someone has to be responsible and accountable for it. Many of our interviewees had dimculty establishing a centralized CX function with operational responsibilities. Instead, smaller committees struggle to gain support and visibility for their efforts to align the customer experience across channels and operational silos. Lacking authority themselves, these committees flght ongoing uphill battles to drive accountability for customer experience in each market. Said one interviewee, "There is a customer experience team in Europe that the US team works with to manage the customer experience, but outside of Europe there is not anyone solely dedicated to CX" (VP Global Customer Experience, logistics company).
• How should we work together? The complexities of matrixed multinational organizations and the vast array of distributors, dealers, and other experience partners that global flrms depend on makes it difflcult for flrms to establish consistent processes and policies in any area of the business. This challenge extends to global CX management, as well, as companies have few processes for turning local best practices into global process standards and facilitating cooperation among locales. One interviewee admitted, "Right now, everything's pretty loose outside the US. There are no organized processes to coordinate with the other regions" (VP Global Customer Experience, logistics company).

Leading Firms Strive For Global ex Management, Local ex Design

Given the complexity of managing customer experience in a single country, it's no surprise that firms haven't mastered global CX management. At one end of the spectrum, giving individual locales full control brings the risks of inflated cost, redundant efforts, and brand dilution- while maintaining full control at the global level can lead to customer experiences that fail to resonate with customers around the world.

Firms that deliver standout customer experiences excel at six customer experience disciplines: strategy, customer understanding, design, measurement, governance, and culture (see Figure 2).3 In our interviews, we uncovered practices in each of the six disciplines that firms use to establish global processes for creating and managing locally relevant experiences.

To deliver on this manage globally, deliver locally philosophy, the companies we spoke with:

• Translate the global brand into a local customer experience strategy. The people who deliver customer experiences in person, over the phone, or through the interfaces they design need a clear understanding of the intended experience for their customers. While corporate and brand strategies are defined globally, the customer experience strategy should be based on the local expression of a brand's core attributes. For example, a massmarket brand in its home market might be seen as a luxury brand in another, and this will impact local expectations and experiences in ways that cannot be defined globally. One of the companies we interviewed tackled this challenge by defming the core emotional components of the experience they wanted their customers to have, and then worked to translate those emotions into a set of guiding principles upon which to build local experiences.
• Develop a dear understanding oflocal customers. Knowing your customers - who they are and what they really want from your company- is a critical part of being able to deliver the right local customer experience. Getting the most detailed understanding of local customers requires observational studies that uncover customers' functional and emotional needs in the context of their everyday lives that customers themselves might not be aware of. This kind of research helps local offices determine the right level of localization suitable for their customers. The Head of Customer Experience at a logistics company stated, simply but powerfully, "The country organizations are closer to customers than we are in the head office." What if you can't make this kind of research scale? Many of our interviewees said that they focused on voice of the customer programs and other customer feedback mechanisms like social listening to understand customer needs.
• Design to suit local markets. Locally relevant experiences don't happen by accident- they need to be actively designed. Instead of worrying about what a specific store or mobile interface will look like, firms should focus on the process of translating insights from local research into solutions that meet customers' needs. Typical design processes include multiple iterations of prototyping and testing, and are most effective when local employees and customers are invited to co-create along with the design team.4 One interviewee told us, "Solutions are built for specific markets and customers, and local organizations have to understand their own clients and markets before copying someone else's solution" (Head of Customer Experience, logistics company).
• Have a global governance function. Global customer experience governance is not a policing function. Rather, it provides guidance, oversees processes and funding, and aggregates best practices that can be adopted and adapted to local markets either internally or via outside agencies. The Head of Customer Experience at a logistics company described his company's global governance team this way: "There is a 3-person team in the head office running more general oversight of the initiatives. We facilitate best practice discussions by having conference calls at a regional level. We make sure that local organizations talk to each other and we draw best practices from there. When we see trends in a region, we elevate that to a central level and build a story around that. We then share that story of what several regions with similar initiatives did to solve a problem - not the solutions specific countries have invented." This process works from the local perspective, too. An interviewee at a local subsidiary of a large global flrm said that he looked to the head office for help in establishing processes and practices - not templates- that would help his organization focus its investments on improving the right parts of the local experience.
• Track a combination of global and local metrks. Having global measurements in place is critical for benchmarking the success of customer experience initiatives over time and across regions. Many of the companies we spoke with use Net Promoter as a standard measurement for the purpose of tracking the quality of customer interactions in each local market on an ongoing basis.5 But beyond global measures, firms need to measure the parts of the local experience that influence the most important local business initiatives. For example, a firm might focus on acquisition in a new market and track loyalty among existing customers in more mature markets. In the first of these situations, a firm might focus on an experience-based metric like customers' likelihood to recommend, whereas in the second scenario, the key measures would be likelihood to repurchase and reluctance to switch- all of which can be tied to customers' perceptions of their experiences.
• Build a global customer-centric culture. Building a customer-centric culture is critical for building a mature ex function. Firms accomplish this through their hiring practices, socialization of ex efforts, and employee rewards. Among the firms we spoke with we found both top-down and bottom-up culture building initiatives. One firm created a list of 20 initiatives that could be easily adopted and made them available to local offices - among them, a simple suggestion to replace images of its own shipping vessels with pictures of people who represent the company's customers. Of the 55 regions the company counts, only six opted not to participate. Bottom-up initiatives we found include lunch sessions where each local office gets together to talk about how to improve their customers' experiences.

Lay the foundation for experience-based differentiation on a global scale

Forrester's in-depth interviews with business executives yielded several important observations:

• Make the business case for local ex. While many global expansion efforts are focused on getting to markets quickly and cheaply, firms need to understand that cost containment has diminishing returns. Instead of focusing solely on the costs associated with delivering locally appropriate experiences, companies need to look at the potential revenue benefits that come with providing the right experience for their customer- and then look for efficient ways to deliver those experiences. If your firm doesn't yet see the benefits of delivering locally relevant experiences, it's time to model the impact of experience on conversions, retention, satisfaction, and likelihood to recommend at a local level.
• Seek out ex collaborators. In many companies, there are pockets of employees who understand the value of customer experience and are actively working to improve it. Where firms lack a formal CX organization or processes, grassroots level organization is the only initial path to coordinating CX initiatives. Many of the firms we spoke with began with like-minded counterparts in two to three locales connecting on common CX issues and sharing approaches and lessons learned. Out of these ad hoc interactions arose more formal regional coordination of processes and technology investments that were then used as proof points for greater global integration.
• Standardize processes, not output. The most critical piece of insight our interviewees provided was the idea that standardizing processes- not output- is the key approach to delivering experiences that resonate with local customers. Operating efficiently on a global scale is important, and it doesn't have to come at the expense of delivering cookie-cutter experiences. Companies should focus on building a set of repeatable global processes and practices that local operations can adopt and implement to get to the right solution for their customers. Said one interviewee, "We inspire other countries to utilize similar thought processes to drive improvements- follow the process that lead to the solution and talk to your customers'' (Head of Customer Experience, logistics company).