Tuesday, August 14

Customer Experience is stalling around the world! What next?

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We identify five actions to get on the road to customer-centricity

Customer Experience (CX) is apparently stalling around the world.

The concern started with Forrester’s annual US Customer Experience Index which ranked 314 brands across 21 industries with 118,000 adult customers surveyed. The survey made disappointing reading:

  • Not a single top brand sitting at the top of the CX index rankings continued to improve. This is significant because a trend of continual upwards improvement is the hallmark of a great customer brand.
  • The number of companies with scores in the excellent category fell to zero. Not a single company made it to the top tier. If a company is to significantly outperform its competition, then good CX is simply not good enough to differentiate.
  • Not a single average industry score improved. Worse – three fell. In fact, twice as many brands’ CX index scores fell as rose!

Surveys in the UK and many other countries in the world showed similar results. KPMG Nunwood found their annual Customer Experience Excellence score for the UK not only fell to a record low but is now where the USA was 5 years ago.

Why has this happened?

It’s easy to conclude that Customer Experience has stalled means that companies are placing less importance on it as a performance differentiator and placing greater importance on other factors e.g. operational costs or product innovation to make a critical difference.

  • Actually, this is not true. Customers are increasingly well-informed and are placing greater and greater emphasis on their experience when making their buying choices. What was judged excellent last year may only make it to very good this year even if that same level of prior excellence was maintained. Its not the company hat has changed it’s the customer. Customers have become better informed and much more demanding and judgemental. Expectation has accelerated and which is a real concern because it’s moving faster than companies’ ability to change and keep up. The original survey statistic in isolation points to a lessening of focus and this could not be further from the truth!
  • The central issue is the speed of CX driven change, which results from the way CX is deployed in many organisations. It is too inert. Traditional product/service-centric organisations start with customer experience by forming a department which collects data and analyse customer journeys and use this to try to influence change. These departments usually sit mid-tier within a traditional organisation structure, usually reporting into operations or marketing. The biggest complaint we have observed from CX heads is their inability to quickly drive meaningful change. Driving change process from the middle of the organisation structure,with insufficient authority over the rest of the business is simply too low and too slow.

There are other issues in the way Customer Experience is understood and deployed which will be the subject of further articles – but if we focus on these two alone, companies can make a massive difference!

What should you do differently?

  1. Recognise that customer expectations are rising. As the polls show, companies are not keeping pace with these increased expectations: the whole subject is of greater importance in the minds of all customers.
  2. Don’t be content with “best practice”. If you’re coming from behind in relation to your competitors, then adopting the same tools and techniques that they have will most likely only get you to where they already are. Overtaking them requires what we term “next practice” thinking. Here are two examples. Firstly, creating a superior understanding of customers wants and needs will not be achieved by data alone. Yet, this is the direction most companies are going without realising the opportunity gap. Secondly, traditional journey mapping leaves revenue, cost, service and differentiation opportunity on the table. Again, very few companies are exploring the next practice alternatives. They are significant.
  3. Get the right measures in place. The CX industry is obsessed with data and measurement, to the point where that has become the raison d’etre of many CX functions. But often it’s obsessed with the wrong thing. We’re agnostic about Net Promoter Score (NPS) and whilst it generally demonstrates that those companies who treat their customers right (making them more likely to recommend to friends and family) get better financial results, the indicators they create are often distorted. Further, it doesn’t do much to tell you what’s wrong and where the opportunities lie to make innovative changes to customer propositions.
  4. Think outcomes not journeys. There’s nothing intrinsically wrong with identifying the pain points in a customer journey and making improvements to change them but – and it’s a big but – without focusing on customer outcomes you’re in danger of improving a journey that may ultimately be irrelevant to what the customer wants when they deal with your business.
  5. Get happy. This is not a frivolous proposal: companies that provide an environment geared towards employee happiness have a greater propensity to deliver a great service to their customers. Start by removing the principle causes of unhappiness, frustration and discontent and watch your satisfaction scores rise. And if you think this sounds glib, just think back to the last time you had a great customer experience: did the people who’d delivered it look like they’d just been told their cat had died? Highly unlikely!

Adopting these approaches means being prepared to address change differently. Following traditional structures, methods and deployment techniques may deliver results and competitive edge in the short term – but it will simply not last.

Bottom line: if the world outside changes more quickly than a company’s ability to change on the inside, then ultimately that company will die.

Traditional best practice is not good enough: Customer Experience champions need to go beyond being best practice followers. They need to be innovators.

What is your company going to do differently?

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About Author

The Next Ten Years believes that supercompany performance is within the reach of most companies. Even mid-size and large organisations have the ability to grow their revenue and profits in excess of 20% every year. Superperformers think differently, they think next practice and everything they do focusses on customer. Traditional best practice will not take you there. You have to be prepared to challenge accepted norms. The Next Ten Years is a resource of ideas, new thinking and case studies to help you challenge the status quo in a way that helps your own career as well as your company.

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