Q5’s resident CX expert Huw Watkins shares some musings on seven ways to improve customer experience that grow customer spend and reduce costs.
It’s taken a while, but the marketers have finally caught up with the academics. Back in 2005, CRM pioneers Peppers & Rogers called customer experience “the single most important aspect in achieving success”. In 2018, the annual Gartner Chief Marketing Officer (CMO) survey found that 89% of the marketers they spoke to said they now expected to compete mostly on the basis of customer experience. This was more than twice number who gave the same answer in 2010.
Unfortunately, whilst Gartner also found that 80% of marketers believe they deliver a ‘super experience’, their views are not shared by customers. Only 8% of customers believe the same.
This yawning gap is costing organisations a huge amount of money in missed revenues and additional costs. So, while customer experience is now justifiably taxing the minds of CMOs, it should equally be taxing the minds of CFOs. If a business activity is not adding value to customers, eliminate it.
Our ability to define, measure and manage customer experiences that differentiate brands, build customer advocacy, grow revenues and reduce costs has increased exponentially and we can now quantify financial value at every stage of the journey.
So, what’s going wrong and what can be done about it?
We’ve known for a long time how to recruit, train and manage customer facing people to deliver excellent experiences. We’re really good at building mobile and traditional websites that offer tremendous user experiences. What is often less well considered is the need to ensure that the people, processes and systems that support customer facing people and customer journey touchpoints across organisations, partners and channels are fully aligned.
Too many organisations exist in a ‘2G Customer Experience’ state. Their customer facing people are deployed, managed and targeted towards the delivery of unique customer experiences but the efforts of these people are undermined by the misalignment of the remainder of the organisation. The eCommerce UX is good at the outset but falls over as the journey progresses. The efforts of these organisations are just not good enough to meet the expectations of today’s customers.
Misalignment between front and back offices and partners causes both external and internal harm. External customers receive disappointing experiences, their expectations are failed, they spend less, return less frequently, and they tell lots of other people about their disappointment too.
Internally, the organisation doesn’t get the returns it expected, and it spends more money and assigns more people to sorting out problems. The morale of front line staff is damaged as efforts to deliver excellent customer experiences are undermined by struggles with colleagues, processes, systems and tools. At best their effectiveness will be reduced, and at worst they’ll leave.
In our work across multiple industries and hundreds of clients, Q5 have identified seven very simple but important principles that can ensure your customer experience is a 4G version in which all the parts are in alignment and which runs to the very core of the business.
1. Understand and measure what really matters to your customers – now and in the future
Look from the outside in. Don’t guess, don’t assume and don’t anticipate. Use qualitative and quantitative insight to determine what’s important, when, and just how important it really is. Don’t assume that what’s important now will be just as important in the future. Customer experiences need to evolve continuously to keep pace with changing expectations.
2. Understand the full implications of your customer experience vision on your organisation
At a top-line level, the customer experience is a simple thing; it is the physical manifestation of the promise made by the brand. It seeks to evoke specific feelings in customers to cause them to act in desired ways at different points of the journey.
But, when you get down into the weeds, the complexity is huge. The functioning of every element of the business needs to be considered to ensure it works together seamlessly from front to back and end to end. It is highly unlikely that a consistently excellent customer experience can be delivered without (ongoing) change and investment in all parts of the operating model.
3. Don’t rely on digital
Technology has had a huge impact on the discipline of customer experience. What were once fluffy assertions about value made by its advocates can now be proven. Technology provides the facility to test and learn rapidly, to refine customer journeys, to monitor and track in real-time, to provide personalised experiences and to have real-time remote conversations.
However, technology is not a panacea, it is an enabler. Investing in technology without investing in the rest of the operating model will not deliver the desired returns.
4. Rebuild your operating model
Making minor interventions to your business is unlikely to bring about the degree of change necessary. Poorly articulated strategy, functional silos, discordant values and goals, poor governance and lack of competence are all barriers to the provision of a consistently excellent customer experience.
Many organisations need to rebuild their whole operating model if they wish to make the step change required from their ‘As Is’ to their desired ‘To Be’ state.
5. Ensure your whole organisation understands your customer experience.
Every member of your organisation – and the third parties working with you – must fully understand the experience you are trying to deliver. They must understand what it is, why it is so important and why it is relevant to them. The methods of dissemination will vary but, as with any culture and change programme, it is vital that the message is consistent and repeated. It is all too easy for people without direct customer contact to slip back in to an ‘inside out’ view of the world.
6. Apply the principles of LEAN manufacturing to your internal processes
Whilst LEAN was developed to systematically eliminate waste from manufacturing processes, its principles can very effectively be applied to the development and improvement of the customer experience i.e., why are we doing it this way if it doesn’t benefit the customer and it inhibits the experience?
By mapping the customer journey, the discrete processes, activities and tasks that contribute to each stage and touchpoint can be identified and isolated. By then working with their owners in a cross-functional format, it is possible to identify and re-engineer elements that do not support the customer experience. This process will include people, teams and activities that are not directly customer facing. It will also identify internal barriers, such as lack of customer insight, insufficient expertise, incorrect tools, contradictory goals and inadequate systems.
7. Use the correct measurements. Net Promoter Score is not the one number to rule them all
The Net Promoter Score (NPS) has been fantastically successful in penetrating to the C-Suite in a way that no other customer measure has managed. But the old adage that what seems too good to be true probably is remains as valid now as it ever was. NPS is useful but not the single number with which to measure experience. Organisations need a combination of common lead and lag indicators applied to non-customer facing parts of the business just as they do to the customer facing parts. They should be baked in to individual targets and remuneration.
Lastly, in addition to these seven principles, organisations must always be ready to flex and change. Customer experiences are never static; what might be uniquely differentiating now may be the norm in just eighteen months. Customers do not judge your business against direct competitors alone; their expectations are formed by their combined experiences across every sector and every touchpoint.
CMOs and CFOs don’t always come from the same place, but customer experience is one area where they need to join forces if they’re to realise its full benefits.