A focus on Customer Experience (CX) is a vital tool in the armoury of successful business but NPS metrics and automated tools are not enough to uncover and deliver the customer value needed to leverage innovation and growth. Collaborative design and direct customer insight answers the question “why” at a human level unlocking creativity, innovation and an experience that builds the relationship.
#1 Why is CX Important?
All businesses need to have a thought-through strategy for Customer Experience (CX) because it is a vital component in the delivery of the customer value proposition. CX will mean different things to different businesses because their value propositions differ but it provides a core approach to developing engagement, lifting the customer relationship above the transactional, providing a competitive defence and boosting long term sales and profit.
The key concept here is that the customer is your profit centre. Smart businesses know that the strongest source of growth and profit is the customer not the product. This is because a customer who is fully engaged with your business will provide you with extra sales, more use, more spend and longer tenure. In fact, they may become advocates and recruit customers for you.
86% will pay more for a great experience (Walker), loyal customers spend 67% more than new customers (Edelman), emotional engagement drives 306% higher lifetime value and doubles recommendations (Motista).
#2 What is CX?
Customer Experience may be simply defined as the experience the customer has while interacting with your business. How they think, feel and behave. The experience extends from first contact, which may be through brand and marketing, apps and website, into a sales interaction, purchasing and paying, fulfilment and use potentially across multiple purchase occasions and channels.
Many businesses take each of the interaction points and through a process of journey mapping and failure analysis try to engineer out all the repetitive problems, thereby creating smooth interactions improving operational efficiency and reducing Opex. In fact, most businesses are Efficiency brands where the customer value proposition is in simple low-cost convenience. Efficiency is certainly an enabler but is ultimately transactional and forgettable, not to mention easy to copy or undercut. Sophisticated businesses recognise that a higher level of customer value comes from an Experience centred proposition where, in addition to appropriate efficiency the business offers memorable engagement, building loyalty and emotional commitment. These aspects are subjective and are less amenable to operational engineering but can nevertheless be designed and managed.
How is this different to customer service? Customer service is what we do to the customer. Customer Experience is the customer’s subjective experience, from first to last, not just the operational interaction that we call service. It’s always the customer’s perception of their experience that counts, not ours.
Since Customer Experience is defined as the customer’s experience it seems self-evident that the customer should be involved in defining the appropriate experience and developing collaboratively a mutually beneficial proposition. All too often the business assumes that it knows what the customer wants and over develops efficiency elements, actually wasting investment and resource on performance targets that customers don’t value. Likewise, key subjective relationship building requirements are missed because no one asked the customer.
#3 How do we measure CX?
There is now a whole industry involved in creating Customer Experience metrics such as Net Promotor Score (NPS) and automating responses to improve performance and demonstrate a ROI. Undoubtedly it is positive that these metrics have become visible in the boardroom but they are typically very over simplistic and dangerously open to gaming. While it is said that what gets measured gets done it is also true that any measure that becomes a target ceases to be a measure.
A typical approach will be to set Key Performance Indicators (KPIs) for a small number of quantitative operational parameters (such as call response time) and NPS scores are taken after interactions by channel, market, product and service type. In addition, there will be a mass data feed from social media and web forums that applies an algorithm to spot trends and issues.
The problem is that experience is subjective and describes how the customer thinks, feels and ultimately how they change their behaviour over the long term, hopefully recognising the added customer value the business brings, buying more and generating more profit. Responses vary contextually – am I in a hurry, do I need reassurance? It is not a matter of a net sum of all my experiences either, because not all elements matter equally to me and these will change with the context.
The tools for marketing automation and customer relationship management (CRM aka automated cross-sales interventions) and the coming feeds from artificial intelligence (AI) and Internet of Things (IOT) are based on a statistical artefact. It may appear from the internal perspective that cross -sales increase to a proportion of customers who have received a timely and relevant intervention, but ignores the 90% or more likely 99% who were nuisanced by a mistimed or inappropriate contact reducing customer value and their likelihood to buy in the future. From the customer’s perspective like 20th century junk mail we produce a 21st century blizzard of commoditised digital noise. Without understanding exactly what is valued by the customer and “why?” at a human level is impossible to creatively innovate and deliver an experience that builds the relationship and sets your business apart.
This is not an engineering problem, no matter how seductive it is in the boardroom to have an increasing NPS score ahead of competition and to drive process “improvement” aka Opex reduction on an internally defined step-by-step customer journey.
#4 BeyondCuriosity to Experience
BeyondCuriosity is a specialist insight agency helping businesses innovate and grow. Seeing your business through customer eyes is what we bring, and use our expertise to define, design, deliver the value proposition including the essential Customer Experience component. Most importantly we answer the question “why?” which unlocks value-adding experiences through design creativity.
Specialist customer insight is required as an initial and continuing input in the definition of the value proposition. Who are your target customers? What exactly is it that the customer values and how can this be assembled collaboratively to mutual benefit? After all the customer cannot have everything they want unless they are prepared to pay for it at least over lifetime value. This hypothesis can be tested as a minimal viable proposition in the market.
It may be that the optimum customer value proposition appears at first sight to be Efficiency based – digital, quicker, cheaper, more convenient – and the customer journey can be legitimately broken down into key operational delivery targets. However, at this stage it is vital to explore routes to enhanced customer value through subjective, emotional and service based enhancements. This may be more challenging to deliver operationally but an Experience based proposition offes a much higher ROI. Customers will engage, buy more, buy more often, be less price sensitive and tell their friends.
It is important to avoid the temptation to build an internally defined solution based on the initial insight. Instead build the design collaboratively with the customer. This iterative design is consistent with user-centred design thinking and Agile sprints. The components that add customer value need to be genuinely delivered to live customers of course not diluted out to reduce cost.
Once the proposition is live Customer Thinking demands that the business be organised so that feedback is recognised and acted on from all points, led from the top. This is what distinguishes a customer centric organisation – listening, developing and acting in the customers interest at all times. NPS and CRM are not enough, we need to listen and understand beyond statistics. We need to get closer to the customers, suppliers and employees who live the experience. If your value proposition demands the human touch then your metrics and management need to reflect this.
Customer communities are one source of insight, and the gold standard is direct customer listening and collaboration, with professional facilitation and neutral interpretation.
Customer Experience is complex and human and the seductive vendors of NPS and “mission critical software that powers intelligent customer engagement” are selling an empty dream. Get close to customers; involve customers in collaborative development; listen 360 and champion customer centricity. This is Customer Thinking and BeyondCuriosity would love to be your partner.
BeyondCuriosity is a specialist insight and customer strategy consultancy with deep experience in financial services and technology innovation.
“The main reason that we would choose them as a strategic partner is their pragmatic and innovative ways of working to achieve outcomes that can be acted upon. Their recommendations are always clear, concise and actionable and this has enabled us to move our business forward at a significant pace” Aldermore Group Marketing Director
To learn more call or email Chris Little