10 years in CX: The evolutions and revolutions that defined the decade
As we near the end of the decade, we reflect on some of the biggest customer experience management transformations that have taken place from 2010 to 2020.
MyCustomer has been at the vanguard of customer experience management coverage for over a decade, sharing best practices, news, insights and advice to customer-focused professionals, and helping them to better understand and engage customers, and spread the CX gospel within their organisations.
During that time, we’ve witnessed (and hopefully helped!) customer experience management evolve from a discipline that was often dismissed by those in the c-suite, to a practice that is pivotal to many of today’s company strategies, championed by a CX leader with a seat at the top table.
As we near the end of a decade that has seen unprecedented change in customer strategies, we take a look back at some of the biggest transformations that have taken place:
- The switch from inside-out to outside-in customer strategy
- CX's role within the boardroom
- Shifting from all-out automation to a human-digital approach
- The role of CRM
- Moving the focus from big data to small data
From inside-out customer strategies to outside-in
‘Inside-out’ orientation refers to organisations adopting a perspective of their customer interactions through the eyes of their own business, which often results in a customer journey that is more focused on the needs of the organisation than the customers. ‘Outside-in’ orientation, meanwhile, involves looking at the customer journey and wider relationship through the customer’s eyes, which enables organisations to create journeys that focus on the needs of the customer.
Ten years ago, the inside-out approach was still dominant. But there was always an awareness that this orientation was outmoded, and as social media gained influence throughout the decade, providing hitherto unknown levels of amplification to customer outrage, so companies increasingly found themselves at the mercy of major backlashes when they were overlooked.
For instance, confectionary company Toblerone was taken to task when it changed its beloved chocolate bar without consulting its customers. Starbucks’ overhaul of its rewards programme led to consternation from its coffee-loving clientele. And fashion retailer Gap’s decision to launch a new logo was met with derision.
Such cautionary tales meant that as the decade wore on, brands became more inclined to adopt an outside-in approach. And the growing appetite to understand the customer’s perspective in turn led to a surge in disciplines such as customer journey mapping to help them understand the customer perspective, with MyCustomer research finding that over two-thirds of companies polled were mapping their customer journeys by the end of the decade.
Despite an increase in these practices, it is interesting to note that as we end the decade, customer experience standards are stagnating. Forrester reports that the quality of CX is stagnating both in the US and in the UK. Elsewhere, the Institute of Customer Service has revealed that customer satisfaction levels in the UK are flatlining or declining.
Against a backdrop of ever-rising customer expectations, the implication from these reports is that the next frontier for customer-centricity as we move into the 2020s will be to continue to reduce customer effort (presuming they have identified where effort exists during mapping) and to focus on customer emotions.
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As Forrester’s Rick Parish notes: “Brands that want to break away from the pack should focus on emotion: How an experience makes customers feel has a bigger influence on their loyalty to a brand than effectiveness or ease in every industry.”
Dare we suggest that this focus on emotion means that we’ve seen CX strategies evolve from inside-out, to outside-in… to Inside-Out?
From trying to get CX on the CEO’s agenda to board-level representation
10 years ago, talk of customer experience management failed to resonate with many CEOs. Finding themselves in the midst of a global economic catastrophe, most were keeping a close eye on their financials, and were unwilling to embark on what they viewed as a crazy customer-focused crusade.
It was therefore up to customer-focused professionals to make the case for CX, particularly through the lens of ROI and its potential positive impact on the organisation’s financials. To help quantify the economics of customer-centricity, experts framed ROI analysis around specific measures and outcomes, such as increased sales to existing customers, lower staff turnover costs, increased brand value and more.
Elsewhere, Jack Springman wrote this popular piece from the time, which recommended taking lessons from the CFO to make the argument for CX investment.
“In any compelling case for investment, the predicated financial returns are critical; in particular, understanding the scale of return required for grabbing the CEO’s interest,” wrote Springman. “The CFO can provide some coaching on this, firstly to outline what the CEO's priorities are (in terms of revenue growth versus cost reduction). But more importantly, the CFO can provide guidance on the size of profit uplift that will register with the CEO as being significant; also on the return on investment and other acceptance criteria that will be applied.”
In 2014’s Conference Board survey of CEO priorities, ‘getting closer to customers’ was the number one issue.
By midway through the decade, the message was finally hitting home, with customer-centricity starting to show up near the top of lists of CEOs’ biggest priorities. In 2014’s Conference Board survey of CEO priorities, ‘getting closer to customers’ was the number one issue, whereas three years ago it hadn’t even been in the top five.
At the time, Sam Keninger noted: “On one level, it’s getting easier to get c-level meetings on the topic of the customer experience. It’s also led to more executive adoption of customer experience management systems, and to a greater focus on CEM in general. When you have people at the top involved, CEM-related initiatives become more strategic, more multichannel, and encompass more of the organisation.”
Forrester had been documenting the emergence of ‘chief customer officers’ as far back as 2011 – a cross-departmental, board-level figure that championed customer experience. As the decade wore on, these figures became increasingly prevalent as CEOs increasingly saw the wisdom of having a senior leader take ownership of CX, whether they were called chief customer officers, heads of customer experience or any variation thereof.
Flash forward to today, and the role has become so significant that this year MyCustomer launched its CX Leader of the Year award to recognise the achievements of professionals in this field.
From automating interactions to striking the right balance of human and digital
Back in 2010, despite growing awareness of the value locked up in contact centres, around half of organisations still viewed them as cost centres. Even as late as 2015, contact centres were still weighed down by negative perceptions within their businesses, viewed as inefficient and costly departments.
Due to this mindset, contact centres operated with a focus on efficiency rather than service quality, leading contact centre managers to measure staff on metrics such as average call handling time (ACHT), rather than whether the customer’s query was resolved, or whether it was a satisfactory experience.
In a bid to address the need to cut costs (i.e. agent headcount) while serving changing customer preferences, organisations upped their automation of processes. In Dimension Data research from 2010, two-thirds of businesses reported that automation was a priority for their contact centre, with over half also viewing the roll-out of self-service as a priority.
But while there was a growing appetite for self-service, many customers still desired human interaction. And as Don Peppers noted to MyCustomer at the time, while the rising automation of service interactions may have saved organisations some money on agent headcount, it came at a cost to the customer experience.
In Dimension Data research from 2010, two-thirds of businesses reported that automation was a priority for their contact centre.
"Call centres suffer immensely from cost-reduction syndrome,” he said. "In an effort to make short-term numbers and accomplish short-term results, companies are constantly looking for ways to reduce costs. One of the principle ways is automation. And customers are fed up with this. The title of my recent talk is ‘Press one to get lost’ because I feel that ought to be the first option on the IVR. ‘We don’t want your call, get out of here’. And customers get that message loud and clear."
The emergence of chatbots and AI on the service scene, further moved us towards the tipping point of over-automation. But the last two years or so have begun to see a re-evaluation of the role of the human in the service ecosystem. In 2016, Martin Hill-Wilson reported on several organisations that were striving to find the right mix of human and digital service, and designing their customer journeys to deliver a balance between online convenience and the ‘human touch’.
And last year, Adrian Swinscoe noted how the re-appraisal of automation was taking place throughout the business world: "In recent years a lot of the talk has been dominated by technology, artificial intelligence and the ‘rise of the robots’. 2018 was no different but there has been an additional theme emerging and that is around the ‘rise of the humans’, which is cognizant of the fact that the human touch plays an essential role in many customer experiences. That is challenging many digital-only strategies and causing many organisations to have to rethink the role of the human touch and technology in the experience that they want to deliver to their customers."
And this tension between digital and human service, is something that Forrester expects to characterise the service landscape into the coming decade. Noting that IBM’s recent study suggests 85% of all customer service interactions will be handled without human assistance by 2020, and that an Invoca survey found that 52% of US consumers feel frustrated when they are not given an opportunity to communicate with a human, Forrester has warned those organisations that continue down the path to digital-only service that they will continue to “disappoint and anger some customers”. Hybrid CX (i.e. finding the right blend of human and digital service), on the other hand, represents the future, being “emotionally more positive, has greater impact and is thus strategically superior to digital-only CX.”
From CRM to CX platforms
2012 saw a number of vendors rebrand and build out their CRM offerings with customer experience trimmings, as customer relationship management began to evolve into customer experience management.
Oracle, for instance, combined the acquisitions of RightNow and Vitrue alongside existing applications such as its Fusion CRM platform to deliver Customer Experience (CX) suite, a customer-focused strategy intended to help organisations differentiate their brand and drive ROI.
Elsewhere, SAP sought to distance itself from the CRM competition by announcing shift in its messaging from “relationship” to “experience” at the vendor’s 2012 Influencer Summit.
The rebranding attracted the ire of customer experience management professionals, who had already voiced concerns that CEM could be misappropriated by the vendor community.
When SAP paid a staggering $8 billion to acquire customer survey provider Qualtrics, renowned industry analyst Josh Bersin remarked: “Experience has taken over the software market”.
But many within the vendor community were adamant that the move was a legitimate one, rather than opportunistic.
"Customer relationship management is the corner stone of a customer-centric approach, but as the brand needs to be able to address the customer expectations during cross channel processes, we are seeing the evolution of CRM to customer experience management," said Oracle’s Steve Fearon at the time.
Fearon’s colleague Anthony Lye, echoed these sentiments: “CRM is now largely seen as a tool to automate internal functions; customer experience is the stuff that touches the customer,” he said, adding that “the transformation of CRM to customer experience” was a big opportunity.
Meanwhile, Adobe’s John Mellor insisted that his company’s move was more a reflection of maturing technology than any rebranding exercise, while SAP’s Dr Volker Hildebrand was insisting that ‘experience’ was the missing element of CRM at the company’s SAPPHIRE:NOW conference.
Some five years later, and SAP was putting its money where its mouth is, paying a staggering $8 billion to acquire customer survey provider Qualtrics – an acquisition that caused renowned industry analyst Josh Bersin to remark: “Experience has taken over the software market”.
It is easy to see why he came to that conclusion. By then, Adobe, SAP, Salesforce and Oracle had all either rebranded existing products under the Experience banner or had pooled various marketing, analytics and content tools together under one umbrella to create Experience clouds, proceeding to make experience a primary focus.
During the Qualtrics announcement, SAP CEO Bill McDermott himself expressed his view that experience management is “the groundbreaking new frontier for the technology industry.”
Some commentators expressed shock at the amount that SAP had paid – it represented the second-largest purchase of a SaaS software company after Oracle’s acquisition of Netsuite, while Bersin highlighted that SAP paid more than 20X revenue for Qualtrics.
However, others were less surprised, given the trajectory of customer experience management, including Vinod Muthukrishnan, CEO of Cloud Cherry.
“Every tech company with a strong CRM/support/marketing suite needs a comprehensive CX strategy. CX platforms ingest data from CRM/POS/ERP's and push alerts to Support platforms and intelligent marketing cohorts to marketing automation systems (allowing for highly focused marketing based on a customer's most likely response to stimulus instead of just profile history). In essence, a CEM platform sits at the heart of all of these systems
“My guess is that anyone with an experience or marketing cloud offering will look inward and find that they have a CEM sized gaping hole in their suite of offering; making them less competitive against SAP. And that is the future multiple SAP has paid for.”
From collecting Big Data to driving action from Small Data
Big Data was the big buzzword at the beginning of the decade, with nearly two-thirds of UK businesses polled by IBM in 2012 reporting that Big Data would be their key to delivering competitive advantage. As interest increased, research from business intelligence firm Jaspersoft estimated that as many as two-thirds of firms had either already deployed Big Data solutions or were planning to do so in the next 12 months.
Unsurprisingly, vendors swooped to capitalise on this, with a swathe of software firms building out their presence in the Big Data space – IBM launching a raft of new Cloud-based Big Data solutions, Microsoft taking a stake in 24/7, and VMware acquiring Big Data analytics tool Log Data.
But the harsh reality was that, despite the hype, translating Big Data into better customer understanding and business benefit was still well beyond most organisations for much of the decade. Research by Henley Business School from 2012, for instance, found that most organisations were still struggling to manage large data sets, let alone Big Data, to capture all cross-channel customer interactions with their company.
Skills shortages represented a crucial part of the problem, with a dearth of Big Data specialists and data scientists undermining efforts to improve data management and analysis, resulting in estimates that as few as 5% of companies were in reality able to capitalise on Big Data.
Research by Henley Business School from 2012 found that most organisations were still struggling to manage large data sets, let alone Big Data, to capture all cross-channel customer interactions with their company.
The sheer volume of customer data being generated was also an issue – and as the decade wore on, this would only grow as the number of channels, platforms and tools either generating or capturing customer data increased.
Speech analytics became more prevalent in contact centres. Social media monitoring and text analytics also surged in popularity. While an appetite for greater customer insights led to emotion being a desirable source of data.
This insatiable quest for data collection would eventually come to a head, of course. A study of consumers and marketers by The Economist Intelligence Unit found that by 2013 there was a huge disparity in how organisations and consumers viewed privacy, with businesses massively under-estimating how much of a concern data privacy was to their customers. The topic would subsequently dominate this area, culminating in the establishment of strict data privacy regulations later in the decade.
Meanwhile, in the face of mounting data volumes, organisations began to acknowledge that collecting data for data’s sake was a fool’s errand, and that data without insight is meaningless (and costly at the same time).
So by the time IDG surveyed 300 organisations mid-decade to gauge their top data concerns, the most pressing problem had become the “difficulty of extracting insights”, reported by nearly a half of all those questioned. Accompanying this, was the challenge of creating a single customer view – a 20-year old goal, yet one that seemed further out of reach than ever.
With customer data capture happening within every nook and cranny of the organisation, across multiple departments with multiple siloed databases using different technologies, the single customer view become The Holy Grail of customer data management in the mid-2010s.
New tools and platforms would emerge on the scene, promising to provide omnichannel customer clarity, and this past year has been all about customer data platforms for the marketing cloud vendors, with Adobe, Salesforce and Oracle all making CDP announcements.
Against this backdrop, there has been a further customer data epiphany shared by many organisations. Just as data without insight it meaningless, so insight without action is meaningless. And as the decade draws to a close, more than ever there is a focus on ensuring that data and insights are actionable.
Nonetheless, even though the discussion may have moved on, it would be inaccurate to say that businesses have got a grip on Big Data, and in a recent study conducted by Harvard Business Review Analytic Services, it was suggested that over three-quarters of all brands still have no real understanding of what their customers actually want, despite understanding how important this is to delivering a positive customer experience.
One of the problems is that there has been such a focus on Big Data this past decade, that many companies have overlooked Small Data – the data gathered via the likes of surveys and interviews that explains why consumers do what they do and make the choices they make, exploring feelings and perceptions.
While there has been a recognition that Big Data is only as good as the insights you get out of it, actionable insights are much harder to obtain if you aren’t combining Big Data with Small Data.
“Big Data alone is no silver bullet,” the HBR research reminds us. “In fact, the majority of organisations may be data rich, but they remain insight poor.”
Plus ça change.
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Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.