12 new strategies making us optimistic for the future of CXby
A new year demands new CX strategies. Peter Dorrington outlines some of the key CX strategies that he believes will be high on boardroom agenda for this year - and that make him cautiously optimistic for the future of CX.
In this article I will be discussing my thoughts about customer experience strategies for the future. I have tried to be brief, but there is a lot to do and not much time in which to do it, so grab a beverage and settle down for this feature length article.
Towards the end of January, I had the privilege of being the opening keynote speaker at the international CX Summit – the first conference in my calendar this year. Whilst my presentation was focused on the future, it was also an opportunity to briefly reflect on last year, the first anniversary of creating my own firm.
How we got to now
There can be no doubt that the speed and scale of the pandemic caused disruption of global proportions; affecting individuals, communities, businesses and institutions alike. Whilst there were some industries and sectors who were unaffected, others were deeply impacted or simply had to find some way to ‘keep calm and carry on’.
Extraordinarily, the pandemic also affected the whole of the value chain – from sourcing raw materials to servicing existing customers. Global and local supply chains were disrupted, often at short notice, and organisations scrambled to find new sources of supply or routes to market.
The result was a behavioural change of all the parties in the value ecosystem (and it is still changing) - we are not at the ‘new normal’ yet. Speaking of which…
The ‘new normal’ will not be a return to the ‘old normal’
Prior to the pandemic, government, business and consumer confidence was high – at least in the UK. Plans were even being discussed to stimulate the economy further and faster.
But since the outbreak of the pandemic there has been a dramatic drop in that confidence, which can be exemplified by the behaviour of consumers:
- Instead of a growth in spending fuelled by borrowing, consumers switched to saving more – partly because of concerns about the future but also because of the effects of lockdown.
- With lower confidence about the future comes a trend for consumers to think more carefully about what they are spending and deferring any major purchase decisions whilst they wait-and-see what happens.
- There is also a growing backlash against excess consumerism – ‘influencers’ who promote aspirational lifestyles now look out of touch with the reality faced by many of their followers – feelings of admiration are changing into resentment and indignation.
- Shoppers who previously indulged in casual shopping (browsing) now need a reason to go shopping and to purchase – something I am calling ‘causal shopping’ and they are more careful about what they buy too.
- We have also gotten more comfortable with meeting, working, and shopping online – which we all know is a completely different kind of experience (which some newly ‘digital’ enterprise have yet to fully grasp) – in many cases the ‘customer experience’ is being delivered by the customers themselves.
- Whilst value and convenience are clearly still important and as the research from last year shows, there is a growing demand for a customer experience that displays empathy and compassion.
- Consumers also expect that businesses ‘need to know me’, remembering them, their recent interactions and anticipating their needs. Businesses can no longer rely on customers making the effort to get to know them.
- Finally, the shift to home / hybrid-working is bringing its own challenges and opportunities. As we question the role of the office in the future, so in turn must we consider the supporting ecosystem around – the short-term impact on city centres is already apparent.
The new ‘COVID-consumer’ is markedly different to their pre-COVID alter ego.
The CX strategies that will I believe will define 2021
In this context, the following are some of the key CX strategies that I believe will be high on boardroom agenda for this year and next. It’s not a complete list and I am deliberately ignoring some well-discussed technologies like AI, automation, etc. (I deal with these elsewhere or others have extensively done so).
It’s time to re-examine organisational purpose
What is the raison d'être of your organisation? Why does it exist and is it fulfilling its purpose? Customers, employees and even investors are starting to question whether a business should be more than just about ‘wealth creation’ for investors, especially when the wealth is unequally distributed.
In recent times there has been a heightened awareness about the global ecosystem, led by activists like Greta Thunberg. In January there was also a concerted small investor attack on hedge funds who ‘short’ stock for profit – the most prominent of which was the case of trading around GameStop. In the eyes of many these large firms typify what is greedy and immoral in the world.
It now appears that there is a growing realisation that organisations need to focus on the interests of more than one stakeholder group (i.e. not just investors). Which leads me to my next point…
Evolution from customer-centric to stakeholder-inclusive
The pandemic also showed us how interconnected and interdependent we all are. Businesses suddenly found themselves unable to rely on established suppliers, employees were unable to come to work or channels completely closed down. Most worrying, customers were left disappointed and looking for alternative suppliers.
I am going to write about this co-dependent ecosystem in detail in a follow up article, but for now I will simply discuss some examples of the dangers of a ‘customer-centric’ business focusing only on customers:
- Shortly after the start of the pandemic, some businesses suddenly found essential supplies drying up. For years they had beaten their suppliers down on price but lockdown forced a reversal in the power structure; there was suddenly far more demand than supply. Suppliers began to prioritise clients who had treated them well in the past (e.g. like customers) and placed their most demanding clients at the back of the queue.
- Meanwhile, the world of work was changing – many employees started working remotely and, whilst it was novel and refreshing at first, it rapidly because exhausting and depressing for many. The ‘cultural capital’ formed over years in the office was being depleted in months of remote working. Employee wellbeing went from being a focus on compensation and benefits to protecting employees’ physical and mental health.
In my view, a discussion about focusing on one stakeholder group or another, or on the interplay between individual actors is a missed opportunity – it is now time to look at the bigger picture.
If CX as a discipline is to survive into the future, those who are engaged in it must get better at explaining (and proving) how what they do adds value to all the stakeholders - not always easy for those individuals whose whole career has been customer-centric.
This will in turn also require businesses to introduce…
Holistic management of the value chain
In most organisations, the customer is at the end of a very long ‘value chain’, any part of which can fail. You must never forget that customers are neither fair or logical – they don’t care how difficult it is to meet their needs, or why they are disappointed. It is your brand the customer blames for a service failure, irrespective of actual cause.
In the pandemic, we saw how interconnected and fragile a value chain might be. Within days, stable suppliers, production and shipping could be disrupted by local, national, or even international lockdowns. For lack of a single component, whole production lines ground to a halt. Demand for-and-from the travel and entertainment sectors all but dried up. Those that could get supplies couldn’t sell them, those that could sell them couldn’t get them.
Suddenly it is in the interest of an organisation to be as concerned about the wellbeing of their suppliers and channel partners as for their employees and customers. Over the last year, I have seen examples of both the best and worst; the best being those able to pivot as conditions on the ground changed, the worst being those who dogmatically stuck to old, rigid formulae.
Flawless execution is now expected, but so is empathy and human-centric design
For many businesses, the first few months of the pandemic were dominated by a need to transform their operating model (or speed up their transformation). At the time, the challenges were largely perceived as technical and procedural.
It is true that despite the strictures of lockdown, many customers still expected flawless execution from vendors – the right order, on time and in perfect condition. Most were prepared to cut some slack to those vendors they could see were on a transformational journey, but that honeymoon period is long over now. Frankly, it’s been nearly a year, everyone else can do it, why can’t you? If you are still blaming the pandemic for offering a bad service, shame on you!
However, as the research on the role of empathy showed, it is not just transactional excellence that customers expect: 97% of customers said they value empathy, but 40% said it is lacking in customer service – a worrying gap that history shows some new ‘disruptor’ market entrants will find a way to close. If your customer experience is not living up to expectations, you are vulnerable.
The same research also identified that, customers will accept a negative outcome - if they are treated with respect and compassion. The implication of this finding cannot be overemphasised; businesses do not need to spend ever increasing amounts of money trying to satisfy every customers whim. Treating customers with compassion does not need to cost more and may even save the business money. But to do so will require a change in organisational culture as well technology and operating procedures.
Inspire a human organisational culture
As the Peter Drucker said: “culture eats strategy for breakfast”.
Customer experience as a business discipline is not new – it’s been practiced for millennia by traders everywhere. It’s only recently that we’ve started to give it a name and perhaps even more recently that we’ve identified that it also requires a mindset.
If your business is more concerned about its own operations than customer outcomes, it is going to be hard to introduce meaningful and lasting change – you need to prepare the ground first.
Cultural change starts at the top and must engage employees
In most organisations, employees look to two people to get their direction: their immediate supervisor (i.e. the one who sets their objectives and evaluates their performance) and the most senior person at the top of the organogram – the person who sets the overall direction for the organisation. In order for a CX strategy to succeed then, both need to be prominent advocates of that strategy.
One challenge CX leaders face is that many organisations believe themselves to be logical and rational. They are good at creating a vision and defining strategies, which are then allocated as plans, actions and responsibilities. Unfortunately, this mindset overlooks one simple fact: that most organisations are made up of people – people who are not completely rational or logical, they have feelings, beliefs and attitudes that must be addressed. Just saying ‘make it so’ doesn’t make it so (sorry Jean-Luc).
To undertake a successful transformation, there are two cirtical phases that need to be completed:
- Engaging and exciting the workforce, gaining ‘buy-in’ and instilling a willingness to change, skip this phase and you will be doing the bulk of the work alone in the face of, at best, scepticism, at worst passive-aggressive behaviour.
- Sustaining momentum – where you measure and celebrate success, adapt to change, identify future requirements and most importantly of all, ensure the change sticks.
The ‘dash to digital’ will become a marathon
Samuel Johnson once said “when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.”
In 2020, many businesses had to (complete their) transition to digital in a hurry or face extinction. In a Herculean effort, they went from ‘bricks’ to ‘clicks’ in a matter of weeks – something that would normally have taken many months, if not years.
Some of those that did it well are now ‘doubling down’ in 2021, as customers become more comfortable with digital-first engagement and they reap the rewards of a job well designed and carried out. However, those that did not do so well will have to catch up in a hurry if they are to protect their market share.
Modern digital / mobile platforms are wonderful things – offering easy self-service access to a plethora of goods and services but, contrary to the marketing of some platform vendors, they are not a panacea for all ills. Even worse, they often highlight deficiencies in other channels and parts of the value chain.
This may be good news for CX professionals – both groups are going to be looking for help in ensuring they deliver the best customer experience possible with the tools at hand.
On-premise shifts to cloud platforms and partnerships
There was an explosion of adoption of cloud platforms and ecosystems last year – for many it was a way to implement and scale quickly, as well as leverage global expertise and R&D without hiring expensive (and hard to come by) talent.
With cloud systems it is often possible to deploy more quickly, delivering a MVP sooner – especially for small and medium-sized enterprises (SMEs) without the resources of their larger rivals. In accordance with the apocryphal Pareto ratio – they could get 80% of what they needed out of the box and the scale and scope of functionality also allowed them to ‘pivot’ as demands and strategies changed – a flexible ecosystem suited to emerging market forces.
However, competitive differentiation comes from how these platforms and ecosystems are used and with whom, not how they work. It is not the tool that is important, it’s what you do with it.
Interaction management, customer journeys and experience landscapes
Customer journey mapping and analysis is not enough – think ‘experience landscape’ – where customers move between journeys and interactions in a random way. In my experience, customers rarely live linear / sequential lives that match the documented journey.
With this in mind, product managers need to consider the broader context of how their product or service is used in the real world. They must also build in enough flexibility to allow customers to use the product in a way that suits them, not the business. Experiences not only need to be memorable, they need to have memory – of the past, the context and the aspiration.
Meanwhile, experience developers then need to incrementally improve individual interactions (‘micro-experiences’). If customers are building their own journeys, each interaction has to work as a discrete entity.
When you can do that, you are well on your way to an ‘outside in’ human-centric organisation.
Profiles give way to hyper-personalisation
Profiles are a heuristic – a rule-of-thumb we use to represent a homogenous group of customers – ‘one-to-some’, where the ‘some’ is the smallest group we can service economically. However, whilst they approximately fit a group of customers, they rarely fit any specific customer. As my friend Martin Hill-Wilson often says: "there is no such thing as an average customer" and, according to the jaggedness principle, he is absolutely right.
Yet, in the age of digital and mass-customerisation (customerisation = personalisation + customisation), customers are starting to demand a true one-to-one relationship – they expect you to know them, to anticipate their needs and wants, and to tailor your products and services accordingly.
With the technologies and platforms now available, there is no good reason this aspiration cannot become a reality in many sectors – in some examples I have seen, it already is.
Ad-hoc insight becomes embedded decisioning
I have spent the last 20 years thinking about and analysing data, most of it about customers. In my view, the most important foundation of a successful CX strategy is listening to, and understanding customers.
Voice of the Customer programmes are now common, but rarely feed directly into operational decisions. Surveys are conducted and reviewed, fires identified and put out, customers responded to. But no insights feeding back into the organisation as a whole in a timeframe that makes them actionable.
For example, contact centres are at the frontier of customer engagement, every conversation an opportunity to learn and improve and yet, in so many cases, this data and insights are not fed into the business, except at the scheduled review of service level agreements (about which more later).
A by-product of digital is the potential to generate a tsunami of data – data about every aspect of how a product is used in the real world and being digital it lends itself to operational integration in both directions – to gather data in and a tailored service out.
I’ve sometimes heard data being referred to as the new ‘black gold’ – it’s not. Data is like clay, of little intrinsic value until you build something with it. When you do, it can be transformative, so many executives tell me ‘I have more than enough data, but precious few insights I can immediately act upon!’.
Adoption of new measures of performance
(This too is going to be the subject of a follow-up article).
Many of the ways that organisations measure themselves today are derived from concepts formed in the late 1800’s: that there is one perfect method to do anything and once determined that method should become the standard against which performance is measured. This worked well in the industrial era of mass production and standardisation but it is not suited to the experience era or hyper-personalisation.
Yet, so many organisations focus on these operational measures as if they are the only things that matter. Let’s be blunt – customers don’t care about your NPS score, or your average handle time – as I said before, they only care about what they get out of the experience.
At a time when more sectors become commodities, the experience of buying and using your product (including aftersales customer service) is the only time your organisation can display its difference – through the service it offers. Don’t get me wrong, efficiency and effectiveness is important, but empathy, compassion, rapport cannot be measured in those terms. In fact, they are often at odds with delivering the kind of experience that customers expect and deserve.
COVID-19 was, and remains, a terrible shared experience that spanned the globe. However, awful as it was, it forced change upon us all, some of which will persist well into the future. It also caused us to re-examine tried and trusted assumptions and expand our thinking, in both breadth and depth.
The ‘new normal’ is not yet fixed, so we must remain flexible as we transition from the chaos of 2020 to something more stable and if we work hard and are lucky, we will be able to ‘build back better’.
As a result of the measures we took last year, many more of us now have the means, the methods and the motivation to shape the future of customer experience. I remain cautiously optimistic – we have learnt so much this last year and every day I hear of businesses reinvesting, customer encountering new ways to be delighted.
I don’t know exactly what the future holds, but we can be sure that our customers will demand more of us and it is up to us to rise to the challenge!
Peter is an award winning expert in using a combination of data and behavioural sciences to lead transformation in the field of Experience Management (XM); encompassing Customer Experience (CX), Employee Experience EX) and Partner Experience (PX) .
Over the last 3 years,...