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Six reasons why standard CX thinking isolates it from the c-suite

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There are six reasons why standard CX thinking will hold you back if you are trying to make customer experience a c-suite priority and elevate yourself accordingly.

6th Oct 2022
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Editor's note: Jack Springman passed away on Sept 8th 2022, after a year-long battle with cancer. Weeks before he passed, he completed and published a book that has been hailed by the CX community: The Final Rant - Making Customer Experience A C-Suite Priority. Below we feature another abridged extract from this essential book. 

There are six reasons why standard CX thinking will hold you back if you are trying to make customer experience a C-suite priority and elevate yourself accordingly.

Reason 1: Selecting exemplars based on philosophy rather than financial performance

If you accept the principle of CX being a commercial discipline, the starting point should be identifying relevant comparator businesses with superior growth records and superior profitability, then seeking to learn from these exemplars about the customer experiences they deliver.

But the CX profession does the opposite – its starting point is philosophical rather than commercial. As a result the same narrow pool of exemplars crop up time and time again – Zappos, Nordstrom, Southwest Airlines, Starbucks, Ritz Carlton or other leading hotel chains. All of these conform to the monocultural view of what a great experience looks like – empathetic and human, going above and beyond, adaptive to individual consumer needs, etc. – rather than a results-driven view.

These companies do deliver a great experience, no doubt. But they are not the only ones if you define great from a commercial perspective – creating value for customers to create value for the business. And when we look through the lens of business success, we get a very different perspective on what a good customer experience looks like.

Let’s take the airline industry as an example. Over the ten years leading up to the start of the pandemic, the ultra-low-cost carriers (ULCCs) took the industry by storm. As the late Sampson Lee, former President of Global CEM, pointed out, they have grown at exceptional rates because they deliver great value to customers in the form of low prices and the experience they provide is in keeping with that proposition.

The ULCCs are examples of businesses pursuing a strategy based on operational excellence that enables them to deliver low prices, fast turnarounds and good reliability with only a basic level of service being provided. Over the ten years to 2019 easyJet, jetBlue and Ryanair showed a compounded annual growth rate in passenger numbers of 6-9% per annum (see figure below) and in revenues of 9-11%, all while increasing the load factor – the key determinant in profitability – meaning that profits grew at over 12% per annum. By contrast, over the same period Southwest Airlines, a darling of the CX industry, enjoyed passenger growth of only 5% on a compound annual basis.

Passenger volume

Now I am not trying to argue that because jetBlue has grown faster than Southwest, it provides a better experience. But what I am saying is that good is not uniform – what good looks like depends on your strategy, not a set of CX profession norms. And in the context of their strategy, jetBlue has provided an experience that has enabled it to grow faster than a noted CX exemplar in their industry.

Of course it would be quite easy to test the hypothesis that the much cited CX exemplars have delivered better superior financial performance to relevant comparators – just re-read the books of Colin Shaw, Shaun Smith and others who wrote about customer experience in the early 2000s, create a list of the companies cited and then analyse whether they have outperformed their sectors in financial terms (sales, profit, return on capital) or in returns to shareholders (dividends plus share price appreciation). But no one has chosen to do that.

Reason 2: The deification of customer-centricity

Probably the greatest damage to the credibility of CX with the C-suite is the parroting of the need to be customer-centric. It is a prescription that is falsely justified, anti-strategic, hypocritical, self-serving and overly simplistic. Using it is likely to hinder rather than help you achieve your goals.

As highlighted above, there are sectors where businesses delivering low prices have outperformed those focusing on delivering a superior customer experience. But that hasn’t stopped researchers from trying to justify customer-centricity on the grounds that it delivers superior performance. The problem with these studies is that they are seriously flawed and most CEOs would laugh if they looked at them.

Customer-centricity can only be defined in very loose terms such as putting the customer at the centre of everything we do. The problem with such vague definitions is knowing whether you are being successful or not. Measures such as NPS, CSAT and standard customer strategy metrics (covering customer acquisition, retention, growth and profitability) quantify effects rather than causes. We need to be able to tie changes in these outcome measures to effective measurement of customer-centricity if we are to understand the impact it is having.

But as there is no way of tightly defining customer-centricity, there is no way of objectively measuring it so we can understand whether it delivers desired results. And without an objective way of defining and measuring it, we cannot track whether improving customer-centricity definitively impacted the KPIs that the C-suite really care about.

The bottom line is that CX professionals look naïve when they eulogise about it. Matt Watkinson, author of The Grid and The Ten Principles Behind Great Customer Experiences, nailed this when he wrote about the complexity of markets in a 2021 Linkedin post, describing all the different factors (e.g. regulatory, competitive and technological) that need to be taken into account when managing a business at the macro level. As Watkinson put it: “Balancing these considerations (and there are many more) is what makes running a business hard, and why I struggle with the term "customer-centricity” — it strikes me as an overly simplistic prescription.”

Why does over-simplification matter? Because if your planned customer experience transformation is genuinely a strategic initiative, it will need support from parts of the organisation where the closest relationship is with a different set of stakeholders to customers. For example, the accounts receivable team in finance are most likely to associate themselves with shareholders, the supply chain management team with suppliers and sales teams with channel partners. Extolling the importance of customer-centricity risks alienating them rather than winning them over. If you want to sell your initiatives internally, you need to be as empathetic with your internal audience as you would like your front-line staff to be with customers. This starts with using their language rather than yours.

Reason 3: Excluding product interactions from the definition of CX

Another issue is the conflation of customer service with customer experience, most obviously with the ‘amazing service’ philosophy highlighted above. Given many CX professionals have contact centre backgrounds, this is not a surprise. But it does neither customer service nor customer experience any good.

The former is important enough to be called out specifically. And the latter is much broader encompassing interactions with marketing, sales and service; and most importantly with the products or services the business is providing. Still many CX professionals choose to exclude product interactions from the scope of customer experience. This automatically limits its importance as a strategic asset.

The view that customer experience is about customer interactions persists mainly because price and product interactions are the responsibility of other teams. But this distinction is dangerous, as highlighted by Watkinson in a 2020 MyCustomer podcast. As he explains, it doesn’t matter how good the 98 buying experience is if the service provided doesn’t solve the problem that the customer has.

Once again, what we see in the CXPA and Gartner views of customer experience is CX team-centricity rather than customer-centricity. Customer interactions with the company – via the web site, mobile app, social media channels, physical branches or stores and the contact centre (for email, telephone, chat, etc.) – are what CX teams typically control. And because they are the CX team, what they control comprises the customer experience. But from the customer’s point of view, it excludes the reason for being in contact in the first place – to hire or buy products or services to help them achieve their desired outcome complete their jobs-to-be-done. For customer experience to be a strategic asset it needs to be holistic.

Reason 5: Worshipping ‘best’ practices

Since its inception, the CX profession has been in search of principles around which the industry can coalesce. Principles then beget processes, procedures and ‘best practices.’ The implication of best practices is that they are universally best – every company should do it.

In some cases, that may be true – my Optima colleague Graham Hill always cites the Erlang C model for managing queues in call centres as such an example. But instances like this are far from universal. Practices may be good or great, but in most cases there is no one practice that can ever be best for every business of every size in every context. And if one does exist, like Erlang C queuing models, it won’t be a source of differentiation.

When thinking strategically, the only best practice is appropriate practice – what is appropriate to your competitive context, what competitors are doing and how you intend to differentiate, how you plan to achieve your financial objectives and what level of resources you have available. And in the areas where you want to be great – those that are fundamental to how you differentiate – you should be aiming to be better than best practice and keep improving so that you remain ahead of the competition.

Ultimately it is the responsibility of a CX leader to make choices as to how to spend the limited resources they have to the best effect. And that can only be achieved if the CX strategy is grounded in business strategy and is appropriate to the financial constraints and objectives of the company rather than a set of beliefs about what is right and wrong. All of which leads us to the topic of how you measure the creation of value for customers. For many customer-centricity advocates, NPS is what they are seeking to improve. But again as a measure it has a number of limitations.

Reason 6: Excessive focus on NPS

In the customer experience profession, NPS is a guiding light and improving it is the raison d’être for many. Like CSAT scores, NPS quantifies qualitative feelings so that they can be analysed with averages created and outliers identified. With the score itself, there are multiple problems.

Firstly it lacks intellectual and scientific rigour – the idea that NPS is the best indicator of future growth has been shown to be spurious. Secondly the score provided is not a strong indicator of future behaviour. Research undertaken by C-Space in 2018 identified a clear gap between what people said they would do and what they actually did. 

As Ron Shevlin of Cornerstone Advisors points out, a far better measure would be one that captures the number of customers who referred a new customer or the number that increased the depth of their relationship (for example, by adding an additional product). This is the opposite way of thinking - rather than infer future behaviour from stated attitudes, infer attitudes from data on actual behaviour. That is not to say NPS or CSAT scores should be ignored, but they need to be part of measurement system that reflects how value is created.

The first element is tracking how effectively the value proposition to customers is being delivered – the elements where delivery can be objectively measured. This will encompass product and service metrics as well as those that are within the domain of the CX team (such as digital completion rates, first contact resolution, response times, etc.) The next element is, at an individual customer level, linking those objective measures to attitudinal scores such as NPS or CSAT. The final element is linking the first two, again by customer, to actual behaviours – loyalty, additional product purchases and profitability. By tracking these elements at a customer level, it becomes possible to better understand what creates value for customers and the business and what doesn’t.

So how do you overcome these challenges? The simple answer is change from taking an operational view of customer experience to a strategic one; from looking at improving the experience provided across one or more touchpoints to considering all CX elements in the context of a business’s overall strategy and its brand promise so that the full value potential for customers and the business can be realised. That can only be achieved if a structured, end-to-end approach is taken to customer experience definition and implementation.

 

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Michelle Spaul Customer Experience Consultant
By Michelle Spaul
10th Oct 2022 15:59

spot on, love how you lean into so many writers. Can't disagree with a word, and especially like inferring data from behaviours.

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