Associate Partner Optima Partners
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The myths putting the future of customer experience in peril

If 2020 heralds a major economic downturn, CX roles will be in peril. But there are four myths that CX professionals can stop relying on to ensure they are on safer ground. 

8th May 2020
Associate Partner Optima Partners
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In its predictions for 2020,  Forrester forecast that one in four customer experience leaders will lose their job. This prediction was against a buoyant economic background with increased expenditure on CX and the total number of executives increasing by 25%.

Given the sharp downturn due to COVID-19, that now looks conservative. As budgets are slashed in the face of reduced demand, a figure of one in three CX leaders losing their job now looks more likely. 

Forrester’s original prediction reflected the increasing levels of pushback by senior executives against CX that is fluffy and not commercially-oriented: “CX leaders who can’t prove their value to the business will find themselves on the street… Those that do keep their jobs will do so by ensuring that their metrics and measurements relate to what matters most: KPIs with a dollar sign in front of them.”

In a recent exchange, an industry expert made the same point using more colourful language: “The CX industry is drowning under the weight of its own BS at the moment.”

I share that view - the buoyant economic conditions of the past eight years have provided the perfect conditions for BS to accumulate. When business is booming, the incentive to separate causes from confounding factors is minimal – no one wants to rock the boat and there is enough success to share around. That is no longer the case.    

Customer experience leaders are at risk

In a recent article titled Who's lost their trunks, The Economist highlighted how fraud becomes more evident during recessions. “Booms help fraudsters paper over cracks in their accounts, from fictitious investment returns to exaggerated sales. Slowdowns rip the covering off.” The same can be said of intellectual fraud – the propagation of beliefs, methods and approaches that promise but don’t deliver value.

The Economist’s article echoes a quote from the revered investor Warren Buffett: “You only find out who is swimming naked when the tide goes out.” CX leaders who have listened to flawed advice will be the ones who risk being bare-arsed, embarrassed and unemployed. Meanwhile the “charlatans and bandwagon-jumpers” – to use the words of the same expert as above – will hide from the consequences of their counsel and use the downtime to burnish their images, ready to reap rewards once the upturn begins.  

It’s not to late for CX leaders to modify their beliefs and change their behaviours. With that in mind, I'm going to bust four of the most popular myths - two of which appear in the article below, and two of which follow in my next piece

1. The job of a CX professional is to manage the customer experience

It may seem self-evident that the role of a CX professional is to manage the customer experience. But that assumption – more than anything else – is the reason why, even in a growth market, 25% of leaders were expected to lose their jobs because they weren’t delivering results.

In the description ‘managing the customer experience’ there is no outcome-orientation, no active verb. If experience is used as a verb, it is the customer who is the subject and the business the object. Semantics matter – they frame how people performing a role see their primary objective, also how others see them. If we could go back twenty years and change the name of the profession from customer experience to something more dynamic and results oriented, I would suggest that many of the credibility issues the industry is facing would be significantly lessened.  

It is too late for the industry to change its name now – too much has been sunk into awareness building, the creation of CX training and certification programmes and it would threaten the livelihood of those acclaimed as CX influencers. But it is not too late for CX leads in businesses to change the name of their role and their team. Or at the very least, reframe their thinking.

For those wishing to remove the target from their backs, think 'customer engagement' rather than 'customer experience'. CX roles have dual objectives - creating value for customers and creating value for the business. The former involves helping the customer achieve their desired outcome with the latter translating customers success into revenue and profit – converting prospects into profitable customers, retaining them over the course of multiple buying cycles and deepening the relationship by helping them complete an increasing number of jobs-to-be-done, all the while serving them in the most cost effective way. Customer engagement captures this duality of value creation far better than the more neutral customer experience.

Name changes are moot unless there is an equivalent change in performance orientation – the metrics against which CX professionals are held accountable – but we will come to that in the next piece.

2. Customer experience is a sustainable competitive differentiator

On the surface this seems perfectly reasonable. But once you dig a little deeper into the underlying assumptions and tacit implications, deep cracks become evident.

One source of this belief is a 2015 Gartner report called Customer Experience Is the New Competitive Battlefield. This has been jumped on and amplified by CX professionals, with some arguing that the customer experience is everything - the only form of competitive advantage that is sustainable. 

The summary of the Gartner report reads: “Greater competition and growing consumer power have eroded traditional product- and service-based differentiation, forcing firms to seek new, more durable forms of competitive advantage. Many business and IT leaders see the customer experience as a sustainable source of competitive differentiation.”

Implicit in this argument is the assumption that the customer experience is distinct from any product and services provided – it is something that IT leaders can influence (or why bother call out IT leaders alongside CEOs rather than other functional leaders). This is a fundamental misunderstanding of what constitutes a customer’s experience. From a customer’s point of view, their experience constitutes all their interactions with a business – including their interactions with the physical or digital products and services that the business has provided.    

The definition of what constitutes the customer experience is CX-team centric rather than customer-centric. Interactions with products and services are not included because they are outside the responsibilities of the CX team, typically residing with product managers or design teams.

As far as customers are concerned, their use of the product and service constitutes the most important part of their experience. As Matt Watkinson, author of The Grid and The Ten Principles Behind Great Customer Experiences. highlighted in a recent MyCustomer podcast, it doesn’t matter how good the buying experience is if the service provided doesn’t solve the problem that the customer has.

If you define the customer’s experience as incorporating all interactions – including those with products and services once they have been purchased – then CX being a source of sustainable competitive advantage is fair enough.

But this is not how it is generally interpreted – and clearly not by Gartner. Irony of ironies, the definition of what constitutes the customer experience is CX-team centric rather than customer-centric. Interactions with products and services are not included because they are outside the responsibilities of the CX team, typically residing with product managers or design teams.

This does not make CX (as typically defined) unimportant – it is a vital part of the value proposition. A value proposition is composed of the products and services provided, how they are priced and how the company interacts with customers to provide them with information, enable them to purchase and support effective usage. But the last part - the interaction or experience element – isn’t the only part and can never be a differentiator on its own. All it can do is complement the intended source of differentiation. 

In their 1995 book, The Discipline of Market Leaders, Michael Treacy and Fred Wiersema highlighted the three main dimensions on which companies could differentiate themselves - operational excellence, customer intimacy and product leadership. 

Operational excellence delivers consistent quality, reliable service and competitive prices enabled by high levels of efficiency. Customer intimacy stems from a detailed understanding of customer’s needs and wants which is translated into proactive and personalised service delivery (including customisation of the core offering to meet a customer’s specific needs as well as personalisation of communications). Product leadership arises from having the most functionally rich products or propositions with features or service wrappers that others are not providing. (Product leadership would also incorporate network effects which have been effectively leveraged by the likes of Google, Amazon and Facebook.)

Whichever strategy is being followed, the customer experience must be designed as an integral component. Most importantly, even if you are following an operational excellence or product leadership approach, you can still deliver an excellent experience as long as it is complementary to the primary source of value being provided.

 

In the second part I detail the final two myths that are putting customer experience positions in peril. 

Replies (2)

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linkedin
By LinkedIn Group Member
11th May 2020 07:56

This comment posted in the MyCustomer LinkedIn group by member Hunter Ricci:

I think it's common to see CX leaders idealize and mythologize their practice. Looking at CX from a more pragmatic standpoint helps to contextualize the precarious position of CX pros in the current crisis, and react accordingly.

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Peter Dorrington - TTEC
By Peter Dorrington
11th May 2020 16:40

Hi Jack,

as always an interesting and well-argued article - I enjoyed reading it and it did stimulate a couple of thoughts I would like to share:

Engaged Customers may be loyal, but not necessarily valuable – in fact, they can be the costliest to serve. One of the challenges that CX practitioners (and, to be honest many business leaders) face is that they focus on the ‘rewards’ without a clear understanding of the costs. Some of a business’s best customers may not be that ‘engaged’ but they buy regularly with ‘no muss, no fuss’. We need to clear what each party wants and needs from the relationship

Secondly, as you say, much has been said about ‘Customer experience is a sustainable competitive differentiator’ but the focus is often on the features of the experience, like price or convenience: features that can be replicated by competitors. However, a business’s history and relationships with its customers cannot be easily copied or reverse engineered – the trick is to figure out how to operationalise the value of that relationship.

Finally – metrics. Argh! Where to start? We could have a long debate about what to measure, when and how, but my main concern is this: a focus on a few measures can lead to surrogation. For too many organisations, ‘the number’ is what is important, not what it represents or why. This in turn can lead to ‘target fixation’ – where we miss the bigger picture because we are focusing on a few key measures. CX does not live in a vacuum, so we need to balance an operational focus with situational awareness.

I am looking forward to the next article!

Thanks (1)