Associate Partner Optima Partners
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Why CX has become more religion than strategy - and why that's a problem

The customer experience profession has evolved dramatically over the past 20 years - but has it now encountered an unholy problem?

9th Jul 2020
Associate Partner Optima Partners
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Prayer customer experience
istock

Over the past 20 years, the customer experience profession has formed, stormed and normed. For the most part these developments have been positive with advances in tools (e.g. journey mapping), enhancements in training and increased professionalism.

But some of the norms have become more than that, more like fundamental beliefs that are accepted without challenge. CX is a commercial discipline – or it should be – not a religion. In commerce, there are no givens (beyond legal and ethical considerations), just choices. And when there is zeal for absolutes, good strategy development suffers.

From a strategy perspective, defaulting to norms is the antithesis of differentiation – it leads to sameness and discourages innovation. Strategy is about how you deploy your scarce resources to achieve superior financial returns. Effective CX strategy development requires a willingness to be different – listening to all the advice that is on offer but not feeling pressured into following others because the CX filter bubble asserts it is the right thing to do.

Avoiding the one-size fits all CX strategy trap

The best example of CX monoculturism is customer-centricity – a concept that enjoys almost unilateral support within the profession. As an idea I think it has a number of flaws - it can’t be defined and can’t be measured so effectiveness can’t be determined, it denigrates other stakeholders such as staff, and the customer-centricity exemplars such as Uber, Airbnb and WeWork have all failed to develop profitable business models (see here and here for more expanded critiques).

But even more damaging than its deficiencies is the underlying assumption that there is only one way to deliver a customer experience that creates value for customers and value for the business. As the examples below show, this is not the case.  

In their seminal book The Discipline of Market Leaders, Michael Treacy and Fred Wiersema describe three value drivers – ways in which market leading businesses successfully create value for both customers and shareholders – product leadership, operational excellence and customer intimacy. Only with a strategy of customer intimacy does the notion of customer centricity even begin to make sense. Yet businesses following operational excellence or product leadership strategies also need to design the experience they deliver to customers. These experiences need to reflect how they create value for their customers – defaulting to ideas derived from a different way of competing won’t work.   

The only best practice is appropriate practice

Monoculturalism also underlies the description ‘best practice’.  The implication of best practice is that it is universally best – every company should aspire to it. But there is no one practice that can ever be best for every business of every size in every context – it is the antithesis of smart strategic thinking. Strategically, the only best practice is appropriate practice – what is appropriate to your competitive context, 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 that you want to be really great at – those that are fundamental to how you differentiate – shouldn’t you be aiming to be better than best practice?

(Within a group of companies, it is clearly possible to create a centre of excellence to share what has worked well. But I still think it is preferable to call this great practice rather than best practice. Even if brand promises are similar, competitive contexts and profitability are likely to be different, meaning what is right for one group subsidiary isn’t necessarily right for another. And describing something as great practice is suggestive – this is something you can learn from – whereas best practice is more didactic, if you don’t do this you will be falling short.)

The same issue also appears in generic advice proffered on Twitter. To use Adrian Swinscoe’s analogy, these 280-character homilies to the importance of delighting customers, delivering amazing service and making customer service your differentiator are akin to the 1970s prog rock guitar solos where artists sought to outdo each other but just ended up sounding the same. These pronouncements are grounded in years of experience and often display virtuoso insight. As such they are not fundamentally flawed, but not being wrong doesn’t make such advice relevant or right for a particular business – it pays no attention to specific context so may not be appropriate and may even be dangerous.  

Let’s take the simple example of seeking to delight customers. On the surface this would appear to be a great thing to do. But obviously this comes at a direct cost, the time taken to go above and beyond customers’ expectations, and an indirect one – customers’ expectations are raised meaning they are likely to be disappointed if they don’t receive the same improved service levels next time they call. It may be better to just satisfy rather than delight – a commercial choice needs to be made based on the costs and benefits and accordance with strategy.

But too often the tone is one of certainty – this is universally the right thing to do. And as the linguistic joke goes, all universals are wrong (except as far as religions are concerned). Clearly there are great practices that you can learn from and the vast majority of such pronouncements are worth considering. But to be effective, CX strategy has to be specific rather than generalised.

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 rather than a set of beliefs about right and wrong and is appropriate to the financial constraints and objectives of the company.

Exemplars based on performance rather than preconceptions

CX’s one-size-fits-all problem can also be seen in the narrow pool of exemplars that crop up time and time again in case studies – Zappos, Nordstrom, Southwest Airlines, Starbucks, Ritz Carlton or other leading hotel chains. All of these conform to the customer centricity-driven 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. But they are not the only ones if you define great from a commercial point of view – how it benefits the company providing the experience. From this perspective, a good customer experience is one that increases the lifetime value of a customer – increases loyalty, advocacy and profitability. And when we look through the lens of commercial 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 last ten years, the ultra-low-cost carriers (ULCCs) have taken the industry by storm. As Sampson Lee, President of Global CEM, has pointed out, they have grown at exceptional rates because they deliver great value to customers 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. Over the last decade Ryanair, easyJet and jetBlue have shown a compounded annual growth rate in passenger numbers of 6-9% per annum (see Figure 1 below) and in revenues of 9-11%, all while increasing the load factor – the key determinant in profitability – meaning that profits have grown at over 12% per annum. By contrast, over the same period Southwest Airlines passenger numbers grew at only 5% on a compound annual basis.

CX strategy

Figure 1: Growth in passenger volumes, 2011-2019 

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 them to grow faster than a noted CX exemplar in their industry.

Sampson makes the same point about IKEA. IKEA has bucked the trend of retailers failing beyond their home markets and now has 433 stores in 40 countries. It has done this by tailoring its product range to local tastes while retaining the core trade-off in its proposition. Customers enjoy a wide choice of well-designed furniture at a reasonable price but the shopping experience is functional rather than enjoyable and effortful rather than convenient – customers have to assemble the furniture themselves. By the standards of conventional CX thinking, IKEA should be seeking to delight and reduce effort, but the experience it provides is totally appropriate for its value proposition and overall strategy. More importantly it has proved to be amazingly successful.

Let’s look at a different measure of success – the willingness of consumers to sport tattoos of a company’s logo. Beneficiaries of this most extreme form of brand loyalty include Apple, Coke, Harley-Davidson (obviously), Nike, Red Bull and Vans.

These businesses evoke a lifestyle to which consumers aspire, but they are not cited as exemplars by CX professionals as customers interactions are primarily with the product provided rather than with a representative of the company or via its online channels.

Many CX professionals have either contact centre or service design backgrounds. As such there is a tendency for product-related interactions to be seen as outside the scope of customer experience. This exclusion has been challenged by a number of prominent voices, notably Colin Shaw and Shaun Smith, whose books from the early 2000s have provided much of CX’s foundational thinking. By contrast, the CXPA definition of customer experience remains distinctly ambiguous on this point.

But from the customers point of view, interactions with the product are the critical component of their experience. And as many of the benefits are intangible – associated with the lifestyle evoked – the experience these businesses deliver is marketing-led rather than service-led, defying conventional service-oriented CX wisdom.

Further there is often a single visionary behind their success – Steve Jobs for example – and visionaries are inside-out rather than outside-in thinkers – a point made by Matt Watkinson in a recent LinkedIn post. They have an innate understanding of consumer needs rather than the humbler desire to understand them and a ‘build it and they will come’ confidence. As such they are the opposite of customer intimate, if we are using Treacy and Wiersema’s classification, with their success stemming from product leadership.

Purpose and role of CX strategy

The purpose of CX strategy is to translate business strategy into customer-facing operational practices. It is the middleware that transforms board level decisions into what gets done. As such, CX strategy should sit along equivalent strategies for the other key value chain stages – for example R&D, supply chain management, operations – and all the key horizontal value chain elements such as HR, Finance, etc.

Figure 1 below provides an overview of how CX strategy provides this connectivity. An overview of this framework was described in my previous article – Why creating a good CX strategy is so hard.

CX strategy

 

Figure 2: CX Strategy Overview

This article has focused on the area in the red box – grounding CX strategy in business strategy and corporate financial objectives. And I will expand more in the next one as to how different business strategies – focused on operational excellence, product leadership or customer intimacy – should impact how you design the customer experience you wish to deliver. 

But I will end this article with a spoiler regarding customer intimacy. The essence of customer intimacy is knowing your customer so well that you can be proactive and highly customised in the service you provide. By its very nature, any form of consultancy requires a high level of client intimacy in the form of highly customised solutions – or at least it should do.

But here’s the rub, when CX advisors promote a singular approach to delivering a great customer experience to their clients and fill the social media echo chamber with confidently asserted universal advice, are actually being the opposite of customer intimate.

Ironically preaching about the need for customer centricity may reveal you to be the opposite with respect to your own clients. Worse it’s not good commercial advice. Because as the likes of Ryanair, IKEA, Apple, Nike and others have shown, you don’t need to be customer centric to deliver a great experience, you just need to deliver an experience that is founded in your business strategy.

 

Replies (3)

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By DeltaSwan
14th Jul 2020 09:08

Brilliant article, you make a lot of great points.

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By shaun.myers
14th Jul 2020 14:22

Excellent article, thank you. I'd make the point that passion and commitment are equally important in driving change (even if this does come across as a little evangelical at times!), as you say this must align with Corporate goals however to succeed. For me sound bites and cliches on social media do more harm than to the CX profession.

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By andy_mcf
04th Aug 2020 17:01

Fantastic POV which I share. Over 10 years ago I started writing about customer service, success, and experience. My premise then was that there was no such thing as one-size fits all and that the discipline required a more balanced approach.

A link to my attempt to focus my efforts and to temper reader's expectations.
https://pivotpointsolutions.net/2009/06/14/why-pivot-point/

Thank you for doing a better job of explaining it. (I'll be linking back to this article as a fuller explanation.)

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