Customer experience (CX) has emerged as something of a panacea for businesses. And for good reason. When done well, it creates value, reduces costs, and improves both customer and employee satisfaction.
But building an effective customer experience capability isn’t just about applying some analysis to existing data, or building a great interface for a mobile site. It requires a transformation of the business: its processes, technology, employee mind-set and behaviour.
Our work with organisations of all types has enabled us to learn about the differences between successful and failed customer-experience transformations. Broadly, those experiences can be distilled down into seven sometimes fatal mistakes - the “seven deadly sins”.
Many managers enter a transformation with no real vision for the organisation’s future state. Instead, they have a general desire to improve the customer experience and rush into action very quickly. Targets are often vague, devoid of aspiration, and lacking in specificity - a reflection of an underlying fear of failure. Leaders may also prioritise the wrong areas of focus, wasting time setting targets for parts of the customer journey that don’t have a real impact.
Great organisations instead spend significant time up front to define a clear, compelling and ambitious aspiration, which doesn’t necessarily involve becoming a customer-experience leader. Depending on the context, it may make sense for a company to aim at having a best-in-class customer experience or limit its efforts to improving the baseline experience. They also think about how to translate their vision/aspiration into a common purpose for all employees. Great CX is always linked to strong collaboration across silos. A strong common purpose accelerates the necessary collaboration.
Many customer-experience transformations fail because they are not a top-three priority for the CEO or the top team. Without their support, securing cross-functional alignment – crucial for any customer experience programme – is difficult, and transformations lose momentum when internal resistance or apathy materialises.
The odds for success improve when engaged leaders make high-profile commitments to customer experience (such as, making customer experience a top agenda item, allocating significant resources, putting top performers into CX roles) and ensure integration across current internal silos.
Many organisations launch customer experience transformation programmes with no sense of what the new experience will be worth. Leaders of such a transformation will find it hard to secure sufficient resources for needed investments if they don’t have evidence that their efforts will generate business value. More than ever, gimlet-eyed chief financial officers demand a business case for even the smallest changes. And if the CFO isn’t on board, your transformation effort will probably come to a halt.
Making a successful business requires using customer research and operational data to link customer satisfaction with financial outcomes, such as customer churn and new revenue. This analysis will provide the foundation to know what each point of satisfaction is worth to the business.
Many customer-experience transformations begin with the top team’s assumptions about what matters. Are these leaders overly weighting the voices of a few dissatisfied, highly vocal customers who are “squeaky wheels.” Are they seeing the world through their own experience as customers?
Successful transformations are treated as an operational problem, starting with a rigorous attempt to identify those things that matter most to customers. Two factors stand out: Measuring customer journeys instead of isolated touchpoints, and using imputed importance to analyse survey responses.
These methods allow companies to take a targeted, hypothesis-driven approach to a customer experience transformation. They can then determine what matters overall by combining imputed importance, the number of customers touched, the priority level of the customer segments involved, and alignment with broader strategic objectives. It is critical to couple these statistical techniques with ethnographic research to build a fuller picture of “what matters,” especially in settings where statistical techniques may come up short.
CX transformations can collapse even when executives have correctly determined what matters to customers, defined a good target, articulated a clear link to value, and provided strong support. In these cases, the culprit is often a loss of momentum when the project doesn’t deliver impact in the short-term.
Many leaders focus on long-term changes or holistic service redesigns and don’t expect any financial impact from them for two to three years. Employees may become frustrated during this period and disengage, while customers may decide to take their business elsewhere. Moreover, leaders may focus exclusively on the top-line impact - revenue from increased loyalty and reduced churn - to the detriment of equally powerful (often more easily attainable) cost levers, including cost to serve.
Great customer-experience transformations include a balanced portfolio of initiatives (long and short term, revenues and costs) to show success early, sustain momentum, and learn over time.
Many managers tend to think about the customer experience very narrowly. Some excel at designing specific kinds of interactions with customers but ignore the fuller experience, both before and after purchase. Others forget to look at operations through the customer’s eyes. Many focus only on reporting and tracking. The core issue is that they underestimate the importance of the internal cultural changes needed to achieve and sustain a new approach.
Successful cultural change relies on four factors. One of them is formal measurement and performance systems. But employee involvement, role modelling from leaders, and clear explanations of why change is necessary are important, too. Great transformations work across all four at once and spend as much time on the “soft stuff” of culture change and communication as on the “hard stuff” of performance management.
When companies fail to consider opportunities from design thinking - shorthand for a process that is based on deep understanding of the customer and a test-and-learn approach to problem solving - they may not succeed in transforming identified customer pain points.
Good answers often require looking outside of established practices, in particular, by learning from other experiences and industries. That includes a full accounting of the impact of digitisation, which enables automation and the seamless delivery of processes. Great organisations apply the tools of human-centred design to create distinctive customer experiences. And they follow where the evidence leads even if that means breaking with conformity – it is a path to innovation.
Stay on track
Transforming customer experience can deliver higher profits, more loyal customers, and more engaged employees to name but a few. Knowing and resisting the temptations I have outlined above will help you keep your vision and change programme on track to deliver on those rewards.
About Harald Fanderl
A member of the leadership team of McKinsey's European Marketing & Sales Practice, Harald leads the global customer experience service line and the collaboration with the Disney Institute, and co-leads our EPNG work in retail and new downstream. He focuses his work primarily on commercial transformations in contract-based industries and consumer goods, and brings deep expertise in customer experience journeys to his work.
Most recently Harald has helped clients evolve their customer experience strategies from a focus on single touch points to delivering customer journeys, which encompass all customer interactions and have much stronger impact on customer satisfaction and business growth.
Harald has been published in numerous international journals on the subject of customer experience.