Is “Customer Experience” the Only Business Value Measure That Matters?

Cross posted from my blog at SAP Community Network…

Is “Customer Experience” the Only Business Value Measure That Matters?

If you attended the recent SAP Customer Experience Workshop or were following the tweets from #SAPcx, you might get the impression that this is what Lior Arussy of Strativity Group was asserting.

Focusing on customer experience sounds nice, you say, but is it really the most important? Lior points out that one of the biggest problems any company faces is the commoditization of its offerings. It’s a matter of time before some competitor comes along that can provide a similar or substitute product or service at a lower cost, eroding your company’s margins. In the end, a superior customer experience is the only long term way to differentiate your brand from your customers.

Indeed, focusing only on enhancing customer experience is a transformative way of thinking: if an initiative or activity by the company or an employee is not directly contributing to improving the experience of customers, then why are we doing it?

To hammer this point home, Lior posed the following question and answer:

In other words, as companies hit success and strive to continue their own growth, they are in fact driving commoditization of their own products and services when they:

  • Provide only incremental improvements of their products
  • Fight for increasing market share
  • Scale to increase volume
  • Focus on reducing costs to maintain margins when moving down market,

This is due to the fact that you start acquiring more unprofitable customers while neglecting to improve the experiences of your most profitable customers.

The actions above are a standard evolution for companies that hit ultimate success of their product or service and strive to continue growth beyond that point.  Without doubt, there is some business school calculation that can determine the optimal point at which companies should focus again on blue water innovation and disrupt your own business, as opposed to incremental improvement. But perhaps we can stave off this point longer by striving to continually improve the experiences of our best customers.

One of the reasons our companies lose focus on customer experience when they are focused on scaling is the fact that we tend to organize departments around competencies rather than customers. The managers of these departments are then measured by statistics such as “average time spent per customer call” in the call center, which incentivizes cost efficiency, but not necessarily a more enjoyable customer experience. Or, maybe managers follow the idea that each customer contact is a revenue opportunity, and agents are now asked to hawk “special offers” for which customers are “eligible” when in fact the customers were calling in to fix a problem with the company’s service. It’s for this reason that I now dread calling my credit card company.

So, maybe you are willing to agree that a relentless focus on improving the customer experience is a most important goal. Measuring  customer experience is not an easy thing. First, there is a significant disconnect between how good employees think they are doing and, and how good of an experience customers actually had.

Lior points out that, in the end, all a person has is their memory. If a customer gets lousy service, then they have a bad memory, which they remember for a long time. If a customer gets the service they expect, they retain no memory of the experience, which doesn’t help your brand either. To create a good memory, you have to exceed the customers expectations.  It is these good memories that define better customer experience, which means your company has to strive to continually exceed your customers’ expectations.

One of the ways Lior measures customer sentiment is through their behavior towards the company: are they neutral, a detractor, or a promoter.  Lior mentions that often focusing on experiences that create more promoters in the population of customers is the best investment, and that means finding more ways to exceed the expectations of more of your customers and thus create more good memories.

The slide above is worthy of 5 different blogs. In truth, while I found the entire workshop to be transformative, but my excuse for spending two whole days at the workshop was because I was looking for the CIO perspective in improving customer experience.  In the end, its clear that the CIO is a key figure in a few ways.

First, do your customer oriented business processes and supporting systems include listening for cues to the customers emotions.  Do they provide capacity for personalizing the customer’s experience? This can be as simple as understanding the emotional reasons why customer come in contact with your company in the first place, and for capturing information such as birthdays, and names of children.

Second, your employees that work with your customers all need access to the same information about the customer – that 360 degree view that us marketers are always tweeting about.  Its this common base of information that also provides the ability to break through departmental silos – something IT should be good at.  And once they have this view, your employees need sufficiently flexible processes that allow them to solve customer needs and delight your customers by exceeding their expectations.

Third, the company IT department and the CIO are in the unique position of being able to look at the whole of the company from the customer’s perspective. While CEO engagement is typically required to get all sides of the business to properly focus on enhancing customer experience, the CIO often has channels such as the company website where they can develop a single integrated experience for the customer. The IT world is evolving such that CIO’s need to spend less time managing technology, and can instead focus on business transformation and innovation. CIO’s can add competencies such as design centered thinking to their teams. Combining customer-centered design into the companies business processes can go a long way to helping the entirety of the company to focus on enhancing customers’ experiences.

If you wished you had been able to attend this workshop, fear not. You can read the Tweet proceedings on Storify to get an idea of what the speakers shared. In addition, we recorded a special session of SAP Radio with a panel that included Dr. Henry Chesbrough, Ray Wang, Michael Krigsman, and Reza Soudagar.

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