The cost of customer experience

Read time 10min 30sec
Waldo Marcus, Avidity Group
Waldo Marcus, Avidity Group

Driven by unparalleled insights, innovation and increasingly fierce competition, it certainly appears as if the golden age of the customer is upon us.

Life used to be much simpler: you had a product, or provided a service, and if people wanted it, they'd buy it. There was little in the way of visibility into customer satisfaction, other than the fact that they kept buying your product, or stopped. There was also a lot less choice. The focus, it can be said, was squarely on the product. Customers were seen as targets to which something could be sold.

It was only after World War II that things started to change. There were now more products than ever before, and, so the thinking went, there really should be some effort to understand what was going on in the mind of the customer. At the time, a man named Ernest Dichter had an unusual skill set: he was interested in marketing, but also had some psychology training. It was in the 1930s when Dichter first struck upon the notion that people buy products because they're in some way an extension of what they believe. It could also mean people want to buy something because it reminds them of an earlier version of themselves, the way a convertible car, say, will remind a (probably middle-aged man) of his youth and long-forgotten freedom.

This was getting beyond the product into a person's head, and in some ways laid the foundation for much of what goes on in marketing today.

Supply chains and delivery methods are now vastly improved, and, with increased competition, differentiation is becoming much harder. There are now also well over four billion of us on the internet, and many of us demand to be addressed by name and prompted when our detergent is running low.

Business as usual

While there are pockets of customer experience (CX) excellence, what's surprising is that so many businesses continue to do things the way they've always done them. Large enterprises continue to act like they have no idea who you are, despite you being a customer of theirs for the last 20 years. There are different reasons for this, but perhaps part of the problem is the proliferation of data, and the inability to harness the insights.

It's into this maelstrom that the customer and marketer are pitched, one consuming, the other recording. Will we ever get any better at this?

One measure of how seriously companies are now taking the customer is the rise in the number of customer experience officers. The position first emerged in the United States and has slowly spread around the world. There aren't a huge number of them in South Africa, possibly because companies are still figuring out what the role should entail.

Customers are no longer impressed at receiving an SMS or email with their name on it; they are looking for tailored offerings that show that companies know them.

Paula Sartini, BrandQuantum

Customer experience appears to be an atomised position - everyone's aware of it, but it's seldom anyone's sole job. The danger of this is that nobody ends up doing it. And if it's someone job, it's more likely they've been in the company for years, and knows everyone by name. This is because it's a high-risk job, and you'll probably be stepping on a lot of toes. CXOs need to ensure that all information about the customer experience flows through them, so they're in charge of this data set. Another measure of how seriously a company takes the position is the resources they apportion it: you can't be very effective with no budget, and no staff. It's said that a favourite trick of those who want to get rid of the CXO is to shuffle them off to a distant and dusty department to live out their days, which proves it's still largely a political game. But this is changing. The customer has never been more important, and the experience they receive from all parts of the organisation is now firmly on the C-level's agenda. Expect to see the appointment of more CXOs who will report directly to the CEO and the board.

What are leading companies doing, and what can we expect this year? Artificial intelligence paired with customer data can now be usefully deployed in the enterprise. Companies, though, will be challenged by how they blend humans and chatbots to provide a seamless service. Leading companies will also be making sense of the customer data they already have, which will assist both bot and human in quickly discovering context in customer conversations.

Deeper understanding

Waldo Marcus is the chief customer experience officer at the Avidity Group, which markets itself as a customer experience specialist.

Asked how companies can deliver a better customer experience, Marcus says the first step is to understand exactly what it is the customer wants and expects, instead of just assuming we know the answers.

Quoting from the Customer Experience Insight website, Marcus says customers will be best served by:

  • More personalisation: Most customers still want a one-on-one experience. The challenge is to create one in the growing age of anonymity.
  • More options: Besides a real human on the phone, customers also want to be able to interact with a company through other channels, such as from its website or through social media.
  • Constant contact: Companies need to work out which information to provide to a customer, as well as through the channel they prefer.
  • Listen closely, respond quickly: Are you acting on your customer feedback? If so, tell them about it, or they'll stop giving feedback.
  • Giving the front-line more control: Customers now expect service and sales representatives to be able to handle anything - and have the authority to satisfy customers.

Paula Sartini, founder and CEO of branding specialists BrandQuantum, also says companies need a deeper understanding of what's important to their customers, and should realise that not all customers want exactly the same thing. For some, the speed of the product or service is important, while others may see price as the determining factor, for example.

Sartini also mentions that customers have been spoilt by services such as Uber, and now expect the same type of superior experience from other companies, across all industries.

Sartini quotes Walker, a US-based customer experience consulting firm, as saying CX will replace product and price concerns by the end of this decade.

"Customers are no longer impressed at receiving an SMS or email with their name on it; they're looking for tailored offerings that show that companies know them," she says.

One way of thinking about this is to divide your customers into different segments, but probably not according to demographics. Jacqui Conradie, a senior manager, digital transformation: industries & go-to-market at Deloitte Africa, says customers making a recurring payment, for example, don't need a personalised customer experience, nor do they expect one. Others, though, do want a high-end experience, and, she says, the trick is knowing what each segment wants from each point of contact. And if a company isn't able to engineer a customer experience touchpoint, 'they should just make sure that it's positive'.

Rise of the CXO

How do you determine if a company needs a customer experience officer? Marcus says while almost all senior executives believe a superior customer experience will be to their competitive advantage, under 10% of customers feel they're getting the experience they deserve. He says chief marketing officers are often tasked with delivering the customer experience, and although marketing and CX are closely aligned, marketers are mostly concerned with sales, perhaps to the detriment of the customer experience. The CXO is not only focused on revenue, but how customers experience a product or service before, during and after their engagement with the company.

Sartini suggests that while some companies have appointed CXOs, this isn't necessary for all companies, many of which could get by ensuring that departments across the organisation meet the customer's expectations.

Conradie agrees that there's no decisive answer, and it will depend on, among other things, the size, type, industry and culture of a company.

What's important, though, is someone who champions the customer. Conradie says in mapping customer journeys at established organisations, 'we often notice the disturbing trend that the journey follows the internal organisation structure rather than the ideal customer experience'.

"An organisation should look at the journey as an integrated whole so that there's an opportunity to fill any gaps and make sure that whoever is fulfilling the role of the customer champion can really be objective when it comes to breaking down the siloes within a business to create the best possible customer experience."

Drowning in data

Many organisations have mountains of data about their customers. How should they make use of it?

Marcus suggests companies ask some fundamental questions: what is it they want to achieve with this customer data? What's motivating the consumer to engage with you? It's not all about revenue, he says, but rather on creating a sustainable relationship. Other questions to consider: why are customers spending money with our competitors rather than with us? Where are our customers on their spending cycle? What kind of personal data are we gathering from them?

Conradie says while customers may come into contact with marketing and sales, they will also 'touch' other parts of the organisation. Analytics can help track these interactions.

"Rather than ask what kind of data needs to be harvested, marketing executives need to ask what problem they're trying to solve and then glean the best insights from the data available to them to make better decisions in pursuit of solving a specific problem."

Conradie suggests the marketing organisation pay more attention to metrics such as 'affinity', 'engagement' and 'actions' instead of likes, clicks and views.

Measuring success

A key part of the customer experience management process is around how it's being measured.

Marcus says there are various tools available, and 'it depends how far down the rabbit hole you want to go'.

Many companies use a net promoter score (NPS), or how likely you are to recommend the company or product to someone else. The problem is that it's a bit of a blunt axe: your detractors aren't just non-promoters. Some people are also willing to be detractors and promoters - at the same time - which also proves how fickle people can be. Laying down an NPS system is also costly and time-consuming, and once it's installed, companies feel bound to use it.

For Marcus, the best option may be a mix of methodologies, such as NPS, customer satisfaction ratings, or loyalty drivers, the last of which, he says, change with every generation.

"The idea is to align your measurements to more than just revenue and the direct feedback customers are giving you," he says, adding that perception metrics will be a good start to develop a base for measurement.

It's also important to remember that while a superior customer experience is important, it shouldn't be pursued at all costs. If it adds an extra cost to the product or service, will the customer still be interested? And what is it costing the company? If a company bends over backwards every time they deal with a customer, it may prove to be unsustainable in the long run. Companies should instead aim at providing a uniform level of service.

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