Thursday, July 20, 2017

Different Brands Have Different Reasons To Improve Customer Experience

Photo by Igor Ovsyannykov on Unsplash
You likely hear a lot about customer experience these days. Business media is full of articles about CX, and the data we collect at Gartner demonstrates that CX metrics are among marketers' most important. In addition, business leaders tell us they are investing more in customer experience.

But why? Why is CX essential for your brand? What will improving CX do for your various stakeholders--not just customers, but employees, leaders, and investors, as well?

Can you answer those questions with something other than platitudes about the importance of happy customers? Because if you cannot define, in a very real way, why CX matters to your brand, then you cannot make others inside your organization care, secure collaboration, obtain funding, or encourage any meaningful change.

Many Brands Have Clear CX Opportunities

Different brands have different potential benefits and expected outcomes in CX. There no single set of CX benefits or metrics that will fit every company equally. Understanding your brand's unique situation, challenges, and opportunities is a good place to start when defining a CX vision and requesting necessary commitments from leaders and peers.

For some brands, improving their CX offers relatively clear and obvious advantages. For brands in contentious marketplaces with intense competition, fairly easy switching, innovative challenger brands, frequent repurchase actions, and a diverse set of customer selection criteria, the need for CX initiatives and investments can be easy to discern. Brands in these sorts of marketplaces--that is to say most brands--need to focus on CX because:
  • Competitive differentiation improves demand: Brands are created through experiences--what the brand does, not just what it says. Through disciplined CX processes, you can understand what your customers value and work to meet those expectations better than your competitors.
  • Strong experiences foster loyalty: Brands find it less costly to keep than to acquire customers, and they are more effective at cross-selling to current customers than gaining new prospects. Providing experiences that customers value builds relationships, diminishes churn, improves share of wallet, and generates higher margins.
  • Powerful customer relationships generate robust word of mouth (WOM): Brands create the greatest breadth and depth of WOM by meeting and exceeding customer needs and producing elevated levels of satisfaction. In our ad-blocking and ad-skipping world where consumers are less trusting of brand ads and content, credible person-to-person brand advocacy between those in established relationships delivers greater awareness, consideration, inbound traffic, conversions, and sales.

Airlines and the Question of CX Relevance

But what if your brand is in a different sort of marketplace? One with high barriers to competitive entry, greater customer switching costs, less competition, perceived parity in offerings, sparse repurchase, or consumers obsessed with price. In situations like these, the standard and obvious benefits of CX are, well, less standard and not so obvious. Utilities with little competition, life insurance companies with infrequent repurchases, telecoms with significant perceived barriers to switching, and other brands may question the benefit of increasing (or risks in diminishing) customer loyalty and advocacy.

United's customer incidents and PR crises provide an excellent lens to consider the CX challenges faced by air carriers. In the past decade, United Airlines has suffered two CX disasters so infamous that they each have their own Wikipedia entry: "United Breaks Guitars" in 2008 and this year's widely circulated video of a bloody passenger being dragged from a flight. But while each generated an enormous amount of publicity, there is no evidence either situation severely affected the airline's business in any significant or lasting way.

Some people claim United's stock decreased in the days after April's incident went viral, and they're correct--but stocks move on a daily basis for all sorts of complicated reasons, and within a couple of weeks, United's stock was trading no better or worse than its competitors. There is no indication this incident hurt the airline's stock price, and even if it did alter the price for a few days, executives don't worry about or base decisions on daily fluctuations of stock value. The same was true in 2008 when pundits claimed the viral video would damage United's business, but in reality, the company's stock outperformed the competition following that PR incident.

Nor is there evidence of a significant change in flyer preference or purchase behavior. I wrote back in April that United's well-publicized incident would not adversely impact demand for United's flights, and it appears I was correct. For the three months ending in June, including the month of United's passenger debacle, the company "boosted ticket sales even as fares climbed higher," resulting in a lift in both revenue and profits. Customers did not abandon United after seeing the video of the doctor dragged from the plane, just as they did not quit the airline after seeing the funny music video about a broken guitar.

I am not suggesting these incidents didn't cost the airline. As I wrote in April, this event elevated expenses for United, such as the value of the financial settlement offered to the wronged passenger and the lost productivity dealing with the sizable PR crisis. But in the end, United did not suffer lasting business or economic damage from the incident, despite the fact thousands of people swore in YouTube comments, tweets, and posts they would never again book a flight with the airline.

Does this mean air carriers don't need to worry about CX? Is there no upside to improving customers' experiences or downside to repeated violation of customer expectations? No, but the CX equation is different for brands in verticals with unique situations.  

Friday, July 7, 2017

Your Brand’s Unique Future In Customer Experience

I
Source: Iker Urteaga, Unsplash.com
read a lot of articles every day about the future of customer experience (CX) and how cutting-edge technology is about to change the world for every marketer. A lot of folks are eager to tell you what your brand should—no, must—do to prepare for the future.

The future of CX is artificial intelligence. Or it’s chatbots. Or augmented reality. Or voice-operated devices. Or wearables. Or virtual personal assistants. Or the Internet of Things. Or blockchain. Or personalization. Or visual search. Or VR.

In fact, the future of CX for your brand may be all of these things. Or not. No blogger or tech journalist can answer that question for you, because the answer lies not in the tech but in your brand’s ability to ascertain the unique needs of your unique customers.

Brands overly focused on the potential of hot, new technologies rather than on the needs of their customers fall into a trap I call “Lego marketing,” where CX solutions seem to be preconfigured blocks that can simply be snapped into place to create success. Snap—we launched a Facebook page because consumers will engage with our marketing content for free. Snap—we’ve launched a corporate blog because consumers crave branded content. Snap—we have a Google+ page because our agency said it was the thing that will topple Facebook. Snap—come check out our new Periscope channel because live video is the new black, and our brand is not about to be left behind!

Snap, snap, snap. All the pieces click into place and the result is—a marketing program that looks pretty much like everyone else’s. Sure, the colors of your bricks are different from your competitors’, but the strategies and tactics are virtually indistinguishable. Unfortunately, so are the results. Marketing budgets have risen to 12% of revenue according to Gartner's 2016-2017 CMO Spend Survey, and despite this, top CPG brands are losing market share and value, Americans find brands and companies less truthful, and ad blocking is on the rise (and will soon come native to Chrome and Safari).

Meanwhile, companies that lead with unique and differentiated CX are eating the world. Apple, Starbucks, USAA, and the other brands you love didn’t achieve that special relationship with you by chasing new technology and snapping it into place like everyone else. To learn more about differentiated brands are developed with differentiated CX and how the road to success doesn't start with technology but ends with it, please read my complete blog post on Gartner.com.

Wednesday, June 21, 2017

Learn From the Rise and Fall of Uber's Customer Experience

Source: Pexels
For a private company, we sure know a lot about Uber. We know its meteoric rise to become the most valuable "unicorn" in the world. We know its well-publicized issues with corporate culture. We know Uber has a tremendous void in leadership at the moment, with no CEO, COO, CFO, or CMO. And we know the company lost $2.8 billion last year and added another $708 million of losses in the first quarter of this year.

It is no secret that Uber is a troubled company. Of course, the story of this company is far from complete. It still is sitting on piles of cash, has a lot of talent, and retains many customers. But gone are the days when the word "Uber" conjured up overwhelmingly positive sentiment about the service and every other startup positioned itself as "the Uber of..." a different vertical.

Even without knowing the end to this tale, the explosive growth and subsequent trials of Uber provide a way for us to recognize the power and complexity of customer experience (CX). At a time when many leaders think CX means better marketing content, offering more emotive customer care, or diminishing friction within processes, Uber demonstrates that CX is about all that and much more.

Gartner defines customer experience management as “the practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty, and advocacy." That's our side of the equation as business and marketing leaders--how do we manage our organizations to craft strong, closer, resilient, mutually beneficial relationships with customers.

Gartner further defines customer experience as "the customer’s perceptions and related feelings caused by the one-off and cumulative effect of interactions with a supplier’s employees, systems, channels or products." That is the customer's side of the equation--i.e., the important side. It is what our prospects and customers think, feel, and say about the brand as a result of their every interaction.

With these definitions in mind, we can see how Uber rose from a scrappy, small startup to a mammoth company that swamped an established traditional industry in a matter of a few years. And we can also see how the company's well-known PR issues are now rocking the company, causing people to delete the app, and putting Uber's enormous valuation at risk.