Tuesday, March 27, 2018

Leadership's Essential Role in Customer Experience

Photo by Tim Graf on Unsplash
Many companies are striving to launch customer experience (CX) programs that will improve their growth, margin, and customer retention. In working with our clients, one of the challenges we see is a tendency to view CX as a tactical effort--something designed to seek out and resolve customer annoyances, particularly in customer service interactions. As a result, company's CX focus can be narrowed to activities like enhancing customer care processes, front-line employee performance, customer care hiring, and call center training. While these are all good and necessary efforts, this sort of myopia misses the point of what CX really is and what it can do for your company.

One financial services client had become frustrated with the lack of CX success. Years of investing in improvements to customer care had yielded little impact to the organization's overall customer satisfaction scores. Although post-call transactional surveys validated that the customer care group had improved service interactions, the relationship surveys across the entire customer base demonstrated little to no improvement. We worked through the numbers: Only 20% of customers contacted the company for service each year, and 80% of those interactions were routine (such as checking account balances), offering little opportunity for the company and its employees to make a strong and differentiating impression.

This meant that just 4% of the company's customers had an annual opportunity to be exposed to those sensitive moments that allowed the brand the greatest opportunity to provide a significant and memorable experience--an average customer would experience such an interaction once every 25 years. That did not mean the company had wasted its time--after all, the improvement in the transactional surveys demonstrated that the customer care group was achieving its goals of improving their interactions. Moreover, the brand recognized the value of minimizing negative customer care experiences since each one increases the risk of diminishing or severing a customer relationship. Nonetheless, the brand could not expect to foster a significant and measurable improvement in customer perception across its entire customer base by focusing only on a small set of relatively rare customer touchpoints.

Mature and robust CX programs not only identify and solve points of friction and dissatisfaction for customers, but they also help to foster a more customer-centric culture. This means not just helping front-line employees to provide better experiences on a case-by-case basis but also encouraging and assisting senior leaders to keep the customer in mind as they make decisions that affect the experiences of vast swathes of customers. Changing the structure of a loyalty program can instantly affect far more customers than training hundreds of customer-facing employees. And a change in return policy can anger a much broader set of customers in a shorter period than can an entire call center full of disengaged call center reps.

Changes to loyalty or return policies are just obvious examples of outward-facing executive decisions that impact the CX of large numbers of customers, but leaders also shape the culture and operation of the organization in a plethora of more important and subtle ways. The goals they set, the performance they reward, the way they balance short- and long-term objectives, the spending priorities they create, the customer-centric behaviors they model, and the products they approve all influence how employees act and thus how customers feel and what they say about the brand.

Consider Uber, the company that came seemingly out of nowhere to swamp the established and protected taxi market in a matter of years, just by providing a significantly better customer experience. Uber didn't win with advertising strategy or content--they won with CX, turning users into advocates. Customers flocked to Uber's on-demand service thanks to an app that called cars to their location, provided a highly-rated driver, permitted cashless transactions, and did so at a better price. But in 2016, Uber hit a significant roadblock that caused a number of its customers to abandon the service.

Nothing changed with the product--the app worked exactly as it always had and the rider experience remained positive--and yet customers quit the company when its long history of dubious leadership behaviors reached a tipping point that many found too much to stomach. Uber saw reduced customer satisfaction, degraded loyalty, and poor word of mouth, the three core measures of brand CX. Uber's leaders had built a better mousetrap but failed to account for how their decisions and behaviors could impact customer perception, retention, and advocacy. Uber's business faltered not because of tactical issues such as rude drivers or poor UI in its app but because leaders made poor decisions--the same advocacy that built Uber began to work against it. (Leaders often forget that advocacy is a two-way street and that brands are as likely to suffer from poor WOM that drags on trust and consideration as they are positive WOM that drives inbound traffic and sales.)

To read more, including six ways CX leaders can "manage up" and help to influence and support better executive decisions and a more customer-centric culture, please continue reading my blog post on Gartner.com. 

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