When Customer Experience and Profits Collide

September 19, 2016
I recently sat through an interesting webinar from a major Customer Experience platform vendor.  They’ve clearly done a lot of research in the CX area and had some great insights to share.  But after the presentation I was left craving more details on why the CX sector is booming yet the majority of its practitioners are reporting that it is not as effective as it could be.

That’s a lot of folks trying to improve the customer experience at their companies. So, why is it that according to this company 72% of CX professionals do not feel that their programs are having a positive business impact?  If you ask CX professionals the most common response is that their programs lack Executive buy-in.  In short, they blame the C-suite for the lack of impact.  That begs the question of why?  Why would the C-suite not care about improving the customer experience?  Aren’t they sitting in the C-suite because they are really smart people that know how to have an impact? If so then why are they not buying in?  Let’s theorize for a moment.
  1. They secretly hate their customers and are too busy rolling around in huge piles of cash (probably not)
  2. A true Customer Experience initiative can cost a lot of money and they don’t believe the ROI estimates (prioritize short term profits)
  3. Customer Experience encompasses not only driving sales but also making other less desirable tasks more pleasant such as downgrading or cancelling a service (prioritize profits)
  4. The C-suite sees more opportunities to drive revenue and profit from other endeavors ( prioritize profits)
  5. It’s just too big.  Sort of like the big banks are Too Big to Fail.  At massive companies Execs could be concerned that a companywide initiative is simply Too Big to Succeed and delegate it to underlings that don’t have the influence to get it done broadly (profit protection)
So, what is an example of each of these items?

They secretly hate their customers

For number 1 the obvious example is Monty Burns -- the wealthy, evil, corporate robber baron from the Simpsons that owns the electric company in Springfield.  But we can throw a shout out here to a real power company such as PSE.  Having been a loyal customer for 8 years (with the occasional late payment) my latest bill included an extra $350 deposit which the power company will kindly hold for me for 1 year at 4% interest while they figure out if I am a flight risk.  It’s probably not a coincidence that the Simpsons creators made Mr. Burns a power company executive.

A true Customer Experience initiative can cost a lot of money

For number 2 it’s pretty obvious.  With a CX/digital transformation project potentially costing in the millions of dollars and lasting years it can be an expensive proposition. For companies that are dealing with slim margins and an unsure economy it’s easy to put it off from a sheer expense standpoint.

Customer Experience encompasses making less desirable tasks more pleasant

For number 3 we have all sorts of real world examples.  For instance, if I am not in a contract with my cable company why can’t I just cancel online?  I can upgrade online to the Quadruple-Play 10,000mps internet connection but I can’t downgrade or cancel. Oh no -- you call in for that.  To be fair there are a ton of examples like this where companies still hold onto the idea that if we make the customer experience to cancel painful enough we will slow the bleed.  Companies that are stuck in this mindset need to be focused on making their product or service more compelling rather than making the ability to downgrade or cancel more complicated.


Customer Experience is trumped by profit

These instances really are the penultimate examples of where Customer Experience is trumped by profit.  For example, Comcast has made great strides with their X1 platform and the plethora of mobile apps they have available that allow you to do everything from restart your modem to watch a movie on demand on your mobile device.  They understand what they should do in concerns to downgrading and having a delightful customer experience but when juxtaposed against the reality of the loss of profits the decision is probably not hard to make it a deliberately painful process. Which leads me to a formula I came up with for measuring how much emphasis a company is likely to put on the customer experience.  I’ve included it below:
 
C * A = CX

C = Competitiveness of the market on a scale of 1 to 100.
A = Ability of Customers to Move Services. A scale of 1 to 100. 1 being a service that requires contracts with stiff penalties for cancelling. 100 meaning you can cancel at will with no penalties or repercussions.
CX = Overall Likelihood of a Great Customer Experience Score

It’s a simple formula that basically says, the more competition a company has and the lower the barriers to switching services the more likely that company will offer a superior all-around customer experience. If you have no competition there is really no reason to focus on a great customer experience. If your customers are stuck in a contract there is also the potential for less urgency in creating an exceptional customer experience.

In the case of number 4 above in which your project is simply not prioritized there are only two real options. You’ve either been outgunned by a more attractive ROI project or your champion or salesperson is not selling it.  Either way you’ve got work to do here to increase the priority of the CX initiative.  Start by listening to why these other projects are higher priority and see how you can tie into the train of thought that is currently dominating the priorities in the C-suite.

It's Just Too Big

If you are struggling with number 5 you may be need to slice off the project into chunks.  Having worked at some very large companies it’s easy to see that this could be a concern.  The sheer size and number of offerings at certain organizations might mean this makes a lot of sense.

In conclusion, despite impressive gains in the number of professionals actively involved in the Customer Experience field their efforts are not bearing as much fruit as possible.  The majority of practitioners point to the C-Suite but I believe we should first point to the profits and then follow that path where it leads before making our way to the top.
 CX