When CX was acknowledged as the new competitive battlefield
I am sure you all remember the famous 2015 study by Gartner, which boldly proclaimed that ‘Customer Experience Is the New Competitive Battlefield’. This showed that greater competition and growing consumer power eroded traditional product- and service-based differentiation, forcing companies to seek new, more durable forms of competitive advantage. Within this context, 89% of respondents identified customer experience as a more sustainable source of competitive differentiation, and one in which they would invest in the coming years.
But most CX programmes fail to achieve their objectives
Yet in 2018, 3 years after that, still only 7% of companies state they have derived differentiation from CX. This study by CustomerThink also shows that only 23% of respondents claim they have realised tangible benefits from their CX investments. These are high failure rates in an age when CX talk is tabled, in some form, at the Board of most organisations.
So why are there so many casualties in the CX battlefield? Why do so many CX programmes fail to achieve their ROI objectives? Maybe the sceptics are right after all, when they affirm that CX is only about ‘talking nicely’ to customers in personal interactions and ‘throwing money’ at them to keep them sweet when things go wrong. Indeed I have seen a few companies recently ‘relabelling’ the title of the Operations Director as Customer Experience Director, with the clear mandate to ensure that frontline employees are suitably trained to handle customer conversations and complaints. This is certainly a good start, but not enough to survive in that competitive battlefield and drive full differentiation and ROI.
So what does this mean?
CX is not just a fancy trend which will soon be replaced by something new. I personally believe that no organisation will survive in today’s environment without effective customer experience management. Customers are increasingly demanding and have a lot of choice, so they are becoming intolerant of bad service and suboptimal experiences. Having the best product at the best price is no longer enough, if the overall shopping and service experience are not right.
Three key causes of the failure of CX programmes
So why do so many CX initiatives fail? My experience tells me that these casualties are due to a combination of poor strategy and bad execution, coupled with many execs still only paying lip service to CX.
1. Poor strategy
The key questions are whether organisations have the right strategic tools to design their CX and are basing their decisions on the right insight and data. These need to be supplemented by strong design skills and a good dose of added intuition and innovation to anticipate fast moving social, environmental and technological trends. But there is also a more fundamental matter of understanding what a Customer Strategy is. Many people consider it as a synonym of Brand Strategy or Corporate Strategy, therefore failing to appreciate the importance of clearly defining also how their brand promise or business ambition actually translate in how they engage their customers in daily interactions. They fail to design the target customer experience, which needs to be based on the brand strategic positioning and a clear understanding of the target customer segments’ needs and preferences.
A pivotal moment in my career was working in Barclays’ Group Strategy 15 years ago, as it defined the direction my professional focus would have taken from there. This strategic work had two clear parts: on one side, it defined in which geographical and product markets we wanted to compete and the overall strategic ambition (the What), and on the other, it assessed the fitness of the organisation to achieve those goals (the How). This part of the strategy had a clear focus on the Customer and the paramount importance of building the organisational, people and operational capabilities required to succeed. In today's words: designing and delivering the right customer experience.
2. Bad execution
The most common cause of failure I have seen is failing to prioritise and trying to do everything at the same time. This results in a lack of focus, and very often also of clear accountability. Improving the customer experience takes time, as it requires a carefully managed 360-degree approach to align all the elements that underpin the end-to-end customer journey.
What customers experience when interacting with an organisation is the result of the sum of all the parts. There is no magic wand or miraculous single intervention which will create loyal customers and business value. The solution is only a progressive, continuous programme of prioritised tactical improvements and strategic transformation, carefully orchestrated and continuously revisited through timely Voice of the Customer measurement, operational data analysis and closed-loop feedback.
3. Executive dis-engagement
This is both the glue that binds everything together and the fuel required to continue on the CX journey. The glue is time. Without the right executive conversations, the CX programme will remain a lip-service exercise, with the accountability for its success delegated to middle managers or possibly the Operations Director. Whenever the Board has no real ownership of it, the CX programme is destined to join the long list of the casualties. The fuel is resources and money. Without these, even the best efforts are destined to fail, as transforming the customer experience will require the involvement of people from many different departments, and very likely also investment in new operational or technological capabilities.
In conclusion, a clear focus on the customer experience is essential to create sustainable competitive advantage and business value. However, things don’t happen by chance and CX programmes need to be carefully designed and well led and executed to achieve their objectives and ROI.
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