Many of us are happy to see the back of 2022. But are you ready to deal with the scars that the aftermath of the pandemic, the disrupted logistic lines, the ongoing war, and the cost of living crisis have left on customers? Are you ready to face the challenges of 2023 and the transition to a more data and AI-led way of doing business?
There is a difference between working IN the business and ON the business. So is your 2023 customer experience plan one that keeps tabs on ongoing tasks or does it include strategic aspects that will help the business in strategic terms?
Moreover, this may be one of your most important plans as many businesses are on the hunt for ways to reduce costs and some CX programmes may be the target of cost-cutting. In fact, Forrester predicts that one in five CX programmes will be cut this year. And why not?! We know that most businesses pay lip service to customer experience and that most CX programmes fail to show a linkage to financial performance. We also know that many programmes that started as CX programmes have now become largely measurement programmes, which often don’t deliver insights that people trust or are able to use meaningfully and don’t contribute to the bottom line. So this year, you really need to make your efforts count!
Of course, the task is not easy. With the long wait times to get hold of someone, record levels of customer complaints, and customers making customer service employees bear the brunt of their frustrations, this is far from the best environment to work in.
What is also important to note is that, with the cost of living situation, unsurprisingly customers will be more cautious, looking for ways to save money and as a result customer loyalty will be put to test. Research by the Data & Marketing Association (DMA) found that 41% of consumers claim that they feel less loyal to brands and companies than they did a year ago (in comparison to 34% in 2020 – that’s a 20.6% increase).
But don’t despair yet. On the positive side, we know that in this day and age, customers wield a lot of power so customer experience will continue to be important and customer insight – done right – is the best possible guidance for strategic decision-making and operational planning. Besides, as far as retention is concerned, you’d have the advantage of people’s bias to favour the status quo, wanting to retain the habits they have built up (saving them energy) and be loyal to the brands they love (the consistency principle).
So here are seven strategic activities that I believe should feature on your CX plan for the year:
1- Work with finance, sales and marketing
Undoubtedly, just like customers will re-evaluate where they spend their money, so will businesses. With the c-suite under pressure to examine spending and return on investment, I fear that many will cut on the wrong places. They may try to cut the human element from the areas that were actually driving business or cut vital CX initiatives aimed at growth or customer retention. The good news is that data from research on the winning strategies from past downturns is on your side.
In their HBR article “Roaring Out of Recession”, authors Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen reveal research on 4,700 public companies for the years before, during, and after a recession in the period between the 80s and 2002 (the last recession before the 2008 financial crisis) and they found the winning strategy to be focusing both on growth (market development and asset investment) and efficiency. Only 9% of companies though opted for this type of strategy. And the worst strategy? That’s focusing both on employee reduction and efficiency.
Similarly, researchers David Dixon, Sebastian Shapiro, and Nicole Wolf from the business analytics firm Marketscience conducted a comprehensive economic analysis of the last five major recessions just prior to the COVID-19 pandemic. They also found that while spend indeed has to be cut, a winning strategy for companies is to spend with the customers in mind. Their models show “customer satisfaction as the primary driver of long-term base sales” and the “detrimental effects from a cut in spend on operations and customer experience will long outlast the recession”.
They say that in science, the fact that several studies come up with similar conclusions is a good thing. So check them both.
What this means is that:
You should work with finance to find ways to show how customer experience impacts what finance measures. You should also ensure that CX initiatives are aligned with the overall business strategy and that if cuts are to be made, those won’t be in areas that were actually driving value for the customers and as a consequence – for the organisation. For more practical advice on this check Maurice FitzGerald’s posts “CX finally fits in Finance”.
You should also work with marketing. Some of the tools and data that customer experience professionals (should) use would also be of help to marketing teams. For example, research on what customers want the most, what actually drives their behaviour, what are their unmet needs, what are the unmet needs in the market, what are the hidden (behavioural) segments in the existing customer base, etc. – this would be data that can be useful in marketing activities. In addition, a tool such as facial emotion recognition can not only help evaluate customers’ authentic reaction to their digital or in-store experience but also their reaction to marketing content. And then there are AI and machine learning tools and capabilities that can help improve customer acquisition and retention.
You should work with sales. The way I see things, CX is about customer science. There is the science about research, measurement, and science about people’s behaviour. Understanding what drives customer behaviour can help both customer experience activities and sales and marketing. For once, particularly in B2B, I’ve seen that salespeople spend a big proportion of their time resolving issues on behalf of their clients. So resolving the root-cause problems for these issues and creating a reliable and effortless mechanism for customers to use customer service people to resolve these issues will free more time for salespeople to do sales. Then CX people can help sales by doing a “sales audit” and find the unconscious drivers of successful sales. For example, I read somewhere that typically, salespeople attribute successful sales to things they did well and unsuccessful pitches to things outside their control. I certainly sympathise with this finding as upon reflection, we did exactly the same in our company. However, there could be some small, behavioural science principles that could improve sales conversion that customer experience people may find during their sales audit. And then, just like with marketing, potentially, Machine Learning could help. In the above-mentioned article, I shared the story of how Udacity co-founder Sebastian Thrun noticed that some of his salespeople were much more effective than others when replying to inbound queries in a chatroom. He realised that their chatroom logs were essentially a set of labeled training data. They used the data to predict what answers successful salespeople were likely to give in response to certain very common inquiries and then shared those predictions with the other salespeople to nudge them toward better performance. As a result, the salespeople had increased their effectiveness by 54% and were able to serve twice as many customers at a time.
2. Make more use of data, AI / ML and behavioural science
In activity #1, I mentioned customer science, machine learning and behavioural science. We see customer science – the fusion between data, AI and behavioural science – as key to company competitiveness in the future. They say data is gold and the fuel to the new economy. Of course, that’s true only if it’s collected with purpose (collecting hаy to find a needle isn’t the best strategy) and if it’s put to use. If you don’t have a plan yet for what data will be most beneficial for you to find more about your prospect audience, personalise your pitch or marketing content towards them and then personalise their experience – it’s about time you start planning the type of data and data infrastructure you need to be more competitive. We call this a “magic wand workshop”.
My objective for last year was to find the right partner who could supplement our offerings with machine learning capabilities and in doing the research I found that the likes of AWS could even sponsor these types of activities for start-ups and other small organisations in their early days of using cloud-based data infrastructure and machine learning capabilities. So you may find that these activities may not be as cost-prohibitive as you might think.
While data pools and machine learning may seem like too long-term when you’re under pressure to deliver this year, they are well worth it. They say that AI won’t replace managers, but managers who use AI will replace those who don’t!
Still, there is something else you can do with data to get results this year. Enter predictive behavioural analytics.
As you know, the challenge with existing surveys is making the sample representative, overcoming survey fatigue, and even in the best scenario you are surveying no more than 20% of your customer base. That may still be good enough to take some actions, but with predictive analytics you can do a whole lot more. With predictive analytics, you can take the information from your surveys, and combine it with operational data to find the cumulative key moments that predict how likely are customers to feel, how likely they are to buy from you again, remain customers, or defect. This extrapolates the knowledge you have on the customers you surveyed to 100% of your customer base.
Armed with this information you can focus your sales team’s attention on the customers most likely to buy and your retention team’s efforts toward those customers most likely to churn. And this is not just about efficiency. This approach has been tested with many organisations and the results were always 15-30% better than their traditional non-targeted approach. In one case, ARPU (average revenue per customer) increased by a whopping 79%.
Notice that I started with predicting how customers are likely to feel. If you already have a predictive model but it that doesn’t include emotions, adding a module for emotions improves the accuracy of the model. This is important as last year I published a whole book with research showing the value of emotions and the strategies to create an emotional connection with customers.
And what about behavioural science? Well, behavioural science can a) point you to the type of data you need to collect based on the principles of customer behaviour and b) help you make use of the data coming out from the model to design the right interventions, marketing campaigns, or nudges to increase acquisition, retention, and ARPU. If you haven’t taken a course yet, now is the time.
3. Find the real value drivers in the experience
Whether you are ready to use predictive CX analytics or not, you still need to find what are the key value drivers in the experience. Too much has happened in the last couple of years and chances are that the drivers of your customer’s behaviour may have changed. I remember how we did research with one of the largest shipping companies during and after the last recession (the financial crisis). We did models on many customer segments across the world but we found something in 2010 (the year after the recession) that was consistent in all models but nowhere to be seen in 2009 (the last year of the recession). There was a big change in the experience and the market! The company used these insights to create a new offering and as a result of this and other initiatives NPS increased by 40 points and shipping volume increased by 10% over the course of 30 months.
You may have your VoC programme but does it provide you with the insights you want? Are they seen as reliable and trustworthy around the organisation? Do they drive action and results? If the answer is “not quite”, doing more of the same won’t get you better results. Many will resort to changing the vendor but the issue may not sit with them. I’ll tell you why.
I see two main issues with most organisations’ measurement and VoC programmes:
First, if you don’t measure of haven’t included emotions in your models, then not only the results may not be a good representation of the real world but could be missing the biggest drivers of value or being outright deceptive. (You can read about how listening to customers may be deceiving in this article.)
Second, most programmes measure no more than 10 or 20 aspects of the experience. This is more than enough for ongoing measurement, once you’ve found the top 3-5-7 key drivers of value for the different segments, but given that so much has changed over the last few years, you may need to investigate a wider array of customer experience aspects to find the golden nuggets that drive customer behaviour. Some of those may be emotional or working on a subconscious level (i.e. customers not saying that these are important but in fact driving customers’ attitudes and behaviour towards organisations). You can read more about finding the emotional and subconscious drivers in this article.
As so much has changed, it is probably worth checking whether your VoC programme is still measuring the right aspects of the experience, i.e. the ones with the biggest effect on customer behaviour and attitudes towards the organisation.
4. Focus on creating emotional connection with customers
My several-month-long research with data collected from some 18,537 customers of 24 large organisations from nine different industry sectors, conducting predictive analytics analysis on 59 customer groups, showed that emotional attachment is by far the biggest driver of value for organisations, compared to the traditional customer journey touchpoints that organisations are so focused on in their journey mapping activities. And I’m not alone in this finding (in science, that’s a good thing). Researches from Motista and MBLM also concluded with similar findings. You can create emotional attachment through product design (check Don Norman), through interface design and UX (check Aaron Walter), through brand & marketing (ask just about any marketer but also check this research with data from 1,400 case studies of successful advertising campaigns), customer services and customer experience as a whole.
Yet, despite the overwhelming scientific evidence, few organisations have a data- and science-based strategy for how to evoke targeted emotions. That’s a Big Miss. One of the reasons why emotions don’t come up on business radar’s is because few organisations include them in their research and measurement mechanisms and that also leads to a distorted view of the world and potentially sub-optimal investment of resources and effort.
So this year, bet on science and make sure that intentional efforts towards creating an emotional connection with customers are part of your CX strategy plan.
5. Personalising the experience
One of the ways to create an emotional connection with customers is to show that you know them. After all, how could a customer feel some sort of a relationship or connection with an organisation which doesn’t show that it knows the customer and that it values its tenure with the organisation.
Personalisation takes this concept a step further and it ensures that the organisations tailors the experience to the customer. And this is not a “nice to have” concept. Customers are expecting it, looking for it, and shopping more where they get it. Bain & Company’s data shows that leaders in providing personalised experience have two to three times higher conversion rates and get a 5-10% uplift in sales compared to control groups.
There’s been talk about personalisation for so long that now, with the rise of using AI algorithms, people start to talk about the individualisation of the experience.
Leaders in providing personalised experience have two to three times higher conversion rates and get a 5-10% uplift in sales.
There is still a lot of room for improvement. Reducing under-relevant over-communication springs easily to mind (I could see some companies sending communications even on Christmas…). In fact, a recent HBR study found that virtually all (99%) of the respondents considered the integration of customer data into their business processes to be very/extremely important, yet only 2% believed that their organisation did so extremely successfully, and only 17% very successfully.
So, if doing more with data to personalise (individualise) the experience is not part of your 2023 CX strategy, you should think twice about it!
6. Work on the employee experience
As I said at the beginning, many of us were happy to see the back of 2022. That was the year that coined the terms “The Great Resignation” and “quiet quitting”. Those can’t be good terms in the context of employee engagement.
This creates the necessity to give priority to employee engagement, invest more in employee research and employee engagement activities. Just like the CX function can work with finance, sales & marketing, it can also work with HR using its toolkit. Similarly to how predictive behaviour analytics can be deployed to find how customers are likely to feel and who is in danger of attrition, those can be deployed to flag employees with cumulative hard shifts or other factors that lead to higher propensity to leave the workplace.
And what are the most important emotions linked to employee engagement? What are some of the practices that organisations can adopt to evoke those? Well, you can read about those in this article.
One thing that organisations can do that can improve both the customer experience and employee engagement is to deploy AI-powered analytics into the contact centre.
David Wasserman, senior director of workforce engagement management at Genesys argues that leveraging AI as an enablement for the quality management and coaching in contact centres can alleviate some tensions with employees during appraisal, feedback and coaching sessions. He points to the fact that evaluating agent interactions with customers is mostly based on supervisor listening to just a small number of interactions and research has proven that humans evaluate those interactions in inconsistent and biased way. The result is friction between supervisor and employee that may lead to turnover.
Deploying AI-based analytics in the contact centre will allow the organisation to evaluate all interactions, leverage speech analytics to provide sentiment analysis, emotion detection and automatically point staff members to videos to improve certain skills, e.g. empathy, effective questioning, consultative selling, etc.
7. Embed CX in the culture of the organisation
At the beginning of my career in the world of CX, I didn’t like the word “culture”. It was too vague for my young self eager to drive concrete actions (after all, that was something us consultants were typically being blamed for). It was also difficult to measure and put value against. I remember though, how in those early days, my colleague Kalina Janevska, equally young and eager as me, asked one of our clients which of the service offerings we provided to them proved to be most helpful. The client was a big telecom in Nigeria who we had recently helped to implement a customer experience transformation programme. The answer was a bit of a surprise to us. The client didn’t name a particular service as the most useful but said that it was the staff listening to us during all the meetings and workshops that changed their perspective, changed the lingo of the organisation and galvanised the way they do business vis-à-vis to the customer.
Now, from the distance of time, I have seen that culture plays the most important role for the long-term success of CX within the organisation and the financial benefits that come with it. The thing with large organisations is that people get moved around a lot or leave, strategies change and so on. Teams get assembled and dismantled on yearly basis. So I’ve seen that organisations that invested in training large and diverse teams into the concepts and tools of CX are reaping the long-term benefits several years down the road. CX is thriving and so are the people we’ve trained. They many have changed roles or been promoted but still retain their customer centric mindset and the toolkit.
If you think about it, there are so many decisions taken inside the organisation on a daily basis in the back-office functions that have an impact on the experience customers receive and so many people interacting with customers on daily basis that only a bought-in and empowered workforce can ensure the delivery of an effortless and emotionally engaging experience.
I came to appreciate this even more now that I’m working with an organisation with 44,000 employees spread around many countries. The organisation spends a lot of resources to ensure all employees know not only the importance about customer experience but also the experience the organization aims to deliver, the type of behaviours that are expected of staff members and how each one, be it a back-office staff member or a front-line employee, can contribute to that vision for the experience. And seeing the type of examples of applying the learning and acting on the spot with a customer-centric mindset people who have completed the programme send on a regular basis, one can only vouch for the merits of this approach.