When The Wall Street Journal declared ‘Customer experience gets worse. Again’, in June of this year, it sparked soul-searching and head scratching in equal measure. With all the money spent, and all the work done, how and why are so many firms getting customer experience so wrong?
The article referenced research by Forrester US, that measured perceptions of 223 brands, across 13 sectors. The average score on the analyst group’s CX Index dropped to 69.3 out of a 100, lower than any point since it had adopted its current methodology in 2016.
The average index score had fallen consistently, year-on-year from a 72 point high in 2021.
Quoted at the time, Pete Jacques, a principal analyst at Forrester, said consumers were becoming increasingly sceptical of the value they believed they were getting from brands.
The UK Customer Satisfaction Index published in July, hinted at similar challenges. Of the 282 firms tracked by UKCSI, just 10% managed to improve their score by two points or more in the previous 12 months. On the flip side, 80 organisations on the list saw their scores fall by two points or more.
The gloomy atmosphere hanging around CX practitioners hasn’t been alleviated by reports that firms in the US and Europe are downsizing CX investment. “The US is a little ahead in cutting [CX] teams, but even here in Europe we see vendors challenged because the project money is less,” Dr Maxie Schmidt, VP principal analyst, serving CX professionals, Forrester, told CXM.
“That is a sign customer experiences are being deprioritised”, she added.
That organisations are ‘deprioritising’ CX is broadly acknowledged among customer experience professionals. Some argue that post-COVID, businesses are more dialled-in on short term revenue goals, than pursuing long-term, and often challenging CX projects.
“Shareholders want to see instant returns these days,” said Lee Jones, growth director, Elev-8, a CX consultancy. “The other problem is high turnover in leadership teams. They’ve one or two years to prove themselves, but you measure customer advocacy in years,” he added.
The economic fallout of the pandemic has “completely derailed” the way organisations have been thinking about customer experience, said Ian Golding, CCXP, global customer experience specialist, and CEO, Customer Experience Consultancy.
“It’s short term thinking, task-focused — it’s like we’ve got our head in the sand,” he added.
Short term thinking has led some aspects of customer experience and service to the chopping block. Many organisations still view customer service as a cost centre for the business, and not something that can generate value.
“A lot of organisations have diverted their attention towards cost reduction in service for the last few years, specifically in going digital,” explained Jones.
“It’s been too easy for suppliers to turn their voice and face-to-face contact channels off, because it’s a cost [saving] opportunity,” he added.
For the last 12-to-18-months, the conversation around digital’ has been dominated by generative AI and the opportunities it offers companies to maximise efficiencies while cutting costs. Cisco recently claimed gold across two categories in the USA Customer Experience Awards with its gen AI project that helped improve customer success rates by 300%.
Intriguing as those success stats might be, it would be insane to assume gen AI is some form of magic CX bullet. Businesses that invest in CX without thought to the customer journey risk making expensive mistakes.
Organisations are “throwing technology at the customer journey, and they don’t really care what happens to the customer,” Golding said while speaking at an Awards International event in Dubai last month.
“Unfortunately, technology decisions are being made not “with a better customer experience in mind. It’s done with efficiency in mind. So, could we get rid of one or more employees, if AI takes this role?”, explained Dr Maxie Schmidt.
Ironically, one of the reasons behind Forrester’s poor view of customer experience in the last 12 months, both in Europe and the US, has been the explosion in the use of chatbots. “The drive into chatbots with the added sprinkle of gen AI, has really created disappointing experiences for customers,” commented Dr Schmidt.
“There is a lot of potential, but it’s just not there yet. It’s very nascent,” she added.
Companies fumbling costly tech projects because they’ve ignored ‘customer experience’ isn’t something new. If CEOs are looking at AI it is because they need to catch up with the competition, or they see a way to cut costs, “they’re not thinking about the CX side,” said Qaalfa Dibeehi, managing partner, Human 2 Outcome, a Dubai-based CX consultancy, at the same Awards International event.
CX professionals, whether they are in-house or working as external consultants need to insert themselves into the technology conversation, or risk being ignored completely. “I don’t see enough of us trying to force our way into those rooms where the technology and data people are having those conversations,” said Dibeehi.
“CX people shy away from technology and IT… But [they need to] get in there because the [customer] perspective is probably completely missing,” he added.
If CX professionals can start influencing technology conversations and connecting tech investment with customer experience there are huge savings to be had in “plain sight”, said Sean Keane, co-founder and managing director of Service Economics.
Even organisations that are on the front foot with customer experience can spend up to 15% of their time handling demand failure – basically answering calls, messages or emails, about broken customer journeys.
“In most contact centres [failure demand] can range from 15% of all demand, up to 80-90%… Could you think of another industry where you’d accept that?!!,” explained Keane.
If firms tackle failure demand, not only would they improve customer experience, but also make handsome savings. “Let’s imagine you’re an organisation and only 30% of all your demand is failure – that is still a whopping number. Are you knowingly going to spend 30% more than you have to on people and technology?,” commented Keane.
But customer experience practitioners need to build their influence across organisations, not just in the IT department if they are to sway bigger company decisions. Unfortunately, most firms haven’t created a board-level role for customer experience. “We don’t really have a seat at the board room table,” admitted Dibeehi.
“There are a few chief customer officers; that person has to do the role without much resource to influence the other chiefs to do things the right way, and doesn’t really carry a big stick,” he added.
A dearth of influence goes a long way to explaining the piecemeal approach to CX practised by the majority of firms. Organisations commonly say that customer experience is important “and then put a mid-level manager in charge. How are they supposed to do something about customer experience [with] no resources… That is bound to fail,” commented Dr Schmidt.
Mid-level customer experience executives are also unlikely to influence another fundamental pillar of CX – employee experience. Most CX consultants would agree that empowered and highly engaged employees will improve customer satisfaction, but still most organisations overlook employee experience.
“You’ve got businesses that don’t look at employee experiences, full stop!,” said Jones.
According to Forrester, highly engaged and empowered employees are 76% more likely to complete tasks that are important for customers. However, training and retaining such staff is not cheap, warned Dr Schmidt.
Unfortunately, highly engaged employees also don’t necessarily respond well to the ‘command and control’ culture that’s common in corporate Europe or America.
“It is not always ‘happy employees, make happy customers’. [Organisations] have to think how they can enable [employees], and how they can get out of their way!,” she added.
CX experience is always going to struggle to win adherents in the boardroom, particularly in organisations that are commercially and KPI driven. CX isn’t about delivering next quarter’s numbers, it’s a longer term “strategic imperative or operating principle”, said Dibeehi.
Although firms will talk more readily about the importance of their client-base, it doesn’t follow that they’ll always act in their customer’s interest. Most organisations are happy to balance the interest of customers with those of shareholders and employees and the pursuit of short and long term interests.
“Customer experience can increase loyalty, it can increase a willingness to pay [and] it can reduce cost to acquire customers, but that is a long term play,” said Dr Schmidt.
“And shareholders and the c-suite just play short term. That is the general problem, and I don’t think it is going to be resolved,” she added.
According to Forrester, smaller firms, startups, and member-owned businesses are more naturally predisposed to embracing CX’s principles. Established businesses, with board members and shareholders, locked in a short term quarterly mindset, are more likely to pick and choose what they want from the CX playbook.
“The CX industry is notoriously bad at passing the exec test. What company waits for two years for something to wash its face? In any other business you have to say ‘how’s this going to wash its face in under 12 months,” explained Keane.
For established businesses to embrace CX, they usually have to have their backs against the wall and in search of a competitive differentiator. “Most of those organisations are receptive when they could see a cliff edge coming – when they’re about to be ‘disrupted’,” said Keane.
Only when firms are faced with an existential crisis are they willing to undertake the systems thinking work required to embed customer experience across an organisation. Will an established business throw out existing management systems, targets, incentives, and even how it measures its performance? Change on that scale requires leadership, no small amount of risk, and backing from a board.
When the average tenure of c-suite executives is anywhere between three and five years, it is easy to see why they’re more likely to pursue a watered down version of CX. “CX is often seen as the icing on the cake,” said Dr Schmidt.
“Customer experience is about understanding customer needs and figuring out how to get that reciprocity started as opposed to some icing on the cake. I think that is a huge misconception!,” she added.
The big question is whether continuing deterioration of customer experience will tilt the balance back in the direction of greater (but perhaps wiser) customer experience investment. Consumer indices that reported falling CX scores could be just scratching the surface and the reality is much worse.
“The industry has run out of road. [We] can’t keep doing the same old stuff,” warned Keane.
“It’s not working and to bring it back to the Forrester stats… that’s only scratching the surface, because if you’ve had a really bad experience with a brand, then you don’t bother with a review.”