This story is a version of a post published here.
I was recently watching a keynote by Mr. Mark Hurd, Co-CEO of Oracle Corporation, that he delivered at the Modern CX Conference of 2015. The talk was insightful and I will discuss some of my observations and take aways in this article.
To start off, these words by Jamie Nordstorm that Mark quotes in his talk, sums up the way customer experience is shaping and changing the world:
“Companies were in control up until 2000. But now the customer is in the driver’s seat. If you embrace that, you will thrive. If not, you will not survive.”
I personally loved his talk. The keynote, without a doubt, shows why we need business leaders like Mark who believes that customer experience is the differentiator for their company to survive. Here are some of my key take aways from his talk:
The change in consumer spending vs enterprise spending
Mark gives us an astute picture of the change in the spending pattern of consumers. He explains that
the world-wide GDP is $72 trillion dollars, however, the world-wide IT industry is only 3% of that GDP, which is $2 trillion.
What’s interesting is that, although small in comparison, the world-wide IT industry is responsible for supporting the rest of the world-wide GDP. There are very few industries today that can do without IT!
Mark, while talking about the change in consumer spending, states that,
10 years back, consumers spent $200 billion and that figure has grown five fold to $1 trillion now! In stark contrast to that, the spending of companies has remained almost constant: they spent $900 billion a decade ago and the figure is absolutely the same!
So consumers are willing to spend, but companies do not have the money to innovate and to satisfy the customer.
This is an particularly interesting, because companies are increasingly cautious of their budget while consumers are leaping ahead by spending on new innovative products. It is critical for companies to accelerate their innovation and catchup with consumers, or they would soon start spiralling downwards.
Companies that don’t innovate and don’t work on CEx die!
Mark brings up an interesting fact when he says that
a whopping 70% of the companies that were listed among the Fortune 500 companies in 1990 have ceased to exist!
They have either become extinct, have been acquired/merged with others or have shrunk. A massive 50% of the companies that were listed among the Fortune 500 companies in 2000 do not exist now. He brings to light that these companies that fail to innovate or that have failed to be dynamic have all failed. He stresses on CEx innovation more than anything else. His argument is that product innovation is important but unless their products and services deliver exceptional customer experience, companies will struggle to sell more.
The consumer base itself is changing massively
Mark dives in to comment on the change in spending patterns of current consumers. He mentions that
86% of today’s consumers are willing to spend more on a better consumer experience.
Lower price is not a criteria for buying, better service is! Unfortunately, only 1% of such consumers believe that their expectations are being met. And probably the fact that enterprise spending has not increased in the last 10 years, as stated earlier, this gap is not surprising.
He says that when a customer was dissatisfied earlier, he would call up and talk to the representatives of the company, maybe even voice his anger and dissatisfaction. If very dissatisfied, he would walk away from the brand. But, he could not make a significant impact to a big brand because he could not voice his opinion to a large number of people. But, with the advent of the internet and social media and their gigantic growth, consumers can reach a lot of similar buyers and reach them extremely fast. There has been a crucial shift of power from a company to a consumer. A dissatisfied consumer now can communicate with fellow buyers and spread negative feedback even before a company realises that it has provided a bad customer experience!
The CEOs job is to perform
Mark emphasises on the point that the CEOs today need to PERFORM, every quarter and every quarter after that. The CEO must “…think long-term and deliver in the short-term: there is no long-term without short-term performance.” The world GDP is growing at 2-2.5% annually and that means that $1.4 trillion is up for grabs. But, it also means that every organizations is vying for a part of its share! There are only two ways in which an organization can partake this amount: either grow revenue in its own customer base or take a part of another’s revenue. Here is where the CEO must step in! His primary objective is to increase revenue and focussing on CEx will help him do that. It will be difficult for the CEO to keep finding new business; he must rather focus on deriving the maximum value from the existing customers.
Mark emphatically says that the different silos must integrate to make the customer experience of any organization better: the sales process, the marketing process and the service process must integrate and must be looked at as a single customer experience process. The ability of a CEO to innovate, integrate and fuse the processes will decide whether the company will last.
NPS vs CSAT
Mark hints that CSAT may not give us a very accurate picture of the customer experience. He mentions that he was taught in business school that 95% CSAT was perfect and that if an organization was chasing 96%, it was wasting money and resources. He was taught that one must identify those unhappy customers and not chase them. He believes, however, that the theory is now obsolete. It worked when the social media was not prevalent and powerful. If the 5% dissatisfied customers now resort to the social media to voice their dissatisfaction, a company will never recover. Hence, customer experience now is not about how to deal with the dissatisfied customers but about how to never get them. The cost of recovering from dissatisfied customers, most of whom are more than willing to talk about their experiences, is huge.
Oracle itself uses a metric called Customer Loyalty Index (CLI), an advanced version of Net Promoter score, and does 10,000 surveys each year and looks at data by geography and by product line.
In conclusion, as unmissable is Mark Hurd’s energy and enthusiasm at the conference, it is also hard to miss his urge to focus on customer experience and innovation. He touches upon several other related topics like leadership, sales, and marketing, but he also connects everything back to customer experience. I truly believe that, as CEO of one of the biggest and oldest companies in the world, Mark has a pretty clear picture of how the future will unfold and he can tell that customer experience is super important not just for now but for the times to come.
You could watch the video to get more amazing data-backed insights into customer experience. Here is the video for you: Mark Hurd — Modern CX Conferences 2015 Keynote