Revenue risks are anything out-of-sync with customers.
$3.8 trillion (USD) revenue globally is risked by bad customer experiences annually.
— This is $119 billion higher than last year.1
Issues in bad customer experience:1
— Service delivery issues 46%
— Communication problems 45%
— Employee interactions 39%
— Price 37%
— Quality 35%
— After-sales support 21%
Note that the issues listed above are caused by non-customer-facing functions as much or more than customer-facing roles: the talent and ecosystem that create policies, processes, business models, and products.
This is the first of a 5-part series: Executives’ Guide to Customer Experience Value.
In Part 1: Revenue Risks, you’ll see:
1) “Walk the Talk” Global Crisis Risks Revenue
2) Experience Management is Integrity
3) Experience Management Removes Revenue Risks
4) Customer Alignment Multiplies Revenue
53% of consumers say they will cut spending after a bad customer experience.
— Consumers say 12% of their brand interactions don’t live up to expectations.1
$3.8T is the tip of the iceberg.
It’s based solely on revenue lost per customers’ curtailed spending.
There’s more to it!
Spiraling costs curtail your resources available for revenue generation.
Out-of-sync products, services, policies, and processes drive up costs:
- Negative word-of-mouth slows sales velocity.
- Lower sales velocity increases the cost of customer acquisition.
- Self-service and digitalization make up for non-intuitive scenarios.
- Customer Success shepherds customers’ product value and MVP improvements.
- Customer Support remedies, returns, refunds, and escalations.
- Loyalty incentives, discounts, rebates, product recalls, lawsuits.
- Churn expands monthly quotas for Marketing leads and Sales conversion.
- Technologies, facilities, staffing, and consultants to manage all the above.
Higher costs:
— Increase pressure for revenue. It’s a vicious cycle!
— Put new opportunities on hold. Resource constraints!
— Shrink budgets for hiring, resourcing, salary increases, and profit sharing.
— Make it harder to differentiate and expand.
— Tie up your talent’s creativity with offshoring, etc.
— Complicate retaining talent, partners, customers, and investors.
— Are roadblocks to revenue growth!
Being in sync with customers is customer-centricity. It avoids costs. It reduces revenue risks.
“Walk the Talk” Global Crisis Risks Revenue
Revenue risks of bad customer experiences and out-of-sync costs intensify via lower (a) trust, (b) integrity, (c) productivity and quality, (d) community/country growth, and (e) empowerment.
$3.8T lost revenue is perpetuated by low trust in business.
— Actions belie your claims of customers 1st or employees 1st.
— Failure to walk the talk breeds skepticism.
— Employee skeptics produce less and risk integrity.
— Customer skeptics raise costs as you jump through hoops.
— Low integrity is a vicious cycle: a strong undertow.
(a) Lower Trust
Across 26 countries, trust dropped by 12 percentage points since 2021!2
Only 32% of people believe executives do not lie.
Americans’ views of honesty and ethical standards among:3
— Executives: 12% high, 43% low.
— Advertisers: 8% high, 50% low.
— Bankers: 21% high, 31% low.
— Nurses: 76% high, 5% low.
Distrust raises costs of acquisition and retention of:
— Customers.
— Employees.
— Partners.
— Investors.
Rising costs mean raising prices and revenue risks.
— Customers are fed up with inflation!4
— Higher prices for employees mean raising wages (for 50-80% disengaged employees5).
— Higher prices for you are a vicious cycle.
— Pressure for revenue to make up for all this can perpetuate non-integrity and distrust, internally and externally.
(b) Lower Integrity
21% of firms have had a significant integrity incident in the past 2 years.6
(Integrity incident = major fraud, data privacy, security breach, or regulatory violation.)
$830 billion (USD) company equity was destroyed due to corporate fraud in 2021.
Consequences? Higher prices or fewer growth opportunities!
Integrity-First Firms dropped 10 percentage points in 2 years in every continent!6
— Integrity-First Firms: often talk about integrity and back it up with actions.
— Policy-Driven Firms: comply with regulations.
— Say-Do Gap Firms: talk about integrity without actions backing it up.
(c) Lower Productivity & Quality
Disengaged talent perpetuates bad customer experiences.
— Doing the bare minimum in their job.
— Low coordination and collaboration.
— Self-centered decisions and actions.
— Inefficient policies and processes.
— Ineffective outcomes for everyone.
$8.8 trillion, or 9% of global GDP (gross domestic product) is the worldwide cost of poor management and lost productivity from Not Engaged or Actively Disengaged employees.5
How big is $8.8 trillion? These gold boxes show countries’ combined equivalent GDP.7
(d) Lower Community & Country Well-being
Lower GDP means fewer opportunities: revenue risks.
— Higher taxes to run your country.
— Lower quality of life for communities.
— Currency volatility slowing your growth.
(e) Lower Empowerment
Additionally, your Procurement team is killing revenue growth. As a personal example from 2024, invoices less than $10K-$20K were delayed extremely, short-paid, or denied by Procurement — on every continent.
— Never happened in 20 years in my business.
— Similar occurrences for my fellow entrepreneurs.
— Why suddenly in 2024? All the above in this article!
VPs and Directors normally have an established budget and a threshold signature authority.
— By denying your employees the resources they deem necessary to excel, you express distrust in them, breed disengagement, miss out on advantages they could have created for your company, and shoot yourself in the foot!
Dishonoring an invoice is low integrity.
— Purchase orders are the delay/deny phase.
— Invoices are essentially contractual.
— By jerking around suppliers, you wreak havoc with their integrity for their obligations, mental health, financial viability, and ability to serve you and others.
— You invited them to spend their time meeting with you, making a proposal for you, filling out forms for you, and you got a salary all the while as they got nothing.
— Heavy-handed Procurement is a nit-picking bandage on dysfunctions from Not Walking The Talk.
Low integrity is a breakdown in living up to your value proposition. It’s cutting corners in what you promised. That’s risking revenue significantly.
Walking the talk is doing what you say = integrity = consistency = being in-sync.
Experience Management is Integrity
Revenue risk is mitigated when Experience Management focuses on integrity for customers, employees, partners, and investors combined.
Customer Experience (CX) is what customers experience.
Employee Experience (EX) is what employees experience.
Partner Experience (PX) is what partners experience.
— You rely on these 3 parties to run your business!
— Investor returns depend on these 3 parties’ combined efficiency and effectiveness.
“Experience” is what they got for what was promised.
Experience Management (XM) is your proactive and reactive management of CX+EX+PX.
— Reactive: Support, Success, Loyalty investments.
— Proactive: integrity, walk the talk, do the right things right the first time, consistent.
— Goal: getting everyone in-sync.
— Outcome: maximum growth in earnings per share.
Experience management shapes value creation and value delivery to meet or exceed expectations. It’s pivotal in earning and keeping preference.
Customer Experience Management (CXM) relies on voice of customer (VoC) to align internally with customers for their end-to-end journey via customer-focused employee engagement in fact-based decision-making and continual improvement.
You can substitute “Customer” with “Employee” or “Partner”
(and “employee engagement” with “manager engagement”).
Experiential Marketing relies on behavioral science to engage customers for the micro-moments via UX, viral marketing, demand gen, CRM, loyalty marketing, and Net Promoter System.
Experiential Marketing is a subset of CXM.
— It relies on VoC for effectiveness and efficiency.
— Internal alignment with customers accelerates and amplifies all experiential marketing gains.
Experiential marketing shapes customers’ perceptions, expectations, and memories of your brand.
— It’s instrumental in attracting and retaining customers.
— CXM is pivotal in earning and keeping preference.
Customer Success and Customer Support are primarily reactive CXM.
— Their importance increases more and more as CXM is absent.
Customer Strategy is the domain of Marketing and Sales.
— How to segment the market, which customers to target.
— How to expand revenue with each customer and market.
— It’s a subset of CXM since its effectiveness and efficiency relies on VoC to guide fact-based decisions and improvements.
Customer Experience Management Strategy is executives’ shared vision for how customer-centered business will maximize value.
CXM is getting everyone in-sync with your customers’ aims.
— They bought into your value proposition.
— Did they get what you proposed?
Saying what you’ll do and doing what you said is integrity.
A 1-to-1 ratio in what’s expected and received is why discount brands and luxury brands can succeed equally well.
Striving for a 1-to-1 ratio gets you in sync with customers.
— Discover their expectations.
— Proactively manage expectations.
— Focus everything on delivering to their expectations.
Sounds familiar? As an executive, you drive a 1-to-1 ratio (or better) for investors every quarter.
A 1-to-1 ratio maximizes earnings per share:
- Right the first time: focuses coordination and collaboration.
- Lower costs: prevents mis-steps and ‘bandages on diseases’.
- Differentiates: drives creativity for what customers value.
- Grows organically: builds magnetic attraction and retention.
Customer experience management = integrity = 1-to-1 performance in delivering what’s promised = being in-sync = company-wide alignment to customers’ aims.
Experience Management Removes Revenue Risks
Revenue risk is abated when CXM drives customer-centered running of your business.
Rallying employees around customers’ aims is the Number One way to re-energize and re-focus everyone.
— Customers fund salaries and budgets!
— Your firm stops existing if customers go away.
— Everything your firm does is for customer well-being.
— How are you conveying the above to everyone?
— Do you share stories/photos of customers’ world daily?
— How many metrics track value to customers?
— How many metrics track walking the talk?
THIS is CXM: outside-in mindsets and actions.
— Outside in is VoC shaping how you run your business.
— 20% of CXM focus is collecting VoC.
— 80% of CXM focus is internal: aligning to VoC.
Shift your reviews and rewards:
— What are you doing about CX gaps?
— Reward progress in closing gaps.
— Gap closure improves customers’ well-being, which improves scores, and most importantly, reduces costs and expands revenue.
CXM multiplies all growth metrics’ progress by facilitating customer insights use as a primary guide for every:
— Growth effort.
— Strategy company-wide.
— Performance standard.
— Efficiency approach.
100+ gains like this were achieved annually when I led company-wide CXM for many years at Applied Materials:
— Every department focusing on 2 gaps they caused.
— Mistake-proofing their work processes.
— Rewarded for gap closure progress.
— Recognized for customers’ gains.
— Validated by customers’ behaviors.
Revenue risks transformed to CXM annuities:
— Stopped root causes of prevalent issues.
— Freed-up value-rescuing talent for growth opportunities.
— Freed-up customers’ lost opportunities and resources.
— Reduced customers’ inhibitions to engage and buy more.
— Freed-up Marketing & Sales from churn-based quota creep.
— Freed-up value-rescuing budget for more salaries, hiring, resourcing, and profit-sharing.
Annuities produce ongoing value, and that’s what this CXM approach does:
— Savings continue forever from former value-rescuing.
— Gains from redirected resources keep snowballing.
Customer Alignment Multiplies Revenue
When you define Customer Experience Management as company-wide alignment to customers’ aims, you multiply growth by 1.1X . . . 1.8X . . . or higher!
1) Bad customer experiences cease to curtail customer spending.
2) Out-of-sync costs stop spiraling and limiting resources available for growth opportunities.
3) Walking the talk energizes employees with:
— Internal and external trust.
— Shared purpose across employees.
— Cross-organiational coordination and collaboration.
— Integrity: 1-to-1 ratio in saying and doing.
— Empowerment to do the right things right consistently.
4) Revenue risks as a pervasive undertow are turned around:
— High standards spur good behavior of customers and employees.
— High productivity allows lower prices and higher quality.
— Higher growth improves quality of life and GDP.
— Higher empowerment of managers to make and honor purchase decisions.
— Higher differentiation via upskilling and resourcing.
— Easier acquisition and retention of customers, employees, partners, and investors.
Get in sync with customers’ aims to minimize revenue risks and maximize earnings per share growth.
1Bad Customer Experiences Put Nearly $4 Trillion at Risk in Global Sales., Qualtrics, November 19, 2024.
2Edelman Trust Barometer, Edelman, January 2025.
3Americans’ Ratings of Professions Stay Historically Low, by Lydia Saad, Gallup, 2025.
4Food Prices Rose 28% in 5 Years. Here’s Why, by Taryn Phaneuf and Laura McMullen, Nerdwallet, January 15, 2025.
5State of the Global Workforce: 2023 Report, Gallup.
6Global Integrity Report, by Jim McCurry, EY, 2024.
7Countries by GDP, World Population Review, 2024.
This is the first of a CustomerThink Advisors 5-part series: Executives’ Guide to Customer Experience Value.
Part 1) Revenue Risks
Part 2) High Potential
Part 3) Alignment
Part 4) Walking The Talk
Part 5) Top Tier Leadership
Simple and great read with top practical value! I think this is your best article ever. Though your articles are often excellent, this one was my morning read! – R
Glad you liked it, Ricardo. Customer Experience Mangement is one of the least understood professions — even among customer experience experts. Quick wins, timid involvement among non-customer-facing groups, and obsession with real-time feedback loop and scores is killing CXM and jobs and companies.
From the trends shown here, recovery from the pandemic is weak, with business-as-usual prevailing and worsening. This is where CXM really needs to focus. Who else has acces to customer insights and ability to tailor reports for each functional area’s actionability? Getting in-sync is the key to all the woes. It will take any organization (B2B, B2C, government, non-profit, etc.) from strength to strength.
Corporate integrity and perception issues – transparency/trust/honesty/veracity – are core to revenue risk, as is the level of employee commitment (staff treated as costs rather than assets). At the top of my risk list, though, is the lack of enterprise humanity combined with the myopic overfocus and high investment in all things AI and digital, at the expense of a stakeholder-centric culture. Walmart, relative to Costco, is ground zero for how this is playing out: https://customerthink.com/pay-attention-to-the-writing-on-the-wall/
Yes, Michael, over-focus on automation of customer interactions is 1 of 3 insults to customers highlighted in my article: 25 Bad CX Practices to Stop in 2025: Insults.
I was surprised to hear from an executive recently that FTE reduction fears are cited as a top pushback among employees for adopting technology or process improvements.
Opportunities for growth are abundant in any company, with resource constraints to pursue them. So, my first reaction to efficiencies is not FTE reduction, but rather, re-allocation of talent toward growth opportunities. Existing employees already know the culture and structure, so time-to-value is quicker. Re-directing resources from value-rescuing to value-creating is a smart growth multiplier.
Dishonesty is the top shocker for me, because the very essence of CX and EX is acceptance of a value proposition, which then must be honored. If we’ve lost that principle, how can we trust anything that anyone says, or expect follow-through on anything. That’s a seriously disturbing trend that’s hard to reverse.
My hope is that people will re-think CXM to indeed reverse this horrible quicksand.
Great insights on enhancing customer experience! I particularly liked the part about aligning customer expectations with service delivery. Looking forward to more discussions on this topic!
Thanks for your comment, Valerie.
Yes, mis-alignment is the source of spiraling costs.
— mis-aligned expectation-setting.
— mis-aligned value delivery.
— mis-aligned changes initiated by customers.
— mis-aligned resolution of failures in the above.
The 2nd — value delivery — involves everyone company-wide. If they’re not contributing to value expected by customers, why does their job exist?
Re-thinking that is the key to collecting and championing customer insights to align everything and everyone.
And that’s the key to stopping the spiraing costs, low integrity, low productivity, dis-empowerment, and revenue growth pressure.
Your response to Valerie put me in mind of a quote by total quality icon, W. Edwards Deming. He not only understood the practices of quality processes and a quality-centric culture, he was also a student of marketing and customer value where the overall organizational focus was concerned. Deming’s quote was: “Everyone in the company has one of two jobs: To support the customer or support someone who does. There are no other jobs.”
Absolutely, Michael. Deming and Drucker are evergreen.
Rallying everyone around core-growth customers’ aims respects the fact that everyone’s salary and budget and profit-sharing are paid by customers.
This alignment stops wastefulness by stimulating higher purpose, collaborative spirit, follow-through, transparency, empowerment, creativity.
Unfortunately, there’s a powerful undertow underway of behavioral science applied to marketing masquerading as “Customer Experience Management”.
It’s not CXM. Behavioral science applied to marketing is customer-focused marketing, affecting micro-experiences of customers — not their full experience. Indeed, it still might be self-centric rather than customer-centric!
Self-centric approaches, regardless of how customer-focused they may be, always short-change the value of customer experience management.
Why? Because bad CX still prevails. And that means high costs. And subsequent bad behaviors, as outlined in section 1 of this article.
That’s why this article alerts executives that true CXM **prevents** bad CX and low integrity.
And that multiplies budget available for growth, which can certainly multiply revenue.