With a lot of corporations taking aim at improving their customer experience, it baffles some in the industry how many initiatives fail to ensure that the customer relationship being nurtured is mutually beneficial. By that, I mean, initiatives that are good for the customer and are good for the business. With experience across multiple industries and through conversations at various Customer Experience forums and events, we have heard and seen examples of decisions and initiatives that didn’t turn out well. Usually, it’s easy to see how those efforts were designed to be beneficial to one side, but failed to recognize the other as a member of the customer relationship. When this occurs, the result is almost always a failure to some degree. Customers are either turned off and eventually walk away or business objectives are not met and the company suffers. There are a few exceptions – some examples of dumb luck where one or the other was ignored and things just happened to turn out well. But those are rare and I would not recommend running your Customer Experience initiatives hoping for that kind of luck.
A simple model to illustrate would be a square separated into four quadrants. Running left to right is the customer experience – a negative experience at the far left and a very positive experience on the right. The company occupies the vertical axis with a negative business outcome at the bottom and a positive impact at the top. It is often necessary to put the business outcome in terms of a familiar and track-able business metric, but not fall prey to furthering one metric, say, revenue, at the expense of another, like cost of customer acquisition. Those customer experience initiatives that find the sweet spot set out to create value for both the customer and the business with a clear set of objectives and a solid plan to implement.
Let me explain more with a few examples, starting with one that aimed to provide a positive customer experience while driving a key business metric – or “good for both the company and the customer”. A financial services company that provided tax preparation services found itself swamped at certain times of the year, particularly just after W2’s were made available by a vast majority of employers in late January and again in the weeks and days just before April 15. By implementing planning tools and an appointment system on its website some years ago, the company was able to smooth out its peak busy periods and better plan its staffing. Customers benefitted by experiencing less wait time and showing up better prepared so they got their taxes done in one visit. While the key business metric that drove the business case was the reduction of staffing costs, the company found the reduced wait times for walk-in customers meant that fewer of them walked out and overall volume of returns prepared increased.
In a different vein, an example of “good for the company, but bad for the customer” could be seen in the Netflix challenges they created for themselves in the summer of 2011. Wanting to grow their streaming digital content service, they split off their DVD mail delivery service and gave it a new name, website, and even required customers to maintain a separate account. What used to be a convenient customer experience offering different delivery methods for one monthly recurring charge was changed overnight and, by the way, cost more if you still wanted both the streaming service and mail delivery. Netflix made that decision based on their own needs and wants, but failed to consider the customer. Customers left in droves, as it was widely reported, with a total loss of about 800,000 customers in the third quarter. Fortunately, they saw the error of their ways and reversed the strategy and their fortunes, partially. With a new approach under one subscription, Netflix gained back 600,000 customers in the fourth quarter. Regardless of the turnaround, it remains a good example keeping the customer in mind when making business decisions.
Moving to the lower right quadrant, there simply are too many examples of “good for the customer, but bad for the company” that we see as corporations strive to improve their customer experience at all costs. Unfortunately, those costs sometimes become a bit too great to bear as customers take advantage and a truly mutually beneficial relationship fails to emerge. Too often, businesses that engage in daily discount deals find themselves in this quadrant. Without a clear plan and some half-baked objectives, they offer their products and services at a steep discount and then give half away to the third party daily deals website operator only to find that they delighted more customers than they ever have, but with nothing to show for it. As another kick, those delighted customers are savvy about chasing the next deal and usually not the kind to come back to pay full price. If you don’t believe me, ask my friend who finds a new dentist every six months this way. Most of us are fairly loyal to our dentist, but not this serial daily deal-finder. He moves on to whoever possesses a DDS and offer a daily coupon when its time for his next cleaning. My friend and daily deals aside, other examples include companies that bleed revenue in the form of “good will” credits, lose inventory through extensive giveaways, or try to delight every customer at every interaction through unsustainable, unscalable, and sometimes ridiculous measures.
I won’t go into any examples of efforts that are bad for both the customer and the company – let’s hope no one is knowingly launching any of those efforts. Please, however, ensure that your customer experience initiatives strive to positively impact the business while being beneficial to the customer. Only then can a fruitful relationship start; one that both parties wish to remain in for a long time and for each other’s benefit.
Great post, Tim. One thing I frequently find when discussing social media initiatives with executives is that they want a quick ROI impact to the bottom line. When I explain that having a positive long-term impact on sentiment about their product is a goal of social, they often don’t get it. Instead, they want to know how the resources devoted will quickly be recouped in sales.
What they’re missing is that social initiatives, along with othe customer experience projects are often designed and execute with the premise that they are good for the customer, which will generate long-term positive sentiment, advocate referrals, eventual sales, and long-term customer retention.
Focusing on customer experience is no longer an option, it’s a cost of doing business and sometimes “because it’s good for the customer” is a strong enough reason for funding a project.
Just my $.02 🙂
Thanks, Sean — appreciate the comments and agree. ROI opens up a broader subject, but I fully agree that it is sometimes difficult to specifically quantify what is “good for the customer.” Even “good for the company” has it’s challenges both in drawing a clear and legitimate line to hard benefits and being able to track and attribute things like less churn or higher revenue to any one specific initiative. The point is we need to look through the lens of “good for the customer and good for the company” and at least articulate it, if not quantify it, across both dimensions for nearly every business decision we make.
Just another example of how you are the modern Nostradamus of customer experience trends. Good job kid.