Finally, it happened.
We lived in our blissful world of an abundance of money that fuelled the illusion of eternal and unlimited growth. The stock markets knew only one direction for a decade. They were rising and rising. Venture capital was readily available. Valuations of all sorts of companies, profitable or not, skyrocketed. Growth at all cost over profitability has been the war cry. Acquisitions have been extremely expensive up to the end of 2021.
Logic never supported this illusion, the signs have been on the wall, yet we closed our eyes.
Then, in 2022, reality knocked at our doors, and none too subtle.
In the “CX industry”, examples for this quite rude awakening include Zendesk. Zendesk went private in June 2022 for $10.2 bn after refusing a $16+ bn offer in February 2022. Another one is Freshworks shares starting a steep decline in October 2021 after a very successful IPO in September 2021. These are only two examples and I by no means want to single out these great companies. Other signs included an increasing number of major layoffs throughout the first half of 2022, culminating in Salesforce announcing more focus on profitability due to a subdued outlook and subsequently laying off 8 thousand employees. Oracle already laid off more than 10 thousand employees of its CX division in August 2022. Amazon fired 18 thousand employees since November, 2022. Especially companies in the tech industry increasingly implemented hiring freezes throughout 2022.
This is to quite an extent a consequence of their optimism (or should we say hubris?) but also of companies across industries keeping their budgets in tighter control than before.
Another problem is that the definition of customer experience is not fully clear. In the words of Paul Greenberg, it is “how a customer feels about a company over time”. Dr. Michael Wu in a recent CRMKonvo gave a very pragmatic one: “The difference between customer expectations and the company’s delivery”. Still, business department continue to compete for ownership of their company’s CX.
At the same time, across brands, the Forrester Customer Experience index dropped in 2022.
As a result, spending does not grow as before – even somewhat declined – which “forces” vendors to lay off personnel, whether this is the right solution or not.
Now, what does this rant have to do with CRM or CX?
Why don’t customers buy from their vendors?
They do not see the value of the offers.
Based on the recognition that the true differentiator of every vendor nowadays are not product, price or promotion/placement but the customer experience, there are a few things that enterprise software buyers – customers – and software vendors can do. Software vendors clearly didn’t deliver up to their customers’ expectations.
This is something that can be changed.
Here some brief recommendations. Some of them have a short term impact, some a more long term one.
- At all times, be clear about where your CX pain points are.
- Develop models that help in the objective quantification of the benefit of improving on these pain points. These models mandatorily need to include a financial impact analysis.
- Invest where you differentiate yourself from the competition and not where it does not matter.
- Prioritize the pain points using the models regularly and frequently, to address the right ones first. This prioritization is a cross department effort that includes IT. It follows a think big – act small approach.
- Develop an IT strategy and roadmap that minimizes technical debt over time and helps to efficiently address the pain points.
- Be clear what your customers need and want and deliver exactly that in a way that it is fast and easy to implement. This way, there is an improved time-to-value for customers. This includes industry solutions that are more than current industry clouds.
- Establish pricing models that clearly show the value for the customer. What we still see far too often is the transposition of on premise pricing models into the cloud.
- Reliably include your partner ecosystem into the creation and implementation of industry solutions with fast time to value. My recent article on how to create winning industry solutions gives some valuable recommendations.
- Genuinely have your customer’s success at heart. Consider your own success as a consequence of your customer’s success. Reimagine your organization across this idea, starting with your customer success department.
While this sounds like a lot, it is actually not too hard to achieve.
Combine this with the three humble wishes for CRM, CX and customer engagement and let us all work on resolving these challenges.