The costs of marginal thinking in customer experience


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CX has come a long way, the hard way. Long ago, companies dictated their customer experience. They devised a marketing strategy and told the public what to like, what to buy, even how they should feel about it. And most of us bought it.

Real “customer experiences” were something that just happened, not an enterprise strategy.

Enter the Age of the Customer and the ubiquity of social media. As millions of customers seized the opportunity to broadcast their opinions and experiences online, they wrenched control of the brand away from companies.

Now, the voice of the customer reigns supreme. It influences how brands are perceived, and what’s necessary to acquire and retain customers. And those perceptions are evolving faster than ever before. That means companies can no longer afford to think ‘marginally’ about the customer experience.

What is Marginal Thinking?

Too often, companies opt for the path of least resistance, the quick fix that leverages what they already have in place. They focus only on the marginal cost of that band-aid, which may be more palatable. But too often, that strategy is short-sighted and ends up costing them more in the long run.

In his book, How Will You Measure Your Life, Clayton Christensen explained the high cost of “marginal thinking” in organizational decision-making. This brilliant mind behind The Innovator’s Dilemma (that became a bible for the Silicon Valley playbook) knew what he was talking about.

What does this mean in terms of customer experience?

In the past, businesses simply didn’t “get” the importance of usability, learnability, and discoverability in their products, services, and online presence. And customer empathy? It was definitely not a thing.

Now, customer experience is a core driver of fierce competition. As companies scramble to solve pain points and keep pace with changing expectations, they often fall into the trap of marginal thinking. Many brands are only willing to pay the lower costs of surface repairs. But without solid customer-centric approaches for all their offerings and operations, the hidden costs will pile up.

The “full cost” vs. “marginal cost” of customer experience

The “full cost” vs. “marginal cost” can be a risky, slippery slope when making decisions about customer experience. If you’re a pragmatic thinker, you might insist on leveraging your company’s existing resources vs. implementing something new that requires greater investment and introduces more unknowns.

But can you take your business to the next level without changing much?

Suppose you decide on the “marginal cost” approach. It’s easier on the budget to continue managing customer service reactively. That usually means putting out fires ad-hoc, and manually browsing social networks to respond as needed. You might get by on that. Or not. You can also keep marketing based on guestimating about your target audiences, and create content only when needs emerge.

Meanwhile, your competition is forging new ground in customer experience. They may be…

  • Driving change that matters most with customers. With text analytics and natural language processing, they uncover actionable insights from oceans of customer data (e.g., social media, surveys, call centers, transactions, email). They identify what needs improvement, and when and how to make changes that have a measurable impact with customers and business growth.
  • Proactively resolving service issues. By consistently clocking CX across touch points with AI and machine learning, they can find and fix pain points faster. And they invest in developing omni-channel communication strategies to respond quickly, strengthen brand perception, and personalize interactions to build customer loyalty.
  • Increasing engagement to retain and attract business. By capturing a holistic picture of the customer lifecycle using journey maps and personas, your competition is gaining a better understanding of what customers need and prefer. With deeper insight, they’re better equipped to create customer-focused content marketing that builds emotional connection to their brand.
  • Empowering employees to deliver delight. Forward-thinking brands know they need to give employees the tools, training, and motivation to deliver exceptional service. Those companies make it a priority to build a customer-centric company culture.
  • Unlocking the power to increase marketing relevance. Using machine learning, your competitors are identifying patterns in customer behavior to fuel business growth. No more best guesses. Their marketing dollars are spent more wisely with targeted segmentation based on data-driven insights.

With today’s fickle consumers and competitive landscape, using marginal thinking and focusing on marginal costs could be your downfall. Customers will gravitate to businesses that are better at meeting their needs and delivering the experiences they prefer.

In other words, it’s vital to weigh the downstream “full cost” of “marginal” business decisions — especially for customer experience.

Moving the needle on customer satisfaction

Let’s not forget that all of these customer experience improvements usually increase customer satisfaction. Higher ratings expand the likelihood of word-of-mouth referrals (your holy grail). And as you earn trust and loyalty, you create opportunities to solicit and reward satisfied customers as brand advocates.

Understandably, shifting your focus beyond the margin can seem daunting. But innovation and big picture strategies don’t have to mean overwhelming investments or unrealistic timelines. You can take it in phases.

However, it does mean taking a holistic view of your customer experience, from the inside out. First, you need to make a cultural commitment with executive buy-in and CX champions, employee engagement to socialize your CX vision, and collaboration across lines of business.

Next, make a practical commitment to ensure you deliver effective, empathy-driven communications for both customers and employees. Also explore technologies that can take your customer experience to the next level. It’s OK to start small — just get started.

When you move away from marginal thinking, you can unleash new potential. With each step toward a holistic vision, you lay the foundation for building powerful, long-term CX excellence.

Interested to explore possibilities or need help with communication challenges? Let’s chat to spark some ideas >

Image: Pixabay


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