The Hippocratic medical oath of ethics and the most fundamental principle of CX are essentially the same: first do no harm.
This defensive posture doesn’t sound nearly as sexy as postulating a code about healing the world or making certain that every customer everywhere is always delighted. But the most basic tenet of both medicine and CX is risk mitigation and risk management. And both fields face the same two basic mitigation/management challenges:
• Minimizing the likelihood of the occurrence of risk events and
• Reducing the adverse impact or consequences when risk events occur
While two sides of the same coin, these are different activities for a company. The first is about trying to avoid customer experience failures – doing no harm. No matter how polished your processes and how great your people may be, however, some number of CX failures are inevitable. Which is when the other side of coin kicks in – minimizing the impact of the harm once it has happened. Given that there has been a problem, how quickly, efficiently and completely can a company recover to minimize the damage to the customer relationship?
Almost without exception companies and CX pros focus on the upside, the gains that can be realized by delivering better customer experiences. This makes sense on the surface, as there are real opportunities to drive better business outcomes by giving customers stronger positive experiences. We can back this up with all kinds of data illustrating that customers who give a firm higher CX ratings are more likely to remain customers, spend more and recommend the company than customers who are critical of the firm’s CX performance. This is part of the return on CX (RoCX) that makes investing in better customer experiences good for business.
While it’s much more appealing to focus on the upside opportunity, the flipside presents a corollary that is equally true. There are real downside business risks that can undermine business outcomes by disappointing, angering or frustrating customers with substandard experiences. Simply turn the data around and look at the empty part of the glass: customers who are subjected to poor experiences are more likely to defect, spend less and speak against the company than customers who are pleased with their experiences. This also is a component of the RoCX equation
The nature of business, our tendency to focus on growth and accumulation, even our language emphasize offense over defense. The business math, however, argues for concentrating first on risks.
It usually costs more to resolve a problem than to avoid the problem. “Doing it right the first time” almost always costs less than remediation after the fact.
• You already have spent money doing something that disappointed the customer . . .
• Then you have to spend to correct the problem . . .
• After which you need to spend yet more again to remediate the situation
There are some who will rightly point out that customers who have negative experiences swiftly resolved in a manner that exceeds their expectations often are more loyal to a firm than customers who never experience a problem. This only reinforces the basic math, as such efforts inevitably are more expensive and don’t change the underlying fact that avoiding a problem is less costly than doing something wrong and then fixing it.
Managing risks costs less than improving performance. The most common downside risks are associated with fumbling on “table stakes”-types of activities: accurate reservations, on-time delivery, clean facilities, products that work correctly . . . in other words, miscues in meeting basic customer expectations. In the large majority of instances, it costs less to maintain performance on these baseline activities than to invest in areas of improvement.
Typically, moreover, there is little or no upside in exceeding expectations to try to WOW customers on tables stakes issues. In fact, companies that over invest in these baseline activities find themselves confronted by the law of diminishing returns and sometimes realize that they can disinvest and save money by not over performing on basic expectations.
The revenue savings realized from plugging the holes from performance failures also exceed the increased earnings from nominal improvements in CX performance. I know this is heresy and will raise the ire of many, but there is little doubt that retaining customers who otherwise might defect because of a failure to meet their basic expectations will keep more money in the till than the value of additional funds that might be generated by an incremental boost in performance. This not to say there isn’t an upside that can be realized from stronger experiences, as there is. But when it comes to nominal or small improvements in CX, “at the margins,” as economists say, the immediate savings in earnings from reducing CX problems will most likely exceed additional revenues from incremental improvements in CX.
And, of course, the one cost/benefit calculus with which every marketer agrees: it costs less to retain a customer than to acquire a new one. The most frequently cited differential is 5X, although some sources say new customer acquisition costs are much higher than five times the retention cost. Because of this retention/acquisition cost differential, an increase of X% in retention generates a far greater boost in profitability than a comparable increase of X% in newly acquired customers.
And the Behavioral Math
The behavioral math also skews in favor of our HippocratiCX oath. We are more apt to remember, act on, act on more quickly and tell others about negative information and experiences than positive ones. Consequently, behavioral math tells us that:
It may be cruel, but it’s true: negative experiences are simply stickier and more enduring than the good ones. While if you take away one dollar and then add a dollar you are even, if you have a negative experience and a positive experience the net result is still a negative: the negative taste almost always is more poignant and lingers longer than the positive. While the number of positive experiences required to atone for one bad experience will vary depending on the nature and importance of the experience, the magnitude of the sin, and the speed and breadth of the response, it is generally accepted that it takes five (that is FIVE) positive experiences to neutralize ONE negative experience. That is a lot of compensatory behavior to overcome human (and animal) instincts.
To manage CX risk it is essential that firms understand the “downside drivers” of CX failures. These negative or downside drivers can isolate the performance criteria where companies simply can’t afford to fail if they want to “do no harm.”
Once a problem has happened, the key is reducing the impact on the customer relationship: that is, minimizing the harm that has occurred. Improving the ability to try to redress problems in a timely manner is one key advantage of a real-time feedback system and closed loop process. Performance failures can be more easily identified, managed and, if necessary, escalated. Having invested the money to ask customers about their experiences and customers having invested their time to respond, it is incumbent upon the company to reply to any issues and remediate any negative experiences as quickly and meaningfully as possible.
Unfortunately, however, this doesn’t always happen. There are all too many instances where customers put in the time and effort to tell a company about an issue but the firm fails to respond. This adds insult to injury for the customer and, if anything, compounds the initial harm by essentially saying that the company doesn’t even care that the customer was disappointed and wasted their time reporting as much.
Hippocrates no doubt wasn’t thinking about the customer (and probably not even the patient) experience, but the HippocratiCX oath still holds true as the fundamental guardrail for customer experience management.