What is Your CX Priority: Satisfied Customers or Profits?


Share on LinkedIn

What should your ultimate goal be when designing your customers’ experiences? Well, you might assume the logical response to be “to have satisfied customers”. We, however, are not that sure.

What can be considered a “satisfied customer” to begin with?

This is a question that most customers can’t even answer. In truth, unlike a newly widespread mentality, customers don’t require “perfect” or even “delightful” experiences in order to stay. In fact, in his book The Effortless Experience, Matt Dixon uses research to prove the point that “delight doesn’t pay, and the belief that you must exceed the customers’ expectations to impact loyalty is false.”

If companies want to maintain and increase profits with customers buying and re-buying their products and services, what they need to provide is an overall experience in which the benefits (rational and emotional) outweigh the costs (price, effort, time etc).

You cannot make everyone happy with everything all the time, and even if you could, satisfaction and recommendation still aren’t enough to stop churn; in fact according to Cambridge University, they don’t guarantee loyalty and they don’t drive new sales.

When you try to please everyone, you end up pleasing no one

Many times CX practitioners focus on intangible, esoteric analyses that fail to correlate with company numbers or shareholder expectations.

We take a “holistic approach” that seems right from our biased perspective without truly knowing if we’re focusing on the aspects of the experience that actually drive our customers’ decisions to buy or not. And this is a mistake.

By trying to do everything, in many cases we end up doing nothing. There are so many influences affecting the experience that when we try to measure and address them all, we fail. Why? Because it’s extremely expensive and time-consuming to monitor every inch of the journey, and the return on that sizable investment is nearly impossible to reach.


CX’s Love affair with ‘Dubious’ Metrics

While historically, the CX community has become enamored with unreliable, broad metrics, with little to no actionable results, other industries are less easily charmed with empty scores.

Remember what happened when Wall Street Journal caught wind of NPS®? They were not impressed in the slightest. In fact, the article referred to NPS® as a “dubious management fad” (ouch!). That is because Wall Street cares about one thing: profit. And you’d be surprised at how little the main customer experience KPIs actually correlate to profit, churn, and loyalty.

CSAT and NPS® fail as Growth and Loyalty Indicators

When NPS® was launched as “the only metric to measure loyalty” Bain&Co. published a paper claiming that its greatest rival, CSAT was unable to predict growth. But the aforementioned study from Cambridge University revealed that NPS® doesn’t do any better.

Here is an excerpt from the study:

“Clearly, the widely acclaimed NPS® is based on a customer’s attitude rather than his or her actual behavior. In 2013 Pollack and Alexandrov provided insights into the validity of the Net Promoter Index (NPI) to measure customer loyalty and predict financial performance. The study investigated the net promoter question as an alternative to the traditional word-of-mouth measure. The findings did not support the assertion of NPI’s superiority over other voice of customer metrics. There is no empirical evidence to support the predictive ability of NPI on growth and financial performance. The authors recommend that firms do not use NPI as a standalone diagnostic tool, or as a predictor of growth or financial performance.”

Does this mean CX KPIs are incapable of predicting growth?

No. But it does mean that there is a lot of room for improvement. Both CSAT and NPS®, for example have their place in analyzing positive and negative feelings throughout the customer journey. And let’s not forget how much both of these metrics have contributed towards helping customer-centricity become a priority for companies all around the globe.

However, more often than not, they fail at measuring purchase or churn decisions, which are the root cause of profits and/or losses.

We are in the infancy of the 4th Industrial Revolution. Technology is at our doorsteps with machine learning and A.I., eager to disrupt the market as we know it and those who don’t get on board now will be left behind.

So, what’s the alternative?

VoC surveys need to become as dynamic as the market we live in today. Companies can no longer get away with basing strategic decisions on metrics that don’t present a strong correlation with financial results. Just think of former giants that bit the dust despite boasting impressive CX KPIs, like Nokia, Blackberry, Toys “R” Us, and countless others.

Lucky for us, MarTech has provided us with new tools capable of pinpointing insight in a way that was previously impossible. Instead of sorting through endless heaps of data, looking for the needle in the haystack, we can save time and money by concentrating our efforts on the part that matters most: the decision.

CX needs to rally behind profitable projects

The main takeaway here should be that the success of your CX projects hinges on profitability. Why? Because it’s pretty difficult to get corporate buy-in for a project that won’t increase, or at very least correlate with financial results.

This is a numbers game, so if you want to get your board excited, you’ll need to demonstrate the profit potential of designing and implementing experiences that positively impact customers’ decisions.

Without practical and actionable results, CX is useless. We cannot be so focused on making every step of the experience perfect that we forget to ask our customers what they expect from our products and services, what will make them stay and, most importantly, what would make them leave.

There’s no more room for one-size-fits-all experiences or surveys. So, consider looking up Industry 4.0 powered technologies (self-adaptive surveys, NLP modules, etc) that dialogue with clients based on whatever is important for them to say and not for you to ask. That is the surest way to know precisely how to increase purchases and loyalty, decrease churn, and win at both customers and profit.

Net Promoter Score and NPS® is a registered trademark of Bain and Company.

Mary Drumond
Mary Drumond is Chief Marketing Officer at survey tech startup Worthix, and host of the Voices of Customer Experience Podcast. Originally a passion project, the podcast runs weekly and features some of the most influential CX thought-leaders, practitioners and academia on challenges, development and the evolution of CX.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here