I have spent twelve years studying and championing customer experience, which only now seems to have reached a level where it is reverberating throughout the business world. Research shows that a moderate increase in customer experience generates an average revenue increase of $823 million over three years for a company with $1 billion in annual revenues.
I have compiled my latest research into a my new book called The Customer Of The Future: 10 Guiding Principles For Winning Tomorrow’s Business, the book’s content can be bucketed into three areas to include “psychological,” “technical,” and “experiential” approaches to a customer experience strategy.
Psychological:
In all of my research I’ve found the biggest missing link includes mindset, culture, and leadership development. I used to think technology defined a company’s customer experience – that allowed for a seamless zero friction customer experience that provided customers flexibility and choice. In fact my book deal was set to be a book about technology. But I had an eye opening experience. I had the chance to visit and tour Amazon. I was very eager to peak behind the curtain and find the magic that made this self-proclaimed “most customer centric company on earth,” customer-centric. But I was shocked by what I found. There was no magic or secret sauce. I simply met very hard working, humble people – that had the right attitude necessary. No matter if it was Jeff Bezos, the manager of a shipping department, or the head of HR, everyone was drinking the same kool-aid of focusing on the customer. Love Amazon or hate them, they have the mindset necessary to compete on experience. Culture is a close relative of mindset. Many companies have no clear idea of what their culture actually is. They might tell you what they want it to be, but if you actually asked employees their feedback would be very different. My own definition of culture is creating a space where people feel safe, where they are challenged to create personal growth, and that they want to come back to every day. If you feel great at work, then you are going to produce better work. If you feel a lack of purpose, you don’t have the tools you need to do your job, and you are uncomfortable with working conditions, your work will suffer. Employee experience is the first step in creating a customer-focused culture. Many companies treat culture as an afterthought, particularly in the business to business space, where only 14 percent of large B2B companies have a customer-centric culture. Company culture and employee experience are directly related to profits. Companies that do employee experience well have 4.2 times the average profit of those who don’t, according to a study of 252 companies.
The last piece of the psychological approach to customer experience is a leadership development strategy, because all too often we give customer experience lip service by appointing a chief customer officer. We think we’re done once we have this figurehead in place. But that’s not true. Today’s complicated environment requires transformational leadership, a company that develops and onboards talent indoctrinating them into our culture and philosophy, not leaving it up to chance.
Technical:
When I had set out to write a technology book, one thing became clear to me very quickly. Customer-focused companies had CTO’s that did not want to talk about technology. For example I clearly remember my interview with former CTO of Sephora Ali Bouhouch. I went to his office in downtown San Francisco prepared to talk about his technology strategies, but all he wanted to talk about was the Sephora customer, an acne-ridden teenage girl, who simply wants to go to parties and not feel embarrassed by her skin. He wanted to talk to me about what technology enables Sephora employees and customers to do; the human side of it. He had no interest in talking about technology. While technology is important, it’s not everything. First the company must have the psychological pieces in place before making technology decisions. In the book I explain the category of customer experience technology. If we simply follow the money, the customer experience investments going into technology – specifically artificial intelligence – are astounding. Forrester Research estimates that the “Cognitive Computing Technologies” (platforms based on artificial intelligence) business will be worth $1.2 trillion by the year 2020, with investments in AI tripling by then. Digital transformation is also covered in my book at length, with twelve steps to achieving it. Often when I give a speech I will ask the room how many of the audience members have been through a digital transformation, how many are going through one right now, and how many haven’t done anything at all. I’m always shocked to find one third or more of the room has done nothing to plan a digital transformation.
The last pieces of the technical strategy are personalization and analytics. With both of these topics, thanks to advances in technology, we can be forward-looking rather than simply doing too little too late. Personalization reduces acquisition costs as much as 50 percent,
lifts revenues by 5 to 15 percent, and increases the efficiency of marketing spend by 10 to 30 percent. Time is our most important commodity, and personalization respects customers’ time. If you aren’t in the business of saving your customers time, making their lives easier and better, you risk being disrupted by a newbie who will. Customers will defect to companies that know them, anticipate their needs, and provide just-in-time products and services. Companies won’t notice this slow exodus until their market share is gone, and it will be too late. In the book I dedicate an entire chapter to analytics, and the role analytics plays in creating better experiences for customers, and create more efficiencies in our businesses.
Experiential:
The third piece is the experiential part of a customer experience strategy. I have bucketed marketing, a code of ethics and customer experience design into this category. The truth about marketing is we can’t talk about communicating with customers until we think about how we are organized internally. As Jamie Gutfreund, the CXO of Hasbro once told me in an interview, our marketing departments are like separate vertical sky scrapers, completely cut off from one another, and we have a customer who expects a horizontal customer experience across every environment she moves through and she’s not getting it. We can’t talk about customer-focused marketing without looking at how we share data around the customer. Customer data is critical today, but so is having a code of ethics that defines how a company will protect and serve the customer, and their privacy. We need to be thoughtful, considering what type of experience we would personally want to have, and then build it. While it’s easy to lean on AI, and data automation, today not having a clear set of principles is dangerous. In the book I share my own experience with my identity being stolen and publicly used, and there was nothing I could do about it. The last piece is designing experiences, because often we design experiences that are product-centric, not customer-centric. We make life harder on the customer to make it easier on our own brand. When the company starts being more thoughtful, considering how the customer actually uses the product, and wearing an empathy hat, that is how you design the zero friction customer experience.
The customer of the future clearly has high standards, and the company of the future is able to meet those standards. The company of the future understands that if they are able to simply make life easier and better for customers, they will always have a customer.
Order The Customer Of The Future: 10 Guiding Principles For Winning Tomorrow’s Business on Amazon today.
Blake Morgan is a customer experience futurist, keynote speaker and the author of two books including The Customer Of The Future: 10 Guiding Principles For Winning Tomorrow’s Business. Sign up for her weekly customer experience newsletter here.