Improving customer experience can increase annual revenue by more than $1 billion for large wireless service providers, airlines, and hotels—and by tens of millions to hundreds of millions of dollars for firms in other industries. But despite these benefits, only 11% of brands earned an “excellent” rating in Forrester’s annual Customer Experience Index study.
What’s holding companies back? As brands go to new lengths to transform their customer experience, their own ecosystems are working against them. That’s because most businesses—even young ones—were conceived with inside-out guiding principles, like reducing costs and optimizing operational efficiency, rather than putting customers’ needs first. For example, one Fortune 500 company’s decision to cut costs by outsourcing transactional data made sense years ago as it promoted its low-cost services, but today that company can’t pull data into its mobile app quickly enough to satisfy users, severely inhibiting the app’s perceived value.
What’s more, customer experience competition is getting fiercer as stragglers claw their way into the middle of the pack across industries. That’s good news for customers on the hunt for good experiences, but bad news for companies saddled with inadequate CX practices trying to stand out from the herd.
To reinvent their place in the market, brands must fundamentally re-think their CX ecosystems: the web of relations among all aspects of a company—including its customers, employees, partners, and operating environment—that determine the quality of the customer experience. At Forrester’s Forum for Customer Experience professionals, I discussed the three initiatives that brands must embrace in order to set themselves up for successful CX innovation:
1. Update organizations
Customer experience professionals possess the deep customer understanding and operational skills necessary to move organizations forward. Realizing this, numerous large corporations like Microsoft, General Motors, and Eli Lilly have appointed experience managers to sit on the executive team. That’s progress, but feisty Connecticut-based Newtown Savings Bank has one-upped the market giants. Committed to delivering on its promise that “the experience matters,” Newtown Savings Bank’s chief experience officer now leads marketing and public relations, and guides the bank’s strategic planning.
2. Upgrade staffing
Typically, managers are separated from day-to-day interactions with consumers. As a result, they too easily develop a mindset that is completely divorced from customer experience realities. Innovative companies are finding ways to infuse their management cultures with an empathetic shared understanding of customers’ needs. A Marriott executive told us that the company is bridging this rift by filling new digital and marketing executive positions with CX-focused managers. Emeritus changed the format of monthly conference calls between headquarters and building managers to make CX, not revenue or occupancy, the first topic of discussion.
3. Rethink partnering
Companies like Facebook, Tesla Motors, and Delta Air Lines see that controlling not only their data, but also the development and deployment of their software, helps them build unique experiences. For example, Tesla built its own eCommerce/customer relationship management system so that it can track a car from manufacture through sale and use. This unified view lets Tesla rapidly correct problems because it can see how a customer uses the car and how the car performs in response. Delta Air Lines has made a similar play by acquiring software IP and passenger data from Travelport, a travel reservations firm. The deal gives Delta greater control over booking, check-in, and in-flight services. As CEO Richard Anderson put it, “We need to own, control, and operate the data around our operations system. We’ll be able to make investments more quickly. We won’t be on a shared software model.”
In this competitive environment, delivering a good experience won’t be good enough for long. As businesses focus on improving their CX ecosystems, they will invent new ways of designing and operating business models, hiring and training personnel, and addressing their customers’ needs. Will your firm be one of the leaders?
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