The Top 5 Customer Experience Challenges – and the Best Practices to Avoid Them
- Few business leaders question the financial upside of delivering superior or differentiated customer experiences (CXs).
- Fewer business leaders actually achieve that upside. Research shows that many companies efforts do not result in higher customer lifetime value, longer customer retention or any other driver of business growth.
- Fortunately, the research also shows these customer experience challenges stem from 5 common reasons – which if recognized can be prevented.
Bain & Company analysis found that CX leaders grew revenues 4% to 8% above their markets. The data revealed that differentiated CXs resulted in customers that buy more, stay longer and make recommendations to their friends. That makes logical sense. But that doesn't make it easy.
Research by Forrester found that 84% of firms aspire to be a CX leader, but only 1 out of 5 delivers a good or great CX. Forrester is not alone in sharing some distressing data points.
- According to Bob Thompson, CEO of CustomerThink, less than a third of CX initiatives are successful. That's according to a study which found only 23% of respondents realized tangible benefits from their CX investments. Ouch.
See the research that shows less than one-third of customer experience projects are successful – and the best practices to prevent the most common challenges.
Click to Tweet- IDC shares the magnitude of the problem. The analyst firm did a research project which found 87% of companies say they provide excellent CX, but only 11 percent of customers agree. That's a seismic gap.
Research published at Harvard Business Review, McKinsey and others show the top 5 reasons for customer experience failures are poor strategy, ad hoc implementations, missing technology, a lack of change management, and poor analytics.
The Best Practices to Avoid Customer Experience Failures
When it comes to customer experience mistakes, an ounce of prevention is worth a pound of cure. Recognizing why customer experience fails permits companies to apply risk mitigation and proactively prevent or mitigate the factors that challenge success.
Here are the techniques to avoid the 5 most common customer experience mistakes.
Start with Strategy
As the saying goes, 'Well begun is half done.'
Starting with strategy may seem like common sense but for business leaders unsure of what a strategy should include, how it should accelerate execution and what measurable benefits it should deliver, it's not commonplace.
The right customer experience strategy does four things:
- It prioritizes and clarifies the most important customer and company objectives; customer objectives will revolve around customer satisfaction (things like CSAT (customer satisfaction) and NPS (net promoter score)) while company objectives will focus on things like customer lifetime value, retention and other leading indicators of business growth
- It defines the methods or best practices to achieve those objectives; this will include how to deliver differentiated CXs and multiple points in the customer journey
- It creates a roadmap for time-based execution; that's because a boil the ocean strategy doesn't work, and execution needs to be planned in progressive phases
- It uses performance analytics to measure progress, show results and make quick course corrections when needed
Strategy is the precursor to everything that comes after. Great execution won't get you very far if your strategy is wrong. In fact, without strategy the execution is mostly aimless.
A customer experience program without a clear strategy is a lot like watching a foreign language film without subtitles. A lot of activity but you have no idea where it's going.
Apply a Repeatable Methodology
Despite the near obvious recognition of the CX imperative, most business leaders fail in the execution. Research from O’Keeffe reported that while 91% of businesses want to be a CX leader, only 37% even get started with a formal program.
The O'Keeffe study is almost identical to research done by IBM which found business leaders get the vision but incur great difficulty in executing the plan.
What's needed is a deployment framework that advances the strategy into clear and prescriptive execution. A good customer experience framework is built on the four building blocks of value creation, experience design, technology automation and knowledge sharing.
An effective framework engineers the customer and business outcomes defined in the strategy and thereby maximizes the likelihood you delight customers and at the same time achieve company goals.
Leverage the Right Technology
The most common mistake here is piecing together a portfolio of best of breed applications. While these point solutions can solve immediate problems, they also contribute to longer term challenges such as data siloes, incomplete workflow automation, difficult enterprise-wide reporting and complex system integration.
A better approach is to start with an overarching architecture and technology platform. The diagram below shows a high-level architecture. It also shows that for most companies, the platform will be their CRM system.
A centralized CRM platform can be configured to deliver prescriptive customer interactions. Market leading CRM software platforms such as Microsoft Dynamics and Salesforce also have ecosystems of integrated third-party apps to fill any gaps.
Don't Forget Change Management
A Forbes publication advises that your ability to fix imperfect customer processes "depends on having built a culture where mistakes are embraced as learning opportunities, and customer complaints are seen as opportunities for improvement."
That's good advice but for many companies will require a shift in company culture to put the customer at the center of everything the company does and to quickly bring customer experience challenges to the forefront.
A change management program should be a part of any type of culture change. It will encourage employee buy-in and enthusiasm for what is nothing short of a company transformation.
Recognize that a new CX program brings new processes, automation, information, roles, responsibilities and control (or oftentimes an actual or perceived loss of control). That's a lot of change, and the problem with change is that it causes anxiety for many employees.
While the change is endorsed by the few business leaders imposing the change it is not always so well accepted or is even contested by the majority receiving the change.
To facilitate that difference, a change management program systemically shifts individuals, teams, and organizations from a current state to a defined future state while mitigating productivity loss during the transition, creating an environment for sustained change and realizing the benefits of change more quickly.
Data & Analytics
Most leaders know you can't manage what you can't measure. Fewer seem to know how to measure the experiences that drive customer and business growth.
According to Gartner, 81% of business leaders report they will compete mostly or entirely on CX, but less than half have established the link between CX drivers and business outcomes. The analyst firm goes on to say that while 48% of CX projects exceed management’s expectations, only 22 percent exceed customers' expectations.
Analytics are needed to bridge this gap and measure success for both the company and the customer. They are also needed highlight variances in real-time so staff can quickly intervene, and management can pursue a path of continuous improvements. The key to successful analytics is to focus on the most impact customer experience metrics.
A Risk Management Approach
Most customer experience failures follow two common mistakes. First, they fail to accurately identify risks that threaten their company objectives. Second, perhaps because they don't appreciate the magnitude of the potential risk, they fail to act timely.
They let the risks linger, somehow believing they will go away on their own. The opposite is more likely. Unmanaged risks fester and grow, often below the surface, so when they later emerge, they are much more difficult to resolve and may be uncontrollable.
Customer experience best practices make it clear that a risk management program can avoid these and other challenges.
Risk management is the process of identifying, measuring, and prioritizing risks, implementing strategies to manage them, and creating plans to prevent, mitigate or respond to high likelihood or high impact risks which threaten our project objectives.
While it is impossible to eliminate all risk or anticipate all the challenges that may occur. Customer experience statistics show that risk management is one of the best tools available to reduce the likelihood that big problems will occur, and that concerns can be dealt with before they become crisis.