Why the majority of customer experience efforts will fail

The entire ethos of this blog is to take a questioning look at the Customer field.  On that basis, I confidently predict that the majority of customer experience efforts will follow the CRM cycle and fail to deliver on the promise of higher customer satisfaction, loyalty, revenues and profits.  Why?

The theory is fine

Is there something wrong with the theory?  Not that I can see.  The theory is robust  in that the companies that consistently create superior value for customers tend to do well in the long run.  These companies tend to companies that have put good profits – those made by creating value for the customer – at the heart of their business models.  And behind this business model lies a distinct ethos: that of not taking advantage of, exploiting and letting down their customers.  It is an ethos that gets that trust and loyalty is earned by being trustworthy and being loyal.

The critical importance of ethos and culture

Before we go further it is worth defining ethos:  the guiding beliefs or ideals that characterize a community, a nation or an ideology.  Ethos gives rise to culture.  Specifically, the taken for granted attitudes, values, priorities, thinking and behaviours.  I like to think of cultures in terms of natural landscapes: mountains, deserts, jungles, rainforests, savannah…Each culture supports certain types of people, certain types of behaviour and rules out many others.

All customer experience initiatives are embedded within a specific cultural landscape.  And most of them are busy working on eliciting customer feedback, redesigning customer interactions, redesigning business processes, changing systems and working on the front line staff who interact/serve customers.  Very few are paying any attention to the cultural aspects – of the organisation or the wider society.

How does culture play out?

When Katrina struck the USA the enterprising American business folks got busy on making money out of the misery of their fellow americans.  So motel and hotel room prices doubled, tripled, quadrupled.  So did the prices of food and drink and so forth.  This behaviour is a direct result of the American culture and particularly the business culture.

When financial services industry was deregulated in the UK, the financial services folks got busy on working out clever ways of exploiting the ignorance of  non-financial people be they business folks or consumers.  And frankly, it was culturally OK – after all the motto is “Buyer beware” – the responsiblity is for the buyer to make sure that the seller is not taking him for a ride.

Now compare that with what is happening in Japan right now.  The north of the country is devastated and thus the Japanese have an opportunity to enrich themselves at the expense of the fellow countrymen who are suffering and in no position to take care of themselves.  Yet, there is no looting.  Nor are the Japanese businessmen taking advantage of their countrymen.  On the contrary, supermarkets are cutting prices and vending machine owners giving out free drinks.  You can read more here.

Why the majority of Customer Experience efforts will fail

The majority of Customer Experience efforts will fail especially in the USA and the UK.  Why?  Because Customer Experience efforts can only take hold and flourish in cultures where loyalty and the long term is valued both by society at large, by businesses and by customers.  This may be the case in Japan (and hence no looting and price hikes), it is definitely not the case in the USA and the UK.  Here only growth and profits matter.  Why bother to go the extra mile to make ‘good profits’ when you can take the short cut and make ‘bad profits’?  Put differently, we have Katrina, we have folks who are desperate for our products, so it would be stupid of us not to double, triple, quadruple our prices!

What I find really puzzling is that companies are busy taking actions that will, in the longer term, result in poorer customer service.  Yet, somehow, the companies persuade themselves that they are improving the customer experience.  When I look at it, I see cost reduction disguised as customer experience improvement.  Which reminds me of the way that the UK government is spinning the massive cost cutting: ‘savings’ and ‘efficiencies’.

If you disagree then please comment and share your perspective.  I am open to being challenged, to being shown the error of my ways.

PS: Here is the Forrester Perspective

Paul Hagen wrote an interesting post on the gulf between the hype and the reality.  Click here to read it.

 

 

Posted on March 15, 2011, in Customer Experience, Customer Strategy and tagged , , , , , , . Bookmark the permalink. 6 Comments.

  1. I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you down the road!

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    • Hello Jason
      I thank you for your kind words. I invite you to take part in the conversation and do reach out to me if I can help you with anything customer. Perhaps you’d like me to explore and write on a specific topic.

      Regards
      maz

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  2. If you want a better understand of what I mean by bad profits and the culture behind these bad profits read “Telecoms – Regulator demands steep cuts in mobile revenues”. The interesting points are:

    1. The European commission has called for these cuts;
    2. The cuts concern wholesale prices charged by the big mobile networks for connecting calls to their networks;
    3. The big operators (Vodafone, O2, Everything Everywhere) have strongly argued against cutting fees;
    4. Viviane Reding (European Commissioner for telecoms back in 2008) said back in 2008 that mobile termination rates were excessive and “guaranteed money” for operators.

    If you study the mobile telecoms industry you will find that the European Commission is the institution that has done most for the mobile phone customer. Why not the mobile phone companies? Think Katrina.

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  3. you asked to leave comments if we disagree, not if we agree – so I am not sure I agree, but I really liked your sentence “When I look at it, I see cost reduction disguised as customer experience improvement” . A perfect example is Pelephone – a mobile carrier in Israel (which I recently ported to…). They recently officially notified all their customers that customers who have questions or just want change their plans SHOULD NOT come to the service centers, but only use the phone. So it is “you do not have to come to us, just call” but behind the scenes it is “we will cut face-to-face service representatives, and you will rot waiting for someone to answer the phone”…

    Having said that, I wonder if your statement is right. Even if you live in a country where money speaks louder than humanity (UK, USA) – don’t you think that a customer experience oriented organization will standout from the crowd ? The impact might be even bigger than in other countries.

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    • Helo Arie, I thank you for dropping by and sharing your experience, your perspective and posing an interesting question.

      First of all let me say that we do not have to agree – a lot of insight tends to come from people who do not necessarily agree and yet engage in dialogue with an open – questioning – mind. As for my prediction (that the majority of customer experience efforts will fail) let me share that I will be delighted to be proven wrong. In fact, I issue a challenge to to all the companies engaged in CEM to prove me wrong! Frankly, I write about this stuff because it matters to be that we get this right.

      As for the question you pose: “….don’t you think that a customer experience oriented organisation will stand out from the crowd?”. I am in total agreement with you, in the UK and the US, a customer oriented organisation will stand out from the crowd. To use an analogy, an oasis really stands out in a desert. Why? Because an oasis is a rare event in a desert landscape. Which brings me to my point: the desert landscape does not make it easy for oases to sprout up across the desert: the essential ingredients (soil, rainfall, climate..) are simply not in abundant supply. So I am saying that the culture and institutions (including business practices) work against companies being customer centric – especially companies that to date have organised themselves to take advantage of customers.

      On this point, I am also all to ready to be proven wrong. Yet, I am rather confident that I will not be. The future of customer centric orientation in my view lies with new start-ups who build customer focus into their business model and their organisation (like Amazon and Virgin).

      Finally, please excuse me for my late reply.

      Regards
      maz

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  4. Maz,
    Thank you for your answer. I love the Oasis analogy, but I am not sure it is 100% correct here. An Oasis sprouts spontaneously based on the conditions (or the essential ingredients as you call them). Once a nomad goes in the desert (which he believes to be a hot place with no water) finds an Oasis, he says to himself “wow, I did not know such thing can happen” and from that point on, when he walks with his camels – he will look for more oases. Now he is converted and will tell his fellow nomads about the phenomena. While in the desert Oases are created based on nature forces, CEM aware places are created by people. People who will see that the first oases are popular, and will look for more places like this, prefer places like this and strive to create more CEM aware places. So I believe that because it stands out from the croud, there is more potential to see the benefit.
    However, as you say – time will tell…
    Arie

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