Originally published on GreenBook, May 2021.
In Part One of this series, three initiatives buckets were introduced. The initiatives designed to retain customers related to:
- competitive parity,
- retention and
- brand building.
In this part we examine CX initiatives designed to retain customers by identifying a hierarchy of those organizational actions and indeed, inactions that result in pushing customers away.
A customer’s pain point occurs when, in the customer’s assessment, a supplier has failed to meet service expectations. Putting aside the theological world and the economic lunacy of even trying, absolute CX perfection is unobtainable and so, setting out to eradicate all pain points for all customers is a fool’s errand. When your CX team talks about “surprising and delighting” customers and a “frictionless experience”, you can be certain that your CX program is philosophically based, rather than business outcomes focused. And you should not be surprised to find the marginal cost of the next CX initiative is less than the marginal benefit in the form of lowering defection and raising retention. Commercially, this often results in new and expensive CX initiatives which are ill-designed to attack a defection issue.
In this instance, the business should be narrowly focused on understanding how defection can truly be impacted through retention-based initiatives.
Thinking about the myriad of touchpoints and interactions, the natural executive question is: which of these drive behaviors and therefore should have metrics set and initiatives developed for improvement? The answer is given by two key considerations:
- The organization’s objectives i.e. a x% improvement in retention, reduced churn etc; and
- What actions the multivariate analytics establishes will enable the organization to achieve those objectives i.e. which touchpoints are currently eroding customers’ willingness to return?
In too many instances, it’s the rigor of the analytics which is the missing link – creating expensive, and ineffective in CX programs.
It’s the rigor of the analytics which is the missing link in the clear majority of CX programs
All too often CX practitioners forget basic sampling theory and proffer tiny, convenience samples which ultimately result in costly CX initiatives. Trouble is, there is no objective, scientifically derived measure that the “problem” they are solving for is related to any business outcome (e.g. retention). For example, for an airline in Asia, a common in-flight customer complaint was that the seat-back pocket was too small to fit personal belongings. The cost of addressing this design was considerable. While analysis showed that a small seat-back pocket was certainly an annoyance, it had zero effect on rebooking behavior. This analysis was consistent with the practice of European carrier, Ryanair.
Dating back to 2004, Ryanair removed seat-back pockets assisting in industry-leading 25-minute turnaround and reduced cleaning costs – which fed though to lower fares. Lower fares were a driver of customer retention and acquisition. Large or for that matter, no seat-back pocket is not – despite the volume of stated complaints.
There is no objective, scientifically derived measure that the “problem” they are solving for is related to any business outcome
Most stated customer complaints are merely “squeaky wheels”. Sadly, too often there is an absence of science in CX programs and, it is this reason why organizations are wastefully allocating unsustainable resources to initiatives that are scarcely altering the organization’s outcomes or even, the CX measures.
Caution! - Stated Problems
A North American airline prided itself on its category leading in-flight entertainment. It discovered a seemingly inexplicable relationship between delayed flights and complaints about the in-flight entertainment. Needless to say, passengers on delayed flights were no more likely to experience a problem with the in-flight entertainment than passengers on flights running on time. The intervening or moderating variable was the delay to the schedule sensitized passengers to find fault in the broader airline offer. This is a very common finding and yet, organizations use the raw frequency of stated problems to allocate scarce CX resources.
In Quick Service Restaurants
Forethought found that 21.9% of the category leader, Applebee’s guests experienced an issue (counting even the most seemingly trivial issues). Once a guest had become sensitized to the occurrence of a problem, the probability of multiple problems rose. Indeed, there was a 52.2% probability that a guest that experienced a first issue would then experience a second issue. Even more (62.6%) would go on to “experience” a third issue.
The simple point is, stated problems is a sub-optimal way to look for opportunities to improve customer experience. Often, with insufficient science and rigor, managerial judgement is applied to allocating initiatives to pain points: generally the most vocalized “squeaky wheels”.
Somewhere hidden amongst these unfiltered pain points are drivers for markedly changing the customer experience and positively altering retention. These are the pain points directly impacting the primary drivers of defection and other organizational outcomes. Because of the absence of science in identifying these drivers, the important initiatives are often buried amongst the unimportant initiatives and so, there is insufficient investment, endurance and tenacity levelled at the drivers that count.
Somewhere hidden amongst these unfiltered pain points are drivers for markedly changing business outcomes
The rising CX “investment” begs the question, when will the return on CX expenditure make a compelling business case for ROI? Forethought would argue that a positive ROI will only be achieved when marketing science is applied to the screening of initiatives. Statistically determining the subset of drivers that bring about the desired organizational outcomes is an investment that pays for itself ten-fold in guiding a narrow focus for real CX transformation, ongoing measurement and tech integration.
The next article in this CX series is ‘Classifying CX Initiatives - Part Four: Brand Building’.
Ken Roberts is Executive Chairman and founder of Forethought.