What is Customer Experience & why do we do it?

With the rise of Chief Customer Officers, the proliferation of CX ‘forums’, and cries such as ‘CX is the new battleground’ ringing out at conferences and across media platforms, it could be tempting to think that the discipline of Customer Experience (CX) has been successfully sold to the business community at large.

While this is certainly the case in some industries, especially for those where business is conducted wholly or partially online (for reasons we will explore later), it would be a grave error to presume that there exists anything like universal acceptance that Customer Experience is worth the hype.

This article explores the following:

  1. What is Customer Experience, and what is its promise?
  2. How does one do ‘Customer Experience?’
  3. What is the future of Customer Experience in aged care?
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What is Customer Experience, and what is its promise?

Let’s start apophatically as this point can be misunderstood even among CX professionals: Customer Experience is not an act of benevolence. It is not an untethered exercise in redeploying an organisation’s balance sheet to improve people’s experiences, moments, journeys, days, or lives (though these things can be a result of doing good Customer Experience work, they can’t be the driving purpose).

Instead, Customer Experience can be best understood as a philosophy, or a set of beliefs that strung together create a compelling argument to do things differently.

These beliefs are:

1.Where the information is readily available, people use ‘Customer Experience’ to evaluate competing products and services (usually along with price and perceptions of quality).

Think about your own process when choosing hotels, an insurer, a phone plan, or an internet service provider. If, like most people, you read reviews to help you evaluate options, you are weighing Customer Experience.

For ‘products’, Customer Experience is often evaluated as something separate from the product itself. When you buy a new TV online, you assess both the product (the tv), and separately, the service (how easy it was to buy, how quickly it shipped, how long it took to get a problem fixed). In a lot of cases the product (Sony) and the service (Amazon) can be provided by different companies.

For what we typically call ‘services’, the Customer Experience is more difficult to extricate. When evaluating insurers, you want to know how easy or difficult it is to lodge a claim before you make a decision on a provider, no matter how attractive their premiums may be, and when choosing a hotel, the courteousness and helpfulness of staff is an integral part of the experience as a whole.

2. Because of the role of Customer Experience in decision making, CX has a direct and observable impact on financial performance.

Great Customer Experience has been shown to be a differentiator in much the same way that price and quality are. Whether organisation’s know it or not, the way they interact with customers (or fail to) is almost certainly impacting their bottom line. McKinsey analysis suggests that superior CX makes employees happier, results in revenue gains of 5 to 10 percent, and has the ability to reduce costs by 15 to 25 percent within two or three years.

3. Investing in Customer Experience has a net positive effect on commercial performance.

Beware succumbing to the temptation to view Customer Experience as a humanitarian exercise. Customer Experience isn’t done out of the kindness of our collective hearts, but because we believe that CX interventions positively affect our commercial performance. It’s not enough for Customer Experience teams to demonstrate that initiatives have improved performance on customer satisfaction metrics (e.g. NPS), they have to also be able to show that there is a financial benefit (typically a more difficult proposition to prove), that this benefit is greater than the cost of the intervention, and finally that the sum of all benefits is greater than the cost of all interventions (and any intervenors!).

If you’re making decisions or interventions based on the above three beliefs, or some elements of them, you’re more than likely doing Customer Experience work. Let’s dig a bit further into what this means.

How does one do ‘Customer Experience?’

The first thing to note about CX is that it can be done anywhere in an organisation, by anyone (you don’t need Customer Experience in your job title to move the needle). Customer Experience is primarily a way of thinking, and it’s for this reason that it’s possible (though inadvisable) to have ‘Customer Experience evangelists’ (cringe), whereas the idea of a ‘payroll evangelist’ is nonsensical (one is a way of thinking about business, the other is a business function).

The following activities are typical to ‘Customer Experience’ programs:

  1. Listening to customers.

Sometimes it will fall to the Customer Experience team to set-up or spread voice of customer programs across an organisation. Without the mechanisms in place to gather both regular and ad-hoc feedback, CX programs will struggle to identify possible areas for intervention.

2. Mapping and cohering customer touchpoints to form an understanding of the overall ‘customer journey’, and the opportunities for improvement.

Though businesses typically understand their individual touchpoints with customer’s (sales, onboarding, billing), seeing the overall journey from the customer’s perspective is less common. Forming this understanding often unearths opportunities for significant improvement, and customer-sophisticated organisation’s will ask themselves how they can improve this overall journey rather than individual touchpoints (indeed, journey performance is more strongly linked to economic outcomes than individual touchpoints).

3. Explicitly linking Customer Experience to value.

What are the financial benefits of increasing NPS by ten? What is the relationship between customer satisfaction and lifetime customer value? What does an uplift in satisfaction do to churn rates? Understanding these economic levers greatly bolsters the case for change.

4. Adding a customer lens to funding hurdles, governance structures and performance indicators.

Once Customer Experience has been linked explicitly to value, the case for embedding CX thinking operationally can be made. Common approaches here are adding a customer lens to the scoping and prioritisation of projects, embedding a customer voice into project steering committees (or equivalent), and making customer satisfaction the focus of management KPI’s.

5. Restructuring or realigning BU’s so that internal structure better reflects the customer journey.

If we use the customer journey as our central organising structure, rather than historical lines of division, back-office silos are superseded by cross-functional teams that are able to provide services, support, and expertise across the entire customer journey.

6. Using customer behaviour (current and expected) to set strategic direction.

In some ways, people’s expectations shift markedly over time, while in others they stay the same. Predicted shifts in customer behaviour must guide strategy, as they are likely to be accompanied by changes to what makes a product or service ‘successful’.

7. Achieving a culture of customer-centrism.

The holy grail is what’s often referred to as a ‘customer-first’ or ‘customer-centric’ culture. This is achieved when all decisions are passed through a customer filter, and where it’s second nature for all employees to at all times weigh how their work is affecting customers. In such an environment, there is no need for a dedicated Customer Experience team, as the philosophy is entrenched and self-perpetuating.

In new companies, and especially in technology companies, the understanding that Customer Experience drives financial performance is built into the organisational DNA. These companies know that reducing friction (the difficulty of evaluating and purchasing a product or a service), improving the onboarding experience, moving a 4.2/5 product rating to a 4.3/5, or otherwise improving the Customer Experience has a clear, direct, and quantifiable impact on revenue. In the online world everything is tracked, measured, and reported on.

For traditional organisations, and especially for those who conduct business offline (or in a mix of offline and online), a causal relationship between CX and financial performance is harder to uncover. Within the aged care industry in Australia, things are particularly difficult due to some peculiarities with the way the marketplace currently operates (switching costs are prohibitively high, not every provider can service all geographies, block funding is still in operation for some funding types). Our team is working hard to gather the evidence that the relationship between CX and financial performance persists despite these complexities, and we expect to be able to report on this soon.

What is the future of Customer Experience in aged care?

It won’t surprise anybody outside the industry that the future of aged care is customer-driven. In the short to medium term, we expect to see the following shifts:

  1. Information asymmetries (providers knowing more than potential customers about their services) disappear, as online ratings and reviews become commonplace. Expect the Canstar or iSelect of Aged Care to emerge (www.agedcarereviews.com.au is a good example). Soon, disgruntled customers (and their family members) will be highly visible and highly influential, as they have been in most other industries for years.
  2. Existing institutional and clinical-based models won’t survive a tech-literate generation entering care (especially those that keep residents locked up or chemically restrained). Increasingly, locking up residents will be viewed as a human rights issue, and we can expect to see many more first-hand reports of what life is like within residential aged care. In a hyper-connected world, previously silenced residents use their voices to speak out against the poor quality of aged care services.
  3. Person-centred models of care, like Natasha Chadwick’s ‘New Direction Care’, flourish and expand rapidly as customers vote with their feet.
  4. The Australian government continues its drive toward ‘consumer directed care’ with targeted economic and social reform, bringing the functioning of the aged care market in line with other industries.

For anybody who has spent significant time within the aged care industry, it can be hard to imagine these shifts, as on the surface they appear discontinuous and even severe. In reality, however, the aged care industry is simply on the cusp of the transformation that we have seen occur in nearly every other customer facing sector.

Our team is excited for this customer-led future, as we believe the current system is fundamentally failing. In 2020, we take aim at this system ; to follow our team’s progress, please sign-up here.