Lean CX

How to Differentiate at Low Cost and Least Risk

Robert Dew, Bill Russell, Cyrus Allen, George Bej

• Publisher: De Gruyter
• Year: 2021
• eBook ISBN: 9783110684025
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

In recent years, many companies have realised customer experience (CX) is the new marketing battle ground. Substantial investments have been made to map customer journeys, identify pain points and improve CX to try and create cut-through. Using real world applications to introduce next generation design tools based on proven concepts from strategy, marketing, psychology and creative problem solving, Lean CX: How to Differentiate at Low Cost and Least Risk discusses how to use Lean Management approaches to innovate your customer experience.

This practical book describes how the tools from Lean Management can be applied to the CX innovation problem. The authors draw on hundreds of CX design and strategic innovation projects across a range of industries, both B2B and B2C, from primary research through client work and secondary case studies available in the public domain. The examples include many different vertical industry sectors, including those involving hybrid business models. The cases included share what worked really well and where CX failed. The content goes beyond what actually happened to present an idea of what might be possible with the right design approach and committed resources.

Presents the swarm algorithm which highlights what the next generation of successful organisations might become.
Shows how to overcome the CX change risk and reduce the biggest waste in CX management.
Includes numerous international case examples.

Chapter 1 The Case for Change

Some two decades since its inception, the global Customer Experience movement finds itself in a perilous state. Inside many organisations, the executive support and sponsorship of CX that once underpinned investment in CX resources and programs, is being replaced by CX fatigue. The promise of CX transformation once heralded as ‘central to our strategy’ is no longer heard in the corridors and meeting rooms of organisations around the world. Instead, CX finds itself a potential line item on the cost cutting list, the subject of a quiet and considered executive discussion about evacuating costs and reinvesting elsewhere.

CX Under Threat

Forrester Research, Inc., attests to this onset of fatigue and offers the ‘plateauing of CCOs’ as evidence.¹ Few respondents to a 2016 survey held a chief customer officer (CCO) title amongst C-suite leaders who are responsible for CX efforts. Half a decade ago, CCO roles seemed poised for growth as more companies invested in their customer experience efforts. At that time just 10% of Fortune 500 companies had one and 10% of enterprise-level respondents volunteered that their firms planned to hire one. Now CCO roles are under threat. In its predictions for 2020, Forrester forecast that one in four CX leaders would lose their jobs against a background of buoyant economic conditions with increased expenditure on CX. COVID-19 changed that picture and it now appears conservative as budgets are slashed in the face of reduced demand. A figure of one in three CX leaders losing their jobs now looks more likely. Forrester’s original prediction rejected the increasing levels of pushback by senior executives against CX that it is ‘fluffy’ and ‘not commercially-oriented.’ In a recent exchange, an industry pundit made the same point using more colourful language:

The CX industry is drowning under the weight of its own BS at the moment.²

In its Predictions 2020 report,³ Forrester argues even more dramatically that customer experience professionals will either quantify their business impact or find themselves in a tenuous position. CEOs will demand CX initiatives move out of the experimental phase and prove their contributions to top and/or bottom-line growth verified by measurement, metrics, and analytics.

As the Sword of Damocles dangles precariously over the heads of CX executives, the onset of tragedy is restrained only by a delicate chance of survival. We are reminded about the long list of management fads that were once announced with fanfare and now relegated to corporate history. Those fads promised outcomes such as greater effectiveness, more motivated and productive workers, and deeply satisfied customers.⁴ Matrix Management became big in the 1980s where everyone had several different bosses. Matrix Management was phased out as organisations realised it made office life one long turf battle.⁵ Management by Objectives also failed because priorities change over time. In fast-moving sectors, defined objectives can be rendered as meaningless within a week.⁶ Theory X was based on the premise that workers inherently dislike and avoid work and must be driven to it. Once used in human resource management, organisational behaviour, organisational communication, and organisational development, Theory X was replaced in some sectors by its exact opposite (Theory Y).⁷ The list is long.

CX Transformation

While CX is exposed to imminent risk, the bell has not yet tolled. Because leaders and employees are themselves customers, there is still a daily quest for (and sometimes a discovery of) truly differentiated customer experiences. These are the experiences that are both surprising and delightful. The abundance of inherent hope CX will prevail exists because we know customers no longer base their loyalty exclusively on price, product, or brand. Instead, they stay loyal with companies because of the experience they receive.⁸

CX must pivot to survive, prosper, and escape its potential inclusion on the long list of defunct management fads. Changing the approach to CX is critical inside many organisations where CX investments have not been as successful as first hoped. The potential of CX to transform businesses and shift the needle on performance relies on first understanding the gaps, inadequacies, and blind spots.

Three critical vulnerabilities are common across the landscape of government and enterprise CX programs today:

1. Inability to demonstrate CX returns
2. Inadequately differentiated CX
3. Lack of CX execution

Inability to Demonstrate CX Returns

Reflecting on the lack of bottom-line CX outcomes, some CEOs are beginning to exhibit early symptoms of CX fatigue. The CEO, struggling to identify an ROI (return on investment) on several years of CX investment, questions the economic upside created from customer experience improvement. The silence from many CX practitioners is deafening.

Developing and selling the conceptual story of why customer experience is important has proven relatively easy. Executives in many markets realise they must differentiate their organisations through compelling customer experiences. From the early 2000’s to the present day, leadership teams have demonstrated their support for the notion of improving the experience their customers have by incorporating CX in their articulation of strategy. This articulation was sometimes followed by investments in customer research, current state journey mapping, and target state design. Sadly, in most cases, the advancement came to a grinding halt. CX groundwork headed for the filing cabinets of informed, but largely unconvinced, leadership teams. Others remained steadfast in their commitment to investment and progressed into CRM implementation, Voice of Customer program design, and experience reporting and dashboard creation. Fewer still progressed beyond strategy, design, and other internally focused programs to creating new and/or differentiated experiences for customers. This is an alarming but not entirely surprising outcome.

The inability of CX leaders and teams to link CX to the top- and bottom-line fortunes of an organisation is a fundamental contributor to its decline and potential destruction. CX has always been a strategy for growth and profit. It has never been about putting journey maps up on a wall to showcase understanding. A relatively small investment might be adequate for some journey maps and co-design workshops; however, real transformation will only be realised if it is underpinned by a credible, financially driven, business case highlighting the economic benefits of customer experience. In the absence of a financially driven business case, leadership teams may be approaching a time when they are no longer willing to fund the CX experiment. The reason is simple: they cannot see the clear linkage between the experience delivered and creation of financial value.

So why, after many investment seasons, are most CX teams still unable show the ROI attached to their CX program? It would seem to be an amazingly simple question. Despite the importance of customer experience economics, few executives know even the basic numbers that are so critical to establishing a financially driven customer experience business case. Companies struggle to tie customer centricity directly to business performance because many executives feel customer centricity is more of a qualitative measure than a quantitative one.⁹ In the words of William C. Taylor:

Most organisations know the cost of everything but the value of nothing.¹⁰

A big part of the problem is the use of Net Promoter Score (NPS) as the cornerstone metric for CX. NPS was first developed in 2003 by Bain and Company. Today the metric is used by millions of businesses as a measure of customer perception and loyalty. It is often held up as the gold standard CX metric. NPS measures customer perception based on a simple question: “How likely is it that you would recommend our [Organisation/Product/Service] to a friend or colleague?” Respondents provide a rating between 0 (not at all likely) and 10 (extremely likely). Customers are categorised by their response into three groups: (1) Promoters, with a score of 9 or 10 are typically loyal and enthusiastic customers; (2) Passives, with a score of 7 or 8 are customers satisfied with service but not happy enough to be considered promoters; and (3) Detractors, with a score of 0 to 6 are unhappy customers who are unlikely to buy again and may even discourage others from buying. The actual NPS score determined from the difference between Promoters and Detractors is scaled to 100 responses.

Bain’s original research showed companies with positive NPS scores grew faster than their lower scoring rivals. However, NPS scores do not vary consistently across markets, and the rate of growth is not consistent with NPS across sectors. A bank with a small positive NPS could not be compared to Apple’s remarkable NPS to determine a proportional level of growth. NPS purports to measure customers’ desire to stay with a company and whether they will recommend others to that company. It does not do that. NPS is a measure of immediate sentiment like customer satisfaction. The difference with NPS is in providing a way for customers to signal they were more than just satisfied. Companies with positive scores can know they have created experiences resulting in more than just satisfied customers. The resulting revenue is not predicted by this score. The cost of this sentiment is also ignored. NPS must be connected to return metrics to be totally effective – frequently it is not.

The problem with NPS is it is only an accurate measure of sentiment. It is an inaccurate measure of intent. Asking customers about their likelihood to recommend is different from tracking if they did actually recommend someone, who was referred, and when. It is tantamount to the billions of all too frequent discussions about weight loss. Being on a diet may or may not account for something on the bathroom scales. Stating you are on a diet and intend to slim down only indicates a sentiment about body image and a desire to lose weight. But it is the scales that provide unambiguous evidence about your actions. If you have ever tried to lose weight and failed, you will know the scales do not seem to listen to your stated intentions. Scales are not sentimental! Intention to purchase research is notoriously inaccurate (see Table 4.1 in Chapter 4). Tracking NP...

Table of contents

• Title Page
• Copyright
• Contents
• About the Authors
• Introduction
• Chapter 1 The Case for Change
• Chapter 2 Defining Lean CX
• Chapter 3 Creating Market Cut-Through
• Chapter 4 Where to Start
• Chapter 5 Managing the Cycle
• Chapter 6 Business to Business
• Chapter 7 Explore and Exploit
• Conclusion: Our Future is Lean
• Index