CX Factor - Owning the Customer Experience

Jeff Bezos said: "The most important single thing is to focus obsessively on the customer. Our goal is to be Earth's most customer-centric company."

This is what the CX Factor (cxfactor.cx)

Initially, the Amazon Effect was a term coined to describe online shopping's disruption of conventional physical retail locations. As the eCommerce landscape has matured, this effect has disrupted much more.

Retail brands now face disruption from the ever-increasing customer expectations set by the experience shoppers receive on amazon.com. Self-service, rapid and frictionless returns, proactive order status; every aspect of the shopping experience on Amazon was explicitly designed with the customer in mind.

This obsessive focus on customer experience pays off. And it is no longer optional.

However, chances are that if we asked the executive teams of the top 100 retail brands," where does Customer Experience (CX) rank in your company?" it most likely would be at the bottom of strategic or operational priority lists.

The problem is most executives aren't prepared to handle adversity and massive consumer change, especially on the scale we've witnessed in the past few years.

When your business faces challenges, leadership's strengths and weaknesses become evident. A downturn teaches you to dig into the details and be engaged in the critical decisions that impact your customers, competitive advantage, product innovation capabilities, and ability to generate above-market returns on capital.

The CX Factor is the difference between the winners and losers in omnichannel retail.

Sam Walton was one of the best executives to ever "walk the walk and talk the talk" of the CX Factor. Sam said, "There is only one boss: the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money elsewhere."

This simple value created the foundation for a company with a $356B market value today.

The CX Factor isn't just about "loving your customers" and a few surprise and delight initiatives. The difference between the brands that succeed and fall into five key areas:

1. CEO and Board Leadership and the Talent Equation

2. Digital Mindset and a Culture of Innovation

3. Customer-Focused Technology

4. In-Store Experience

5. Profitability, Access to Capital, and Free Cash Flow

The Leadership Model

In many cases, Boards of Directors lack the relevant experience in transformational merchandising and digital innovation to ask the right questions of the management team. As a result, CEOs don't receive proper counsel on the company's critical strategic challenges. 

Today's Directors must have a longer-term, more informed perspective - and be supportive during turbulent times. Traditional CEOs from retail backgrounds might lack the digital or brand experience to lead their company to serve today's customers. Company culture will likely embrace change and customer-centric strategic objectives if the leadership model values innovation and talent.

Digital Mindset and Culture of Innovation

The traditional Retail/DTC/CPG mindset was slow and built on a power structure of bureaucracy. On the other hand, Amazon's model was constructed on a platform of speed, a sense of urgency, and customer innovation. 

The digital mindset is one that applies technology to develop a strategic advantage.

The culture of innovation and CX starts with the organization's mindset and must begin with the CEO. Every leader must inspire change, engagement, and new ideas. Everyone in the company must remain focused on the customer and ensure all decisions enhance their experience. 

Customer and Technology

Today's technology-enabled mobile-first customer has high expectations of every brand they shop with. Boring retail is dead, so the challenge for all merchants to stay relevant and differentiated is ever-present.

Consequently, companies like Ulta Beauty, Ikea, PacSun, and Nike work hard to innovate every part of the customer journey and experience. These leading-edge brands invest in CX technology to assist customers from pre-purchase to repurchase around the clock across any platform. 

You must have the technology to enhance and satisfy every part of the customer experience because you can lose a customer for life in one second

In-Store Experience

The clearly defined role of stores is essential; it has to be worth the time for your customer to drive to the store vs. shop online. For this reason, they are winning retail brands design stores to be an experience in and of itself.

Lush Cosmetics, a British cosmetics retailer with stores in 49 countries and a significant presence in the US, takes in-store experience seriously. With wash tubs set up throughout the store, associates offer product demonstrations on the spot. Everything from how to use a face scrub to showing a delighted child how many bubbles they can create with a tiny bit of a vegan bubble bar.

It is essential to understand how many stores you will need over the next three years and get out of the marginally profitable locations. The top 10% of your locations should receive the investment dollars for innovating the customer experience. 

Profitability, Capital, and Cash Flow

All the customer-centric strategy in the world is empty unless you have access to capital and cash flow. Investors, bankers, and shareholders want to see a focus on profitable growth. You must think like a startup where cash is king and run a lean operation. 

Ensure you have enough cash to weather the storm and concentrate obsessively on the customer. It can feel like a conflict of interest to prioritize lean operating principles and CX innovation, but it is not.

Delighting customers is the best way of ensuring your future success.

In fact, an average NPS increase by 7 points correlates with a 1% growth in revenue. That directly impacts business growth due to the increased satisfaction and happiness of your customers.

That is the CX factor.

The Bottom Line

2022 has been a tough year. We've seen disruption and missed expectations. We know that only strong and innovative brands will survive and grow. Innovation happens daily across all retail categories.

Staying off the endangered list requires courage and a long-term, obsessive focus; on the experience you give customers.

Keep the CX Factor in mind when making financial decisions, hiring, searching for technology partners, opening stores, and looking for the next innovation in your business.

Make CX your true north, and you won't go off course.

https://www.cxfactor.cx/