You can't buy loyalty

Bruno Schenk, December 2022

Better customer experience: A risk worth taking!

As we reach the end of the year, you will notice that many of my articles have touched upon customer experience or service. No matter what you call it, giving people what they value, want and need in a way that makes them happy creates loyalty and drives success. In my view, this is the most important thing for any business – whether we’re talking about a wonderful local restaurant, a telecommunications operator or a global consumer brand like McDonalds, Samsung or Apple. 

The challenge is that user experience is not one single thing but the sum of many parts. Take Apple as an example: it has forged a brand identity, a kind of language that means iPod users become iPhone users who also love their iPad, watch and a whole host of products that feel like an Apple device.

Some may complain about Apple’s closed ecosystem – it could even be called monopolistic. Yet, everything works seamlessly, and its customers demonstrate extreme loyalty to its ethos. And once you’re in this walled garden, it is a lot less desirable to get out. Apple’s partners and competitors have noted this, and we see them making many changes and adding additions to their own ecosystems. For example, switching from Android to Apple iOS or vice versa is state of the art nowadays, and this is also similar to the dominating Microsoft 365 workplace solution. This stickiness is an incredibly valuable trait for any business. But when everything is connected, a single bad event can ripple through an ecosystem and drop a Net Promoter Score (NPS) from a great 8.5 to a worrying 2.0. For a player like Apple, this could be a massive data breach; for your favourite restaurant, an outbreak of food poisoning. Apple is a great example of a company that understands that good customer service must be nurtured continually, and this is a journey that never ends.

Keeping score is not enough

In our hyper-connected, social media-driven world, sentiment matters more than ever. NPS is one measure, but there are typically hundreds of inflection points where customers and potential customers start to gain a feeling about a company. I use the word ‘feeling’ here as NPS is not a scientific measure but a broad indication of satisfaction. An insightful article in the Harvard Business Review (HBR) articulated what we instinctively already know: humans are complex and often contradictory. Our minds are always operating on multiple planes, placing facts, feelings, and experiences within contextual and subjective frameworks. The article looked at a survey that revealed that 52 percent of all people who actively discouraged others from using a brand had also actively recommended it. Across the NPS scale, it found consumers who had both actively promoted and actively criticized the same brand. As we all know, negativity or bad experiences even if true or not, spread via Twitter 6 times faster, and they can influence our actions drastically.  

An SLA, Service Level Agreement (a documented agreement between a service provider and a customer which outlines the services and level of service required) can be seen to be too restrictive, and recently I have heard that in actual fact, it should be called an ELA (Experience License Agreement) which is far more expansive and can last much longer – we all know that experience and value are key both in the short and long term, and having a great service up and running, is no guarantee that the experience is at the expected level. In my experience, especially in the managed service areas, firms often outsource to an expert firm, yet they hold on to the demand and control management, often over endless SLAs – which take important time and focus away from delivering experiences and ads acidity into the relationship. 

My key takeaway from this is that it’s better to get feedback directly from customers shortly after interactions. It is for this reason that we are seeing a lot more use of post-contact surveys from brands, and this trend is likely to continue. Measuring without customer consent their behaviors and use of the app, service or whatever is illegal is often misused.  However, making changes based on customer feedback is not easy – especially for larger organizations that might employ tens of thousands of people across multiple countries, cultures and types of business operations. Improving customer experience is not like pressing a button. It takes time to change processes, update systems and retrain staff.

At the most cynical level, the cost of improving customer service might not lead to a reduction in churn or an uplift in sales that leads to financial benefit. For companies with shareholders expecting a return, better customer service for lower profits is going to be a hard sell at the Annual General Meeting!

Intelligent service must be the goal

Yet, my view is more optimistic, and I believe that we are collectively getting better at customer experience and technology is helping in new and exciting ways. Let’s look at Netflix as an example. When it launched in 1997, its concept was revolutionary. Even after its most recent dip, it is still the world's largest single subscription video on-demand service, with approximately 220 million customers worldwide. The interface is standardized, and each country has its own catalogue of content. Most subscribers would judge the experience based on two simple questions: "did I enjoy what I just watched?" and "is there something I want to watch next?".

For Netflix to deliver good customer service, it leverages technology – primarily data analytics and artificial intelligence – to power not just its recommendation engines but also its content creation, third party procurement, and even to decide which shows get renewed. It has been reported that it runs around 250 A/B tests (also known as split testing, where two or more versions of an advert are shown to an audience at the same time to test which one has the best impact) each year on its interface alone, with groups of around 100,000 users.

Netflix might sound like an extreme example, but this concept of baking customer experience into some kind of feedback loop is a breakthrough, and it scales. The idea revolves around AI technology for many firms, to help teams better understand and qualify interactions, and in the best case predict next steps.

Continual investment

Yet, we can’t solely rely on technology to improve customer experience. It must become part of the visionary and strategic thinking. At a more practical level, organizations should think about continual product and service improvement to drive not just customer experience but also loyalty. Just delivering the same, reliable service for five years is good! Offering slight improvements to the service every year for five years is great. And in a highly competitive market, it is more likely to prompt a customer to sign up for another five years. Incremental improvements might mean better reporting, faster performance, an easier to use interface or a myriad of added benefits that make up more than the sum of the parts.

As the HBR articulated, "humans are complex and often contradictory." Building a better experience therefore requires a bit of creative thinking alongside insights from data.

Another paradox is outsourcing, which is where companies outsource staff in order to optimize costs, gain speed and improve quality. Yet many of these companies end up retaining key personal onsite, who then micromanage the selected outsourcing team. A recent study from Whitelane outlined that many companies who outsource agree that they are “bad” in managing the outsource partner. Why do I mention this? The ultimate goal of outsourcing should be a strong partnership between the local and outsourced team, they should enhance each other rather than compete against each other. For me, an external partner should be treated in the same way as an internal employee – the better integrated they are in the company, the more successful the results. Also, let each firm do their best - for some firms this means serving customers but buying the technology from experts, while for others the technology is key to own, but they would prefer to get outside support for the branding, positioning or support functions. 

There is no magic bullet or one-hat-fits-all answer to delivering a great customer experience. And in many industry sectors, the biggest single driver of consumer behavior is price. The special offer of discounted broadband for 6 months was enough to make us change providers. The two for one meal deal was to tempt us to visit a new restaurant. Yes, these incentives do work and will be around in some form forever. But unless you are prepared to invest in customer experience – even with the acceptance that it might not generate immediate short-term profit – these new transitory customers that arrive through special offers will eventually leave if you do nothing to retain their loyalty.

Good customer experience is not free. It requires an ongoing investment, which is always a risk. In my view, for the long-term success of any business, it’s definitely a risk (opportunity) worth taking!

What’s your story on customer experience? Please feel free to share and discuss in the comments below!

Disclaimer; Content Bruno Schenk and pictures Gettyimages, licensed via Atos, all other sources are hyperlinked in the article