If you work in customer experience, you’re probably used to seeing article headlines such as…
“Creating a ‘World-Class’ Customer Experience”
“Consumers Expect a Stellar Customer Experience”
“What it takes to provide best-in-class customer experience”
Is striving for exceptional customer experience the correct strategy? We think not in all cases. Of course, there are brands for which exceptional customer experience is core to their value proposition – brands such as American Express and Disney are good examples. These brands differentiate themselves by going above and beyond in experience, as discussed in our previous blog posts, and they are successful, and profitable, in doing so.
But delivering exceptional customer experience is costly. And the resulting boost in brand advocacy may not be an effective return on investment. The most cost-effective way of delivering customer experience is to only slightly exceed the customer’s expectation. Most customers are satisfied if their basic expectations are met, and for many this is enough to be a brand advocate. Brands can maximise economic value by first identifying customer expectations and then working out how to meet these expectations. This balance is referred to as the CX economic value ‘sweet spot’
Here’s a simple example.
A company conducts some research that identifies that customers expect to receive a response to a complaint within 5 days. At that point in time, the company is able to reply to complaints within 7 days. The company predicts that by recruiting an additional 9 customer service agents, they can reduce this down to 4 days and by recruiting an additional 15 agents, they can reduce response time down to 2 days.
By recruiting 9 new agents, they are able to meet, and slightly exceed, the customer’s expectation, and would expect to see a boost in brand advocacy as a result. Recruiting the extra 6 agents would cost 67% more but would still just result in customer expectations being met. Expectations would be exceeded by a higher margin, but would the customer actually feel 67% happier?
Companies often make these kinds of ROI calculation for operational elements of experience, such as call centres. But the same mindset should be applied to all elements of customer experience; the level of personalisation in communications, the functionality of a mobile app, the level of knowledge of floor staff. Maximise ROI by meeting, and slightly exceeding, the customer expectation.
The same concept applies for customer dissatisfaction. Companies will often allocate far more resources into recovering from a single, major mistake. For example, Adidas sent a marketing email to customers who participated in Boston Marathon with the headline ‘Congrats, you survived the Boston Marathon’. The wording was criticised on social media, with recipients deeming it ‘too soon’ after the bomb attacks at the finish line, in which three people were killed and more than 250 injured. The appropriateness of marketing messaging fell well below the expected level of customers. But does a PR catastrophe have more of an impact on NPS than other minor day-to-day experiences of customers? Complex analysis is required to find the answer.
KAE’s NPS improvement model identifies which pain-points are having the largest impact on NPS. The model considers both the severity (how annoying it is) and prevalence (what proportion of the customer base is annoyed by it), then uses a genetic algorithm to identify the optimal combination of pain-points to resolve. From using our NPS improvement model for clients, we have found that the most impactful pain-points are often small niggles that impact lots of customers. These niggles can sometimes be very easy to fix, and although it may only slightly improve each customer’s experience, the impact across the whole customer base is significant. Our NPS improvement model can assist with this challenge by predicting the impact on NPS of any specific pain-point resolution.
 Headlines taken from three CX articles (1:https://www.businesswire.com/news/home/20190613005427/en/CORRECTING-REPLACING-Creating-%E2%80%98World-Class%E2%80%99-Customer-Experience-Infiniti, 2: https://itbrief.co.nz/story/a-nz-consumers-expect-a-stellar-customer-experience-adobe-finds, 3: https://www.cio.com/article/3402701/what-it-takes-to-provide-best-in-class-customer-experience.html)
 Qualtrics X4 event 2018, CX masterclass ‘Myths Misconceptions and Miscommunications in CX’ by Nan Russell