Being Selectively Customer Centric – Rationing Centricity

When you say, “customer experience” (CX), I think of the economic benefit that the organization derives from repeat purchases or continuing subscriptions.  I think of non-financial lead indicators such as retention.  However, when you say happy, satisfied, surprised, and delighted consumers who are elated with their frictionless experience I think ideology, opacity, and static or declining organizational outcomes.  Above all, I think of a misallocation of scarce resources and the rising cost of CX as the organization seeks to fulfill every whim of each customer.

Beyond the cost to deliver, another expense is the growth of CX professional fees. These colleagues tend to be conscientious, hardworking, and bordering on vocational in their determination to help the organization improve.  They rise each morning believing that their efforts will result in a better outcome for the customer and therefore, the organization.  However, despite organizations embracing customer-centricity – backed up with the increase in CX investment – in most instances organizations have found that the cost to serve is rising meanwhile, churn rates have plateaued, and acquisition objectives seem relatively impregnable.

 

It is not fashionable to proclaim that we are “selectively customer-centric.”

Saying that you are dedicated to customer-centricity sounds admirable right up to the moment that you realize just how insatiable customers are.  In the absence of a rationing mechanism for customer experience (CX) investment, running faster with more initiatives will needlessly raise costs and raise customer expectations.  The higher customer expectations often flow into category expectations which means not only does an overabundance of CX initiatives needlessly raise your costs with little compensating return, but you have most likely raised the costs for competitors too.  In this context, the term CX ‘initiative’ is used to refer to a stream of work expected to eradicate customers’ pain points and therefore raise the organization’s level of customer-centricity.

No organization should pursue the position of being entirely ‘customer-centric.  There is a diminishing return which means that at some point, the marginal benefit of being customer-centric is less than the marginal cost.  At that point, seeking to be more customer-centric diminishes organizational and shareholder value.  Based on what Forethought encounters, most large organizations have expansive CX programs that are too broad to bring about any meaningful change in the organization’s growth trajectory.

 

No organization should pursue the absolute position of being customer-centric.

You cannot efficiently address negative organizational outcomes such as loss of customers unless you know with mathematical certainty, which organizational practices lead to consumer behavior, in this case, defection.

Not all consumer pain points are equally detrimental to the organization and therefore warrant the same level of investment or focus.  It would be idealistic, but reckless to the organization’s prosperity, to eradicate every point of friction.  This seems a rather obvious statement except, based on our broad experience, it is uncommon for organizations to have quantified with any rigor, which pain points lead to organizational objectives and outcomes.  “Squeaky wheels” and the loudest voice wreak havoc when an organization’s CX resource allocation is not based on rigorous CX science-based analytics.

 

It is uncommon for organizations to have quantified with any rigor, which pain points lead to desired organizational outcomes.

Doubly troubling: if you are unable to quantitatively attribute behavioral change and therefore, quantify the benefit of addressing a pain point, then on what basis was a remedial initiative approved for investment?  It is difficult to conclude anything other than intuition and judgment are the most common modus operandi in CX management. This has resulted in a hefty overhead for organizations that treat CX management as a philosophy rather than an efficient allocation of scarce resources to drive desired organizational outcomes.

It is not fashionable to proclaim that we are “selectively customer-centric” however, the economics of the organization dictate that such a proposition is optimal.  The question should be, which CX initiatives will make a substantive difference to both the organization’s prosperity (usually in the form of retention) and the utility the customer derives from your services?  If your answer is any more than just a handful of initiatives, then you are most likely using the incorrect mechanism for filtering the prospective initiatives.

Photo by Chris Barbalis on Unsplash