FINEX Folio
By Reynaldo C. Lugtu, Jr.
Why customer experience is everything
At the onset of the pandemic last year, companies hurriedly shifted their business models to digital by setting up e-commerce and online platforms. Great example of digital transformation; or so we thought.
For instance, one large grocery chain set up an online ordering system which my wife started to use. She would visit the grocery portal, nicely choose her orders, and check out to pay online. Then, surprisingly a person calls her to say that some items she ordered are not available and asks her what alternatives she wants to order instead. Right now, one year after the pandemic, this set up still exists, the same customer experience which is not seamless.
There are many companies like this in financial services and consumer goods industries, which hastily migrated to digital transaction at the start of the pandemic, with all their assumptions about how customers would use their services. Then, they never bothered to validate if the customer journeys across all experience touchpoints are indeed delighting the customers in a seamless fashion.
Therefore, customer experience or CX will be more important than ever especially during this time when consumers and customers avoid physical movement and contact. It is a totality of cognitive, sensory, and behavioral consumer responses during entirety of the consumption process for a product or service, including pre-purchase, consumption, and post-purchase stages. The overall experience reflects how the customer feels about the company and its offerings, highlighting the how important the emotion of the buyer is.
CX is nothing new as it was already a concept used by brick-and-mortar businesses since the 1990s. But the rise of internet-based businesses in the dot-com era of the 2000s gave rise to the importance of digital touchpoints or stages across the buying and consumption process that employ digital interfaces such as parsing through an online shopping catalogue and checking out to pay.
Companies born on the internet, such as Facebook, Google, and Amazon have perfected the science and art of designing great customer experiences, that even integrate offline experiences such as logistics and delivery of products from Amazon. Traditional companies immediately adopted this and even made customer experience their mantra to drive loyalty and repeat purchase from customers.
In fact, a 2018 PWC study titled “Experience is everything” revealed that great experience drives 16% price premium on products and services. It also drives higher loyalty, and 63% more willingness to share more information.
But before the pandemic, CX was considered a tick box that needs to be checked. In our consulting work with several organizations, we did a lot of customer journey mapping with executives of companies. Customer journey maps are visual illustration of customers’ processes, needs, and perceptions throughout their interaction and relationship with an organization, with the goal of redesigning the CX for the customers’ delight. This exercise is ideally done together with real customers to avoid biases from participating executives.
Many participants in those workshops decided to do customer journey mapping themselves without real customers, which expectedly was fraught with biases and optimistic judgment about their customers’ experiences. This obviously resulted in flawed CX designs. Executives and managers of a company are prone to optimism bias when they judge how customers perceive their experience along the company touchpoints.
That is why it is always best to design CX with the customer in mind and presence. Customer journey mapping as an exercise should be exhaustive which can only be achieved with actual customers. It should be performed with different customer personas, which are characters created to represent the different user types within your targeted demographic, attitude and/or behavior set that might use your product or service.
CX design tactics should make sure that front-end customer interfaces are well integrated into the back-end processes, just like the grocery app example that I gave, which failed to tie the great ordering experience with the inventory management of the company. More importantly, customer journey maps should be validated from time to time with actual customers, to validate certain assumptions previously adopted by the company and to implement new experience design tactics.
CX will be the most important competitive dimension during these times where companies which provide the best CX will outperform those that fail to listen to their customers.
Reynaldo C. Lugtu, Jr. is CEO of Hungry Workhorse Consulting, a digital and culture transformation consulting firm. He is the Chair of the ICT Committee of the Financial Executives Institute of the Philippines (FINEX). He is Fellow at the US-based Institute for Digital Transformation. He teaches strategic management in the MBA Program of De La Salle University
