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Don't Cut Funding Now

Customer experience teams have an important role to play as their firms face economic headwinds; how useful these teams are will come down to how well they can identify and articulate efficient growth ideas

Over recent years, advances in technology have meant firms can bring products to market quicker than ever and customers from all over the world can compare those products with competitors’, providing the right customer experience has become central to the business and sales strategies of most large companies.

In fact, over 70% of sales and marketing leaders indicated that their firms emphasize customer experience as a key source of differentiation anywhere from “sometimes” to “always,” according to CEB data (see chart 1).

But it’s easy to pursue this strategy when companies are feeling flush, budgets are loosened, and growth investments are given the green light. And with good reason, too, because the competition is doing something similar and time is ticking. Senior exec teams reading and listening to customer complaints are inclined to exhibit low levels of patience.

The question is what happens when a firm’s fortunes turn? As corporate America reaches the final stretch of its Q2 earnings season, it’s clear that profits have indeed been tested at some of the world’s biggest and most influential firms over the past two-plus quarters. CEB members in the many networks of corporate functional professionals say that budgets are tightening, that executives have been asked to focus on structural cost initiatives, and that discretionary items like non-essential travel have been curtailed.

For a company’s senior team, this is a moment when customer experience could begin to feel like a nice-to-have and not a need-to-have.


Frequency of customer experience highlighted as a principal source of competitive differentiation

Chart 1: Frequency of customer experience highlighted as a principal source of competitive differentiation  n=236 sales and marketing executives  Source: CEB 2015 Customer Experience Poll


Even More Important in Difficult Circumstances

This stop, pause, and take-stock response is a natural and commonplace one in troubling conditions (much like those working their way through the UK’s Brexit vote). But it turns out it might not be the optimal one.

Those running customer experience management teams – whose job it is to help employees put the customer at the forefront of the decisions they make – can look at the strategic landscape from a different viewpoint. This is for two reasons.

First, as noted in many places, US Federal Reserve data show that recent corporate profit headwinds have led to reduced business investment, but this has been offset by increased consumer spending, driven by growth in personal incomes. It’s important that customer experience teams understand this dynamic to help their firms make smart forward-looking investments that claim a greater share of that increasing household spending.

Second, in a 2010 Harvard Business Review article by Gulati, Nohria, and Wohlgezogen, the authors showed which strategic approach most predicted accelerated post-recession growth. They found that firms focusing mostly on head count and operational cost savings tended to perform poorly as the economy rebounded.

By contrast, the outperformers were characterized by a prudent emphasis on operational efficiency offset by somewhat surgical bets on market development and asset growth plays. In essence, the most successful firms used their operational discipline to strongly reinforce their competitive position instead of retrenching because of too much worry about reining in costs.

The Role Customer Experience Teams Should Play

Customer experience teams have an important role to play in tough or uncertain times. On the one hand, given many teams have responsibility for the company’s “customer listening” and “voice of customer” efforts, they can distill and advocate a selective set of investments designed to increase incremental customer loyalty and so organic growth.

On the other hand, and just as important, Customer Experience can use its deep and granular understanding of the customer to credibly identify “smart efficiencies” gained through the elimination or reduction of processes which annoy customers, making cost reductions more intelligent and mitigating their impact on customers and prospects.

Finding cost-effective and successful growth ideas will certainly keep the funding coming in.

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