Episodit
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We are frustrated. Despite years of effort across industries, customer satisfaction has only seen marginal improvement since the 1990s.
By marginal improvement, we mean it went up four points. Thatâs right, four.
This stagnation suggests a need for deeper cultural and operational changes to prioritize customer experiences truly.
Our discussion in this episode revolves around four key customer-centricity levels: Naive, Transactional, Enlightened, and Natural. These stages represent an organization's maturity in focusing on customers, from the least to the most advanced.
Naive Organizations focus internally and lack regard for customer needs, often viewing the customer as secondary to operational goals. Transactional Organizations acknowledge the importance of the customer but treat interactions as isolated transactions, usually emphasizing efficiency over empathy. Enlightened Organizations offer a more cohesive and emotionally engaging experience, understanding that customers seek meaningful interactions. Natural Organizations are the pinnacle of customer-centricity, with cultures that fully align employee and customer experiences. These companies anticipate customer needs and prioritize creating memorable, personalized moments
Organizations are encouraged to evaluate where they stand on this spectrum and start implementing changes in nine core areas: people, customer strategy, systems, measurement, channels, expectations, marketing and branding, processes, and leadership. Embracing these changes may require a cultural overhaul, but the rewards include increased customer loyalty and satisfaction.
In this episode, we dive into the concept of customer centricity and explore the journey organizations must take to shift their focus more closely to the customer. The journey from Naive to Natural isnât easy, but it is essential for brands that want to build genuine, long-term customer relationships.
Here are a few other key takeaways from the discussion you will learn:
Customer centricity is not just about enthusiastic serviceâit requires a deep cultural shift within the organization.
Organizations must balance rational, efficiency-focused goals with emotional aspects to create a holistic customer experience.
Success depends on how well leadership integrates customer-focused values into every level of the organization.
The nine organizational areas identified help companies assess and improve their customer focus.
True customer-centric brands are often those that consider both customer and employee experiences as interconnected.
Moving towards "Natural" status requires significant effort and incremental improvements rather than a one-time overhaul.
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Growth is essential for businesses. However, new customers with varying needs, preferences, and identities often accompany growth. Worse, these new customers can annoy or alienate your current customers.
So, how do you grow without making your current business blow?
Today, we explore the central challenge of growth: expanding your customer base without sparking conflicts between different customer segments. Ryan's new book, The Growth Dilemma, which Ryan co-authored with Wharton Senior Lecturer in Marketing Annie Wilson, Ph.D., addresses this dynamic in-depth, and we discuss how companies can better manage these conflicts to keep all customers satisfied and engaged.
As brands grow, they tend to attract diverse customer segments with unique expectations and behavior. This diversity can create tensions between groups, especially when one segment's actions or values clash with another's.
For instance, a brand known for its exclusivity may see conflict when a more mainstream audience starts to adopt it, or a company that appeals to one political ideology may face backlash when it attracts customers from an opposing one.
We delve into the four main types of conflict that can arise between customer segments and explore solutions for each. For example, these brands dealt with some of them when:
Patagonia faced a brand image shift when corporate buyers began over-associating the brand with Wall Street, diverging from Patagonia's environmental ethos. The company responded by limiting corporate orders, thereby preserving its original image.
Younger users leave Facebook because their parents' generation heavily uses it. Exclusivity can be key to maintaining engagement from specific age groups or communities on social platforms.
New Balance once faced a backlash after a policy stance was misinterpreted by extremist groups, forcing the brand to distance itself from these associations publicly.
Ultimately, understanding and managing these potential conflicts requires brands to identify sources of friction early on and employ various strategies to keep segments separate when needed. Segmenting offerings, using sub-brands, or creating distinct product lines are all ways to cater to different groups without diluting brand identity or customer satisfaction.
In this episode, we also offer actionable advice on navigating the complex terrain of customer segments and brand management and setting up companies for smoother, more inclusive growth. Whether you're a business leader or a marketer, this episode is packed with insights into balancing growth with customer harmony, ensuring each segment feels valued without alienating others.
This episode also includes ways to:
Recognize the importance of managing inter-customer relationships to foster sustainable growth.
Understand how Functional Conflicts often arise in omnichannel setups and ways to resolve them.
Learn about Brand Image Conflicts and how brands can address image tensions, as Patagonia did.
Distinguish between Identity and Ideological Conflicts and why one often influences customer group dynamics more than the other.
Gain insights into using segmentation strategies, like sub-brands or distinct service channels, to reduce conflict.
Discover how a clear brand identity can attract and repel certain customers and why that might benefit or hinder growth.
Be the first to hear about pre-order and launch dates and invitations to exclusive book launch events for The Growth Dilemma, published by Harvard Business Review Press! -
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Deborah has a pickle. She is considering implementing a Loyalty Scheme but isn't sure when and how to do so. She thought we could help.
We can help. The first question, then, is easy. Now. These things work. They don't create real loyalty, but they get people to keep buying from you, giving you more chances to earn loyalty.
It's the second question, how, that's a little trickier.
Many companies create these programs to foster loyalty, but often, they work more as reward systems, encouraging repeat transactions rather than building emotional attachment.
For example, although frequent flyer points, like Delta's SkyMiles, incentivize repeat bookings, they don't necessarily create genuine loyalty. Loyalty, we argue, is a deeply emotional connection rather than just a series of repeat transactions.
We explore the psychological principles behind why customers participate in rewards programs and why they might hoard rewards rather than redeem them. A concept called Medium Maximization explains why people often "save" points or miles, viewing them as a bridge to future rewards and experiencing reluctance to part with them. This phenomenon works in favor of companies, as it increases customer engagement without necessarily incurring a cost.
Additionally, the Goal Gradient Hypothesis illustrates how people accelerate their efforts toward a reward as they approach it, which is why punch-card systems, for example, are so effective.
While rewards programs have significant benefits, they can also have downsides. Complex or restrictive redemption policies can damage the customer experience, as can the use of extrinsic motivations that may unintentionally reduce intrinsic motivations.
For instance, when a daycare chain imposed a fine on late pickups, late arrivals increased as parents viewed it as a trade-off rather than a rule. Companies should, therefore, be cautious about unintentionally undermining genuine, behavior-based loyalty with overly complicated or restrictive rewards systems.
In this episode, we discuss customer loyalty programs' true purpose and impact. Ultimately, we recommend keeping loyalty programs simple and transparent. Avoid blackout dates or complicated redemption processes, as these can frustrate customers and reduce the program's value. At their core, loyalty schemes are tools to encourage spending rather than create loyalty, so Deborahâand youâshould design them with that goal in mind.
Additional Takeaways to Listen for In This Episode:
How extrinsic rewards, like points, can decrease intrinsic motivation and affect customer behaviors.
The importance of aligning a rewards program with customer behavior patterns and preferences.
How Idiosyncratic Fit influences customers to engage more deeply in programs where they feel they have an advantage.
Examples of how poorly designed loyalty schemes can backfire and damage customer relationships.
The pros and cons of different reward types, like points versus cashback, and how this impacts customer satisfaction.
Understanding competitive rewards programs can help you refine your offering to stand out.
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Why do customers tell you everything is fine when you ask them face-to-face but then give you a less-than-optimal rating later in a survey? Is everyone duplicitous, or are customers stricken with experience amnesia as soon as they make it to the car park?
It turns out that it is neither a character flaw nor a medical condition that causes it. We explore what does in this episode.
Letâs face it. Itâs a frustrating issue that can make getting accurate and timely customer feedback hard. We begin with a real-life example: a restaurant experience where Colin and his friends told the manager everything was fine with their dinner despite a long wait for food. Later, they reflected on the experience more critically, but the moment to provide that feedback had passed.
Colin blames it on being British. That may be part of the cause, but other things are happening here, too, and it isnât uncommon.
Our listener, Dave Hillman, has encountered this dilemma in his business. His customers express satisfaction face-to-face but provide lower scores on feedback surveys. Why does this happen, and what can businesses do to get more upfront and honest feedback?
We unpack several reasons why in-person feedback can differ from post-experience feedback. We explore factors like the fear of conflict, the desire to avoid awkwardness, and how personal guilt can deter customers from raising issues. We also look at how companies might unintentionally make it harder for customers to share feedback at the moment.
Anonymity, timing, and how feedback is solicited also play significant roles. For instance, collecting feedback immediately after the experience can result in more accurate data as perceptions change over time. We also discuss how phrasing questions differently in person versus on surveys can lead to varying responses.
In this episode, we also provide strategies for businesses to balance both types of feedbackâimmediate and delayedâand ensure that all input, regardless of when it arrives, is valuable and actionable.
In this episode, you will also learn:
The cultural reasons behind why people avoid giving critical feedback in person.
How post-experience reflections, like a football match example, shift perceptions over time.
The role of sampling bias and how it can skew survey results.
Why anonymity encourages honesty and how it lowers personal costs in sharing feedback.
The importance of identifying what truly drives value for customers to guide feedback collection.
The benefits of using independent third-party surveys to remove bias and get more accurate results.
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Let's talk about government and Customer Experience. It might surprise you that government and Customer Experience have a tighter relationship than you think.
Many organizations, particularly in the private sector, recognize the importance of providing great experiences to keep customers satisfied and loyal. But should governments do the same for their citizens? Can a well-run government improve societal well-being by focusing on efficiency, transparency, and user-friendly services?
In this episode, we explore the government's role in delivering experiences to citizens through essential services or regulatory actions that impact organizations and their customers. Historically, a poorly managed experience with the government has significant consequences (cue: the Boston Tea Party). But beyond extreme cases, day-to-day interactions with government agencies also influence our quality of life.
We start by asking why government agencies should care about CX at all. Using real-world examples, such as the surprisingly smooth process of renewing a passport or the convenience of services like Global Entry at airports, we see how an efficient government improves employee morale and public satisfaction. Plus, efficient government departments can save money, attract top talent, and increase citizen trust.
Beyond service delivery, governments play a vital role in regulating experiences for private companies. Markets can become exploitative without proper regulations, leaving customers vulnerable to poor practices. We look at examples of beneficial regulations, like the Truth in Lending Act, which protects consumers from misleading financial products, and the Americans with Disabilities Act, which ensures accessibility for all.
However, regulation is a delicate balance. Too little oversight can lead to exploitation, while too much can stifle competition and innovation. Some lawsâlike those that mandate thousands of training hours for hairstylists or forbid self-service gas stationsâseem overly restrictive and detrimental to the customer experience. Finding a middle ground that protects consumers without creating unnecessary barriers is key.
Join us as we discuss governments' critical role in shaping experiences and why every government, like a business, should aim to improve the CX it delivers to its citizens.
More Key Moments in the Discussion:
How efficient government services influence national life satisfaction.
The impact of "bad profits" in the financial sector and their regulatory solutions.
Why governments can't afford to ignore inefficiency for long.
Examples of overregulation stifling innovation in U.S. states.
The link between government CX and economic growth.
How the White House's consumer protection initiatives aim to improve daily life.
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Taking unproven routes can lead to exciting new possibilities. However, it could also lead to potential failure. That's what makes life interesting, isn't it?
Optimistic thinking has led to groundbreaking achievements, like the moon landing in the 1960s. However, it's important to strike a balance between hope and realism.
In today's episode, we explore the concept of optimism bias and how it plays a role in the "AI Hype Cycle." We discuss the pros and cons of optimism and why it can be risky and rewarding.
For those of you who don't watch MBA videos as a hobby, this video summarizes the Hype Cycle's importance and how it relates to the recent trend toward leveraging Big Data.
So, what is this hype cycle we keep referring to?
The Gartner Hype Cycle maps out the lifecycle of new technologies, including artificial intelligence (AI). Starting with initial media excitement, the Hype Cycle often leads to inflated expectations, followed by disillusionment as challenges arise. However, innovation doesn't stop there. As understanding improves, we reach a more balanced "slope of enlightenment," eventually leading to the "plateau of productivity," where technology adoption becomes more widespread and realistic.
The discussion touches on AI's current status in the Hype Cycle, questioning whether we are at a turning point where initial optimism is waning. Some organizations overestimate the short-term benefits of AI, hoping it will be the silver bullet to solve all their problems, only to face disappointment when things don't work out as expected.
Like many other innovations, AI is more complex to implement than initially imagined, and optimism can sometimes blind organizations to its true limitations. Managing expectations is key: while optimism is necessary to drive change and innovation, one must temper it with caution and realistic planning.
Ultimately, this episode encourages listeners to temper optimism with practicality regarding new technologies like AI. Small, calculated risks are encouraged, but organizations should avoid placing all their bets on one solution. Balance is key to navigating the Hype Cycle successfully.
More Key Points Discussed in This Episode:
Understanding the pros and cons of optimism bias in business decision-making.
An overview of the Gartner Hype Cycle and how it applies to AI.
Why the initial excitement around AI may not meet short-term expectations.
The risk of overhyping new technologies and the consequences of inflated expectations.
The importance of balancing optimism with realism in the implementation of AI.
Strategies for navigating the Hype Cycle without falling victim to disillusionment.
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Over the course of three years, Maersk Line improved its Net Promoter Score (NPS) by an impressive 40 points, resulting in a 10% increase in shipping volumes. Even more remarkable, this growth occurred during a global shipping decline.
But can other companies replicate Maerskâs success? Or are case studies like this more cautionary tales than roadmaps?
We explore the value of case studies in business, particularly how they can be used to highlight the application of concepts and theories in real-world situations.
The Power and Pitfalls of Case Studies
Case studies are powerful. People love stories, and case studies tap into this by offering relatable and engaging narratives that illustrate both challenges and solutions. For businesses, theyâre a great way to demonstrate bona fides to clients and showcase what can be achieved through strategic change.
However, case studies have their pitfalls, too. Maerskâs results were exceptional, but not every company is positioned to follow the same path.
In the Maersk example, the company was at a unique junctureâfacing market pressures and a history of mergers that led to a decline in Customer Experience. Their leadership was open to new ideas, and they had the right project manager in place to lead a global CX transformation.
The pitfall is many companies believe they are the same and will get the same results because they too are having a problem in Customer Experience. However, the specifics of one companyâs success may not translate to another unless the conditions, challenges, and resources are aligned.
In this episode, we discuss why case studies are best used for inspiration and education, not as one-size-fits-all solutions. Itâs crucial to extract the underlying principlesâlike customer focus and strategic leadershipârather than overgeneralizing from one company's experience.
In this episode, we also explore:
The origins of using case studies as a teaching tool in business schools.
How benchmarks are created and why they can be risky when generalized.
The role of mental models in simplifying business decision-making.
Risk aversion in organizations and the desire for examples to follow.
The "silver bullet" mentality and why people seek easy solutions.
The dangers of using case studies as the sole resource for business strategy.
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If there is one thing that academics know how to do, itâs publish new research. It seems that umpteen studies are published every hour. It can be overwhelming to keep up with it all.
So, we undertook it to help you with this weekâs episode.
We explore three fascinating studies in the realm of consumer behavior with insights from Dr. Morgan Ward, a Professor of Consumer Behavior at Emory University. From the influence of sound on social status to the role of streaks in motivating behavior and even how firms should use AI to deliver news to customers, this episode provides a wealth of information for businesses looking to understand and serve their customers better than they do today.
Social Status and Product Sound
Dr. Wardâs research delves into how consumers choose products based on the sounds they emit, linking these choices to social status. The study finds that people often seek status through two main channelsâdominance and prestige. Some customers buy noisy products, like a Harley Davidson, to assert dominance, while others opt for quiet, high-end products, such as Dyson fans, to signify prestige. Ward emphasizes that understanding the status-seeking motivations of your target audience can help businesses design products that appeal to specific social power desires.
Key Takeaway:
Customizing product sounds can signal social power, appealing to customers' status-seeking behavior.
The Gamification of Behavior Through Streaks
Ward also discusses the role of streaks in consumer behavior, particularly how brands use streak-based incentives to encourage continued engagement. Apps like Duolingo, Snapchat, and Headspace all capitalize on the idea of maintaining streaks to motivate daily usage. However, there are tradeoffs. Extrinsic motivators like streaks can sometimes overshadow intrinsic motivators, leading to a decrease in overall enjoyment and, ultimately, participation. Ward warns businesses to consider when streaks are appropriate carefully and to balance the motivations that drive consumer behavior.
Key Takeaway:
Streak-based gamification can motivate, but businesses should carefully balance extrinsic and intrinsic motivations.
AI vs. Human Interaction:
Finally, Ward shares research on when companies should use AI versus humans for customer interactions, particularly around delivering good or bad news. Interestingly, the research suggests that AI should handle bad news because customers perceive it as more impartial. In contrast, a human best delivers good news to create a personal connection. These findings affect how businesses structure customer service strategies and use AI.
Key Takeaway:
AI is better suited for delivering bad news, while human interaction is more impactful for delivering good news.
Additional things youâll learn in this episode:
How cultural differences affect consumer status-seeking behavior.
The psychological impact of losing a streak and how it influences future behavior.
Why some products benefit more from gamification than others.
The future implications of AI-human interaction in customer service.
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Colin doesnât sit in aisle 13 when he flies on an airline. Itâs silly but true. He also fancies his red knickers on days when he is speaking in front of large crowds.
While this errs on the side of too much information, it also foretells the topic of this weekâs episode: superstitions and how they influence our decisions as customers and otherwise.
Many of us hold on to irrational beliefs that are common sense, even when they defy logic. Airlines, for instance, often skip row 13 because of widespread discomfort with the number, including Colinâs, despite no real reason to avoid it.
But how do these seemingly irrational habits affect customer behavior, and what can businesses learn from them?
Customers often engage in superstitious practices, particularly when they feel powerless over a situation. Colin recounts a story of Asian customers choosing construction equipment based on serial numbers they considered lucky. In this case, selecting a machine wasnât just about quality or functionality but also about seeking control over the unknown.
Humans are pattern-seeking creatures. Our minds are hardwired to find connections between things, even when none exist. Superstitions help people feel like they have some control, which influences customer behavior.
While some superstitions, like avoiding row 13, are passed down culturally, others are more personal. For example, the host tells a story about football fans ordering fries at a pub, believing it would help England score a goal. While everyone knew it wasnât logical, the collective belief became a fun ritual.
Superstitions also manifest in business. Companies sometimes hold onto outdated practices with no rational basis. The host shares an example of an advertising agency insisting on a six-word phrase at the end of ads, not because of any research but simply because "that's how it was always done." These business practices, like customer superstitions, can become embedded over time without questioning their effectiveness.
In this episode, we discuss why businesses should understand and acknowledge that customers and companies arenât always logical. We also explore how accommodating these irrational beliefs can lead to better customer experiences. Rather than dismissing superstitions, companies can work with them to create a more comfortable and personalized environment for their customers.
Additional things youâll learn in this episode:
How mental models shape customer behaviors
The connection between biases and superstition in decision-making
Why businesses often cling to irrational processes
How to spot and eliminate unnecessary "superstitious" practices in your company
Ways to accommodate and even leverage customer superstitions for a better experience
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Hurricane Debbie dumped 17 inches of water in Colin's home.
It was a traumatic experience, from wading through the murky water to the neighborâs houseâhoping not to encounter the alligators that usually hang out nearbyâto watching a team of 12 recovery professionals sweeping through and gutting what remained inside after the water subsided. The experience has been emotionally draining, especially since they didn't have flood insurance, making the cost of repairs overwhelming.
It exposed the emotional nature of these circumstances and reminded us of what is important when treating a distressed customer. This episode explores the Customer Experience lessons learned along the way.
The story begins with the frantic search for help after the flood. With no time to gather multiple quotes, a friend recommended Servpro, a disaster recovery company. While Servpro did a great job, one small misstepâusing the term "demolition"âupset the host's wife, highlighting the importance of language and empathy in high-stress situations. Despite the upsetting circumstances, Colin and his wife appreciated the team's professionalism and sympathy.
We also touch on a less positive customer service experience with the cable company. While their technician was helpful and empathetic, the initial process during the phone call didn't consider the host's extreme situation. The rigid, unempathetic procedure highlighted how companies, like the cable provider, can improve by empowering their employees to handle unique circumstances flexibly.
While getting coffee, the lack of empathy from a cheerful barista served as another example of how businesses can fail to acknowledge customers going through difficult times. While we recognize that coffee chains do not specialize in disaster recovery, it was still a missed opportunity for them to show empathy in a moment requiring more than routine friendliness.
A frustrating visit to a self-storage facility was another eye-opener. The company had implemented a tablet/virtual receptionist system, which lacked the human touch, particularly during hurricane season when people needed help the most. Companies should be prepared to offer a more hands-on, empathetic approach to meet heightened demands during extraordinary times.
The episode is a call to action for companies to build flexibility and empathy into their Customer Experience strategies, especially during times of crisis. Businesses that show genuine concern for their distressed customers during challenging times will create loyal customers for life, while those who don't may lose them.
In this episode, we also dive into:
The emotional toll of disaster recovery and its impact on Customer Experiences.
How language choice can impact a customer's emotional state.
The importance of empowering employees to handle unique customer situations.
Why self-service solutions may fail in high-stress scenarios.
The critical role empathy plays in building customer loyalty, especially during crises.
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Customer feedback is critical to managing and improving your customer experience but it isnât easy to get. Worse, it isnât always useful and enlightening on what you are doing well, or perhaps more importantly, not so well.
In this episode, we tackle a common problem many businesses face: how to get more actionable customer feedback. Our guest, Tim Waterton, Chief Revenue Officer of HappyOrNotÂź, brings over 20 years of experience in helping companies gather and analyze customer insights. Waterton shares valuable tips on making the feedback process seamless, efficient, and impactful.
One of the main insights Waterton offers is the importance of capturing feedback at the right momentâimmediately after the Customer Experience. According to him, this approach ensures that businesses collect more accurate feedback as people's recollections of their experiences fade quickly. He suggests that feedback should be short and simple to encourage participation, using tools like micro-surveys (e.g., quick emoji selections).
Waterton also explains the difference between feedback and reviews. Feedback is company-initiated, where you ask the customer directly, while reviews are customer-initiated and usually more detailed. Both have value but serve different purposes in understanding the customer experience.
A key takeaway is the balance between positive and negative feedback. While many companies receive mostly positive feedback, focusing only on the negatives or positives can skew your understanding. You need both to find areas of improvement and highlight what's working well.
We also warn about the dangers of over-automating customer experiences. Colin shares an example of a milkman who improved efficiency but lost personal connection with customers, ultimately losing Colinâs wife's business. This cautionary tale is a crucial reminder that companies must balance efficiency with the human touch, especially in the age of AI and automation.
We wrap up with practical tips on gathering meaningful feedback, including choosing the right channels, keeping surveys relevant and concise, and acting on the feedback you receive.
In this episode, you'll also learn:
The difference between feedback and reviews and why both matter
How to avoid "survey fatigue" and keep customers engaged
The role of micro-surveys in capturing real-time feedback
The importance of balancing automation with personal interaction
Why acting on feedback is crucial to improving Customer Experience
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One of the benefits of being in business and academia for years is that we have a lot of experience running workshops. This episode is a brain dump of all the stuff you wonât learn in a book but is critical to the successful outcome of your program.
The first and perhaps most critical step is breaking the ice. By setting a relaxed and open tone, you ease participants into the session, ensuring theyâre ready to engage. A simple question at the start can do wondersâsomething as quirky as asking attendees to share something strange about themselves. This activity breaks down barriers and injects some fun into the proceedings, setting the stage for a lively and productive workshop.
As a facilitator, it's vital to approach the workshop without a predefined answer or outcome in mind. Your role is to guide participants in finding solutions, ensuring participants take ownership of the results. This approach fosters a deeper connection to the material and encourages lasting change.
For instance, when working with a client like Maersk Line, the world's largest shipping company, itâs important to ask the right questions and provide tools rather than answers. This method leads to better results and enhances the participantsâ sense of accomplishment.
Also, flexibility is key when it comes to planning your workshop. While having an agenda is important, adjust it as discussions evolve, allowing for deeper exploration of ideas and ensuring that everyone is on the same page.
Similarly, consider the group dynamics when dividing attendees into smaller teams. Mixing personalities and ensuring a balance of perspectives can prevent dominant voices from stifling creativity and lead to more innovative solutions.
In this episode, we dive into these essential strategies for leading a workshop that leaves a lasting impact. Drawing from years of experience, we explore practical tips to ensure your workshops are engaging, effective, and memorable for all participants.
If you listen, you will also learn the following:
Ryan wrote a script for Broadway, and Colin is married to his stepsister. No, really.
How to effectively manage group dynamics by balancing personality types and seniority levels.
The importance of having a clear goal for the workshop and aligning all activities towards achieving it.
Why off-site workshops can prevent distractions and boost creativity.
The significance of determining the ideal team size for different workshop activities.
Techniques to ensure follow-through on workshop outcomes back in the workplace.
The impact of physical space on group energy and interaction during the workshop.
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Claire Dunwood has a pickle. She wants to know how to manage rising customer expectations with fewer resources than she used to have. This episode seeks to help herâand youâdo exactly that.
Itâs pretty common to hear problems like this today. Responding to rising expectations is easy when there is no limit to the resources you can throw at it. Doing that same thing on a budget is a different kettle of fish.
We kick off by exploring how expectations form. Expectations for experiences, even for those we've never had, are often built from adjacent or similar experiences, drawing on memories, media, or past interactions. Therefore, customers have preconceived notions about how their interactions with your brand will unfold, even before theyâve engaged with you.
Claire noted that customer expectations seem to be constantly rising. Effective management of rising expectations requires identifying which aspect of the expectations is risingârational, emotional, or sensoryâand whether it aligns with your business goals. We discuss the importance of focusing on the aspects that drive the most value for customers rather than trying to meet every rising expectation.
A key takeaway is the importance of focusing on what matters most to your customers, as highlighted by the Blue Ocean Strategy. This approach suggests excelling in the most important areas to your customers and letting go of everything else. Knowing your customers well is essential, as it helps you decide which expectations to meet and which to disregard, ensuring that you spend your resources wisely.
In this episode, we share practical strategies for managing customer expectations, including understanding customer needs, proactive communication, setting clear boundaries, maintaining consistency, and leveraging technology. These strategies help balance the demands of rising expectations with the reality of limited resources.
In this episode, we also talk about:
The formation of customer expectations from adjacent experiences
The categorization of expectations into rational, emotional, and sensory
The concept of outcome-based prioritization when resources are limited
The role of transparency and proactive communication in managing expectations
How to decide whether certain customers are worth the effort based on their expectations and profitability
Examples of businesses effectively setting and exceeding customer expectations
The importance of staying agile and responsive to customer feedback
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Personalization is a developing area in Customer Experiences. With AI driving what could be possible, many of you might be wondering how you can best leverage its capability in yours. To that end, we invited our special guest, Graham Hill, Ph.D., to explore the rapidly evolving field of Personalization in Customer Experiences.
With decades of experience in customer relationship management (CRM) and Customer Experience, Hill shares valuable insights into how personalization, particularly with the help of AI, is reshaping customer interactions and driving business results.
Hill explains that personalization operates on a continuum, ranging from broad, branded communications to highly individualized content tailored to a single customerâs needs.
He also emphasizes balancing mass and personalized communication within a marketing strategy. While mass communication builds general brand awareness, personalized and individualized content can significantly enhance customer engagement and drive sales.
Hill discusses the impressive impact of personalized communications, noting that customized content can be up to nine times more effective and individualized content up to 44 times more effective at eliciting customer responses than generic communications.
However, he warns against over-personalization, advising businesses to consider their goals and the specific problems personalization can solve before investing heavily in these technologies.
Hill also critiques traditional segmentation methods, advocating for outcome-based segmentation instead. By understanding what customers are trying to achieve and how they measure success, businesses can design more effective personalized communications that resonate with customers at different stages of their journey.
The episode also features a case study from Hillâs work with Toyota Financial Services, where implementing personalized communication in the repurchase management program led to a significant increase in response ratesâfrom 10% to 35%. Hillâs approach underscores the importance of clear goals, continuous improvement, and a customer-centric focus in personalization efforts.
In this episode, we also explore:The balance between mass communication and personalization in marketing strategies.
The significant impact of personalized and individualized content on customer engagement.
The importance of outcome-based segmentation for effective personalization.
The dangers of over-investing in new technologies without clear goals.
Practical steps for understanding customer needs and enhancing key interactions through personalization.
The role of AI tools in supporting but not overshadowing simple, effective personalization efforts.
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Fair Warning: this episode regarding excuses was prompted by recent experiences with tradespeople during Colinâs kitchen renovation.
No one likes excuses, least of all your customers. Lately, Colin has been hearing many amazing excuses about why something can or cannot be done in his kitchen project. It got him thinking about excuses and why people make them. Todayâs episode explores the ideas of excuses and what they tell us about human behavior.
Consider examples like long call center wait times blamed on âhigh call volumeâ or companies deflecting responsibility for faulty products or order issues by passing the buck to manufacturers. These situations highlight the commonality of excuses in everyday interactions.
It is important to understand the difference between an excuse, which is used to avoid blame, and a reason, which acknowledges the cause of a problem and usually is followed by steps to make it right. Additionally, we explore the psychological motivations behind excuse-making, including our innate desire to see ourselves as right, and how this plays into consumer behavior and decision-making.
One important concept that supports our behavior around blame is Confirmation Bias. When avoiding blame, we tend to favor information that supports our existing beliefs (i.e., that it is not our fault), even in trivial matters.
Additionally, we delve into the concept of Fundamental Attribution Error, where we are more likely to attribute othersâ mistakes to their character while excusing our own based on external circumstances. This human tendency to avoid blame and protect our ego is universal. However, the consequences bear a sharp contrast to the benefits of taking responsibility, especially in leadership roles.
A case study from the UKâs Post Office scandal illustrates the severe consequences of excuses on a larger scale, where avoiding responsibility led to widespread harm and even imprisonment. From this, we draw lessons on the importance of honesty and accountability in both personal and professional contexts.
In this episode, we explore the fine line between a reason and an excuse and examine how they function in various Customer Experiences.
In this episode we also discuss:
The psychological need for self-preservation and its impact on excuse-making.
How Confirmation Bias affects our decisions and perceptions in everyday life.
The difference between taking responsibility and deflecting blame in customer service.
Real-world examples of excuses versus reasons in customer experience.
The potential long-term damage of excuses to trust and relationships.
Strategies for handling mistakes and building stronger customer relationships by owning up to errors.
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In this episode, we tackle a thought-provoking question from one of our listeners: Is it ethical to use urgency as a marketing tactic?
This question sparked a deep conversation about the ethics of digital marketing, particularly the use of scarcity to drive sales.
We feature insights from Daniel Bisett, partner and CXO at WeRock DM, and Marketing Professor at UT McCombs, who shares his thoughts after watching "The Social Dilemma" and wrestling with the impact of digital marketing on mental health.
Bisett discusses the ethical concerns of creating false urgency in marketing, comparing it to the stress and pressure felt by consumers during high-stakes purchases, like a kitchen remodel. He argues that manipulating customers with "FOMO" (Fear of Missing Out) can lead to hasty, anxiety-driven decisions, which ultimately harm the customer and the brandâs reputation.
Instead, Bisett advocates for building trust and long-term relationships by offering genuine value rather than pressure-filled transactions.
Bisettâs message and our subsequent discussion challenge marketers to reflect on their tactics and consider the long-term implications of their strategies, not just for their business, but for their customers' well-being.
In this episode, we further explore whether using behavioral science in marketing crosses ethical lines, especially when marketers understand more about customer behavior than the customers themselves. We also delve into the nuances of ethical intent, the role of empathy, and the importance of transparency in marketing practices. We also discuss how companies can ensure they are not just making sales but also treating customers with dignity and respect.
In this episode you will also learn:
The ethical implications of using behavioral science in marketing.
The difference between needs-based selling and manipulative sales tactics.
The role of empathy in ethical marketing decisions.
How intent and transparency can help marketers stay on the ethical side of business.
Real-life examples of ethical and unethical marketing practices.
Strategies for building long-term customer relationships based on trust and value.
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In this episode, we dive deep into the concept of empathy and its significance in Customer Experience Management. We challenge common perceptions of empathy, explore its connection to emotional intelligence, and examine how both concepts can enhance your experience management efforts.
We begin with a discussion on the importance of Emotional Intelligence (EQ), referencing some compelling statistics:
Emotional intelligence influences 58% of job performance.
90% of top performers at work have a high EQ score.
The demand for EQ skills is projected to grow six-fold in the next three to five years.
Employees with empathetic leaders report a 76% increase in engagement and a 61% boost in creativity.
Restaurants managed by individuals with high EQ see a 22% annual profit growth.
EQ interventions in the workplace can reduce employee turnover by 63%.
75% of Fortune 500 companies have utilized EQ training tools.
Our guest, Sandra Thompson, an emotional intelligence coach from Ei Evolution, shares her insights on empathy within the context of EQ. She emphasizes the necessity of using empathy skills, which involve asking questions and truly listening to understand another personâs feelings and interpretations, rather than projecting our own emotions onto their experiences.
We also explore the idea that traditional empathy might be too contextual, as emotions are personal and can lead to misunderstandings if the emotional context differs. Thompsonâs concept of âwalking in the customer's shoesâ is dissected, with the notion that while some shared experiences can foster empathy, unique contexts might still cause disconnects.
We break down empathy in emotional intelligence into three approaches: bad (not caring), good (walking the experience as if you were a customer), and better (experiencing as a customer and asking questions to understand their feelings). This layered approach is essential for effective experience management and creating genuine connections with customers.
In this episode we also explore:
The impact of empathy on job performance and employee engagement.
How empathy and emotional intelligence can reduce employee turnover and increase profitability.
The role of emotional intelligence in leadership and its effect on creativity.
Strategies for developing and implementing emotional intelligence skills in the workplace.
Real-life examples of how empathy and EQ improve customer experiences.
The importance of self-awareness in emotional intelligence and managing personal emotions.
Practical tips for enhancing empathy skills through active listening and inquiry.
Sandra Thompson Contact Details. Website: www.eievolution.com LinkedIn: https://www.linkedin.com/in/cxeisandra/ -
In this episode, we challenge the conventional wisdom of customer-centricity and discuss why firing a customer is sometimes necessary. While it may seem counterintuitive, knowing when to let go of a customer can benefit your business in the long run.
We outline five critical rules to help you determine when it's time to part ways with a customer:
Rule #1: Fire customers if they cost too much. Some customers drain more resources than they generate in revenue. It's crucial to track these costs accurately and address the imbalance. If you can't rectify the situation, it's time to let them go.
Rule #2: Fire customers if they don't align with your brand. Your brand's values should resonate with your customer base. If a customer's values conflict with yours, maintaining the relationship can harm your brand's integrity and alienate your core audience.
Rule #3: Fire customers if they don't fit with your future. As your business grows, some customers might no longer fit your strategic goals. Prioritize resources for future growth by letting go of customers who don't align with your long-term plans.
Rule #4: Fire customers if they are too risky. If a customer's business model or payment practices pose a significant risk, it's safer to part ways. Overcommitting to one client or taking the undue risk can jeopardize your business stability.
Rule #5: Fire customers if they abuse your employees. Support and protect your employees from abusive customers. Ensuring a respectful work environment is critical for employee morale and long-term success.
Understanding these rules will help you make informed decisions about maintaining customer relationships that align with your business goals and values. Sometimes, the best way to move forward is to let go.
In this episode, we also explore:
The importance of knowing your customer cost metrics and tracking them accurately.
How to handle awkward conversations with customers about cost imbalances.
Examples of brand alignment, including the Colin Kaepernick and Nike story.
Strategies for soft-firing customers without abrupt severance.
Recognizing when your growth trajectory requires pruning your customer base.
Identifying and mitigating business risks associated with certain customers.
The impact of customer behavior on employee well-being and company policy.
Insights on post-pandemic changes in customer behavior and their effect on businesses.
The balance between customer-centricity and business sustainability.
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In this episode, we explore the role of AI in customer experiences and whether it will replace human interaction. Ali Cudby, CEO of Alignment Growth Strategies, shares insights on leveraging AI to build customer relationships effectively. We discuss practical AI tools that enhance customer experiences and streamline efficiency.
There are a couple of helpful AI tools Cudby mentions. For example, Synthesia generates AI voiceovers for video scripts, making updates easy and translating content for global audiences. Also, Absorb uses AI to create prompts-based presentations, reducing time and effort. Cudby describes how these tools allow for more accurate customer communication while freeing up time for personalized interactions where it matters most.
Cudby (alicudby, Alignment Growth Strategies), the author of Keep Your Customers, emphasizes that while AI is a valuable tool, it cannot replace genuine, personalized experiences delivered by empathetic humans. Customers must feel seen, heard, and valued to build trust and loyalty.
The episode also highlights the importance of context in customer experiences and how AI can assist without overshadowing human value. We also touch on the potential risks of AI, such as the creation of fake videos, and the importance of verifying authenticity, especially during critical times like elections. Schema matching helps us identify inconsistencies in AI-generated content, ensuring we make better judgments.
The discussion includes the concept of Blue Ocean Strategy, which advises focusing efforts on what drives the most value for customers. By maximizing resources in areas that matter most, businesses can avoid spreading themselves too thin and achieve greatness.
In this episode, we also discuss:
The significance of AI tools in customer education and training.
The balance between AI efficiency and human empathy in customer interactions.
The impact of AI on content accuracy and time management.
Real-life examples of AI and human synergy in customer service.
The role of schema matching in identifying AI-generated fakes.
Strategies for optimizing customer experiences using the Blue Ocean concept.
The importance of context in understanding customer emotions and needs.
How to determine the value AI brings to your customer experience efforts.
The potential pitfalls of over-relying on AI in areas where human touch is crucial.
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Friction occurs when a customer has to work or think hard during an experience. Many times, friction is accidental or the result of organizational apathy. In these instances, friction is a bad thing.
Friction is rarely a good thing in a Customer Experience. However, there are times when it can be beneficial.
For example, when your bank uses two-factor authentication to ensure you are who you say you are. This friction enhances customersâ feelings about an experience.
So, how do you know the difference? It depends on the context.
For example, Disney and Apple have annoyed Colin. Typically, he sings these two brandâs praises, so this friction surprised him.
Both require Colin to make appointments for his experience, which bugs him. Disney has a new program where you book appointments before you arrive to ride an attraction at a certain time. They charge for it, too. Apple requires you to book an appointment in one of their locations rather than turn up with your questions. (But Apple doesnât charge for this service.)
While Colin is still determining if the Disney program will improve the experience, he is sure this new process will be more hassle than the previous one. Time will tell whether it will be worth it.
Regarding Apple, the friction of booking an appointment has benefited Colin. He isnât turned away because everyone is âtoo busyâ to deal with him when he arrives at his appointed time.
So, while Colin would rather Apple was always available when he shows up at a retail location, making the appointmentâand the friction it introducedâhas provided value for him.
In this episode, we delve into friction in Customer Experiences, exploring when it's beneficial and detrimental. We provide examples illustrating how friction can enhance or hinder customer interactions, shedding light on its nuanced role in shaping perceptions and behaviors. By understanding the multifaceted nature of friction, businesses can unlock new opportunities for customer engagement and loyalty.
You will also learn the following:
The advantages of removing friction and making things easier for customers.
The prevalence of accidental friction stems from neglect or apathy rather than deliberate strategy.
Examples of deliberate friction in various industries, from amusement parks to luxury restaurants, and the underlying psychological mechanisms at play.
The importance of finding the right balance between security measures and customer convenience, avoiding excessive friction that may deter or frustrate customers.
Strategies for strategically managing friction to align with broader business goals while prioritizing customer satisfaction and ease of interaction.
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