The CX gap between Champions and Starters - the need to narrow the divide to drive business growth

Profile picture for user slauchlan By Stuart Lauchlan October 12, 2020
Summary:
There's a gap between CX Starters and CX Champions that's a challenge to bridge, according to new research.

Zendesk
(Enterprise Strategy Group)

Over 90% of the organizations out there today have room to materially improve their CX practices…if they don't continually improve, they're going to lose their customers to more customer-centric competitors, so it's a big deal.

A grim assessment from Adam DeMattia, Deputy Director of customer research at research house Enterprise Strategy Group (ESG), but one that rings true. Good customer experience (CX) is one of the Holy Grails of CRM and customer service management - and one that has proved just as elusive to all too many companies over the years. In fact, the chasm between good CX and bad is one into which many firms plummet and struggle to get out of.

With that in mind - and with my own tolerance levels of poor CX diminishing over the years - my eye was caught by a new report -  CX Champions: How CX Leaders who raise their game are driving business success (registration needed) - carried out by ESG on behalf of Zendesk.  Based on data from more than 1,000 CX managers and leaders in North America, Europe, Asia Pacific and Latin America, one output from the study is a Customer Maturity Scale that segments businesses into three tiers based on 7 characteristics of how organizations deploy support teams, data and technology: 

  • Agent training 
  • Matching staffing levels to need 
  • Ability to implement customer feedback 
  • Speed in implementing customer feedback 
  • Comprehensiveness of service and support data 
  • Timeliness of service and support data 
  • Importance of security capabilities 

The tiers are: 

  • Starters, which exhibit zero to three of the seven characteristics.
  • Risers, which have four to five of the characteristics.
  • Champions, which have at least six of the characteristics in place. 

DeMattia expands: 

Our first stage of maturity, our least mature organizations we call CX Starters. At those organizations, somewhere between zero or three of those best practices are in place. So not a lot. Interestingly, this actually is the biggest piece of the market - based on the research, it's 42% of the organizations represented. Moving up the maturity ladder, we see what we're calling early stage Risers. These organizations have more best practices in place, between four and five, and they make up about 33% of the market. Taking one more step up the ladder, we have our late stage riser. So these are organizations that are almost Champions, right, they're right there, they're knocking on the door. And that represents about 18% of the market. And then the final step, the pinnacle of the pyramid are CX Champions. They [may] have all seven best practices in place today, but they only represent an elite 8% of the market right now.

Of the seven best practices identified by the global study, DeMattia makes the point that these need to be thought of as holistic: 

There's no single area to focus on, no silver bullet, no magical elixir that's going to dramatically transform your organization's CX capabilities. It is the broad application of a number of best practices that span the team, how its structured and managed, the tools that our customer service representatives use to render service and support to our customers. And the last piece is the data we have to hand and how we use that data to continually improve our practice.

A helpful analogy here as we try to make this real is to think about health outcomes. We've all gone to the doctor and been told, 'Make sure you eat right, you're exercising regularly, you're getting a full night's sleep'. And if you do these things, you'll have better outcomes, right? You might lose weight, you might feel healthier, you might not get sick, you might even be happier. That's ultimately the process we're going through with this research.

Growth 

It’s an extensive report, but with a basic underlying message - good CX is driver for business growth. DeMattia explains: 

We know when it comes to customer experience generally, or customer service and support more specifically, there are a bunch of do's and don'ts. Our belief is that organizations that employ the most best practices that get answers to customers faster, get better answers to customers, they're better serving their customers. And those better served customers are going to reciprocate that feeling in a number of ways, whether it be positive word of mouth, repeat business, growing wallet share.

Where an organization sits on the maturity scale depends on a number of factors: 

The first area is all about the organization's ability to deliver great customer experience. What does that customer experience look like at these different organizations? [There are] very, very big differences. The second category is the agent experience. What is the agent's life like at these different organizations? What we see is there are some really big changes here that CX Champions are able to impart for their people. And then the third piece is business outcomes. We're able to see dramatically different results when it comes to things like customer spend, market share gains, customer retention. We're seeing dramatically different outcomes for CX Champions compared to less mature counterparts.

An important learning is that while customers are looking for prompt answers to their queries an problems, speed in and of itself does not guarantee good CX, says DeMattia:

Ultimately, you need efficacy, too, because if you get a customer an answer fast, that's great, but if it's the wrong answer, you're probably just going to create frustration. We know that there are always going to be instances where we can't get to a happy outcome for a customer who's got a problem we can't solve. But what we see is that Champions are driving that number way down. They're able to do that because those teams are better structured, they're better trained, they've got better tools. So ultimately, they're getting to a happy outcome more often for their customers. 

On the flip side of that, we look at another key metric that deals with efficacy, what we think of as one touch resolutions. That is the number of issues that customers bring to us that we're able to solve with just one interaction. And we see some pretty stark differences here. Champions tell us 86% of their interactions with customers are one touch tickets, one touch resolutions, they get to a solution in one customer engagement. And that is considerably higher than what we see among CX Starters. When we take efficacy data, along with agility data, it's pretty clear that CX Champions are delivering a better customer experience for their customers.

All of this matters to the service and support organizations that are on the front line of the CX battle, he adds: 

They are engaging with our customers all the time and their ability to perform is going to have an impact on our customer satisfaction. Everything flows from satisfaction. If we can impart high customer satisfaction, our customers are going to be loyal to us, they're going to spend more, they're going to be engaged. Ultimately, that's what we saw in the data. Seventy-six percent of our Champions said they either meet or exceed their customer satisfaction goals. Typically, within that 76%, 45% actually said they generally exceed their goals where they're outshooting what they're going for. To compare that to CX Starters, only 7% of CX Starters said they're generally beating their customer satisfaction goals. So clearly, there's a wide divide there.

And as we pivot past satisfaction to some of these other business metrics, we see that relationship hold up. The first place we delved a little deeper was basically market share - how has your customer base changed over the last six months? Are you growing your customer base? Is it flat or is it shrinking? What we saw here is 75% of our champions told us that they've seen a net increase in customers over the last six months. To counterpoint that with our CX Starters, 70% of CX Starters said their customer numbers are flat or declined over that same time horizon.

The COVID factor

As ever in 2020, there is an external factor that needs to be built into all this - COVID-19. The study was conducted during the pandemic when, as various diginomica use cases of late have shown, the pressure on customer support teams has never been higher. DeMattia says: 

Societal and business and consumer shifts and behavior and disruptions associated with the current global pandemic play into some of these disparities that we're seeing. We did spend some time asking respondents about how their organization is responding to the current COVID-19 outbreak. First and foremost, we asked what sort of policies is your organization enacting as a result? In the majority, 54% told us that they're enacting more flexible, remote working policies for their service and support organization. So we've got more of those services and support people moving out of the call center and into their homes, but still needing to deliver support to customers. And what we saw is 57% of our Champions said that that process of pivoting to remote work has gone very smoothly. Only 8% of CX Starters are reporting that level of success. So clearly, CX Champions are setting themselves up for success and the ability to adapt to an uncertain world.

With COVID likely to be with us for some time to come with all the attendant uncertainties that brings, the report throws up some interesting data on investment trends among organizations. DeMattia explains: 

One of the biggest things that jumped out to us is the the stark difference we saw when it comes to CX investment trends. What we saw is that the majority of Champions, 56%, told us that they expect to increase significantly their investment in CX tools and technologies over the next 12 months. Only 8% of CX Starters are making that same level of investment…Much more often organizations are telling us that they're focused on getting data to customers faster, information to customers faster, or they're focused on making that information better. And they're focused on delivering it where they are, right into the channel where they want to consume that information. Yes, some organizations are looking to tighten their belts a little bit, but much more often organizations are focused on value add, as opposed to taking cost out.

That might be taken to imply that it’s a case of ‘the rich get richer, the poor stay poor’. DeMattia’s assessment is: 

What we're seeing here is that CX champions are seeing the fruits of their CX labor pay off and they're doubling down on continuous improvement...On the flip side, it's a little bit worrying for the organizations that are in that CX Starter camp. We already know that they're being outperformed by CX Champions today. And if these spending trends do indeed hold up, where Champions are much more apt to grow spend over time, it's hard to imagine a scenario where the chasm in performance between Champions and Starters doesn't widen.

My take

This is an interesting report that bears scrutiny. That said, the one thing that I felt missing from the presentation of its findings was an actual customer. While expecting naming and shaming of companies that are deemed to be at the CX Starter end of the scale might be a wish too far, some citation of companies that might be deemed worthy of Champion status to provide illustration would have been useful. 

To that end, I asked DeMattia for his personal opinion of a Champion company in action. Anticipating the likes of Apple or Amazon, I was surprised at his selection: 

Dominos is a company I’d spotlight as getting it right. They have been innovators of online/app ordering channel for a long while. They have good messaging on “making things right” for customers (pizza insurance, making up for bad experiences, things like that). They solicit customer feedback. I know they are keenly focused on customer data.

As Dominos is one of the long-running digital transformation exemplars we’ve been tracking at diginomica, I’ll buy that.