Is CX the new killer app for ERP vendors? I seriously doubt it

Profile picture for user brianssommer By Brian Sommer November 11, 2018
Summary:
Is your CEO or CMO getting pitched a new customer experience (CX) solution? Before they commit to anything, have them read this frank viewpoint about the space.

Wanting to give your customers a great experience is one thing. Delivering it is another thing altogether. Software could be the smallest part of your CX transformation.

German ERP vendor SAP recently held its CX (customer experience) celebration in Barcelona where it showcased its C/4 Hana suite. Like any good ERP vendor event, we heard how SAP will integrate all the components of its suite, standardize many of the technical platform components and more.

 

SAP HANA CX
But can CX become as big as ERP or as game changing as some digital transformation projects? Alas, it may not. A significant number of firms can’t or won’t make the other, non-technical changes to their firm to effect a material CX change. While I’ll give kudos to SAP for trying, many of the success factors (no pun intended) that are needed for CX to win in the market are outside of SAP’s control.

It’s more than technology

Software companies are prone to seeing every business problem as something that can be improved with technology. They’ll throw technology at things like invoice processing, bookkeeping and hiring. Some software companies have gotten into dating services via their compatibility matching algorithms. Software companies have created virtual communities, social networks, and many more solution categories.

But CX is different. For a company to really provide a great customer experience, it has to:

  • Really understand its customers
  • Care about its customers
  • Be committed to continuous improvement

But that’s not how most firms are wired. Instead of the above, many firms:

  • Don’t really let their employees (except a few in sales and a couple of top executives) interact with real customers. How can people know if their work activities, processes, procedures, products, etc. are delighting or frustrating customers without this interaction?
  • Put short-term sales increases and earnings ahead of creating great long-term customer relationships. When the average CEO might only last for 2-3 years, isn’t it logical to expect that they’ll shale-frack customer wallets in the short-term and leave the brand destruction aftermath to their replacement? When CEOs kick the CX can down the road, the after effects are long-lasting and damaging.
  • Don’t want to change. Changing the old command and control structure, the corporate culture, the sales comp plans, etc. is heavy lifting. It requires making the whole company uncomfortable. Few executives have the stomach, vision or political capital to pull off this kind of transformation. For this reason alone, most CX projects will die an early death or see the project scope pared down to deliver a miniscule outcome.

Whether it’s SAP and its C/4 Hana suite or Salesforce with its Customer 360 solution, technology alone will not drive CX solution uptake.

CX is not for every company

In 2016, I published a piece on the long overdue need for more and better analytics in the airline industry. At the top of this opus, I stated:

Airlines just don’t see us. While we know we are frequent fliers (e.g., I’m closing in on a modest 4 million miles with American), air carriers see us as undifferentiated, interchangeable passengers. They use language like:

  • Load Factor
  • Revenue Passenger Miles
  • Seat Miles
  • Enplanements

to describe us. I suspect airlines are not used to ‘seeing’ us in any detail or nuance. I believe they lack the right analytics that actually shine some insight on how we perceive them. Like any good analytic applications, there should be insights, projections, suggested recommendations, and learnings.

Clearly, no major airline read that article or, even if they did, they didn’t bother to change things. I’m still bereft of upgrades, stuck in the back of the bus, and feeling like the invisible man when it comes to air carriers. They don’t know me. They don’t value my patronage. And, worst of all, they don’t care. If SAP can get some CX meetings going with United, American, Delta, etc., please call me. I’d be happy to come along to explain to them exactly why they need a total CX immersion experience.

Appliance manufacturers are another example. With several decades of home ownership under my belt, I’ve purchased lots of ovens, refrigerators, washers, dryers and microwaves. I’ve filled out countless product registration/warranty cards over the years and only recently has one manufacturer ever reached out to me. Sadly, that outreach was a blatant money grab to sell me an extended warranty and new filters for my refrigerator. That’s not CX, that’s salesforce automation (SFA).

Think about it. Did any manufacturer thank me for my purchase? Did they ever check in on me to see how I liked the performance, reliability, usability, etc. of the appliance? Did they ever try to get an advantage when I was in the market for newer appliances? Nope. They didn’t care about the customer experience as their interest faded away once the product sale occurred. Great CX isn’t needed in companies where amnesia kicks immediately after the sale.

And it’s not just airlines and appliance makers. Many governmental and regulatory bodies seem to be staffed with people who see ‘customers’ as something that gets in the way of whatever else they’re doing. And, this is the first big learning of CX: Not every organization will want to be a CX focused entity. Only the organizations that see value in adopting a more customer focused existence could even become potential C/4 Hana (or Salesforce.com) customers.

I suspect some vendors are already figuring this out as part of their CX offerings include little, discrete tools that customers can use to take a small portion of the online commerce friction out of the sales process. These tools don’t make the company more customer-focused. They just make the ordering of products easier. The company doesn’t change in these scenarios. The same indifferent, internal processes and people are there. It’s just a web app that's changed.

This is not transformative. This is an insult to customers who really want to be put front and center with the company and its interactions. These little, baby-step, piecemeal solutions aren’t solving much. They buy some time for the software customer but, in the end, they may just postpone the day of reckoning for the firm when its customers defect en masse to more customer oriented organizations. You can’t be putting ‘customers at the center of things’ if you’re actually avoiding them.

Let them fail!

When I mentioned this article to my son over the weekend, he said two things to me:

  • Dad, why do you care?
  • Is this some kind of generational thing?

The caring part is an interesting point. If he’s indicative of his generation, when they encounter consumer unfriendly firms, they shun them and spend their money elsewhere. He added that he has NO loyalty to any company or brand. I believe him.

He won’t expend any energy to help a company see the error of its ways. He doesn’t offer suggestions for improvement. He won’t waste his time helping a company improve when there’s no quid pro quo. I can’t argue with that logic.

I differ with my son on this where I have little or no choice. I spend so much time in airplanes every year that I have to steel myself to enter some of these soul-sucking, miserable aircraft. Right now, I’m sitting in a seat that won’t recline with a seat back video display that plays an infomercial all flight long. The flight is 4.5 hours long and all there is to eat is a tiny bag filled with crushed cookie bits. I’m not feeling any CX love here. I want a better CX but I’ll never get it. Oligopolies and monopolies just don’t see value in a great CX.

So, I guess we all have to adopt my son’s attitude (myself included). When companies create a bad CX, they must be left to fail. So, when my cable service provider screws up again, I’ll just change service providers or cut the cord altogether. The only problem with this approach is that we’ll have way too few reasonable alternatives and live in a country of monopolists. Seriously, do you really want to buy everything from Amazon?

CX victories only occur when…

There are certain conditions that must exist for great customer experiences to occur. These include:

  • Empowerment – Employees with any likelihood of customer interaction must have the power to effect change in the organization. This power is more than exercising some flexibility for a given customer. This power is system-wide and it permanently changes how people will interact with the firm. Employees must be free to identify the root-cause of a customer’s dissatisfaction and fix this once and for all. This is quite different from the lip-service customer service efforts many firms use where the help desk merely documents the issue, thanks the caller for their time and wishes them well. That isn’t help and it doesn’t change anything. Do software vendors offer this technology? No.
  • Means to Change – Employees must have the time, budget, tools and management support to make needed changes happen. Anything less is just talk.
  • Empathy – Employees who don’t understand or don’t care about the customers will sink any CX initiative. If your call center folks are measured on the time and volume of calls they handle instead of successful outcomes and capturing real innovation opportunities, they will never propel your firm’s CX initiatives forward. People do what they’re measured on.
  • Support – From the CEO down, will the entire company get behind the CX initiative? Anything less is doomed from the get-go.
  • Honor – Will the company honor the spirit and the letter of the new CX culture and systems it wishes to put in place? Or, will this initiative fade away once the company has a tough quarter?
  • Availability – Will the company make the appropriate resources available to make not just the initial but on-going customer experience initiatives a success?
  • Communication – Will the CX initiative and its importance to the firm be relentlessly and continuously communicated to everyone inside the firm AND does the firm have the courage to hear what customers are telling it, too?

CX should not be an extension of CRM or SFA

Every time a tech vendor speaks of putting more data about a customer in front of a sales or marketing person, the knee-jerk reaction is not to improve the customer experience. Quite the contrary! More data and new tools are often seen as a means to more precisely target customers with offers that will separate the customer from their money.

Listening to tech vendors try to assure us that their tools will allow firms to “put the customer at the center of the experience” is not very comforting. It’s also interesting to hear vendors admonishing their customers not to create too much of a connection with prospective buyers as it will creep them out once buyers realize how much data sellers have. Tech vendors know that CX technology will be used by less careful or unscrupulous firms to shale-frack buyers’ wallets. They know this tech is going to be used to goose sales no matter how much they talk about “taking friction out the customer buying experience”.

So, CX tech buyers and CX tech sellers both know this technology is going to be sold and used as a revenue generation machine first and foremost. If it actually improves any customer’s pre/post-sale experience, I’ll be surprised. Why? Because the software isn’t designed to improve the customer’s experience, it’s designed to capture the contents of the customer’s wallet.

Remember, tech vendors are selling these CX solutions to the same functional buyers who bought their earlier CRM customer relationship management and SFA sales force automation tools. There never really was a customer-first focus in CRM solutions and I have doubts one will substantially materialize within the CX user install base.

Great CX Initiatives…

It would seem that great CX projects need specific objectives and capabilities. I’ve outlined a few here and I’ve also identified how these must differ from the status quo:

  • Have the right goal in mind – Great CX solutions should eliminate delays (in ordering, resolving issues, etc.), eliminate friction from processes, eliminate handoffs/buck passing and more before trying to sell anything else to a customer. That alone will be a major change hurdle for many companies.
  • Anticipate the likely business problem(s) customers have – When customers check-in with your firm whether that's via email, phone, social media, etc., you may have already failed them from a CX perspective. How? You didn’t already know or anticipate the issues they are facing with your products or services. You won’t earn the right to ask for more business from this customer until your firm gets proactive, better informed and long-term focused. If thinking about the customers-to-come is the overriding concern of your firm (instead of the customers you already have), you’ve already lost the CX battle.
  • Act professional with regard to customers – A ‘professional’ is someone who puts the customer/client interests above their own. Does your firm do this? You can’t put the customer first if you put your shareholders, your personal bonus, etc. ahead of the customer. Self-interest is death to CX.
  • Get social science insights to complement the new abundant data you’re acquiring – Reading a book about jet engine repair doesn’t make you a qualified mechanic. When tech people get big data about people, I doubt they really know how to make sense of all of it. At SAP’s CX show a great author steeped in psychology came onstage to address a number of brilliant insights about how people want to be interacted with re: CX. You could tell by the volume of picture-taking smartphones in the air that this was all-new to the attendees. It was also disquieting to me as I suspect a number of these technically inclined people would use bits of this fellow’s talk to change their employers’ systems without fully appreciating or understanding the ethical, brand and full CX consequences. When it comes to understanding the psychology of buying, most of us are unskilled, untested and wrong for these roles. Get the help your firm needs to do CX right or be prepared for some ugly consequences.

Concluding remarks

While I admire anyone who wants to make customer experiences more pleasant, I’m not sure that we’ll see deep, widespread adoption of CX technologies except in those few companies with enlightened, empowered leadership.

We’ll see some improvements in the margins but real CX transformation involves changes in culture, people, business practices, compensation, and more. To put customers first means firms have to put other things like short-term sales efforts second. That’ll be a tough sell to Wall Street.

Some software vendors lack credibility here. To hear a vendor preaching about their CX solution in one breath while still litigating customers, aggressively auditing customers, using opaque contracts, etc. in another strikes me as disingenuous. Vendors need to live the CX story they are trying to sell.

If your firm is serious about putting customers first and at the center of everything, I suggest you and your management team first find role model firms in other industries. Learn from these companies and explore all of the things you’ll need to change (beyond software) to make the CX transformation work. Chances are, CX technology won’t be the only thing you’ll need and it won’t be the most challenging one either.

And, if you don’t know what your firm needs to do to be more CX focused, call me. I still love to give my two cents to firms as I genuinely want to see them change for the better.