Executives are pivoting from managing for the here and now to building an organizational structure that’s sustainable for the long haul. Two big pieces of that puzzle are bolstering efforts to improve the customer experience and driving more value for clients, according to our 2024 "Performance Transformation Global Executive Survey."
Achieving broadscale performance transformation is not easy. In fact, 81% of those surveyed failed to reach all their objectives. Many companies that embark on performance transformation programs find themselves focused on cost cutting. Instead, transformation initiatives need to be holistic and cost discipline should always be at the service of growth-focused innovation in such areas as customer experience. Cutting back rather than investing in these areas risks breaking trust and setting the business on the path to commoditization, jeopardizing future success and any ability to command a margin premium.
Balancing artificial intelligence with a human touch for better customer service
Companies need to maintain a clear view of which elements of customer experience are highly value-accretive and therefore non-negotiable. Consider the push to use artificial intelligence (AI) to automate parts of customer service and reduce labor costs, something that 20% of respondents to our survey reported doing. While AI and automation can deliver efficiencies and reduce costs, it may not be appropriate for all parts of the customer journey. Customers may not feel comfortable communicating with a chatbot, for instance, and companies need to be cautious about the inherent biases baked into the underlying data that fuels AI. Understanding what is perceived as uniquely value creating and non-negotiable to the customer is key to preserving their trust and willingness to pay for the business’s goods and services.
Investing in customer research may not be the obvious choice in an environment of cost discipline, but leaders need mechanisms to identify customer experience focus areas. Prioritizing two to three key customer experience initiatives can help maintain a sense of direction and preserve customer trust. Additionally, to help monitor and maintain customer experience levels as priorities turn to cost discipline, leaders should keep an eye on customer KPIs such as Net Promoter Scores. By clearly tying these KPIs to operational actions, each department’s role in preserving customer trust is made clear. A laser focus on these KPIs must be maintained throughout the organization to prevent slippage to a state where customer experience, and therefore the revenue side of the business, is being sacrificed to cost-cutting.
Reinvesting cost savings to drive customer experience innovation
As competition for customer loyalty intensifies, preserving trust and improving customer engagement is more critical to top-line growth and to future-proofing the business, with Lippincott’s 2023 "Brand Aperture Study" finding future ready brands to be those performing strongly on measures of customer connection and progress.
We are currently working on a two-phase transformation program with a global financial institution with a large presence in the Asia Pacific region. The first phase involved cutting costs across the business, while the ongoing second phase focuses on reinvestment in growth areas, including customer experience innovation. As with most businesses in Asia Pacific with a natural advantage due to lower labor costs, this privilege also comes with a downside — manual processes often persist over the application of advanced technologies. As a result, customer experience is often inconsistent and far from world class. Investing in technology-enabled innovation to provide a consistently excellent customer experience and, by extension, access to topline growth should be the priority when it comes to transformation.
To achieve that goal, a radical and innovative rethink of customer propositions requires input from diverse voices across the organization. Existing talent pools should be incentivized to innovate and think long-term, for example, examining where they might use AI or other emerging technologies to personalize and elevate experiences for customers or exploring new customer-centric business models that could drive future growth. In the current environment, as customer expectations are quickly evolving toward more seamless service, subscription-based models, or greater personalization, businesses need to keep up the pace.
The path to future-proof growth will be different for each organization and each industry, but customer experience innovation remains essential to a successful and sustainable transformation. Businesses cannot let customer trust and engagement fall victim to cost-cutting measures. Truly holistic transformations that incorporate customer experience innovation will have lasting legacies and set businesses up for long-term success.