I'm excited to share the next blog in my Accelerate Value series, one of four complementary series focused on the problem statements that I’m helping CX leaders address at their organizations. Read on to learn more about how you can build a self-funding growth flywheel where you accelerate value through the right combination of better, faster, and cheaper approaches to your customer experience.
As a business leader, you understand the importance of making strategic investments that drive growth. In the realm of customer experience (CX), the goal is not only to improve customer satisfaction, trust, and brand advocacy, but also to create a flywheel where the benefits from CX investments pay for the new capabilities that drive accelerated growth. By prioritizing innovative approaches to your CX, you can take your business to the next level of performance.
Instead of considering CX just as a means to lower friction on the customer journey, you need to focus more of your “leadership capacity” on what drives growth and innovation, or you won’t get the maximum ROI from your CX investments. Within this context, any savings you achieve in the time, effort and spending it takes to enable a better CX can be redeployed to fund the capabilities that drive growth, making your flywheel spin faster.
This shift in mindset is all about getting the balance right between “better, faster, and cheaper” as business case drivers. I like to frame “better” in terms of the emotional connection you are reinforcing with the customer, rather than the quality of execution of your experience design efforts. This puts the emphasis on outcomes vs. inputs, and ensures you put enough energy into developing insights for how customers engage with your brand, what emotions you are seeking to evoke along their journey, and whether you are delivering an experience that is congruent with your CX vision.
In contrast to better, I think it makes sense to frame “faster” in terms of your organization’s agility. Do you generate a steady stream of insights that enable a test and learn approach? Can you generate meaningful insights that your teams can act upon over a series of sprints rather than with long lead times, often after the customer’s journey or marketing campaign are done. Cheaper is about reducing the cost of quality, which is higher if you deliver a poor-quality experience. As you look across your CX initiatives, I encourage you to ask what combination and sequence of “better, faster, and cheaper” is most appropriate for your organization.
In this blog I’m going to focus on how to drive improved topline benefits, as these deliver orders of magnitude more enterprise value than cost savings on their own. In the next blog in this series, I’ll address how to use cost levers to jump start a self-funding approach to your capabilities investments, while also contributing substantial savings you can take to the bottom line even as you make your flywheel spin faster.
Here are five potential focus areas that combine better, faster, and cheaper to create a more effective growth flywheel. Your own CX vision and portfolio of initiatives is likely some combination of these five pathways to value.
1. Boosting your innovation effectiveness
One way to create a growth flywheel is by leveraging customer insights to identify untapped opportunities for innovation. By actively listening to your customers, analyzing their feedback, and understanding their needs and pain points, you can uncover valuable insights that spark ideas for innovation at specific moments that matter along the customer journey. This allows you to introduce new products that address unmet customer needs, driving growth and differentiation in the market.
To do this not only better, but faster and cheaper, you will need to boost your enterprise agility, adopt lean startup behaviors, and create a more open and flexible approach to combine existing ideas in new ways. Check out my book reviews for The Lean Startup, The Adaptive Enterprise, and The Art of Ideas for more on these topics.
2. Driving category engagement
Apple didn’t just make a better phone, it reframed and fused the categories for phones, personal digital assistants, and music downloads. Lego doesn’t just make toys; it engages a community of enthusiasts around licensed entertainment franchises as well as broader megatrends like robotics to reinforce its brand’s association with popular culture and education. Diageo doesn’t just drive education about Scotch whiskey, it provides content-based experiences for aspiring mixologists.
Brands investing in direct-to-consumer experiences are building new capabilities for ecommerce, loyalty, and personalization. They are learning to drive continuous experimentation for content-based experiences, which are part of “beyond the product” innovations for their business models. The same is true for pharmaceutical companies looking to innovate “beyond the pill” with digital therapeutics and other experiences that drive adherence and customer behaviors that reinforce health outcomes. BtoB manufacturers are creating new business models that deliver an “as a service” value proposition to customers that fuse ecommerce, the internet-of-things, and AI-powered experiences such as chatbots or always-on access to experts. What these all have in common is a focus on CX as a catalyst for innovation and accelerated growth.
3. Enhancing customers’ willingness to pay
What are the “clues” that customers perceive along their journey that have the most impact on their willingness to pay? In his book Clued In, Lou Carbone writes about three distinct types of clues (see my review here). Functional clues relate to how people evaluate the specific features of your products and services in more rational terms. Mechanic clues are ways of describing your customers’ sensory experiences and how that makes them feel. Humanic clues relate to how customers feel interacting with other people along their customer journey, including both your frontline employees and others they interact with for key moments that matter. Because they evoke a stronger emotional connection, mechanic and humanic clues have a much greater impact on your ability to charge a brand premium and encourage brand advocacy.
For more on how you can leverage these leading practices in complementary ways to the ideas here for this series, see my blog series that I’ve been collaborating on with Lou titled Reimagine Insights. I also recommend checking out this initial video interview with Lou here. Stay tuned for additional videos mapped to the Experience Management Absolutes that we introduce in our Reimagine Insights blogs.
4. Improving customer retention
There has been a lot written about how boosting customer retention has greater impact on customer lifetime value than lowering customer acquisition costs. To maximize the impact on customer retention, you need to do more than just react to customer feedback and “close the loop” when issues come up. You need to create a more proactive approach to generating insights and systematically drive a quality management cycle to prioritize and work on pain points. And like the points above under innovation effectiveness, faster and cheaper benefits will be driven by the playbook you put in place that fuses enterprise agility, quality management, and data science disciplines. For more on how you can integrate AI into your CX as part of these practices, see my AI & CX blog series here.
5. Amplifying your brand advocates
By delivering exceptional customer experiences, you can cultivate brand advocates who become promoters of your business. Satisfied and loyal customers not only continue to support your brand but also refer new customers, acting as a powerful source of organic growth. Leverage your insights across the journey from both surveys and your unstructured data signals to identify ways to amplify your peaks and create new peaks. Then, encourage and incentivize customers to share their positive experiences, leverage social media and online platforms to amplify their voices. This word-of-mouth marketing can significantly impact your business growth, as positive customer experiences become a catalyst for attracting new customers and expanding your customer base. For example, ecommerce, conversion rates are typically double for customers that engage in reviews.
To amplify this organic word of mouth further, consider embedding reviews in your digital advertising. Bazaarvoice - the market leader for generating reviews, syndicating them across a network of storefronts, and helping you mine them as a source of insights - has done experiments that show that the ROAS for advertising that embeds reviews is significantly higher than the control. By personalizing the experience on your website and mobile app, you can also share reviews for customers in the same micro-segment. And if you read The Catalyst, a book I recently reviewed on change management by Professor Jonah Berger from Wharton, you will appreciate how this fits within the REDUCE framework as Corroborating Evidence, the last two letters in his useful acronym (see here for my book review for The Catalyst).
Across these five pathways to value, collaboration and cross-functional alignment play a vital role in building and sustaining your growth flywheel. Break down silos within your organization and foster collaboration between departments, such as marketing, sales, customer service, and product development. By aligning your teams around the common goal of driving growth through CX, you can leverage their collective expertise and insights to fuel innovation, enhance customer experiences, and identify new growth opportunities.
In conclusion, creating a growth flywheel where the benefits from CX investments pay for the new capabilities that drive growth is a powerful strategy for fueling business growth. By perceiving CX as a strategic investment, leveraging customer insights, cultivating brand advocates, monitoring ROI, reinvesting returns, and fostering collaboration, you can unlock the full potential of CX to drive sustainable growth. Embrace CX as a growth engine and position your organization for success in today's competitive landscape.
I hope this blog sparked some great ideas for you! In the next blog in this series, we’ll address how you can capture cost savings that you can use to jump start the flywheel and build executive alignment to make further investments to make the flywheel spin even faster.