I originally wrote today's post for CallidusCloud. It appeared on their blog on December 6, 2017.
The good news is, more and more company leaders are starting to get that they need to focus on the customer experience; the bad news is, many – most – are still struggling with the concept, choosing instead to focus on sales, metrics, and maximizing shareholder value. The crazy thing is that they think that they are customer focused.
There’s this thing called the customer experience perception gap; it was uncovered by Bain back in 2005, and they referred to it as a "delivery gap." Their findings were:
80% of executives believe that they are delivering a superior customer experience, while only 8% of customer agree.
Wow! These companies are so off-base on their perceptions or understandings of their customers and the experience! How is that even possible? Why does this exist? It’s not because business leaders fail to recognize the importance of their customers; at least, they give customers lip service: more than 95% of management teams Bain surveyed claim to be customer focused.
Why does the gap exist? They cited two key reasons:
- They referred to the first reason as "a business paradox," where companies' growth initiatives hurt their main source of sustainable growth: loyal, profitable customers. They do so by trying to suck more revenue out of each customer by doing stupid little things like higher transaction fees, hidden fees, etc. On top of that, they focus on acquisition over retention, misdirecting their attention away from their current customer base.
- And good relationships are hard to build; it's challenging for businesses to keep promises made and to maintain a dialogue with customers that allows companies to adapt products and services to their changing needs. Bain believes that customer understanding efforts backfire because companies focus more on collecting and analyzing data ad nauseum, as well as on metrics, than on doing what it takes to improve the experience. No argument there.
Remember that this was 2005. As I read the article, I had already written down my thoughts on why this gap exists.
- Companies don't take the time to really understand their customers: to listen (VoC), to characterize (personas), and to empathize (journey mapping).
- If they do these things, then they aren't using what they learned to design a better experience.
- And, finally, they fail to get the organization aligned around the work to be done and the experience to be delivered.
I guess I wasn't too far off.
Earlier this summer, Capgemini released a report that had similar findings, which means we have only made some progress in the last 12 years. Their findings still show a disconnect between customer expectations and companies' beliefs. Capgemini found that:
75% of companies believe that they're customer-centric, while only 30% of consumers agree.
The gap varies by industry, with Utilities (78% - 7%) and CPG (81% - 14%) having the largest gaps.
The gap also varies by geo. The UK takes the cake with a 77-point gap: 92% of companies believe they are customer-centric, but only 15% of customers agree. France has an interesting split with their 70-point gap: 70% of companies believe they are customer-centric, while none of their customers agree! Interestingly enough, in Asia Pacific, the gap is flipped in favor of customers: 79% of customers believe companies are customer-centric, while only 63% of companies believe they are!
What can companies do? What will it take for this gap to close?
First and foremost (and probably the big "duh"), company executives need to get it; they must truly get the importance of focusing on customers and the customer experience. They cannot just give lip service or think/believe they are customer-focused. It doesn't work that way! And most of them probably don't even know what that means, or what it entails. (That's how stats like these come along!) But they do need to know; they do need to understand what it means to be customer-centric, customer-focused, and customer-obsessed. They need to understand what the implications are for the customer and for the business.
Capgemini reported that 81% of customers are willing to pay more for a better experience; in some industries, it goes as high as 87%! We know that there's a linkage between customer experience leaders and stock performance. Focus on the customer, and the numbers, the revenue, will follow.
As a customer experience professional, or an aspiring customer experience professional, work on getting executive commitment. That's your first step.
The rest is much easier from there. I'm not saying that it's not a lot of work to transform the culture and the customer experience, but I am saying that it will be a smoother journey - and one where you'll achieve success - if your executives are all on board.
Your perception may not be my reality. -Aporva Kala
Read the original post here.