CX Life cycle management for continuous improvement in Customer Experience and Revenue/Customer

Customer Experience is like a product created for customers and it displays a lifecycle similar to product life cycle. It has the four stages of Introduction, Growth, Maturity and Decline. During Introduction phase, a new initiative is implemented by an organization which starts getting noticed by customers through the experience they get during various transactions with the company. The pace of receiving a new customer experience is slow and sporadic. People start talking about this new experience in person as well as on social media and the rate at which customer throng to get this experience increases significantly. Advertisement by the company about the change also helps picking up the rate.

This is the Growth phase during which a large section of customer are trying out this new experience. The hype creates a pull for new customers to try out the new experience and presents significant potential for the company to acquire these customers and retain them. More customers connect with company, do more and more transactions and provides a positive impact on the overall revenue as well as revenue per customer. When the initial euphoria of new experience is over, the customers start expecting this experience to be available and the speed of new customer addition slows down, the customer transaction volume remains steady. We are now in Maturity phase. This phase also keeps customer experience more or less at same level. This phase also faces a challenge in terms of competition trying to start initiatives to give same or better experience. The customers are in two minds but most of them continue. How ever some of the customers start building a customer experience fatigue i.e. the experience, which thrilled them some time ago does not excite them anymore and they start looking for something more, something different. They then start losing interest and try out a different experience offered by competitors and company start losing customers along with the revenue. The decline begins. If company does not take any action, the decline continues and company will continue to lose its customer and revenue. 

A few things that needs to be addressed by a company to grow their business. First; Growth phase should be short and rapid where the acquisition of customers as well as customer revenue occurs fast in a short period of time and second; Maturity phase should be stretched as long as possible so that company is able to maintain high level of customers and revenue over a period of time. Ideally company should be able to create another intervention at the right time so that a new life-cycle with new experience starts and impact of decline phase is arrested before it begins. Company needs to acquire mastery over two aspects

1                     Identification of time when new initiative needs to be introduced

2                     Creating a specific new initiative every time so that the cycle continues

The right time for intervention could be determined through measuring customer experience fatigue. As soon as customers provide indications of fatigue, it is time for intervention. The signs of fatigue are stagnant revenue, stagnant rate of new customer addition and introduction of similar experience initiatives by competition. If a company regularly goes through the customer numbers and revenue numbers for specific category (where the initiative was implemented) it can find the trend and catch the moment when a slight declining trend is observed. It can also watch the social media to understand chatter about its experience initiative and initiatives by competition to see if it is going to trigger the decline phase for its initiative.

How do we identify what kind of intervention to be introduced? Intervention should address the right needs which are near and dear for the specific customers who are experiencing fatigue. For which company can use the differentiated needs pyramid method, where in we can create a pyramid with differentiated needs of customer that we are trying to fulfill. We create such a pyramid for our segment of customers and map the existing initiatives against various needs. This will provide us the white spaces where company has not addressed, and competition is trying to address. Then the company can create an intervention targeting specific needs/white spaces so that the interventions are effective and provide the desired outcome of restarting the cycle. The following blogs provide detailed methodology for creating a differentiated needs pyramid for specific customer segment. 

Customer Experience Improvement using Differentiated Needs Pyramid (Maslow’s theory) --https://personalandprofessionalexcellence.blogspot.com/2018/03/customer-experience-improvement-using.html

Predictability in Customer Experience Improvement – A Perspective for Grocery Retail Industry ---https://personalandprofessionalexcellence.blogspot.com/2019/07/predictability-in-customer-experience.html?_sm_au_=iVV4Rtj4p0NLfDVr

In summary, Customer experience has a life cycle of Introduction-Growth-Maturity-Decline. Every intervention created by company will flow through these phases and will stop giving any results in due course. An injection of new intervention at right time can restart the life cycle and enable companies to maintain higher customer experience as well as higher revenue per customer.

Predictability in Customer Experience Improvement - A Perspective for Grocery Retail Industry

With significant competition and similarity between products as well as operating models, it has become extremely difficult to differentiate your products and company. Even price is no longer a differentiation due to price-match policies followed by many players. Customer buy from certain vendor only if they “like” to buy from this vendor. Herculean efforts are being made by different companies to create that unique differentiated experience for every customer which creates the love to transact with the company again and again.  Although multiple actions are taken by companies, predictability in terms of action and desired result/outcome with respect to customer experience is still a challenge.

In my earlier blog Customer Experience Improvement using Maslow’s theory,    https://personalandprofessionalexcellence.blogspot.com/2018/03/customer-experience-improvement-using.html, I have described a framework that could be used to get a better understanding of the customer and create actions to address his/her needs to improve the experience provided by the company. In this blog, I have taken an example of Grocery Retail business and discussed the application of this framework to build predictability in improving the customer experience.

As described in the previous blog, differentiated customer experience levels for a grocery customer are defined. Which start with lowest level that customer will buy form them i.e. “Customer is OK” moving to “Customer being comfortable”, then to “feeling at home” then going “on a high” when he/she shops at the specific grocery shop; Ultimately reaching “Nirvana” while shopping at this store. As certain needs get satisfied, customer moves upwards in step wise manner from “Customer is OK” to “Customer feels Nirvana”. The key for Grocery chain is to create appropriate interventions which will satisfy the right needs at right levels for right set of customers, thus pushing the shopping experience upwards. Accurate identification of needs which would result into specific level of experience, is critical to build predictability in the customer experience improvement program for any Grocery chain. The needs of customers could be identified at multiple levels based on the strategy being adopted, it could be all customers together or customers segmented based on parameters like age, sex, income, race, geography, etc. Predictability in desired improvement is directly proportional to the granularity of the segmentation and specific needs assessment at each level.

For understanding purpose, I have analyzed the needs using two customer segments based on age i.e. “Age > 50” and “Age < 30”. Following picture provides details regarding interpretation of specific experience into what it means to them.  We can see that the needs of both the segments are different and experience that each action will create for these segments will be different. Knowing this relationship will help in building predictability for the company.  

Let us look at the need for “Customer is OK” to shop. The 50+ segment looks for ease in physical access as key whereas 30- segment looks for online access as important.  Which means if Grocery chain does not have online store or online order and pick up at store facility; there are less chances of attracting any younger generation customers to shop with them. The younger generation will feel “nirvana” if they are able to order anything using their mobile phone and get it delivered at home. However same feeling is achieved differently by the 50+ segment. If a grocery chain creates a free wi-fi facility and a café where customers can spend as much time as they want, the 30- generation feels it like home and will visit more often whereas there is no impact on customer experience for the 50+ segment. Grocery chains can create this needs pyramid for various customer experience levels for the specific permutation / combination of their customer segments they run their business with and start building interventions specific to specific improvement desired for specific customer segment thus building desired predictability.

In summary, identify right customer segments, build needs pyramid for customer experience levels, create interventions addressing specific needs of specific segments, achieve specific improvement in customer experience.