The Real Reason Why Customer Experience Matters

You’ve heard all about how customer experience or CX is critically important. But if you look around you, bad CX (and its cousin, bad UX) are so ubiquitous it begs the question whether it’s really that important. I mean what’s the worst that can happen if your customer experience is not up to scratch?

It’s not just about losing a customer to a competitor; it’s not even about your company going out of business, although both can certainly happen. It’s bigger. If your industry collectively sucks at customer experience, entire industries can falter – or to use the tired buzzword for greater-than-average change, become disrupted.

Really?

Really. Let’s see how that could happen / is happening. Most of us should have no difficulties in coming up with several entire industries that collectively don’t seem to give a damn about customer experience.

Little Love Lost for Utilities

Take energy companies. Exaggerating only slightly, all their customers hate them. For many consumers, they are the epitome of greedy business with powerful lobby groups, vested interests, price-gouging behaviour, limited competition and more. At best, they’re considered a necessary evil.

Whether they really are all that evil (mostly they aren’t) is however irrelevant, because it’s the perception that matters. And the perception is firmly that there is little love lost between utilities and their customers.

That’s a problem.

Now, many of us know the energy sector is facing a number of interesting and potentially quite severe challenges over the coming years. In Australia, some of the key drivers include the incessant rise in solar PV installations and an equally relentless decline in total electricity demand – all the while maintaining the brief peak demand levels.

Add to this already-uncomfortable mix the rapidly improving solutions for household-scale energy storage, and you can see why the energy sector is nervous. It’s slowly starting to dawn on the customers that maybe they are not an absolutely necessary evil after all; that maybe there’s a way to get rid of them.

The ultimate threat scenario is that eventually even suburban households will go off-grid in meaningful numbers, setting off a death spiral. In isolated areas with a high peak/off-peak charge delta, grid-connected household storage is already financially viable. As time goes by, it will only become increasingly so, and viability of off-grid scenarios will follow some years later.

The industry seems to take solace from the fact that for the vast majority of their customers, storage – let alone going off-grid – does not currently offer a good ROI, and won’t do so for some time to come.

They’re right.

But also so, so wrong.

Didn’t We Bury The Rational Consumer Model Already?

They’re right in that going off-grid in areas with existing grid coverage makes, on average, currently little financial sense. And it won’t for years.

They’re wrong in assuming that the economics of it would be the primary driver.

Assuming a standard, neo-classical consumer model is dangerous to begin with, given it has been shown to be dead-wrong time and again. It’s especially dangerous if your customers have a proven, strongly negative perception of your company.

If Your Customer Hates You, ROI Is Secondary

Anecdotally, once “affordable” systems come to market, my #1 motivation of going off-grid would not be based on ROI.

It would be the fact that my distributor is a moron.

While obviously setup affordability is an issue, the primary desire for going off-grid has little to do with financial viability. It’s simply because I would prefer to have nothing to do with my distributor.

(nb. yes yes, personifying a company by calling them morons is not “rational” and maybe not even be fair given they have many hard-working employees. Then again, maybe it is. Also, notably, I have nothing against my retailer, an entirely different company thanks to how the industry is structured here.)

Given the public perception of utilities, I would imagine I am not the only one.

Now, the energy companies could respond to the gathering of dark strategic clouds in an intelligent manner; first, they should urgently fix the customer relationship. Second, they could revamp the connection pricing structure to be based on maximum flux. Third, they could encourage increased usage (How, you ask? Encouraging adoption of electric vehicles is one sure-fire way of massively increasing usage, but it’s not the only one) and demand shifting to make disconnection harder in a positive rather than negative way, while also selling those batteries.

Yet, their main response so far has been substantially less intelligent, and chances are you’ve seen it in your electricity bill (fixed charges up). Long-term, this will just make their problems worse.

It’s Already Happening Elsewhere

If the energy sector scenario above seems far-fetched to you, consider that the same principle of bad customer experience driving big changes has already progressed further elsewhere.

Take taxis and Uber for example – the latter isn’t popular purely or even primarily because of often cheaper pricing, although it certainly helps. People choose Uber over taxis because their customer experience is better.

Or how about telecommunication companies and the so-called over-the-top players? As telcos failed to deliver good new customer / user experiences (anyone remember walled gardens, WAP content, the promise of RCS etc?), others took over a large share of the customer’s attention – and money.

If You Don’t Care, Someone Else Will

Don’t be the kind of company – or industry – that doesn’t care about customer experience. For your sake.

Because if you don’t care, sooner or later someone else will.

After all, all the over-use and debate about the term disruption doesn’t mean it can’t happen to you.

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Are you really data-driven?

Many companies and even individuals pride themselves on being data-driven. Or at least that’s what they claim – it is however clear many are data-driven only when it fits their preferred narrative or their view of how the world works.

They are data-driven only when convenient for them. Using data only when convenient is a lame, modern form of confirmation bias.

Let’s look at just three examples where many so-called data-driven companies completely ignore the actual data:

  • Working hours
  • Diversity
  • Exercise

These are all pretty fundamental building blocks of productivity – and as such, should be of paramount interest to organizations of any size and kind. Yet, the vast majority of activity and policies around these flies directly in the face of evidence – the very data that the said organizations claim guides them.

Let’s look at these, and some of the evidence, one at a time:

Working hours

That long working hours are harmful to productivity has long been known, but equally long mostly ignored by corporations. As evidence keeps piling up that long hours backfire for people and companies and that productivity declines steadily as hours worked increases, what are most companies doing?

Nothing.

At worst, you get reports like the NYT story on Amazon’s culture where companies do exactly the opposite of what research suggests. Or you might get inane stories like BoA Merill Lynch having to exhort their junior bankers to take four weekend days off per month. To say that’s “too little” is a bit of an understatement.

Diversity

Most organizations pay at least lip service to diversity, because it’s perceived bad to be anti-diversity. At the same time, most organizations are hopelessly homogenous – especially on the executive leadership level. What’s worse, most talk about “diversity” is focused on really, really, basic things like gender. But there’s more to diversity than that; studies have shown that companies with 2-D diversity – both inherent diversity such as gender and ethnicity as well as acquired diversity like working in another country or following a divergent education or career path – are much more likely to grow market share and capture new markets.

As if that’s not enough, being around different people also makes people more creative, more diligent and harder-working. Like with working hours, the data on the benefits of diversity is not exactly new; people like Bob Sutton have been talking about the topic for 15 odd years (including in his book from 2002 that I can highly recommend: Weird Ideas That Work).

Exercise

Basically nobody disagrees that sedentary lifestyle is a killer – The Economist recently said it has “reached epidemic proportions”. Many organizations may think that has little to do with them and that the best they can do is offer some gym discounts – and they would be wrong.

A Stanford study showed walking improves creativity by an average of 60%; as arranging walking meetings and the like is not exactly complicated, you’d think this would be encouraged more. It has also been shown beyond any reasonable doubt that sitting is bad for you, so simple things like standing desks have many proven benefits. But when was the last time someone asked you for a walking meeting? Does you workplace have adjustable desks all around?

But we’re an exception!

Of course there are genuine exceptions, but they remain precisely that – exceptions. Despite the masses of evidence, I’m stumped as to why organizations do not act on the data. At best, they’re being hypocrites. At worst, they are literally killing their employees and/or making them miserable and failing to reach business objectives effectively.

One reason could be the belief that all that evidence is fine for everyone else, but that we’re somehow different. There are a host of biases involved here, but two concepts stand out – exceptionalism (a perception that an institution is exceptional in some way and thus does not need to conform to normal rules and general principles) and illusory superiority (a cognitive bias where individuals overestimate their own qualities and abilities relative to others). Both are likely too common.

Alternatively, given all of the above have been known for years and years, it could be that organizations and individuals and just bloody slow learners even when faced with convincing data. In an age where learning, innovation and operational agility are imperative, this is not good news.

So, data-driven – really?

If you’re a genuine exception to the above – i.e. you strongly advocate reasonable working hours, are active in hiring and developing for multidimensional diversity and provide support and guidance to being physically active at work – congratulations! I would love to hear how you manage them, what benefits you have seen and what your employees think.

On the other hand, if you fail to acknowledge the points above – i.e. you believe that working perpetually stupid hours is a net positive, that homogeneous groups are superior in innovating and productivity, and that exercise doesn’t have any benefits – you could be called many things, but data-driven is not one of them.

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Don’t Forget How to Fly The Plane – Managing Technology Transitions Safely

A video of this recent impressive cross-wind landing at Schiphol airport found its way to my Facebook feed. Great work from the pilot, but in the comments I saw a friend of a friend wondering if that was the auto-landing software or a pilot at work.

Well, I can assure you it was the pilot; the wind speed at the Schiphol airport averaged 40kts at the time the video was taken, with gusts to 55kts. However, B777’s maximum wind limit for auto-landing is 25kts.

However, for people to even consider that it could’ve been an autopilot got me thinking on one topic that is currently making our world temporarily more dangerous: we are over-reliant on technology that is not ready to take over from us.

With all the – completely valid, I might add – concerns about artificial intelligence, there is a more imminent risk that we are facing, and living with every single day without paying much attention to it. Ironically, the culprit is technological progress; it’s a problem because there’s enough of it, but not enough of it.

Forgetting how to fly the plane

As technology becomes good enough to do some work on our behalf, we tend to be a bit lazy and let it do that work on our behalf.

At first, it breaks down frequently enough so that we retain the skills necessary to take over when needed. But as it improves, we use those skills less and less, until we begin to forget how to take over in the first place – but at the same time, the technology is not yet so developed as to be superior to humans in handling all situations, nor is it infallible or often even particularly resilient. We enter a dangerous chasm of being over-reliant on immature technology.

That’s the dangerous zone we currently live in, and it’s happening everywhere. Like the pilots on Air France flight 447, we happily rely on the computers to run the show for us when it’s smooth sailing. But when something goes wrong, we, like the pilots, suddenly find that we lack the experience to deal with the situation.

Under pressure, we’ve forgotten how to fly the plane; the pilots’ very first responsibility.

The tragedy is that this is unlikely to have happened if we had never had the autopilot taking care of things for us in the first place.

Progress and resilience

And that is how things go, on scales small and large. Over the past centuries and increasingly rapidly over the past decades, humanity has piled on technology upon technology, and as they have grown to be good enough most of the time, we forget how to live without them and rely on them, somehow wrongly assuming they are better than us all of the time.

Whether or not that has disastrous effects like on AF 447 is often a matter of luck.

It’s a matter of luck we haven’t had another Carrington event or a well-coordinated terrorist attack that could disable a large electricity grid for weeks or months.

It’s a matter of luck we’ve avoided a globally devastating pandemic for so many years.

It’s a matter of luck we haven’t hit any climate change tipping points yet. Maybe.

This is good, because we’re not ready for any of them. The electricity grid is remarkably fragile, and we are totally dependent on it. We are systematically unable to deal with a major pandemic – just visit an ER on a good day. And on climate change, the lack of action in face of near-certain string of escalating disasters is deafening.

But luck only lasts so long.

Building Resilience

At some point, the technology surpasses our capacity to deal with issues. At some point, autopilots on airplanes become statistically far superior to humans in dealing with any situation thrown at them.

It is only when that happens – if even then – that we can forget to fly and let the machine take over; when we’re confident it will handle anything better than we ever could have.

We are not at that point yet.

And until we reach that point, we must maintain our capacity to fly – to fly that aircraft, to manage this planet, and to get ready for the turbulent times ahead we so clearly see are ahead of us.

We need to build resilience and backups.

We need to be ready to change and adapt.

We need to harness technology as it becomes available – and yes, drive it forward.

But we must not forget how to survive without it too soon.

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Cutting Through the Fluff

Sometimes, the world of technology is not much better than reading a tabloid; a lot of wasted enthusiasm and energy, but zero substance. In a world where every vendor needs to be the “global leader”, every startup a “disruptor” and every product “revolutionary”, it’s useful to have a set of quick techniques for performing elementary reality checks.

Luckily, there are two exceedingly simple tools/techniques that I’ve found invaluable; from performing due diligence to dissecting news articles to debunking outrageous analyst forecasts, they provide a quick and easy “first-pass” filter for most claims, technology-related or not.

1) Ask Why

The Five Whys is one of many variations of root cause analysis which can be used for much more than just troubleshooting. Asking why is incredibly powerful, because it forces the other party to justify the claims made in a logical manner – which strikingly often appears to be impossible for them. Granted, sometimes it can also be hazardous to one’s health – in a typical corporate environment, people are often ready to assault you by the third why 😉

A simple “Why” can quickly uncover basic, fundamental problems with an offering or activity. And if you prepare to answer such questions yourself, you’ll be forced to develop a much more compelling, logical story that is better based on data.

2) Do The Math

This is something so many companies, journalists, analysts and others fail to do that it’s not funny. We’re not talking about complex climate model-type of math either, but really basic fundamental reality checks. It’s more about answering some simple questions about any of presented numbers:
– do they make sense?
– are they realistic?
– are they backed up by some evidence/data?

Let’s take Cisco’s “IOT is a $19 trillion market“-spiel as an example that still gets repeated, completely uncritically, ad nauseam. For that to happen, it would require the global GDP growth to double, starting last year. Unless, of course, they think IOT is a zero-sum game and all the “opportunity” is someone else’s loss – which would in turn mean a rebalancing to the tune of 25% of global GDP. Unsurprisingly, Cisco isn’t keen to talk about such ‘details’.

Of course, it’s not about outrageously big numbers either; many more mundane claims can be debunked by basic math, realistic adoption curve modeling etc.

First-pass filter rate…resembles Sturgeon’s Law

Frankly, I find it alternatingly sad, infuriating and depressing that the vast majority of … everything, really … fail even such elementary tests. It is another proof point for Sturgeon’s Law (“90% of everything is crap”).

Speaking of laws, there’s another law that I see someone falling prey to on a daily basis – Amara’s Law; “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” That’s something to think about before you pitch your next revolutionary overnight-world-domination idea.

But, but… I have to exaggerate!

This is a common retort to the above criticism; that one simply has to exaggerate and make ludicrously unrealistic claims to get any airtime these days. And there would be some truth to that – it is indeed difficult to be noticed by the media, VCs or whoever if you’re a realist. Extreme messages sell.

I might be naive in that way, but I don’t accept that one would somehow be essentially forced to lie. It reminds me of a quote from Jiddu Krishnamurti, which is a good place to wrap this rant up;

It is no measure of health to be well adjusted to a profoundly sick society.

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