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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