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Talent Developers Hold the Key to Customer Experience Transformation

Monday, December 10, 2018
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Talent developers have found it difficult to connect their work directly to ROI, growth, revenues, or profitability. Soft skills and technical training have been linked to engagement, but few talent professionals have been able to track impact as far as the income statement. They haven’t been looking in the right place.

Customer experience (CX) transformations have been linked to business outcomes, but they have the opposite problem: engagement. Without an engaged workforce, leading the industry in customer satisfaction is improbable at best. This is why so many CX transformations fail: They fail to engage the workforce in change. Engagement is the sticking point.

Talent developers are the key to CX transformation. Data published in academic and private studies have provided all the dots; talent professionals need only connect them together to demonstrate how their efforts will lead to CX success.

Intrinsic Link Between CX and Shareholder Return

"Almost nine out of ten organizations expect to be competing primarily on the basis of customer experience,” according to KPMG.

With disruption and easy vendor-switching, competition for customers has never been more intense. This has underscored a trend that was already in full swing: the primacy of customer satisfaction.

Although plenty of studies in the 90s and early 2000s proved that satisfaction generated income and profitability, more recently, we have seen the rewards accelerate. Now, those companies that sustain above-average satisfaction can dominate their market in a matter of years.

This is in large part because information travels quickly. Happy customers communicate their positive experience, influencing hundreds if not thousands of their friends and acquaintances within days.

One recent study by McKinsey shows a direct correlation between satisfaction and profits since 2007. In fact, businesses that have maintained above-average scores on the American Customer Satisfaction Index (ASCI) for 10 years delivered 400 percent returns to shareholders when compared to the average in their industry (McKinsey, “Putting Customer Experience at the Heart of Next-Generation Operating Models). Through the Great Recession, mastery in CX has delivered a compound annual growth rate of 15 percent above average growth.

There are exceptions to this rule. Forrester analyzed a number of consumer markets, including cable providers, airlines, traditional retailers, investment firms, and digital retailers. The report looked at firms with high and low satisfaction scores in these markets. In markets such as cable providers, where some areas give consumers only one choice, customer satisfaction did not make a difference.

However, in markets where customers were provided with at least two good options, the business with differentiated CX was rewarded with significant growth when compared with competitors (Forrester, Customer Experience Drives Revenue Growth). When customers can choose, they choose companies that satisfy them. Even cable companies, in those areas served by multiple providers, are rewarded for satisfaction.

CX mastery is, therefore, an essential capacity for most organizations to develop, and it is shown consistently in terms of profitability and revenue growth.

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Executives want to master satisfaction, but many are unsure how to accomplish this feat.

CX Is Either Everyone’s Business or No One’s Business

It turns out that maintaining above-average satisfaction scores has a prerequisite, an internal counterpart, without which it is impossible to lead any industry anywhere: employee engagement.

Vast amounts of data support the symbiotic relationship between engagement and satisfaction, between employees and customers. A 2005 study concluded that work engagement is linked to performance and customer loyalty (Salanova, Agut & Peiró, 2005), and the dataset arrived at this conclusion with more certainty than correlations between cigarette smoking and cancer.

In other words, if a business satisfies its employees, it also satisfies its customers. The converse is also true: If a business doesn’t satisfy its customers, then it isn’t satisfying its employees. CX is either everyone’s business or no one’s business.

I am not the only one to hold this opinion. Capgemini (Engaging for Change, 2018), Deloitte (Engagement, Always On, 2018), and Avaya (Employee Experience—Cornerstone of a Successful Digital Transformation, 2018) have all stated quite clearly that engagement is the foundation of change.

Everyone presumes that when we say CX, we are emphasizing technology, when in fact, if you listen to the consultancies that manage transformations, you hear them emphasizing holistic, cultural practices.

Talent developers hold the key to CX because they have the audience, the ability to propel organizational learning. They need only the right content to help forward the CX mission.

6 Core CX Competencies Teach Critical Soft Skills While Developing CX Fluency

CX training develops knowledge in six main areas, which help employees contextualize the changes their company wants to make, as well as recommend changes to drive more satisfying interactions with customers.

  • CX Strategy: The foundation for building a customer-oriented organization.
  • Customer-Centric Culture: Align organizational resources to create positive experiences.
  • Organizational Adoption and Accountability: Break down silos and build a customer-centered organization.
  • Metrics, Measurement, and ROI: Measure touchpoints for key drivers of performance and ROI.
  • Experience Design and Improvement: Uniquely crafting each touchpoint for the customer journey.
  • VOC, Customer Insight, and Understanding: Examining metrics to amplify customer voice and feedback.

CX at its foundation practices deep empathy with customers to improve value. Understanding that satisfying their customers is their new calling softens and deepens employees’ relationship to their firms. Suddenly, the business is not just a commodity; it can become a thoughtful entity that cares.

Another important data point in support of this thought comes from the Drucker Institute, which found that the most successful companies—companies that were able to grow despite living in shrinking industries—were not only better in terms of customer satisfaction and employee engagement, they were better in social responsibility, as well (Wall Street Journal, “Why Some Companies Succeed in Declining Industries”). Giving back is another signal of our deepest level of humanity, which imbues businesses with a higher sense of purpose—also a primary driver of engagement.

It will be interesting to see whether social responsibility will become as strongly correlated with revenue growth as engagement already has been. The tie currently seems indirect and only emphasizes the importance of a motivated workforce in creating industry-leading experiences.

However, it is clear that CX represents a significant opportunity for talent developers, who can cultivate a transformation-oriented workforce.

About the Author
Mohamed Latib, PhD, CEO of CX University, has been involved in CX work for more than 30 years, designing CX workshops, leadership development, customer feedback solutions, and cultural transformation consulting for many major global organizations. Mohamed holds an MS in psychology, an MBA, and a PhD in business administration.
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If you are interested in engagement and profitable growth, I suggest looking at companies who excel at both. Industry leaders, like Southwest Airlines, Capital One and BHP Billiton, and hundreds of private companies empower employees to think and act like owners, driving and participating in the profitable growth of the company. Their engagement and business results speak for themselves. These Forbes and Harvard Business Review articles provide more background: https://hbr.org/2018/01/more-tha
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