11 Customer Experience Flaws that Predict a Company’s Failure

Fatal flaws in customer experience (CX) foretell the demise of many companies. Learn to recognize these flaws and put in place a CX strategy that ensures you become a leader not a loser.

Company with pile of returned goods

These and other widely available studies demonstrate the power of a superb customer experience:

  • According to Harvard Business Review’s Employ­ee-Customer-Profit Chain, a 1.3% improvement in customer satisfaction scores results in a revenue increase of 0.5%.
  • The Profit Impact of Market Strategy’s database found that companies who lead in service have 12 times the profitability and 9% greater growth than poor service providers.
  • Bain & Co. found that a 12-point increase in the net-promoter score doubles a company’s growth rate.
  • A report by the American Customer Satisfaction Index proved that the leading companies consistently outperformed the market. Customer service leaders outper­formed the Dow by 93%, the Fortune 500 by 20% and the NASDAQ by 335%.

Organizations that fail to recognize the importance of CX are risking flaws that destroy customer loyalty and their futures.

Which of these CX flaws sidetrack your company?

Blind Leadership

Ego’s, arrogance, not invented here, ignorance of CX facts, and poor emotional intelligence skills devour the best intentions for improving CX. Leaders must be willing to learn, make a commitment and get out of the way in order to transform results.

Frontline Fanatics

A major airline responded to complaints by notifying customers that they had implemented a “Customer First” initiative for front line employees. The problem was really the management. The airline went bankrupt and eventually was merged with a larger competitor. According to service gurus, 85-95% of service problems are management related. Research shows that high employee engagement leads to better customer engagement. With employee disengagement at all time negative levels companies are in peril right in the starting gate.

Ignorance Is Bliss

Recently, a company shared with us that they survey their customers twice a year. What if you only looked at sales or profit numbers that often? The company would probably go bankrupt! If you don’t measure the customers’ experience regularly and use the data to excel, you can’t manage it. The best you can achieve is mediocrity.

Vision without Vitality

One company President said, “We don’t want to be the biggest company, only the best service provider.” The President gave a five-minute speech everywhere he went; however, no plan or action ever followed. The company floundered. His vision had no substance.

The Panacea Approach

A CEO learned how an executive he knew improved his company’s service using a certain method. So, he did it exactly the same way and failed. That’s like a doctor giving the same treatment plan and prescription to every patient with a problem. To be effective, you need an approach based on best practices but customized for the specifics of your company.

Do It All and Have It All

One leader happily explained to his team that they had 120 new service change initiatives. Unfortunately, employees were overwhelmed, business stalled and performance sank. People can only handle so much. You have to focus. Ask, what’s most important?

I Am a Rock – I Am an Island

A $25-billion company we know has tried to improve service for a decade. They have achieved no gains and have settled for low stock prices, profits and growth.  Recently they started selling off parts of the company to survive. Unless a company begins at startup with a zealous customer focus, there is practically no chance for improvement without a consulting partner. Why? Because the company already has serious internal blind spots, a full plate of priorities, and limited expertise in improving CX.

Drive by Training

Training is not the answer– it’s only part of the solution. Many leaders send their employees to a class to get “fixed”. You also have to work on organizational design, systems, processes and cross-departmental collaboration. Even though training is a vital pit stop on the way to success, it’s not a one-stop solution. The best training effort starts with a vision involving an ongoing commitment to employee development and learning.

The Secret Is Technology

Too many companies figure that technology is the key to better service. This is one of the costliest CX flaws. The truth is – it can help, but it isn’t the answer. In today’s age, you need to be cutting edge in technology to be in the game, however, maybe not first. Many new technologies fail to deliver on their promises. One organization spent millions to improve customer retention through technology; unfortunately, their sales growth continued to spiral downward. Second, it’s people that make or break a customer experience transformation, rather than technology. Too often, people are an afterthought. Great service is an inside-out process that begins with employee satisfaction and loyalty.

The Tool-Chest Dilemma

You can take your pick from new digital technologies like AI, Big Data and chatbots or numerous other approaches such as TQM, Six Sigma, ISO and Kaizen to get better. Too often, these efforts cannot be executed well because employees are drowning in meetings, data and paperwork. Experience suggests that the best approach begins with a thoughtful and honest analysis of the customers’ needs and concerns. Next, it requires partnering with employees through a passionate and relentless drive to give customers what they need. This is a science and an art, which must be done with integrity and simplicity.

The Perils of Poor Execution

How often have you implemented a company strategy but failed to achieve the desired result because leadership changed direction or cut back on resources? Poor execution is deadly when attempting to improve the customer experience because it shows a lack of commitment from leaders to invest their time and resources. The promises become false exhortations, which of course demonstrate a lack of integrity. The trust within and around the organization dies. Now, there is an even bigger problem.

Bonus Flaw: CEOs Don’t Walk the Talk

CEOs agree that improving the customer experience gives a company its biggest competitive advantage with 73% of executives identifying the improvement of the customer experience as a top three priority. Yet, studies show that less than 13% of companies have strong CX cultures that drive better business results. The rest are mired in these CX flaws. It seems everyone is talking about improving, but few are getting anything of substance done.

Eliminate Customer Experience Flaws

To avoid these CX flaws leaders must look in the mirror. Their values, experience and habits are often their own worst enemy. They got to the top with strengths of hard work, drive, and business analytics but it inhibits their vision. All of what they have accomplished may be good, but the game has changed. The customer has the power not the CEO. Competition is global, customers are more discerning, and employees less loyal. Now the emotional intelligence skills of empathy, open mindedness, listening, team-building, and innovation are needed. CX leadership requires a total company effort led by a committed executive, you can’t short cut it.

Steve Jobs said it brilliantly, “Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.”

About the Author

Rick Conlow is CEO & Senior Partner of WCW Partners, a performance improvement company. Based in Minneapolis/St. Paul, Minnesota, WCW works with clients in a variety of industries worldwide to help them excel in sales, service and leadership, facilitating business growth and vitality. Rick is author of Excellence in Management, Excellence in Supervision and Returning to Learning.

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