I’m keen to help you start working today to future proof your business against an economic downturn that may come later this year or next. See my previous blog for other ideas on this topic.
Let’s move onto my next recommendation: Focus on customer experience (CX).
Customer Experience (CX) Strategies
One powerful CX strategy is customer collaboration and co-creation. DHL, the large shipping and logistics services company, discovered that customers wanted to help rethink their supply chains to improve their business performance. DHL understands that innovative ideas come from working with customers, so they got to work on how they could collaborate. They decided to bring customers and DHL partners together in Germany and Singapore-based innovation centers. At each center, they held workshops to share best practices and discuss how they can create value. The purpose was to “conduct intensive hands-on workshops that explore and understand technology, economic, socio-political and culture trends to develop new ways to manage supply chains and logistics.”
Some innovative ideas that were launched as a result of the over 6,000 engagements conducted in DHL’s innovation centers include:
- Parcelcopter, a drone delivery research project, that could, in the future, enable companies to be more responsive, agile, and cost-efficient.
- “Smart glasses” and augmented reality, co-created with DHL customer Ricoh, to improve inventory and warehouse picking efficiency by 25%.
- “Maintenance on demand” (MoDe), co-created with DHL’s customer Volvo Trucks and other partners, that uses sensors to automatically send back vehicle and component performance to identify when and where vehicle maintenance will be required.
Bill Meahl, chief commercial officer, admits the co-creation concept was initially met with internal and external skepticism. Also, customers at first were not sure if it was just a sales tactic. Meanwhile, in the process of this work, they worked across multiple business units with different business models serving the same customer. Then, they had to find the right leaders who “owned the customer” and align and coordinate multiple teams to develop the innovation workshops. The various pieces of groundwork helped the company look at their processes and structure. This is a good exercise when working to be more customer-centric.
The company reports the effort was very worthwhile. Customer satisfaction scores are up over 80% and on-time delivery performance worldwide is 97% or higher. Plus, customer attrition rates are down and revenue from new services/products is up.
Working closely with customers like this helps build engagement and loyalty. It communicates that you value the relationship and want to partner to improve various aspects of customer operations.
My point here is that a great way to deliver customer value and differentiate your business is to focus on improving the customer experience you deliver. Products, pricing/rates, and such, can be easily copied by competitors. Only you can deliver the kind of experience customers will desire.
KPMG noted that, “In a commercial environment, customer experience is becoming the prime source of competitive differentiation.” It’s not hard to find other businesses that agree.
You can start your customer experience efforts now by increasing your customer listening and exploring ways to collaborate. Once you get this into place, it becomes an ongoing opportunity to listen, adapt, and shift as customer needs change. While this should be a part of your business strategy at all times, it is especially important when preparing for, and going through, tough economic times.
Just imagine how much insight you can gather from working first-hand with customers. They will reveal shifts in buying and consumption patterns and more. As you collaborate, you will find together you define new products and services and fine-tune your existing customer experience over time.
In most industries, customer experience is a rapidly growing business strategy due to growing commoditization and the demand to differentiate in a crowded marketplace. On top of that, customer expectations continue to grow. This is because they receive top-notch experiences from B2C companies and expect that same personalization, relevance, and value in B2B interactions. Customers want experiences that allow them to be successful. They crave customer experiences that bring about emotions such as relief and peace of mind rather than hassles, frustrations, and the like.
Customer Experience, Loyalty & the Bottom Line
Research from Temkin Group/Qualtrics shows a clear link between consistently good customer experience and loyalty (read: bottom line impact). Notice the graphic below showing how ratings across three customer experience components (success, effort, emotion) affect each of five loyalty behaviors. The study looked at consumer attitudes across a variety of “companies and industries and is based on whether consumers gave organizations a low, medium, or high customer experience rating. While an improvement in any one of the three components does increase all areas of loyalty, an improvement in the emotion component provides the biggest lift.”
What you see above on the left side are the positive benefits (often financial impacting) that occur when customers rate highly an experience on ‘success’ (getting what they wanted to get done), low ‘effort’ and positive ‘emotion.’ You can see high ratings tie to the benefits strongly. Wahoo, customer experience pays off!
The same study modeled the three-year impact for a company with $1 billion in annual revenue when they consistently deliver a great CX. An example, in the banking industry, shows those who make a moderate improvement to their customer experience could see an additional $816 million in revenues over three years. That is mostly from retaining customers, additional sales to existing customers, word of mouth from those happy customers and more.
Your Future Plans
As you plan for the future and any economic downturn, you will want to include in your plans a continuation of customer experience investment. This way, you don’t commoditize your own products. According to CX author and thought leader Lior Arussy, “Your customers need to have a compelling reason to choose to do business with you—and to continue to do business with you after that. Price is a cheap, unsustainable motivator for customer retention. Customer experience is the quality product.”
You can see that regardless of the economic state, customers still expect a great CX for them to continue to do business with you. That will not change, and their needs and expectations will only evolve and increase over time.
Now is the time to get focused on listening and collaborating with your customers. Let me know how I can help. Your first call is free. I’d love to chat about you can future proof your business.