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The future of Customer Experience with Don Peppers
12 september 2019

On the 26th of September we're arranging Customer Loyalty Conference in Stockholm. One of our Keynote speakers is Don Peppers, he is recognized as one of the world’s leading authorities on customer-focused business strategies. Before his visit to Stockholm we asked him some questions about Customer Experience, the future wtihin the area and a lot more. Happy inspirational reading!

Why has Customer Experience become so important today?

In a word: Technology. Companies can now interact, cost efficiently, with millions of customers individually, track and analyze data about these customers, and tailor their future interactions and offerings. This has changed the ”dimension” of business competition. Before these information technologies evolved, companies had to focus on their public messages – their brands – because they could only communicate with masses of customers and prospects (”markets”). They had no cost-efficient way of managing their relationship with any single consumer. 

But technology now permits companies to change how they communicate with and treat individual customers, one customer at a time, and the result is that all the customer-facing functions of a business – marketing, sales, customer service, etc. – have been ”smashed together” into the single, customer-focused task of managing each individual customer’s ”experience” with them. 

What are the most important parts to address in order to succeed with Customer Experience?

Three primary obstacles must be addressed for a company to be able to deliver a reliably good CX: Capabilities, Alignment, and Culture.

  • Capabilities involve acquiring and using the right technological tools to collect and analyze data and make it available to workers, as well as the other technologies required to interact directly with customers and digitally configure the offering.
  • Alignment is a more serious difficulty, and involves reconfiguring the metrics, incentives, and accountabilities in an organization to accord with a new set of customer-oriented goals.
  • Culture is often the deciding factor, however, because you won’t get results simply by setting up data tools and process rules that require an employee to delight the customer – the employee must want to delight the customer.

You are the inventor of the 1:1 marketing notion in the 90’s – how do you see 1:1 marketing and CRM integrating with Customer Experience?  

The essential definition of 1:1 marketing was ”treating different customers differently.” And this is still the working definition of the ”new marketing,” whether you call it CRM or CXM. And the rules are the same as those we laid out in our thinking about 1:1 marketing: focus on share of customer rather than share of market, collaborate and interact with customers to co-create the product or service, differentiate customers one from another, manage your customers rather than just your products, engage your customers in dialogues, and take products to customers rather than customers to products (e-commerce). By the way, each of these ideas is a chapter title in the book Martha and I originally wrote that outlined the idea of 1:1 marketing more than 25 years ago, just prior to the development of the Worldwide Web.

"To become a successful CX leader, a company must have some kind of unifying sense of purpose that guides employees so everyone will be pointed toward the same ”direction of success”

What are the challenges to create great customer experiences and what is the role of one-one-marketing on delivering on customer experience?

One of the biggest challenges is that companies have difficulty reconciling our 19th Century accounting systems with the 21st Century reality that customer relationships are now the single biggest factor in a company’s economic value. This leads to all sorts of alignment problems (see question #2 above). For instance, it costs money today to improve a customer’s experience, but the profit or shareholder value generated by this improvement won’t materialize until sometime in future months or quarters – or years.  Accounting convention leads companies to emphasize short-term cost reduction and quick profits over long-term customer loyalty, which is a fatal mistake, underminging most CX initiatives.

Closely related to that is a company treating its own employees as if they were simply more expensive cogs in the same machinery that runs the company, subject to rules and restrictions that are robotically applied in an impersonal way. And why? Because most companies don’t trust individual, frontline employees to make the right decisions when it comes to controlling costs and protecting the company’s own interest. This is a culture problem (see #2 above, again). But if you can’t trust your own employee to ”do the right thing” when interacting with a customer, why do you even hire them? To become a successful CX leader, a company must have some kind of unifying sense of purpose that guides employees so everyone will be pointed toward the same ”direction of success,” and employees will want to serve customers better and help the company create more value even when no one is looking!

How much has changed within customer experience since the digital revolution started?

Everything.

Do you have any examples of when the models and tools you talk about have not worked as planned and what has happened instead?

Privacy protection has not developed the way Martha Rogers and I predicted it would. We incorrectly assumed that whatever interactive technology eventually developed would be owned by ”host companies,” and that these companies would become the gatekeepers that would protect their customers’ privacy simply because it would be in their own commercial interest to do so. They would collect customer preferences and other data, but make this precious data available to marketers and vendors without revealing actual customer identities, in order to represent each customer’s interest and generate greater value (because a vendor would have to go back through the host to reach the customer).

Instead, what we got was the worldwide web, which no one owns and everyone has free access to (there are no ”host companies” operating the web and controlling access to it). The good news, of course, is that this more open system made dramatic, meteoric expansion of interactivity possible, as media companies and vendors all launched their own initiatives based on their web sites. The bad news is that instead of host systems serving as gate keepers, we got network-effect quasi-monopoly platforms like Facebook, Google, Amazon and other big tech companies, some of which have built their businesses around tracking the customers who freely come and go, and selling this customer data to the highest bidders.

On the 27th of September you will teach a workshop in Stockholm about ”the future of Customer Experience”, can you give us a sample of what you see for the future?

Future CX practitioners will have to learn how to use machine learning, analytics, and other technological tools to convey more human qualities to their customers – qualities such as empathy and compassion. You can use a chatbot to streamline the customers experience, certainly. But no one is going to empathize with a bot. To create more genuine, emotional connections with their customers, the real CX leaders will be focusing on engaging their employees with a unifying sense of purpose, and then enabling them with the tools and trusting them with the authority to interact with customers on behalf of the business.

Here’s an early preview, for instance: At one Australian company the customer service agents who handle difficult issues are allowed to settle a customer complaint by simply asking a customer the question ”What do you think is fair?” With this question they can resolve the matter and usually win a complaining customer’s renewed loyalty as well. But note carefully that this is not a question that could ever credibly be posed by a bot. Not in our lifetimes, anyway.

"Future CX practitioners will have to learn how to use machine learning, analytics, and other technological tools to convey more human qualities to their customers – qualities such as empathy and compassion."

What is a common mistake companies make when working with customer experience?

One common mistake is confusing higher efficiency in the company’s own processes with a better customer experience. An automated voice response unit might move customer inquiries along very efficiently in a contact center, for instance, but it usually does not result in a more frictionless or efficient customer experience, per se. Making it difficult to find the customer service phone number on your website might make it more likely that a customer will use the self-help tools on the website to solve their own problem, but that’s not necessarily a ”better” experience for the cusotmer.

Any tips on books to read for people who wants to learn more about Customer Experience?

  • Read my book Customer Experience: What, How and Why Now, of course. It’s available on Amazon.
  • I also think Swedish-born Claes Fornell’s book The Satisfied Customer is extremely insightful and instructive.
  • And I found Isabella Villani’s book Good to Great CX to be a great compendium of ideas and cases, as well.

Do you have any favorite company who is in frontline with their customer experience work?

For my money, Amazon has pretty much always been and continues to be the most customer-centric firm on the globe, although Apple is beginning to give it a run in this field, especially when it comes to the issue of protecting customer privacy.

What do you think will be customer expectations in 2020?

The more we interact, the more valuable plain old ordinary trust becomes, because trust makes interactions more efficient. We engage in so many interactions and transactions today that we just don’t have the time to check out the facts or count our change. So people will more and more prefer to buy from companies that they can trust to act in their customer’s interest – protecting them from making a mistake, for instance, even though the company itself might profit from the mistake. Or reminding a customer that a warranty or guarantee is about to expire. Or even recommending a competitive product or service to a customer if they think it would actually be more in the customer’s interest.

As our lives speed up, expect your customers to demand such proactive trust, if you want to enjoy their long-term loyalty! 

Want to hear more from Don Peppers?

Don't miss his Keynote-session at Customer Loyalty Conference 26th of September and his Workshop on the 27th of September, both in Stockholm.

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