Michael Lowenstein is a renowned expert on CX and an early pioneer in the development of customer relationship management theory and practice.
CX is broken. It has been for years now.
The numbers tell the story. The American Customer Satisfaction Index is stagnant, barely above where it was in 1994 (77 vs 75). Consumer perception of CX quality has declined for a fourth consecutive year, according to Forrester’s annual benchmark index, and is now at an all-time low. And again according to Forrester, NPS scores have steeply declined across most industries over the past couple of years.
Behind this grim set of facts is a sobering truth: customers are simply fed up with being taken for granted. Consideration of their needs always seems to end at check-out. They feel like a data point on a spreadsheet. So they have become increasingly agitated and resentful at the unfairness of it all – and more distrustful than ever of the bloated claims that companies make, comparing it to their lived experience.
After three decades of growing interest by companies in CX – from its emergence in the mid-1990s as a credible discipline to the widescale adoption of NPS in the mid-2000s to the obsession of the past decade with orchestration of the customer journey – how is it that so little progress has been made in improving the customer experience?
Companies have got a lot better at selling stuff – but a lot worse at making customers feel good about the total experience. And now, customer attitudes are hardening. They are putting price and value ahead of brand loyalty, having grown cynical of what companies say. No wonder brand loyalty is in decline. Why pay extra for a premium brand if it’s unworthy of their trust?
For answers as to why the trust gap has grown, you only need to look at how public companies function today. For the most part they are run by corporate leaders whose idea of success is a glowing quarterly earnings report (because their compensation is tied to it). NPS may be on the executive dashboard but it’s subordinate to market share and growth rate. And due to the financialization of business decision making, cost reduction always takes priority over creating happier customers. And while the C-suite and even the Board may acknowledge the importance of customer loyalty to future cash flow, they treat CX as a departmental function and not an operating philosophy (resulting in what’s been called “ornamental CX” or “CX Theatre”).
The job of achieving better CX is often handed over to a centralized CX team. And of course the trouble with that model is they become just another functional silo without the authority to act as change agents. Their role is limited to creating journey maps and measuring satisfaction and loyalty without a top-down mandate to meaningfully transform how the company does business.
Perhaps the greatest impediment to CX quality is the attitude of frontline employees responsible for customer satisfaction. Companies don’t treat employees with any more respect than they do customers. So why should employees care how customers feel?
There is a host of other barriers to improving CX – short-termism, lack of organizational consensus and alignment, the use of automation technology as a crutch, senior leadership ambivalence, competing priorities, a diffusion of accountability, the list goes on. The biggest problem, however, is simply an underappreciation for the importance of winning customer trust, according to CX expert Michael Lowenstein.
Michael has been appealing to the better angels of companies ever since the release of his first book “Customer Retention: An Integrated Process for Keeping Your Best Customers” in 1995. Since then he’s published six other books – along with hundreds of articles, white papers and blogs – and is deservedly considered amongst the most respected CX experts in the world. He has long been a proponent of linking employee and customer experience, and was an early advocate of treating CX as a cohesive business system that can only succeed through enterprise level governance and the full endorsement and commitment of leadership.
I started by asking Michael how much further ahead CX is than when he wrote his first book 30 years ago.