We are in a century where customers can choose between countless companies with seemingly an infinite number of available products and services. Differentiating through the simple product itself is a privilege for highly specialized companies or oligopolies. For all others, the core differentiation is nowadays done by offering a better and frictionless customer experience. However, it is not easy to create superior experiences for customers and at the same time reduce costs and complexity. So how to master this task and transform your company into a customer experience winner?

Do you know your customers’ core needs?

The main reason a company is or has been successful is because it solves a specific problem for customers. The company’s offering is perceived by customers as truly value adding and problem solving, which results in a positive buying decision. It can be often seen that the main reason for failed or disrupted companies is that they lost track of which customer problem they solve and how the demands of customers are changing over time. Not adopting to changing customer needs is a death stroke.

Where to start?

It starts by analyzing different archetypes of customers. Each archetype has their own consumption behavior and a slightly different reason why they decide for a specific company or product. Also, the value perception can be different. Taking the example of an airline: an airline has numerous customer archetypes. One can be the “busy business traveler”, another one the “flying vacation family”. Whereas the “busy business traveler” prefers flexible booking options through their mobile phone, this value is not relevant to the “flying vacation family”. Looking at it the other way around: a guarantee to be seated together in one row on a flight is a highly relevant value for the “flying vacation family” but most likely irrelevant for the “busy business traveler”.

Customer Archetypes of an Airline
Figure 1: Customer Archetype; Example “Airline”

The center of every customer experience effort needs to be the identification of those different customer archetypes. Any improvement without considering the customer type itself is most likely to fail due to the lack of customer centricity.

Creating differentiation and experiences through customer acts?

After identifying core needs of different customer archetypes, a company should start to identify and design customer acts. A customer act describes every action a customer plans to do with a company, e.g., “get information on shipping status” or “reporting a technical issue” or “buy a new item”. It is more than the actual buying act but reaches from awareness and information to use and change to customer care. Depending on the company size and complexity there can be dozens of different customer acts.

Each act corresponds to a specific customer experience and is executed over different channels. Leading companies know exactly which acts are used by which customer archetypes and thus can improve their experience by reducing friction. It can be the simple reduction of complexity of the act itself or the use of new digital channels through which the act is executed.

Customer Act "Purchase + Pay" at a Fashion Retailer
Figure 2: Customer Acts; Example “Fashion Retailer”

How to prioritize customer acts?

Based on the fact that a company may have dozens of customer acts, improving them all at the same time to increase overall customer experience would be an unmanageable task or result in massive resource expenditures. Thus, changes should be prioritized according to the biggest customer pain points. There are several options to identify pain points. The easier one is to interpret customer data such as “lowest satisfaction score”, “volume of service tickets”, “intent of hotline calls”, or screening social reviews. Also, company-internal metrics such as “highest manpower efforts” or “highest process costs” can indicate how to prioritize correctly.

The harder and long-term indicators on the other hand are representative customer surveys where customers actively rate their experience. One example would be integrating score ratings into order confirmation mails or through offering discounts in exchange for customer opinions.

After prioritizing which customer act improvement will have the biggest impact on the total level of customer experience and costs, the redesign and optimization process can begin.

How can you improving the way customers interact with your company?

Our experience from real-life consulting projects keeps confirming that the redesign of customer acts needs a team effort. Depending on the business line the customer act is in, various experts, process owners and managers should be involved as one “act team”. However, we also observed that redesigning customer experience is often handled as a one-off effort. However, testing different changes, receiving customer feedback, and continuous adoption on an iterative basis is what a winning customer-centric company is all about. That’s why mindset, capabilities as well as customer-centric thinking are a key component in all our consulting projects.

Optimizing CX by Changing Customer Acts
Figure 3: Customer Experience Excellence

Removing redundant customer acts

The very first task when redesigning a customer act is to merge similar or remove redundant customer acts. Companies sometimes lose track of responsibilities and processes and therefore are operating various customer acts with the exact same outcome. In the worst case, this leads to customer confusion resulting in churn. For example: there are two different customer support hotlines, which have overlaps in their responsibility. A customer decides for one of both but the agent is not able to help on the specific case so forwards the customer to the second line. A clear differentiation between both lines (internal and external) would have helped to assign the customer-specific problem more concretely to one of the two support lines and to solve the problem right away.

Improvements on act level

Once prioritization and elimination of redundancies are done by looking at the big picture, the focus shifts to the act level itself. Improving customer acts end-to-end will most of the time impact several company functions, which need to be coordinated: the product or service itself (e.g. lower product variability), policies and service structures (e.g. budget for service employees for trouble-shooting) or the technological system (e.g. frontend/backend changes).

Agile IT platforms are a game changer

Regarding technological systems, companies with an agile platform IT will clearly have an advantage. They can change the front- and backend easier and faster in order to implement the new customer act strategy. It is fair to say that technology and data will make up more than two thirds of customer experience improvements. From simple “click-to-buy” reductions to complete new digital offerings – technology is what impacts customer experience the most.

Reducing costs per customer act

Another important improvement measure is the reduction of costs per customer act. When measuring costs, we often speak about the unit economics of acts. It needs to be determined how valuable and at the same time profitable each act is. Taking the buying act as an example, the following questions can be asked: “how much do I spend for onboarding customers?”, “What are the average staff expenses per customer purchase”, “what manual processes are involved in one buying process?”. Answering these questions will enable a company to set ambitious targets, for example reduce every manual interaction within the buying process and decrease onboarding costs by 50%.

Unit economics for acts are mostly KPI driven. They should be set ambitiously but not delusively. Understanding the unit economics also guides the act team towards a common goal and indicates which business actions and functions will be affected.

What you can expect from improving your customer experience

We can see at our clients that there are huge benefits of improving customer experience by strategically redesigning customer acts step by step in a continual manner. It not only improves cost efficiency and effectiveness but also drives more personalized, simplified, and digitalized customer interactions. Further direct KPI improvements can be lower customer churn, reduced business friction, higher customer retention, and a higher NPS score.

Example KPI Improvement
Figure 4: KPI Improvement

Curious about where your business friction has its origin? Or how to improve your company specific acts? We are happy to share our experience.

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