November 2024 | VOL. 28

“Customers will pay more for a better experience. If you make it easy and remove friction, they’ll keep coming back.”

-Shep Hyken, Customer Service Expert

Welcome to the November Verde Edition newsletter. This month, we focus on the importance of service/service quality and the impact it has on CX excellence. 

It is well documented that companies have poured significant resources into refining their customer experience, aiming to create a seamless journey from start to finish. Yet, despite these efforts, friction points—those subtle yet powerful obstacles that disrupt the customer’s path—continue to persist. As our extensive research over the past 15 years reveals, the level of friction customers experience has remained surprisingly steady, even in the face of investments in technology, processes, and training. This ongoing friction not only frustrates customers but also directly threatens a business’s bottom line, putting critical revenue at risk.

Some companies, however, have mastered the art of reducing friction and, as a result, have set the standard for customer loyalty. Amazon, for example, excels at service recovery with its efficient and hassle-free return process. By empowering customers to return items easily and get quick refunds, Amazon not only resolves potential pain points but also strengthens customer trust, often turning negative experiences into opportunities for loyalty. Similarly, Ritz-Carlton has become synonymous with exceptional customer service by giving their employees the authority to go above and beyond to resolve customer issues on the spot. This commitment to proactive problem-solving has cultivated an enduring reputation for excellence, resulting in a fiercely loyal customer base.

Friction points manifest in many forms, but perhaps the most detrimental are delays in resolving issues and inconsistencies in perceived value of service quality. When issues arise, the speed at which companies respond can be the difference between retaining a customer and losing one. Customers expect swift resolutions and clear communication; when these expectations are not met, their loyalty diminishes, and their willingness to repurchase is compromised. However, as Amazon and Ritz-Carlton demonstrate, businesses that prioritize reducing friction by enhancing service speed, ensuring consistent value, and delivering high-quality interactions can turn these challenges into opportunities. We see this play out time and time again.

The chart below demonstrates the impact of effective service recovery. Note that customers who get their issues resolved to their complete satisfaction have a higher intent to repurchase than those customers who did not experience any friction. This demonstrates the point that investment in effective and efficient service recovery is simply good for business.

A frictionless experience may be an ambitious goal, but striving toward it can lead to increased customer satisfaction, stronger loyalty, and ultimately, better business outcomes.

The Q2 2024 CX Leader Pulse, conducted by Walker in partnership with the Customer Experience Professionals Association (CXPA), highlights the latest trends and challenges in CX. Here we discuss the key findings and the point-of-view from The Verde Group.

Key Findings:

CX Valuation and Integration Challenges: Although 68% of CX professionals agree that CX is a valued discipline, one-third struggle with organizational buy-in. The primary challenge remains data integration; nearly half of respondents cite difficulties consolidating data across channels, which hinders a cohesive view of the customer journey.

The Verde Group Point-Of-View: While we agree that organizational buy-in is a challenge and that data can be better consolidated to enhance the picture of the customer journey, we believe that the primary reason driving lower rates of organizational buy-in is the lack of financial framing of CX insights. Without a clear and explicit linkage of CX findings to the impact those insights have on business performance, buy-in will be fleeting. Connecting these two powerful data sets is essential and leads to change, investment, and improved outcomes for businesses and the customers they serve.

Success with Solicited Feedback Channels: CX professionals report strong success with solicited feedback methods, with top-performing channels such as web surveys, input from frontline employees, SMS-invited surveys, and in-depth interviews. These channels are highly effective at generating actionable insights, and helping CX teams create meaningful changes that benefit both customers and organizations.

The Verde Group Point-Of-View: This is great news for traditional research firms. Although many believe that the days of traditional surveys may be coming to an end, we see that the legacy methods of collecting customer data still remain of value.

Unstructured Data Struggles: Channels that involve unstructured, unsolicited data, like social media and third-party rating sites, are perceived as less effective. CX professionals find it difficult to drive organizational action from these sources due to data unpredictability and integration issues. 

The Verde Group Point-Of-View: The simple use of unstructured data is truly a challenge and likely increases the amount of noise a company experiences with trying to understand what really matters. This is why we believe that our Revenue@Risk approach is truly an innovation. Revenue@Risk helps organizations separate noise from signal regardless of the amount of data or the sources it is collected from. This is why we welcome unstructured data to our analyses as it only helps to round out our understanding of what truly impacts business success.

Digital Feedback Dynamics: Digital feedback is widely used, with 70% of CX teams employing at least one digital listening channel monthly. Passive feedback mechanisms (e.g., customer feedback on websites) are the most common, while active app feedback is less used but shows promising results for effectiveness.

The Verde Group Point-Of-View: This is great news. The more data, the better. And having ongoing listening posts allows organizations to understand if CX issues are persistent, are diminishing and/or if new threats are emerging.

Strong Organizational Engagement: Encouragingly, only a quarter of CX professionals view organizational engagement as a primary obstacle. This signals that organizations are increasingly embracing CX principles, aligning employees with CX goals, and building internal support, which bodes well for future CX advancements.

The Verde Group Point-Of-View: We believe this will only improve as more organizations take seriously the need to link CX insights to financial outcomes. The more organizations adopt this way of thinking, the more they will embrace CX investments in people, process improvements and technology assets.

The Q2 2024 CX Leader Pulse reveals both encouraging progress and persistent challenges within the CX landscape. While organizational engagement is on the rise, data integration and demonstrating CX’s financial impact remain key hurdles. The Verde Group’s perspective underscores the need to link CX insights directly to business performance, a step that could enhance buy-in, drive investment, and ultimately lead to more impactful customer experiences.

-Dennis Armbruster, Executive VP, The Verde Group

October Poll Results

In October, we asked,

"How would you rate your company's willingness to adopt changes in business practices?"

It is great to see that a majority of our readers indicate that their respective organizations view change as a core part of their culture. Change is good when supported by financially grounded facts that support those efforts. However, the data below suggests that there are still many companies that are not open to change or if they are, may have been burned by implementing change based on misguided information. The Verde Group believes that successful businesses that maximize change efforts based on CX insights do so when focused on specific, financially grounded CX friction points that inflict the most damage to the brand.

READY TO TALK? Book an intro session with Dennis Armbruster, Verde Group Executive VP, to discover how you can enhance the impact of your CX program. We want to help you find methods to anchor your customer insights firmly within your business framework, driving stronger ROI and increasing executive buy-in. We want to learn more about your current challenges.

November 2024 Poll

How empowered are your front-line teams to "make things right" for your customers when problems arise?

We came across this article recently in CMSWire and thought we would share it with our Verde Edition subscribers.

In this piece, Scott Clark reviews both old and new CX metrics that organizations should consider to maximize their investment in the customer experience. And while we couldn't agree more with the overall point of view, there was one piece that stood out. The section entitled "Integrating Traditional and Emerging Metrics" focuses on the need for organizations to adopt a broader, more actionable approach that ultimately drives business results.

We couldn't agree more. There is a place for NPS and CSAT but truth be told, they have both proven to be challenging when trying to correlate them to changes in economic outcomes. This is why The Verde Group created the Revenue@Risk Index. It is comprised of three factors:

1) the absence or presence of friction

2) the efficacy of service recovery efforts and

3) the degree of non-transactional brand engagement.

Combined, these factors create a score that has proven to correlate to changes in revenue. To learn more about the challenges in linking CX metrics to financial performance, you can read our white paper entitled: 𝗧𝗵𝗲 𝗚𝗿𝗲𝗮𝘁 𝗖𝗫 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲. Get it here: https://lnkd.in/gMykX-9v

November 2024's Question:

Question: Dear Verde Group, what data do you have that will help me convince my leadership to invest in customer service speed and quality?

Answer: Thank you for your question! As we indicate in the chart above, resolving a customer's issue to their complete satisfaction results in an enhanced level of loyalty. In hundreds of studies conducted over 20+ years, we see this fact play out time and time again. In addition, we see the benefit of resolving customer issues transpire in employee engagement and retention, essentially doubling-down on the economic benefit associated with investments in effective service recovery. To this end, we include service recovery efficacy in our Revenue@Risk index which is featured in the white paper below (The Great CX Challenge). I would suggest you download this piece as the data included will support your internal discussions and hopefully incremental investments!

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