Traditional Experience Management (XM) is failing brands… It’s time for a new way of actioning!
Customer behavior is in a perpetual cycle of change, and the traditional experience management (XM) strategy is failing brands’ ability to keep pace. Inboxes are oversaturated with promotional emails and one-dimensional surveys, leading to fatigue and disengagement. To preserve the brand-consumer connection, leading retailers are continuously soliciting customer feedback, testing out different process improvements, optimizing their apps and websites, and upskilling frontline employees to better serve their customers.
Despite these valiant efforts, brands still aren’t seeing the results they were hoping for. The question remains: why is traditional experience management failing modern retailers?
Creating a meaningful customer experience is absolutely imperative for winning wallet share and loyalty today. But before we can explore the answer to why traditional XM methods are underperforming, let’s cover the basics.
What is traditional experience management?
Experience management, or XM, is the process of collecting data from customers as they interact with a brand, then leveraging those findings to identify potential areas of improvement. Companies may also use this information to improve their vendor, supplier, employee, or shareholder experience.
Medallia, the pioneer and market leader in experience management, is credited with creating and building the category. They were the first to innovate beyond the traditional “problem resolution” customer service management approach, creating XM as we know it today. This revamped strategy has served the industry and global brands across verticals for more than 20 years.
However, while consumer behavior has continued to rapidly change, the methodologies being used by these experience management titans haven’t done the same.
“The process of monitoring every interaction people experience with a company in order to spot opportunities for improvement.” – Qualtrics
“Viewing and then improving the interactions between your business and your customer entirely from the customers’ perspective — and across the entire journey they have with your business.” – Medallia
What is the current experience management (XM) approach?
For the last 20 years, the most widely adopted benchmark for measuring customer satisfaction has been the Net Promoter System (NPS), created by Fred Reicheld from Bain & Company. The objective of NPS is to help companies measure and manage customer loyalty, resulting in profitable, sustainable growth.
Many brands have also adopted a combination of metrics – including Customer Satisfaction (CSAT), Operational Satisfaction (OSAT), and Customer Effort Score (CES) – to better understand how the customer experience unfolds online, in-app, or at a specific location.
To collect this data, brands send traditional customer surveys via email. They might ask about a specific interaction, like an online or in-store transaction, or they might conduct a quarterly survey to collect more “big-picture” sentiments. All of the feedback is consolidated in a dashboard and triaged into role-specific views: from CEO to frontline employees, everyone is served insights that are relevant to them.
Over time, experience management software companies like Medallia and Qualtrics have continued to create technologies that engage with customers through various channels – namely SMS, digital (intercept and always-on), and other social apps. They also use speech analytics tools to glean info from call center interactions.
Medallia has also begun to pivot the industry to their view of “customer and employee signals.” This philosophy deprioritizes surveys in favor of behavioral data like digital analytics and call center transcripts in order to “empower the voice of the silent majority of customers not responding to surveys.”
As a Chief Experience and Strategy Officer, I agree that utilizing all customer and employee data is absolutely critical to understanding human behavior – shopper analytics, feedback, transactional data, and employee feedback/HRIS data.
It’s not the data that’s the problem, though. It’s the experience management strategy itself, which has not evolved alongside consumer and employee behavior.
How is experience management (XM) failing brands?
When it comes to experience management, I have been on both sides of the table. I have led large retail brands as their Head of Customer Experience, and I have led a global retail practice as an executive advisor for some of the largest and most prestigious brands in the world. In both roles, I have used the same experience management playbook to advise clients: organization governance, benchmarking, survey design, data, and insights.
Overall, brands are hyper-focused on customer feedback and data capture, which leads them to be data rich and action poor.
So, what’s the issue?
The current approach has brands focused on overall benchmarks like NPS, CSAT, OSAT, and CES. Brands look at their dashboards and feel satisfied with the status quo, because their benchmark is hovering around the mid-60s to 70s.
Brand leaders spend their time browsing the stack ranker for their specific geographical area of responsibility, which leads them to praise the score and focus too hard on hitting certain metrics during performance evaluations. The challenge with receiving so much feedback, data, and signals is brands do not know how to action the data.
What’s more, the guidance for experience management governance is outdated. Typically, brands are advised to follow either a centralized, decentralized, or hybrid approach to governing the organization. This mirrors the typical “waterfall” project management structure, which is another key factor in traditional experience management falling behind: experience leaders are struggling to get support from the executive teams and stakeholders, because the traditional XM approach is stifling progress.
The rigidity of quarterly steering committee meetings, data analysis, and lack of action is causing brands to fall out of touch with the current customer.
What is the new way of actioning?
I can answer this with two short words: experience systems.
The experience systems approach aligns with the agile methodology adopted by most modern brands.
The role of an experience leader within an organization should be focused on understanding which initiatives are in place and aligning the agile experience strategy to each initiative. They must also empower these agile cross-functional teams with customer and employee feedback/data, enabling them to prioritize decisions in real time that focus on high-value, high-impact, and continuous improvements that achieve key business goals.
Experience leaders take on an influencer-like role within an organization, and I always ask them the same two questions when leading a workshop: What data do we have that supports this is the right initiative? What data do we need to influence the iteration process?
Building experience systems will enable brands to move at the speed of their customers, integrating flexibility and empowerment into their organizations. Experience systems turn internal teams’ focus towards taking action with the right data at the right time, delivering the best actions and experiences for their customers.
The result is a slew of positive business outcomes like improved same-store sales revenue, increased online cart conversion, increased average ticket size per customer, decreased customer churn, and other operational process improvements that deliver better experiences while winning customer and employee loyalty.
Check back soon for more content dedicated to breaking down experience systems and exploring how leading brands are experience hacking their way to stacked wins.
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Senior Vice President, Chief Experience & Strategy