When Ikea Canada introduced its new Design Studios in Ontario and Quebec, it did so with the intention of creating an entirely new shopping experience. These small concept stores located in urban centers offer personalized design services and one-to-one planning—a far cry from the traditional Ikea shopping trip that centers around navigating a giant, suburban store that feels like a viking fortress filled with homewares with names like Fördelaktig the Brute, Upplövv the Fierce, and Råskog the Bloody.
That new customer experience (CX) was a raging success, according to Forrester Research, pushing sales and customer satisfaction up. In fact, it helped the Swedish company jump a whopping 10 places in Forrester’s 2022 Canada Retailers Customer Experience Index Rankings.
Successful stories like this highlight how important it is to invest in the research and development of good customer experiences that drive sales and customer happiness. There’s a correlation between great customer experiences and brand loyalty, which is something that experts believe will be crucial to survive and even thrive in the market crisis some economists are predicting in 2023. Unfortunately, many companies are cutting or will be cutting down on CX programs this year, according to Rick Parrish, VP, Research Director at Forrester.
A customer experience crisis
“Companies that cut their CX programs are shooting themselves in the foot,” Parrish says. The only question, he adds, is how badly that bloody injury is going to be.
Things are already bad for those programs. Customer experience has been in free fall since the end of 2022. According to Forrester Research’s latest annual report, 20% of companies saw a drop in CX quality in 2022, and it’s only going to get worse, as one in five companies are expected to ditch their CX teams altogether in 2023. Companies will cut these teams to save costs and weather the incoming economic crisis but, ironically, the move will have precisely the opposite effect.
Parrish believes CX is crucial for success, especially during hard economic times. History has proven that even putting a bit of care into CX, even if you do it intuitively, it has a positive effect on your business. Forrester’s data shows that “if you improve CX quality, you improve customer loyalty, which improves both revenue and profitability, top line and bottom line, to say nothing of business resilience.” In other words, it’s time to double down on building great experiences for your customers—not pull back. To do so, Parrish offers two key suggestions.
First, measure everything
Companies need to build the metrics right into their CX programs in order to be able to link their efforts to the company’s bottom line. It’s imperative that teams can show that their work has a direct impact on company sales. They need to prove there’s a return on investment. “The economy has been pretty good, revenue’s been pretty good. Things have been growing. And so companies have often been willing to run their CX teams without having good metrics about return of investment in place,” Parrish says. “That party is over.” And this is exactly why companies are cutting down on CX: most teams can’t point at hard numbers and say this sales increase happened because they changed the way their digital shopping cart works or improved the automated deliveries by adding new transportation and fulfillment centers, like Chewy.com did in 2022, according to Forrester.
Knowing how CX changes affect the bottom line allows teams to see a tangible effect of their actions to better understand what’s going on: for instance, seeing how the sales of certain products skyrocketed while others went down because of a new area in the store layout. Unfortunately, most CX teams don’t have those hard quantitative metrics and, equally worrying, they don’t have the qualitative metrics. In the case of Ikea’s new urban stores, the design worked because the company correctly identified that customers needed a better, more convenient way to understand how the brand’s complex furnishing systems worked and how they could fit into their homes.
But, according to Forrester’s data, not everyone is Ikea: only 20% of CX programs say that they have survey design skills. “That worries us,” Parrish says. “Survey design is an absolutely core skill for CX programs because they rely so heavily on surveys.” By asking the right questions, you get the actual quantitative and qualitative data needed to adjust or change your CX.
Other crucial skills are also lacking, like customer journey management, which looks at how customers interact with your physical or digital store, mapping how they interact with the space, products, and personnel, and breaking down the customer’s behaviors and emotions through the entire experience. This process is fundamental to improve the CX. Understanding why something is not working and what could be the way to fix it is as important as knowing that it is not working. If a team doesn’t have the right metrics to measure consumers’ satisfaction and opinions, it greatly limits how to reorient and refocus future actions.
Build the right team
But companies shouldn’t get rid of CX teams just because they don’t have the metrics, Parrish says. The CX team may be doing many good things that are driving business and brand loyalty. The problem is that they can’t point at the data to prove it or make their work much better. “Let me put it this way: If your company’s CX program has been doing work that has been driving revenue and profitability and resilience, even if you are not measuring it properly, and you cut that program, that’s bad news,” Parrish says. “On the other hand, if your CX program has been operating in a relatively simplistic way and not doing the work that matters most, then cutting them is still not a good thing.”
The opportunity is there to improve the team, so it can make a difference on the balance sheet in 2023 and set the basis for future growth. “It is possible to accomplish this in less than a year, but it would take a heroic effort across many people,” he says.
With that in mind, you need the right human and financial resources, not less, to build the right team with the right skills to measure results and keep refocusing your strategy and developing the right CX, knowing what works and what doesn’t.
In addition to the aforementioned survey skills, four in five CX teams lack critical design, data, and journey skills. “CX teams without crucial skills such as inclusive experience design; design thinking; survey design; data literacy and storytelling; and journey mapping, analytics, and management will remain stuck on basic find-and-fix work, unable to help their organizations innovate to thrive in a challenging business environment,” Forrester’s latest report says, appropriately named Navigating The 2023 Downturn.
That report’s conclusion is that yes, to boost resilience, face this economic turbulence, and prepare for future growth, it is time to be bold, not run away from one of the most important elements to a company’s success. As Parrish tells me, “Money spent wisely on CX improvement is your best bet for business success in this kind of environment because it’s so much cheaper to drive greater loyalty from your existing customers than it is to try and panic and scramble around and drag more people into a funnel that they probably don’t belong in.”
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