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Is Customer Experience a Function of People Experience?
People Experience (PX) drives Customer Excellence inside our firms which ultimately impacts Customer Experience (CX). In short, Service-Profit Chain!
Quoting the excellent work of James L. Heskett and team in the article “Putting the Service-Profit Chain to Work"
Engaged People Engage Customers, which Drives Shareholder Value.
The idea is not new: People Experience (PX) drives Customer Excellence inside our firms which ultimately impacts Customer Experience (CX).
- People Experience or PX is measured by employee engagement surveys, but recently, one can look at sentiment through social media outlets such as Glassdoor, where current and former employees anonymously review companies.
- Customer Experience or CX is measured through customer satisfaction surveys, but social media platforms such as Facebook, Twitter and LinkedIn can provide unfiltered sentiment data.
The theory that PX affects CX seems to work magic at the well-staffed and managed firms referenced in articles, books and research papers. We have all heard of them and many of us buy from them. However, in my anecdotal experience, there is still a lot of room for improvement.
Let's start with a series of questions:
- Is your rate of growth over the past 2 to 3 years higher than that of your industry?
- Do you know if your employee engagement score is above that of your peers?
- Have you invested in training/coaching for your staff lately?
If the answer is "no" to more than one of those questions, keep reading.
Establishing the Connection Among CX, PX and Strategy
Let’s illustrate, in a simplified way, the activities a firm will encounter from strategy to execution. For each major activity, I aligned, in the following graphic, the most critical success factors for optimal CX and PX based on my own research and experience:
If CX is a function of PX, then we need to start at the beginning of the chain: Strategy.
There is ample research on why strategies fail. I reached out to Ralph Oliva at ISBM during my research for this paper. One of his comments says it all: “First, a strategy from the very get-go needs to be designed to be implementable. It needs to consider how fast the organization can change. It needs to also comprehend how fast moves in the marketplace can be made.”
Ralph and his research team provided me with a short list of the 15 most common possible root causes, divided into three main categories: Lack of Focus (leadership, accountability, Lack of Capability (resources, time, expertise) and Lack of Coherence (overlap, alignment).
I agree with those categories, and there are possibly more. I believe, however, the common denominator among those root causes is failing to understand, at the Strategy definition stage, the human capital needed to execute and, subsequently, planning to hire, train or retrain resources to maximize their potential for success.
Planning and Investing in Human Capital is Hard
A piece of evidence came to me recently, as we considered years of strategic planning and correlated efforts with results, project by project. After weeding out the obvious ill-prepared strategies (missing essential pieces), or the fact that the market shifted due to unpredictable outside influences, the biggest culprit for failure was a gross miscalculation of required talent and management resources.
Without exception, once the strategy was approved, the teams proceeded immediately to secure property, plants, machinery, software and other traditional assets. However, when, it was time to invest in the required human capital (hiring, training and/or retaining), we always struggled to get approval, even if the funds or number of hires were planned for.
Why? From my years as an executive, the decisions around traditional asset investments are relatively simple, given the framework within which we make strategic choices: We believe in the reliability of pure metrics such as NPV, ROI, etc. A dollar invested in machinery results in a few cents of increased earnings. Simple arithmetic. Direct line of sight. We can see, touch and feel the results.
It's not the same with human capital. It takes time to hire talent, train them and retrain them. That undertaking is much more complex, risk prone and subject to intangible variables than is investing in fixed assets. As I researched further, I discovered that the need for training/coaching was always underestimated, and often deferred until "better days" due to "cost pressures," if not cancelled or ignored altogether.
Our recent experience with training may offer a clue: If you've worked in a large organization, I'm sure you’ve been through mandatory classes such as six-sigma, lean, time management, project management, change management, sales effectiveness, finance 101, etc. Whether you needed the course to perform your job didn’t matter. Everyone had to attend in-person or online classes with boring, plain vanilla content that was a lot of NVA. (Non Value Added in lean speak).
Millions of dollars spent without much to show for them. This scattershot, one size fits all approach left participants with many bad memories as they advanced to leadership positions.
Interestingly, the other mandatory training, aimed to address compliance (Finance, Ethics, Safety, EHS), is blessed by management as ENVA (Essential Non Value Added in lean speak). No questions asked. We need it!
The Importance of Training for Ensuring the Success of a Strategy
In the context of CX and PX, training matters. That's because if, for example, we’d like to offer a NEW product or NEW business model, to NEW customers. We invest in product development or an M&A activity, or we invest in production capacity and then expect our sales and marketing staff to execute. We also organize intensive training on the features and benefits of the NEW thing without giving much thought to the skills required to sell to NEW customers. Sound familiar?
To illustrate this point, years ago, we invested in developing a disruptive service offering. The artificial intelligence-based system was aimed at vastly improving product selection and usage compared to the traditional process of leveraging tribal know-how. Aimed at improving CX within a specific group of personas (target audiences), the launch was highly successful, and so was its impact on the business. However, I still believe we could have done better.
In hindsight, we needed to position the new service to new customers, not just push it to our current customer base. A modest investment in skills development to sell services or solutions instead of products could have improved the outcome significantly.
Shifting to VA (Value Added in lean speak), training doesn’t have to be complex or expensive. For example, on that same project, in its launch phase some of us took it upon ourselves to coach key staff members (after regular business hours and in secluded conference rooms) on the art of presenting to large groups for maximum impact. The result was awesome, generating more passion and enthusiasm about the product wherever they went during the launch phase.
Tips to Maximize PX and CX
Revisit your strategy and pay doubly close attention to satisfying the CX component, which we traditionally do well, and to bringing the PX element into sharper focus.
Engage in conversations with your teams around:
- Determining the "Real" Number of Staff, accounting for recruiting, on-boarding and training time. I usually forecast three years out, visualizing and quantifying what success looks like and determining the resources needed to satisfy that vision. Use that model as your baseline and state your requirements in detail, down to next quarter’s actions for onboarding talent. If you're in a large organization, work with HR to develop a plan as early as possible.
- Evaluate the "Necessary" Skills and Behaviors required to address new markets, products and customers. Find specifically what would be required to maximize CX and PX at every step of the customer journey. Analyze gaps and plan to fill them. For instance, selling a new pricing model to a sophisticated buyer may require special training for sales staff. Find an outside source to help you -- someone with deep experience in that field. Avoid generalists or complex theories, and keep it simple.
- Implement PX and CX Metrics to drive the intended behaviors and measure success of the new strategy. It may be important to define other performance indicators based upon how you envision the business to change because of the strategy.
Richard Branson's quote says it all: "Clients do not come first. Employees come first. If you take care of your employees, they take care of the clients."
None of the points discussed is rocket science, and it continues to surprise me when I listen to (or read) stories about failed or sub-optimal implementations of CX strategies.
Many thanks to those of you who contributed to this paper. I also thank you, the reader, in advance for your comments on this topic. We need to continue expanding the body of knowledge related to the critical importance of the human element in enabling growth strategies.