Customer experience (CX) as a business strategy has been steadily increasing in importance over the past decade. This increase in tempo is due to the fact, that at some level, people who run for- profit organizations understand that engaged customers drive positive financial performance.
The increase in tempo can also be attributed to macro-economic factors. The increase in competition, decrease in barriers to entry into new markets and the global economic wind-down, increase the amount of pressure on organizations to produce and consistently meet financial expectations. As reported through many analysts, news outlets, etc., the transformation of the economy into one largely serviced based puts a premium on customers and their experience as a competitive differentiator and money maker. More and more senior executives have explicit CX goals, and their compensation to a large degree is directly tied to these goals.
To support this increased focus, CX has evolved into a discipline, with dedicated practitioners, measurement systems, experts, and practices. Most organizations focused on CX have a Chief Customer Officer, or VP of Customer Experience. These people tend to report directly to the top, and have accountability across the organization, often directly leading groups tasked with marketing, sales and service delivery. Their job is a difficult one as they have to not only rally the organization around customer centricity, but develop measurable, manageable metrics that report performance that often span individuals, groups, enterprise business processes, and the customer journey.
One area that is critical to the success of CX programs, and one that I have seen organizations struggle with over the past decade, is how to monetize improvements / investments in the customer experience and tie that monetization to organizational and individual performance measures. A monetization and linkage system that draws straight lines from the income statement down to the individual and back up is critical and of tremendous value to any organization embarking or engaged in a CX program.
Given CX is still an evolving discipline, with a limited body of knowledge of no consensus, who or what do we turn to, to implement such a system that is critical to CX program success?
Unlike 2,500 years ago in ancient Greece where one could consult an “oracle” on such a question, there does exist an Oracle today that has cracked the CX monetization code. That Oracle, Oracle Corporation, has developed a CX value equation and linkage system that ties CX improvement and value realization back to an organization’s income statement. Doing so crystallizes what it means to invest in CX, and furthermore, how to tie investments back to financial success and individual performance measures.
About 2 years ago I worked for RightNow technologies, a leading provider of cloud-based customer service, before it was acquired by Oracle, and was part of a team that assembled this CX value equation. Simply put, organizations focus and invest in CX to grow Customer Lifetime Value (CLV). There are several levers an organization can pull to affect CLV. Those levers include customer acquisition & spend, customer retention & advocacy, and organizational operating efficiency. Pulling any one of these levers will move CLV, which moves big levers on the income statement tied to organizational profitability and shareholder value.
The CX value code exists. It has been codified, and is being used by Oracle to help their customers today. The Oracle of CX, the CX value equation, provides any organization intent on improving CX to drive profitability, a systematic and integrated way to understand CX investment.
In subsequent posts I am going to unpack in great detail, CX, the CX value equation, and Oracle solutions that fuel it. There is lots of work to do, and many new areas to explore. I hope you’ll take the time to follow me on this blog and chime in on my posts.
