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The State of CX Management

Release Date: October 22, 2019

The Qualtrics XM Institute released their report “The State of Customer Experience Management, 2019” which assesses how companies are doing with their CX efforts. Guest host Pat Gibbons welcome Isabelle Zdatny from the XM Institute to discuss their findings and some of the key takeaways from the report.

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Pat:
Wouldn't it be great if there was something that could give us an idea of how companies are improving their customer experience management programs; something to give us some perspective; something to tell us how we stack up against others? Well, as it turns out, there is such a thing.

Isabelle:
Maturing your CX program, investing your CX effort, it's worth it in the long run. Customer experience is worth focusing on.

Pat:
A glimpse into how companies are focusing on customer experience. On this episode of The CX Leader Podcast.

Announcer:
The CX Leader Podcast with Steve Walker is produced by Walker, an experience management firm that helps our clients gain a competitive advantage by delivering an exceptional experience for their customers. You can find out more at walkerinfo.com.

Pat:
Hello, everyone. I'm Pat Gibbons, guest host of The CX Leader Podcast, sitting in today for Steve Walker and thank you for listening. On The CX Leader Podcast we explore topics and themes to help leaders like you leverage all the benefits of customer experience and help your customers and prospects want to do more business with you. As a CX leader, it's important to stay up to date on the latest trends on how customer experiences changing the way companies view and interact with their customers. The Qualtrics XM Institute obviously agrees with that view and they've released their new report, "The State of Customer Experience Management, 2019", which details both some of the exciting things happening in the CX profession, as well as some of the challenging things that CX leaders need to know about. My guest today is going to walk us through some of the highlights of that report. Isabelle Zdatny is a certified customer experience professional and an XM catalyst with the Qualtrics XM Institute. Isabelle, thanks for being on The CX Leader Podcast.

Isabelle:
Thanks so much for having me. It's great to be here.

Pat:
Well, it's a great topic and a timely report because I think there are, there's just a lot going on in the CX industry and a lot of people really trying to figure out how they fit people in new roles; companies embarking on this… it's just a good time to take a step back and look at what's going on. So, you know, I want to jump right into this and actually, you know, my producer's across the table from me – he can validate this: I've got the report in front of me and I've got Post-it notes hanging out and all that. I've been devouring this thing. It's really interesting stuff. But let's first take a step back and tell us a little bit about the XM Institute and your history of publishing reports.

Isabelle:
So the XM Institute is really a thought leadership group inside Qualtrics. And we're dedicated to helping organizations create best-in-class experienced management or XM programs. And the XM Institute is actually relatively new. We were founded only a year ago last October – we just had our birthday – when Qualtrics acquired Temkin Group. And I'm not sure some of your listeners might be familiar with Temkin Group or with Bruce Temkin. I believe Bruce has actually been on this podcast before. And, he's a pretty well-known player in the world of CX. I think you guys classified him as a luminary.

Pat:
[Laughing] That we did.

Isabelle:
Yeah. So he's been in this space for a while. He is one of the co-founders of the CXPA and he and his wife Karen founded Temkin Group in 2010. And then last October, Qualtrics acquired us to startup the XM Institute so are our whole team came over from Temkin Group to Qualtrics. It's been a very exciting year for us. And we got to continue doing a lot of the things that we really love doing when we were at Temkin Group, like training and speaking and conducting and publishing research and building a community of XM professionals. All of that fun stuff. But now we're getting to do it on a bigger scale and we're not just reaching a wider audience and able to help more companies, but we've also broadened our scope beyond just customer experience to look at how companies are designing and managing the experiences of a lot of other people like their employees, their perspective customers, their partners, their suppliers, their shareholders, anyone who interacts with them. So we've broadened it out from just focusing on customer experience to experience management more broadly. And I think it might be helpful for people if before we dig into the meat of this report, I just take a step back for a second and quickly clarify the relationship between customer experience and experience management, because we get this question all the time.

Pat:
And it is it is a good question. And I think that clarification would be helpful.

Isabelle:
Okay. Fabulous. Yeah, I know. Sometimes I slip back and forth between XM and CX and I used them interchangeably. So I'll just explain upfront – save us some time down the line. So one way to think about "customer experience" versus "experience management" is that customer experience is really a use-case of experience management. It's what happens when a company applies XM to customer interactions. And what we've found is that customer experience is usually where companies begin their experience management journey – they'll start by improving customer experiences. But once you start seriously focusing on CX, you'll start to realize that customer experiences are inextricably linked with other people's experiences as well. Right, like employees' experiences because employees are the ones who are actually interacting with customers. So it's important that they're capable of and motivated to deliver good CX. And even like brand experience is incredibly important, right? Because your company's brand is going to be attracting a certain type of employee, a certain type of customer, and it's setting people's expectations around what kind of experience they're gonna have with you. So companies often begin their XM Journeys with CX and then as their efforts mature, they'll start kind of expanding into these other experience areas, designing the experiences of other audiences. So XM is really just about how companies manage all of those different experiences of which customer experience is one.

Pat:
Right.

Isabelle:
So hopefully that's helpful.

Pat:
Yeah, know, I think… I think it is. I think it… it really broadens and puts an exclamation point behind how so many companies today are realizing how important it is to design and develop and manage the experiences that their customers have.

Isabelle:
Absolutely.

Pat:
Yeah. And your… your group, historically, I know, has published dozens and dozens of reports and I expect they're only going to be more rich and valuable in the future. And I think one note that I want to throw in that is, I think, significant for our listeners: I know when it was Temkin group, just part of your business model was to charge for these reports. But now as part of Qualtrics, these reports are free and we'll provide those… those links and everything before we finish the podcast.

Isabelle:
Oh, yeah, that was honestly one of our favorite things about joining Qualtrics. We were so excited about that.

Pat:
Well, let's… let's dig into this report and why don't you start off – his is probably the toughest question you'll have because of its breadth – but give us a few of the highlights of the report.

Isabelle:
Yeah. No problem. So I would say, again, this is an incredibly meatier report. So it's hard to just pull out a few. I think there's really three big findings I can think of from the report. So the first one I would want to highlight is that despite the fact that we know at this point that good customer experience strongly correlates to key loyalty behaviors like "likelihood to recommend" or "likelihood to repurchase", and those key loyalty behaviors drive business value for an organization, companies are still not super great at delivering consistently positive experiences to their customers. We've actually found that only 2 percent, I believe, of companies deliver excellent experiences and 30 percent deliver good experiences, which means that about two-thirds of companies still deliver mediocre or worse experiences to their customers. So that's not great. However, companies are planning to actually increase their focus on customer experience in the coming year. We had over 80 percent of people say that they expect their company to focus more on customer experience in 2020 than they did in 2019. Second big finding I would say, is that CX programs still tend to be pretty immature. We had respondents complete a CX competency and maturity assessment and we found that 79 percent of companies, almost four in five companies, are still in those earliest two stages of maturity. So maturity still remains pretty low. But again, companies I think are realizing that and are planning on investing in improving CX more in the next year.

Isabelle:
And then I think the third key takeaway from this report is that maturing your CX program and investing your CX efforts, it's worth it in the long run. Customer experience is worth focusing on because having a strong CX program is going to benefit your organization in a whole number of different ways. So one thing we did as part of this report is we divided respondents into two different groups based on how they scored on that CX competency and maturity assessment. So companies who earned a high score on the assessment, we called them "CX leaders" and companies who got a low score on the assessment, we called them "CX laggards." And then we compared the responses of CX leaders to the responses of CX laggards, and we found that across the board CX leaders significantly outperformed CX laggards in a whole number of different ways. So we can talk about their relative financial performances in a minute. But we also found that like CEOs at CX leaders companies are significantly more likely to be strong or very strong champions of a company's CX program, and that CX leaders are more likely to focus on employee engagement to recognize the importance of their employees in CX, and they're better at demonstrating empathy to customers and employees. There are some really interesting findings.

Pat:
Yeah, and I think it's great. And it's you know, it's interesting because so many of us that are in the industry and, you know, we're in it every day. You know, sometimes we want to think that the industry is pretty mature, but it sounds like it's got a long way to go. And every now and then, I'm surprised when a company comes to us and says, yep, we're just starting this out. It's like, "Really? Wow!"

Isabelle:
Well, I think if – yeah, I think too, for us, when we're, you know, we help companies do this as part of our day to day jobs. We have a very subjective view – we're only getting the companies who have already decided they want to start focusing on this. And we're missing all the companies who haven't yet started focusing on customer experience. So, yeah, we tend to have a pretty biased perspective, I think about where companies are maturity wise.

Pat:
So, obviously, one of your observation is, is it's worth it. Let's… let's play the role of the bottom-line individual, the CEO, or CFO, that says, "OK, really worth it to me means that there's a financial ROI." The report covered some of that. Tell us a little about that.

Isabelle:
So I think the report definitely suggests that customer experience and financial performance are correlated. It doesn't necessarily dig into whether there's a causal relationship between CX and financial results. But we did find that companies who deliver better experiences to customers are more likely to financially outperform their competitors, and they're more likely to have CX programs that have a significant positive impact on their company's financial performance. So again, as I mentioned, we split those respondents into CX leaders, CX laggards based on their scores on the CX competency and maturity assessment. And we found that CX leaders, 61 percent of them, say that their financial results last year were better than the financial results of their competitors – 61 percent compared to only 48 percent of CX laggards who say the same thing. So CX leaders are more likely than CX laggards to financially outperform the competition. We also asked respondents to what degree they think that their company's CX efforts have impacted the business' financial performance over the previous year. And we found that 71 percent of CX leaders say that their program has positively impacted the financial performance of their company compared to only 38 percent of CX laggards. So…

Pat:
That's significant. Yeah, cause, you know, for people to really take action and really put all this to use, they have to believe in the programs. And it's… that data points to that for sure.

Isabelle:
Absolutely. Another interesting thing that we touch on in this report, we get into it more in some of our other reports like this ROI of customer experience and stuff. But it's mentioned here is that there's a really strong correlation between a customer's experience of the company and their likelihood of recommending that company, which is pretty unsurprising, right? The better their experience, the more likely they are to recommend. And that's also going to drive more business to the organization.

Pat:
So, Isabella, it sounds like with those trends, people are kind of looking at CX seeing some of the positive benefits. One of the things I noticed was there was something… there was a question about to what degree is your organization planning to focus on improving customer experience over the next 12 months? And like 43 percent said significantly more than last year.

Isabelle:
Yeah.

Pat:
Did you see that message throughout the report?

Isabelle:
Absolutely. Yeah. This number really stood out to me. We found that 81 percent of companies say that they're going to increase their focus on CX over the next twelve months. And then, as you said, over half of those organizations say that they're going to increase their focus significantly more. And we also found that they're going to focus more not only on customer experience, but on employee experience and brand experience and product experience as well. So, again, even though right now companies may not be super great at CX, they're trying to get better. And that is great news for all of us in the CX world. Our skills and expertise are going to be in super high demand.

Pat:
It sounds like the experience economy to me. [Laughing]

Isabelle:
[Laughing] Yes! [Laughing] Someone's been reading Qualtrics.

Pat:
Yeah!

Announcer:
Do you have an idea for a topic that you'd like us to cover? A suggestion on how we can improve the program, or just want to let us know how much you enjoy listening? Email The CX Leader Podcast at podcast@walkerinfo.com. We'd love to hear your feedback on how we're doing. That's podcast@walkerinfo.com.

Pat:
So let me… let me ask: one of the ones that I found really interesting was, there was a line of questions around the quality of the customer experience across different channels. And gosh, I'm looking at the report now and there's about a dozen different channels represented. But I think there were some interesting findings there. I won't steal your thunder, but I wanted to comment on that and I might chime in as well.

Isabelle:
Yeah. No problem. So, yeah, we asked respondents to rate the experience at their organization, typically delivers through 10 different interaction channels. So interaction channels included things like on the phone with an agent or in person in a store or a branch or on a computer. We even asked about through chat bots or through mobile apps or social media. And so what we've found in general – and we found pretty much every year I think that we've been doing this study – is that companies think that they're best at delivering experiences through their call centers. So on the phone with an agent, about 60 percent of respondents think those experiences are either good or very good. And then second highest is in a store or a branch with about 40 percent of companies doing a good job there. And then we see this huge drop off. And so only about a quarter of companies, about a fourth of respondents say that they're good at interactions like self-service on a computer and phone or on a mobile app or a mobile browser or social media or online with a chat agent. So all of those those interaction channels tend to be pretty even, not great. About 25 percent of companies think they're good at them. And then we have this other huge drop off after that, where only about twelve percent of companies consider themselves good at delivering experiences that span multiple channels. So across multiple interactions or touch points, and then only 5 percent consider themselves good at chat bot interactions. There's kind of three big chunks of interactions there.

Pat:
And… and it's really interesting and I guess to me I think of that as something companies really have to focus on, because there's no doubt, if you ask almost any customer experience professional, do you think the experience the customers have through digital will the emphasis on that increase? I think the answer isn't just yes, it's an emphatic yes, that that's where things are headed. And so… just seems like we've got some work to do in that area.

Isabelle:
Absolutely. One thing, though, that I think is… I sometimes wonder about in this area is whether companies get overly focused on delivering completely effortless, frictionless digital experiences, which we should absolutely make those better. But one thing that we know about human beings is that we're very social creatures. And so we find interactions with other human beings to be more emotionally resonant and engaging. And so if we're diverting all of our customers to these digital channels and then it just takes like three buttons to interact with us, then we're done. I kind of wonder if companies are going to lose that emotional resonance with customers because there's nothing for customers to really engage with or glom on to. And so I wonder if overly investing – not that we shouldn't make digital channels better – but ignoring those human centered channels if you're gonna make yourself vulnerable to disruptive new companies coming in and stealing your customers.

Pat:
Yeah.

Isabelle:
Convenience goes a long way, but, yeah.

Pat:
Right. Well, it seems like, yes, you're absolutely right. We… We need to focus on the digital experiences. But if, if the goal of a company is we're going to just make the whole experience digital, they may be missing out on something that's really important because, yeah, there is a lot of data that there are times people just, they want to talk to somebody. They want to, you know, have that interaction. And, and there's certain things that we as humans do that you just can't accomplish through digital channels.

Isabelle:
Right. You can't like bond with export like your kids, or like a chat bot.

Pat:
Right.

Isabelle:
I'd be really curious to see if this interaction data could possibly be flipped around at some point, as you say, as companies start dedicating a lot more time and resources to improving their digital channels. And so that's diverting some of the simpler, you know, low-value transactions to self-service channels. If that means that the… when customers contact a human, when they go in store, when they call up a contact center, those interactions are going to be more emotionally resonant, they're gonna be more complex, more urgent, more unpredictable, and so if we're going to need, you know, higher skilled, more emotionally intelligent employees, which is obviously hard and expensive for companies to do. So I actually wouldn't be surprised if as companies get better at digital experiences, they might get a little bit worse at the human centered channel.

Pat:
Yes. No, I totally agree. So what other obstacles did CX leaders identify in the report?

Isabelle:
Yeah. So the… always the obstacle that isn't most frequently identified – I think every year that we've done this – has been other competing priorities. It's the only obstacle that consistently gets selected by more than 50 percent of respondents. Other obstacles that get selected a lot are conflict across internal organizations, limited funding, a lack of clear CX strategy, and one thing I think is really interesting is that when we split respondents into CX leaders and laggards like I mentioned, CX leaders actually said we're more likely to say that they encountered obstacles of limited funding and conflict across internal organizations. And then CX laggards were significantly, significantly more likely to say that they lacked a clear CX strategy and that they lacked leadership for their CX efforts. So I thought that was interesting, seeing where less mature and more mature programs ran into problems.

Pat:
Yeah.That makes that makes a lot of sense. So I think we're at that point of the program where we ask you the big question. And so if you're a regular listener, you know that we ask, are people were interviewing to provide some take-home value: one key tip that a CX leader out there would want to know and that they can do something about in their organization as soon as possible. So Izzy, what's your… what's your tip for the day?

Isabelle:
Yeah. So my tip would be to actually take the CX competency and maturity assessment that we had respondents in this report take. And so it's available for free online now. I'm sure if you Google "Qualtrics CX maturity assessment," you'll be able to find it. And I really suggest that people take this assessment themselves because it's going to let you know where your strong, what skills you're strong in, what skills you're weak, and it's going to allow you to benchmark your own efforts against respondents in this study. Hopefully it will help drive some internal alignment where you can show, you know, your leadership, you can show other people on your team, you can have multiple people on your team, take it. And so everyone can get on the same page about here are our priorities and where we should focus. And hopefully it'll help you develop an action plan for what things you want to tackle first and prioritize.

Pat:
That is a great tip because, you know, when we ask that question, the hardest thing about the question is for people to have something they can do today that I think this is a tip that they can go out and, and take the maturity assessment and just gain some good insights…

Isabelle:
Absolutely.

Pat:
And kinda see how they stack up. I think that's great. That's great. Well, I appreciate all the information on the report, but as you know, we've only covered a fraction of it. There's so much great stuff. Let me… let me tell people because again, the report is available and free and they can find it at qualtrics.com/xm-institute. And it's right there on that page. You can click on it and download it. And it's chocked full of great stuff, but fantastic overview today. We really thank you for joining us Isabelle.

Isabelle:
Thank you, so much for having me. It's been great.

Pat:
Isabelle Zdatny is a certified customer, experience professional and an XM catalyst with the Qualtrics XM Institute. Isabelle, if somebody wants to get a hold of you are you on LinkedIn? Can they find you there?

Isabelle:
I am on LinkedIn and I promise with a last name like my name I'm very easy to find.

Pat:
Yes. [Laughing] Yes. You know, I was teasing her beforehand. Six letters, one vowel…

Isabelle:
Yeah, exactly [laughing]

Pat:
It's spelled, Z, D, A, T, N, Y. That's, that's where you find her on LinkedIn. So, Isabelle, again, thanks for joining us on The CX Leader Podcast.

Isabelle:
Thanks, as always, Pat.

Pat:
If you want to talk about anything you heard on this episode or about how Walker can help you with your business's customer experience. Feel free to e-mail me at pgibbons@walkerinfo.com, or you can contact our regular host, Steve Walker at steve.walker@walkerinformation.com, or give us a call here in the U.S. at 1-317-843-8890. And don't forget to subscribe to The CX Leader Podcast. You can go to walkerinfo.com/podcasts and you'll find links to iTunes, Spotify, iHeart Radio, Google Play, and on our YouTube channel at walkerinfo.tv. Thank you for listening to The CX Leader Podcast. It's a production of Walker, we're and experience management firm that helps companies accelerate CX success. Find out more at walkerinfo.com. Thanks for listening and we'll see you next time.

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