Customer loyalty lessons from truffles, Tesla, and WWII Planes.

Welcome to the debut entry of my CX Chronicles. Think of it as my personal diary, a peek behind the curtain of my adventures guiding clients on the noble quest to earn customer loyalty.

It's a simple philosophy – if it's worth the time for one client, chances are others (you) might find it interesting too.

The overarching theme here revolves around customer loyalty, and it's not just about customers sticking around. It's a mutual dance, a give-and-take. Imagine it as a loyalty waltz. Earning customer loyalty by being loyal to the customer. It's a delicate dance of reciprocity.

In this first post,I will cover three themes that have come across my desk lately:

• Customer culture. Why is it as rare as a black truffle?
• Pricing and loyalty. Why Tesla is a mystery to me.
• Survivorship bias. Why Augie Ray is right on customer surveys.

Customer Culture.

A client asked me if I could name a company that I considered to be truly customer-centric. My immediate answer was silence. Those companies are rare in my experience.

Now, in the 'wild world' of customer experience gurus, there's this buzzing notion that for customer loyalty to flourish, you've got to have a customer-centric culture coursing through your company's veins. It's a hot topic, stoked indirectly by the relentless rise of AI and its impact on the customer experience. As machines gradually take over tasks once owned by us humans, having a team of motivated, skilled, and empowered employees becomes the secret sauce.

But let's not dive into the AI abyss just yet. Instead, ponder the enigma that it's taken so long for businesses to realize that the customer experience and the employee experience are BFFs. In the ivory tower of academia, this truth has been known for ages. Even in real life, visionaries like Horst Schulze, the brains behind Ritz-Carlton, built empires by acknowledging this link. Horst penned his iconic mantra, "We are Ladies and Gentlemen serving Ladies and Gentlemen," at a mere 16 while at a hotel school in Germany.

Now, most companies plaster on their websites declarations of customer-centricity, putting customers first, or even claiming outright obsession with the customer. Yet, my 20-year+ stint at Ennova conducting global employee and customer experience surveys has shown me it is surprisingly often a charade. Sure, you might find pockets of customer culture here and there, like in a customer service or local sales team. But embedding it into every nook and cranny of an organization? Based on survey results it seems about as common as a black truffle.

It made me reflect upon why this phenomenon keeps repeating itself. Too often have witnessed a CX lead within an organization getting nowhere with his or her ambitions for building a customer culture.. Even when the CEO's on board, it's an uphill battle. But then, a culture does not change overnight just because a CX lead, the CEO, and a few others think it is a great idea. It's a marathon, not a sprint.

That is why I believe organizations need to onboard HR in building a customer culture. And I'm not talking a casual nod of approval or including a few questions on customer culture in your employee experience survey. This might just mean a seismic shift in how HR operates, from recruitment and compensation to leadership programs and the very fabric of personal development processes. I will soon share more detailed thoughts on this subject in a separate blog post.

Pricing and loyalty.

I found myself in the hot seat last week when asked to analyze the ripple effect of a company's recent price hike on their customers' loyalty. The business is currently riding high, customers are generally wearing happy faces, but there's a concern about the long-term impact on retention.

I gave a blurry answer to a straight question. In short: It depends. Why? Well, the true impact of your pricing acrobatics might only reveal itself when the current crop of customers hits the repurchase stage. This particular client of mine swims in the B2B pool with lengthy contracts, so the updated prices won't send shockwaves through existing agreements, only future ones.

I am no pricing specialist but every business has to tango with pricing adjustments, some more often than others. And ask yourself what is most important to your business: A pricing strategy that attracts new customers - or a pricing strategy that makes current customers repurchase? In some cases that can go hand in hand. But not always.

Consider the Tesla spectacle. In 2023, the Tesla Y reigned supreme as the best-selling car in Denmark. Part of their success? Relentlessly slashing prices, is a surefire way to court new admirers. Yet, think about the folks who shelled out for a Tesla long before the price drop. They are currently nursing quite a depreciation hit (by the way: those buying just before price drops got compensated). Sales stats might not spill the beans now, but fast forward two or three years and the owners of aging Teslas might face a conundrum. Will their love of the Tesla brand trump their financial bruising, or will they opt for a brand with more predictable pricing?

Once again, let me stress – I'm no pricing specialist. But I believe, as a company, you've got to decide if you're playing the long game or sprinting for short-term glory. If you reckon customer loyalty is the magic potion for sustained growth, your pricing strategy better echo this - at least as much as market forces allow you to.

Survivorship bias.

I am biased here working for a company where surveys are at the heart of what we do. But, I think you should read Augie Ray's post on why customer surveys are still relevant - despite the plentitude of other customer data sources.

Now, Augie Ray, something of a maestro of CX insights, penned a post about Survivorship Bias and surveys – and to drive it home, he whips out an image of a WWII plane's battle scars from enemy artillery. Picture it – a plane back from the front lines, holes and all.

I won't even try to outdo Augie's eloquence, so let me quote the man himself:

That image represents a concept known as Survivorship Bias. In WWII, planes would return to bases after missions, and they were full of holes created by enemy artillery. Now, some might think the position of those holes are places that should be reinforced, since those are the areas of the plane that sustain the most damage. But, a bright researcher realized those holes represented the areas where a plane could be struck and still return (more or less) safely. It's the OTHER areas--the ones with fewer holes--that need to be reinforced since damage in those areas causes planes to be lost.

Go read Augie's brilliant post

In short, Augie defends the customer survey as it can uncover the things you cannot see from just looking at registered data. E.g. you can see when somebody abandons a shopping cart with online shopping. But you cannot know why unless you ask. However, Augie's post is also a lesson to survey practitioners (like me) to ensure surveys are designed so they do not just pinpoint holes in the customer journey - after all many customers are customers despite the holes. Instead, your survey should focus on addressing what the customers' problems and needs are.

The short edition.

As promised the main purpose of my CX Chronicles is to share ideas on how to deserve customer loyalty. So, in this very first edition, I have shared three ideas:

• Customer-focused success requires a customer culture. In every corner of the organization. You will most likely need to bring onboard HR. They might just be the co-pilot you never knew you needed.
• The siren song of price changes might seem like the ultimate commercial maneuver in the short term, but beware – there are long-term consequences lurking in the shadows. Your pricing strategy is no mere transaction; it's a dance with long-term trust. So, tread carefully.
• While surveys are today just one of many sources of customer data they still have a valid purpose. Not least if you want to avoid survivorship bias.
• In the era of data abundance, surveys might seem like the granddaddy of customer insights. But, they are still relevant. Especially when you want to steer clear of the Survivorship Bias pitfall. Use surveys to unravel the things that lie beneath the observable surface.

Topics for the next chronicle are - as it is a summary of my present dialogues with clients - yet unknown. Well almost anyway - regenerative business models will most certainly take center stage. Until then:

Thank you.