Four myths and four tenets of experience management (XM)

Recently, I've been writing about experience transformation , that is, adopting new ways of working to consistently deliver better customer and employee experiences to maximize value for people and for businesses.

These new ways of working constitute experience management (XM), a whole-business management system that drives business value by systematically designing, delivering, and continually improving customer and employee experiences at every interaction and channel across their respective end-to-end lifecycles.

As a relatively new business framework, XM (and closely-related acronyms CX and EX) tends to be loosely-defined, sometimes over-hyped, and oft-misunderstood .

Problematically, this has led to many XM-related myths and misguided (and wasted) efforts that prevent businesses and their customers and employees from getting much value out of XM, including CX and EX programs.

I have predicted that XM will eventually become more important to businesses than product management (PdM) and service management (SM) are today. For this to happen, XM leaders, consultants, and practitioners have a lot of work ahead of us to bring awareness and change perceptions about what XM is and what it can do.

Let's start by dispelling four myths and establishing four tenets of XM.

Myth 1: Your customers and employees are on a journey with you.

The now-popular practice of journey mapping has led to the erroneous idea that people (customers and employees) are on a journey with companies and brands. (For a thought-provoking exercise, list the companies you are personally on a journey with. Sure, you have a relationship and experiences with them, but are you really on a journey with them? How many company journeys can you be on at the same time?).

People have jobs to be done. They want to get things done and achieve outcomes, and may take different paths and use different touchpoints to reach their goals. In a way, they are on a journey, but it's their journey, not your company's.

And the journey isn't even the point.

To subvert a popular expression: When it comes to customer and employee experiences, "it's not about the journey, it's about the destination."

So, why do we even do journey mapping? What's the point?

One word: Value.

XM (and techniques like journey mapping) is about maximizing and accelerating value. Not just value for businesses. Not just value for customers and employees. Value for everyone.

Value creation is the key. But value means something different for businesses than it does for people.

Generally speaking, businesses create value by attracting, acquiring, and retaining customers (and employees who run the business). Monetarily speaking, they create value by exchanging products and services for money.

People, on the other hand, create (or receive) value by getting things done and achieving their desired outcomes. People exchange money for products and services that help them reach their goals faster, easier, and better. For example, a busy professional working long hours might use a food delivery service to save time cooking meals at home.

And with higher expectations and more options and information than ever before, people can be pickier about the companies they buy from (or work for) or quicker to switch when they're unhappy.

That means people assess value and make decisions based on their perceptions and feelings.

Furthermore, people's perceptions and feeling about the value they get are not based on an objective evaluation of product or service performance, but rather on how a company makes them feel overall, and specifically, how they felt in their most recent interaction. Going back to our food delivery example, our hard-working professional might have switched from DoorDash to Uber Eats because their last meal never got delivered, leaving them feeling frustrated or believing DoorDash's service or drivers are unreliable.

Seems like common sense, right? Weirdly, it doesn't seem to be that common, because most leaders and organizations haven't institutionalized a system that explicitly links business value with customer and employee value AND continually assesses customer and employee perceptions AND uses these insights to improve customer and employee experiences THEREBY increasing perceived and real value. (According to a Forrester study, only 25% of companies have a formal system in place to measure and improve customer experience, despite 92% of organizations claiming that improving customer experience is a top priority).

This is why the first tenet of XM is:

Value-driven: Define, align, and quantify how value is created for the business, customers, and employees.

Only then will you be able to be strategic and intentional about maximizing and accelerating value creation for the business and its customers and employees.

McKinsey and Co. seems to agree. They found that companies that prioritized value creation and customer experience saw 1.5x higher revenue growth than their competitors.

Myth 2: XM is primarily focused on efforts to improve survey-based NPS and satisfaction scores.

Unfortunately, this myth is perpetuated by the stranglehold NPS and SAT have over corporate middle managers whose compensation is directly affected by these scorecard metrics.

Effective XM occurs when leaders, managers, and employees obsess over humans, not numbers. Yet,?all too often, they are conditioned to focus on the numbers.

I have witnessed absolutely bizarre behaviors of grown adults who are hyper-focused on the satisfaction and loyalty metrics imposed on them by their corporate overlords:

• In a global cloud technology company, the sales teams spent weeks (if not months) nominating (more like cherry-picking) the customer contacts they wanted to participate in the annual global customer satisfaction survey.
• When purchasing and servicing my vehicle at the local dealership of a well-known car brand, I was more-or-less instructed by both sales and service representatives to only give them "10" ratings on their respective customer surveys. "Anything less than a 10 is considered a failure," they told me.
• When leaving a famous fast-food establishment with my young daughter, I couldn’t miss the poster offering a free menu item for showing the staff a "10" rating on their online survey.
• In a global telecom company, the head of digital operations regularly berated and threatened the analytics team because week after week they reported a flat or declining NPS score. Yet he refused to prioritize any efforts to take action on customer feedback.

There are a number of obvious flaws that go along with this myth and these wacky behaviors:

• Limited scope. NPS and satisfaction surveys typically only measure a narrow aspect of the experience, such as likelihood to recommend or overall satisfaction. They may not capture more detailed or nuanced feedback about specific aspects of the experience, which can limit the usefulness of the data collected.
• Response bias. There is a risk of response bias in survey data, as those who respond to the survey may not be representative of the entire audience base. For example, respondents who have had an extremely positive or negative experience may be more likely to respond, which can skew the results.
• Limited actionable insights. NPS and satisfaction surveys may provide useful high-level data, but they may be missing contextual, actionable insights. For example, a respondent may rate their satisfaction as low, but without additional context or follow-up questions, it may not be clear why they feel that way or what specific areas need improvement.
• Lack of consistency. Different companies or departments may use different survey formats, questions, or scoring systems, which can make it difficult to compare results across organizations or industries. This lack of consistency can limit the usefulness of benchmarking data.

Measuring perceptions and gathering feedback are critical XM processes. But if your company is more focused on a scorecard metric than the audiences it serves and interacts with, it's (past) time to make a dramatic shift.

It's time to go beyond lip service and deeply institutionalize the second tenet of XM:

Human-centered: Create experiences leveraging a deep understanding of human needs, expectations, and pain points.

Companies that prioritize human centricity over scorecard metrics don't stop measuring things like loyalty and satisfaction, but their focus shifts to empathetic methods like Design Thinking (aka Human-centered Design) and voice-of-customer (VoC) and voice-of-employee (VoE) feedback management to inform new experience design and experience improvement.

According to a study by PwC, 73% of customers point to their experience as an important factor in their purchasing decisions, and 62% of customers say they will continue to buy from a brand that offers excellent customer service, even if it is not the cheapest option. This shows the importance of understanding customer needs and creating emotional connections through experiences that consistently meet those needs.

Not every employee is focused on designing or improving experiences - many of them are involved in actually operating experiences on a day-to-day basis! That's why companies need to embed human centricity in their culture, so employees:

• See human centricity role-modeled at every level of the company
• Are enabled with training, resources, and real-world examples of how to put human centricity into action
• Feel empowered with policies that help them make decisions that benefit customers and other employees
• Get recognized and rewarded when they embody the company's human-centric values

In this way, employee experience and customer experience are inextricably linked. A Forbes study found that companies with a strong customer-centric culture are 60% more likely to have highly-engaged employees. And according to a study by SHRM (Society for Human Resource Management), companies that prioritize employee experience have 4x higher average profits that companies that don't.

Myth 3: Experiences can be improved primarily with technology.

We live in an age of unprecedented technological advancements that are rapidly transforming the ways we live, work, shop, play, learn, interact, and do just about anything.

Consider the following tech trends and their potential for benefitting humans:

• AI (Artificial Intelligence)/ML (Machine Learning): AI and ML can automate repetitive or tedious tasks, improve decision-making, and enable new applications in healthcare, transportation, and many other fields.
• Analytics: Analytics can improve decision-making by analyzing and interpreting data from a variety of sources, such as customer behavior, market trends, and operational performance.
• Automation: Automation can improve efficiency and productivity, reducing errors and costs, and freeing up time for more creative and value-added tasks.
• Blockchain: Blockchain can provide secure and transparent transactions, enabling new forms of collaboration and trust, and creating opportunities for new business models and revenue streams.
• Cloud: Cloud computing can provide access to computing resources and services from anywhere, at any time, and enable new forms of collaboration, innovation, and scalability.
• IoT (Internet of Things): IoT can improve efficiency, productivity, and safety in industries such as manufacturing, transportation, and healthcare, and enable new applications in smart cities, homes, and wearables.
• Personalization: Personalization can help tailor products, services, and experiences to individual needs and preferences, improving satisfaction, loyalty, and engagement.
• Virtual Assistants: Virtual assistants can help perform tasks and answer questions, providing personalized assistance and improving convenience and productivity.
• VR (Virtual Reality)/AR (Augmented Reality): VR and AR can create or enhance experiences such as immersive training, virtual travel, and remote collaboration, and enable new applications in gaming, education, and healthcare.

Yet technology by itself is not enough.

One PwC survey found that 59% of U.S. consumers feel companies have lost touch with the human element of customer experience due to an over-reliance on technology.

Another study by Harvard Business Review found that 70% of technology-driven transformations fail due to a lack of focus on people and culture, which includes not understanding how technology can impact employees and customers, and not involving them in the process.

Which brings us to the third tenet of XM:

Technology-enabled: Digitize experiences and automated processes to create value while improving user satisfaction.

Obviously XM doesn't control or dictate technology innovation. But XM avoids innovation for innovation's sake. Instead, XM looks for ways to apply technology and innovation to help people achieve their goals, solve their problems, and make their experiences better, faster, cheaper, and more personalized.

To be clear, technology is an essential ingredient in XM. It's really about the order of things. XM starts with value creation and human centricity, then looks for ways to apply technology and innovation to significantly improve human experiences and outcomes.

A "red flag" for XM would be any efforts that start with technology and then attempt to connect it with value creation and human needs ("a solution looking for a problem"). Looking at things this way, I've seen a lot of red flags and I'd be willing to bet you have too!

Let's not forget Steve Jobs' oft-quoted words:

"You've got to start with the customer experience and work backwards for the technology."

Myth 4: Companies should typically assess and make improvements to customer and employee experiences 1-2 times per year.

Okay, the way this myth is worded makes it hard to take seriously. It's like one of those TRUE/FALSE questions on a pop quiz where the answer is obviously 'FALSE.'

But the irony is that many companies are not assessing and improving customer and employee experiences at all, ever!

Sure, they may be investing in new or improved products and features. And they are most likely working on internal business technology and process improvements. Some organizations are also working on department-specific (aka silo'd) improvements to customer and employee touchpoints or independent, disconnected user experiences.

Some of those improvements are going to be great for customers or employees. But others, as well-intentioned as they may be, will be carried out in a completely uncoordinated manner that could actually make things worse .

You may be asking, "so, how often should companies assess and make improvements to customer and employee experiences?"

The short answer is that that's the wrong question.

Instead, we should be asking "how do the most customer- and employee-centric companies manage and improve experiences on an ongoing basis?"

The answer?

The most customer- and employee-centric companies are looking for ways to create value for people as much as for the business through human-centered, technology-enabled experiences.

How they do it on an ongoing basis brings us to XM tenet number 4:

Product-oriented: Design, build, measure, and continually improve experiences, services, and processes like products.

That's right - the most customer- and employee-centric companies understand that experiences are the most important unit of value creation for their business, for customers, and for employees.

To join this elite group, companies, leaders, and teams need to adopt new ways of working to manage experiences like they manage their products.

Coming back to the "how often" question, product teams (especially teams working on digital products) are almost always working on improving their products. It's why they were hired and why their teams exist.

When companies treat experiences as products, they iteratively design, deliver, measure, and improve experiences to meet - and often exceed - customers' and employees' needs, and create immense value in the process.

If you're thinking of transforming your ways of working and adopting XM to consistently deliver better customer and employee experiences to maximize value for your people and business, take a hard look at the four tenets of XM:

1. Value-driven: Define, align, and quantify how value is created for the business, customers, and employees.
2. Human-centered: Create experiences leveraging a deep understanding of human needs, expectations, and pain points.
3. Technology-enabled: Digitize and automate processes to create value while improving user satisfaction.
4. Product-oriented: Design, build, measure, and continually improve experiences, services, and processes like products.

If this article resonates with you, or you're still trying to figure out how to get started, feel free to reach out! I'd love to hear from you.