There’s a reason why Adidas’s Boston Marathon ‘congratulatory’ email didn’t kill the brand.
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In a Bain & Company study, 80 percent of CEOs surveyed said they believed they were delivering a superior customer experience. But only 8 percent of customers agreed about that “superior” claim.
This is something companies should fret about because customers today have a greater wealth of choices than at any time in history. And brands must move to a more comprehensive customer experience (CX) to build mind share, wallet share and positive brand sentiment between themselves and their customers.
The problem is that, in the scramble to create the requisite impeccable customer experiences needed, these same companies run the risk of building on long-established myths promising, but failing to deliver, great business returns.
As a result, firms are listening to the wrong advice, developing incompatible programs and using outdated technology that doesn’t provide actionable insights. Here are four CX myths your company can avoid that could hurt your bottom line, squander your resources and damage your brand:
Myth 1: Catastrophic failures hurt your brand more than minor incidents.
While it might seem natural that a huge failure would damage a brand more than a series of little ones, the exact opposite is true. A stream of small mishaps — or systematic failures — will cause more damage than a single epic failure.
The reason is that we humans subconsciously search for patterns everywhere we go, so anomalies seize our attention. However, our instinct is actually to dismiss those anomalies if they have no personal impact. By their nature, catastrophic failures don’t occur often, and we believe they will never happen to us, so we see them, evaluate them — and ignore them.
Consider a case study involving Adidas. After years of trailing other sportswear brands, Adidas began turning its fortunes around by making smart business decisions and focusing on customer experience. Unfortunately, catastrope struck in April 2017 when the company sent an email to marathon finishers reading: “Congratulations, you survived the Boston Marathon.”
That year was the fourth anniversary of the 2013 bombing incident.
The negative reaction was swift and predictable, and Adidas posted an apparently sincere apology. By the end of 2017, Adidas’ sales were up 31 percent, compared to decreases for both Nike (3 percent) and Under Armour (12 percent), the other leaders in Adidas’s market segment. Apparently, its email and corresponding PR fiasco had no discernible negative impact on sales.
On the other hand, a pattern of little failures, like a consistently unpleasant customer experience, might have stuck in customers’ minds. For Adidas — or any company, ultimately, small incidents will prove a greater detriment to customer lifetime value.
Takeaway: Enterprises need to understand and address the factors that really drive customers away. This will allow them to spend money efficiently while ensuring that “black-eye failures” are dealt with quickly and completely.
Myth 2: Bad experiences cause customers to leave.
Fortunately for companies, most customers don’t leave after one negative service event. If the majority of companies had churn rates equivalent to theirdetractor rates, they would be out of business in a month.
Of the fraction of customers who do defect, 80 percent cite a bad experience as the reason, but satisfied customers will also leave if they find a better alternative elsewhere. Only those who say they are “completely satisfied” can be counted on to be loyal to a brand.
People often stay with a brand, even after a poor customer experience, because of structural barriers the company creates. Consider friends and family plans mobile carriers offer. If one person in the plan is unhappy, he or she must convince everyone else on the plan to leave, as well.
Airline loyalty works the same way. Someone who has racked up thousands of miles with an airline gets to skip the lines, enjoy the lounge and check baggage for free. So he or she is more likely to be tolerant of a few bad experiences.
Takeaway: Unhappy customers will continue to buy products even after a bad experience. However, smart companies will augment their CX initiatives with additional structures, such as loyalty programs to ensure their customers are “completely satisfied.”
Myth 3: Word of mouth is the silver bullet for brands.
Studies like the Global Trust Barometer have confirmed companies’ belief that consumers trust a recommendation from someone “just like me” over advertising. Positive word-of-mouth (WOM) is great for driving awareness, relevance and esteem for brand marketers at the beginning of the customer journey. But, to an individual, his or her experience with a brand largely trumps what anyone else says about it.
This doesn’t mean that WOM doesn’t play a critical role. On the contrary, the magnitude of impact by negative WOM often outweighs the positive. Negative WOM can be much more charged and passionate. Brands tend to focus too much on achieving positive WOM and should focus more on defending against negative WOM.
Takeaway: While WOM may cause the initial spark, it won’t keep the fire burning. Companies should develop more manageable aspects of customer experience rather than spending too much time, energy and resources generating positive WOM.
Myth 4: Marketers control their brands.
Customer experiences have a significant impact on the brand and the bottom line. Companies should monitor and analyze customers’ preferences, needs, wants and behaviors to glean insights. These findings will help brands understand how to increase share of wallet, while also discerning those who may churn as well as those who could potentially become an advocate.
Pepsi had a colossal PR blunder in 2017, but customer experience ratings remained high, so satisfaction and company value rose in 2017 in spite of the negative PR. Hyundai Motor America has had a persistent reputation for poor quality since the 1980s, in spite of drastic improvements and the launch of premium vehicle lines. Although as recently as 2016 Hyundai was rated one of the“worst brands” by The Balance, the Korean car manufacturer now enjoys above-average satisfaction and record sales.
Takeaway: Customer experience is the “new marketing.” Companies should reinforce positive customer behaviors while simultaneously figuring out how to connect marketing to customer experience, creating a more holistic approach to business strategy.
Going beyond the myths
Companies can no longer hope for blind brand loyalty from customers. Today’s savvy, empowered customers want an end-to-end experience with the brand. To meet this demand, organizations are learning to connect the dots between sales, marketing, customer experience and market opportunity.
Measuring CX for the sake of just improving a score is missing the point. By avoiding the above myths and focusing on key drivers of customer behavior, customer-experience practitioners can have a positive impact on every facet of their company, including the bottom line.