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How Is Customer Experience Reshaping Value Creation?

As private equity, M&A and operating partners look to identify ways to sustain value creation over the long term within their portfolio companies, it would be wise to explore what’s hindering it first.

Whether it’s a poorly designed mobile experience that is displaying incorrectly or is difficult to navigate, or a lack of self-service options with the right tools that can enable the customer to save time by easily addressing the issue themselves, making certain the customer experience (CX) is as frictionless as possible is paramount.

Take, for example, Citibank’s third-party transactional software debacle, which was first filled out incorrectly by a subcontractor, and then despite Citibank requiring three people to sign off on large transactions, they collectively made the huge mistake of approving prepaying a $900 million loan to all of Revlon’s creditors.

Source: Techspot

Citibank is learning a costly lesson in software design as a triple-checked mistake caused the bank to send out almost a billion dollars in loan payments instead of only $7.8 million.”

At the center of this gaffe was Flexcube, an awkwardly outdated software that was paired with a poorly design UI and an even more confusing interface, leaving Citibank in an incredibly mortifying situation. “Citibank is learning a costly lesson in software design as a triple-checked mistake caused the bank to send out almost a billion dollars in loan payments instead of only $7.8 million.”

As shared here, if the software platform had had a simple automated prompt or pop-up, like the example below, requiring the user to first approve such a transaction, it most likely would’ve prevented this embarrassing error.

While this is certainly an extreme case of how a combination of bad user experience and a poorly designed user interface can negatively impact value creation, ScheinerInc. has highlighted several areas that investors, operating partners and brands should emphasize when exposing both the obvious and subtle value-creation blockers.

Making Customer Interactions Easier

“For every $1 invested in UX results in a return of $100 (ROI = 9,900%).”

According to this study by Forrester, every $1 invested in UX results in a return of $100 (ROI = 9,900%). UX is about driving engagement, and, if positive, results in trust and loyalty. This same study also indicates that a UX design that is easy and frictionless for the user dramatically drives customer conversion rates up to 400%, and is therefore a key component in value creation.

This Walker study states that “With customers becoming more empowered and information about competitors just a click away, B2B firms must invest to ensure there is minimal effort involved in key phases of the journey.”

The importance of making customer interactions easier is further supported through these stats:

Mobile site visitors are 5X more likely to abandon a site if the required user action isn’t optimized for mobile

13% of customers will tell 15 or more people about a negative experience, with 72% telling six or more people about a positive experience

Only 1% of users say e-commerce websites meet their expectations

Personalization Is Mandatory

According to this report, 80% of customers are more likely to make a purchase when businesses provide a personalized experience, and 90% of these customers found personalization appealing, boosting the ROI of these companies’ marketing efforts.

80% of customers are more likely to make a purchase when businesses provide a personalized experience.”

In the incredibility insightful book, User Friendly, by Cliff Kuang, there’s a chapter dedicated to personalization that includes the following example: Designed to remove all of the pain points from a guest’s visit to Disney’s theme parks, like avoiding long lines for rides or to pay for food, Disney’s MagicBand is an all-in-one device that seamlessly connects your Disney Experience, from entering the parks, to checking into your hotel room to buying food and merchandise, as well as unlocking unique experiences during your stay. Mr. Kuang states that “The most remarkable thing about the Disney’s MagicBands was that they were already as ubiquitous as sunburns and giant frozen lemonades. They were already invisible.”

Amazon, for example, sends me emails and serves up a personalized product page that is unique to my purchase and browsing history. The result is a simple user experience that enables me to click and order in 30 seconds or less.

These are just a couple of examples of Omnichannel Personalization, which uses data from all physical and digital channels to bridge the CX across every touchpoint between the customer and brand any time they interact with the business.

“The most remarkable thing about the Disney’s MagicBands was that they were already as ubiquitous as sunburns and giant frozen lemonades. They were already invisible.”

Rethinking Speed and Efficiency

Every year, companies lose $62B due to poor customer service. For example, 90% of customers report having a poor experience when seeking customer support on mobile.

This survey says “69% of consumers say they judge the quality of a customer experience based on whether they receive a “quick resolution” to their inquiries or requests for assistance.”

As a consumer or customer, we’ve been reprogrammed to have less patience and to demand more from the brand and/or the services we buy. Take, for example, our daily engagement with a platform like Netflix, where you can binge for days and be served up recommendations based on your viewing habits; however, if you look deeper into the experience, which we see (or don’t) as frictionless, the platform easily allows us to scroll through the different genres and to discover and preview content that is incredibly user-friendly, no matter which device you’re viewing the Netflix app on. And in a completely different category, such as buying insurance, consider Policy Genius, which has rethought the entire insurance buying process by architecting the entire customer shopping journey via omnichannel personalization, i.e., through email, text or even a real person, and by providing individuals with real-time updates throughout the end-to-end enrollment process.

“By the end of 2020, customer experience will overtake price and product as the key brand differentiator.” – Walker

The problem for most B2C and B2B brands is that customers now expect to receive the same kind of CX outlined in the two examples above from all of the other brands that they engage with. This not only sets the bar higher, but should remind us that what we’ve come to expect as consumers carries over to the B2B side when clicking through a site or when demoing a new platform for the enterprise.

As we know all too well from having to wait too long to be helped, or from clicking on a customer service button that clicks through to yet another page without addressing your question, or from having to explain the same issue to several different customer support people, this is not only the very definition of a negative customer experience, but one that could lose that customer for good.

For brands and organizations to drive lifetime value and for investors to make certain no value creation is lost, they will need to scrutinize the customer journey and internal processes and platforms to pinpoint exactly where there are CX gaps or opportunities to create value or to minimize the risk of an embarrassing oversight by challenging the design and functionality of an online form.

Questions? We welcome the opportunity to hear about your current customer experience challenges and how we can help to remove these barriers to creating value.

Header Photo: Frank Busch on Unsplash