The optimism of #Purpose & science of #design in forging #digital customer experiences! Opinions my own!

The Economics of Experience is sometimes moot – but it’s not as mystical as one might thin;, if we have the resources and the tools to do so. If not, we can also make rough estimates that can help guide decision-making – the rationale is insights to action (or just taking action!). Think about it – experience is the only objective function that truly matters today- everything else being a lagging indicator .

Worse, over recent years it’s becoming real time, but much less “right” time. These two concepts are divergent ; the sweet spot when we can get real & real time converging = value (customer experience uplift). Often times though, increasing speed and throughout lead to disastrous CX meltdowns (faster).

As experience designers, the main challenge we face is making the time to define successful practices. Instead, teams tend to simply follow processes as they have always been done. We need to forget the short-term excuse of not having enough time and make time to start thinking about the future.

A lot of “future forward” metrics have been tried and tested e.g. Customer Lifetime Value and it’s variant, Customer Equity. But companies sometimes fail to put a positive value around referrals.

Here are popular takes on both estimates:

Customer LifeTime Value

Customer Referrals

Peppers and Rogers made it big evangelising the concept; but more recent thinking has had metrics more coloured in the hues of internal gluons such as trust, engagement and even, Purpose. The theory of everything is something we need; linking Equity, CE- NPS, Trust/ Effort, Employee Engagement and Purpose ratios. We have to push the envelope of measures such as Return on Customer Equity (ROCE) to Return on Purpose Equity (ROPE). There’s never more direct causality between organisation “performance” and Purpose than now. Purpose is the “dark matter” of Customer Equity and economics, there’s no doubt.

If we have a barometer for customer equity such as lifetime value established, we can quickly link NPS (economics) to loyalty factors such as:

Retention rate. Detractors generally defect at higher rates than promoters, which means that they have shorter and less profitable relationships with a company.

Pricing. Promoters are often less price sensitive than other customers. They were attracted in the first place by the value they saw in your products and services.

Annual spend. Promoters increase their purchases faster than detractors. Your share of their category spending increases as promoters choose your products over competitors, upgrade to higher-priced products or services and respond with enthusiasm to new offerings.

Cost efficiencies. Promoters cost less to serve, as metrics such as Cost to Serve would show.

Because promoters have longer customer lifetimes, their acquisition and startup costs can be spread over more years of lifetime revenue. And their higher affinity for premium products and services increases the margins on their business.

Then there’s a strong movement towards journey-centric P&L. In my other articles talking about the Rise of the Chief Customer Officer (CCO), we postulate that the C-suite further splits into 2 categories; the front and back/ enabler ends. The CEO and CCO would face forward, visionary and customer/ franchise evangelist with direct P&L responsibility and purview over customer equity. The other Cs would play enabling roles, the Chief Digital, Technology, Transformation, Information, Financial etc Officers. Might not be that far fetched after all, as we zero in on Purpose and customer-centricity/ experience. Essentially the CCO is akin to a COO in the “old days”, someone that runs the (customer focused) business, while the CEO emanates Purpose and sets longer term vision/ trajectory.

If we flip, transpose an organisation and lay it “flat” focused squarely on customer journeys, then it makes sense..to measure experience economics by journeys such as “I Buy” + “I Reconsider” etc, each made up of lifecycle strains. But it doesn’t have to be journeys, it could be segments even. The idea is to be customer focused and obsessed, using journeys is no better than organising around segments etc., e.g. retail banks and other financial behemoths with wealth slices such as PrB (Private Banking), PsB (Personal Banking), PfB (Preferred Banking) etc.

For most organisations, it’s a quantum leap of faith. Culturally, it may be analogous to the search for infinity – we never really get there. And yet maybe, a cultural reboot is fast becoming a necessity to push the boundaries of customer centricity. Makes sense too, if the millennials and alphas cometh, then logical that organisations should be transfused with new blood – it’s a matter of time.