Customers, Etc

By Ben McCormack

Is Your CX Strategic? Part 2 | Customers, Etc

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Is Your CX Strategic? Part 2 | Customers, Etc
By Ben McCormack • Issue #19 • View online
We continue our exploration of CX and strategy this week, looking at “fit”. Does this week’s theme resonate? I’d love to hear your story—hit reply and let me know.

Returning to where we left off last week, let’s revisit the imagined scenario where you’ve been running the onboarding practice at a new company for about a year, with great results. It’s clear that you’ve achieved a high level of operational effectiveness, and you’re trying to answer the question of “is this practice strategic?” This has you reflect back on the state of customer onboarding when you first joined the company.
It would not be overstating the case to say that when you first arrived, onboarding was in a state of disarray. More to the point, it didn’t exist. Your company had followed the path of many software-as-a-service companies in “moving up market”, providing a more consultative and personal sales experience, leading to bigger deals. However, due to the mostly self-service origins of your application, most of the training was baked into the application itself or available in online help documentation. While some sufficiently motivated customers managed to become successful on their own, this became increasingly rare as you brought on larger customers with more complex organizational needs. The self-service options, while still a valuable resource, weren’t cutting it on their own. 
One way to describe this problem is that there wasn’t a “fit” between pre-sales activities and post-sales activities. Customers who had gotten used to phone calls, meetings, and the personal touch of a sophisticated sales cadence all of a sudden felt in the dark when dropped into a self-service onboarding experience.
Photo by Nathan Dumlao on Unsplash
Photo by Nathan Dumlao on Unsplash
Strategic Fit Among Activities
Last week, I shared one of Michael Porter’s definitions of strategy from his Harvard Business Review article, “What is Strategy?”:
“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.”
I had put emphasis on the phrases “being different” and “unique mix of value”, and we focused on what it would mean for customer experience to be a strategic differentiator, especially in contrast to operational effectiveness. This week we’re going to emphasize the activities themselves, specifically how well they do (or don’t) fit together. From later in Porter’s article:
“While operational effectiveness is about achieving excellence in individual activities, or functions, strategy is about combining activities….One activity’s cost, for example, is lowered because of the way other activities are performed. Similarly, one activity’s value to customers can be enhanced by a company’s other activities.”
Notice how he emphasizes activities. This is important, because it becomes the basis by which he talks about strategic fit at a company. From earlier in the article:
“Ultimately, all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell, and deliver their products or services, such as calling on customers, assembling final products, and training employees. Cost is generated by performing activities, and cost advantage arises from performing particular activities more efficiently than competitors. Similarly, differentiation arises from both the choice of activities and how they are performed. Activities, then are the basic units of competitive advantage. Overall advantage or disadvantage results from all a company’s activities, not only a few.” (emphasis added)
While you can of course achieve a certain level of advantage just by performing individual activities better (e.g. “get better at sales”), real competitive advantage happens when your activities have a strong sense of fit.
Does your CX have strategic fit?
A favorite pastime of folks who work in customer experience—myself included—is to trumpet great customer experiences we see in the wild from the brands we interact with: Apple provides a great in-store checkout experience. Disney has an incredibly immersive queuing experience for waiting in line at a theme park. Chick-fil-a has a seamless drive-through experience. It’s tempting to look at successful brands and want to copy parts of the experience. But what truly makes these experiences remarkable is how well the activities of the business fit together to provide a unified experience and a consistent sense of brand. As practitioners in the realm of customer experience, we have to be careful about championing experiences piecemeal, disconnected from a cohesive strategy.
If we return to our imagined example at the beginning of this article, we had two opposing experiences. On one hand, we had a sophisticated sales department that relied heavily on person-to-person interaction. On the other hand, we had an onboarding experience that was entirely self-service. We could hold opinions as to whether these experiences, when viewed independently, are “good” or “bad” on their own. But that matters less than if they fit together, because if there isn’t a fit, that’s going to lead to a poor experience for the customer.
Porter talks about the advantages of activities fitting together:
“Consistency ensures that the competitive advantages of activities cumulate and do not erode or cancel themselves out. It makes the strategy easier to communicate to customers, employees, and shareholders, and improves implementation through single-mindedness in the corporation.”
In this sense, CX becomes a strategic multiplier. Put another way, it reinforces the company’s brand, helping to maintain a consistent image in the customer’s mind so the customer knows that to expect. The sophisticated white-glove sales approach that transitions seamlessly into a comprehensive onboarding engagement only ends up amplifying the experience that was established at the beginning of the customer journey. This isn’t because white-glove sales is better, but because the activities of the business fit together.
Fit as strategic advantage
Fit among activities isn’t just about an improved experience for the customer. It’s also a competitive advantage.
“Such systems, by their very nature, are usually difficult to untangle from outside the company and therefore hard to imitate And even if rivals can identify the relevant interconnections, they will have difficulty replicating them. Achieving fit is difficult because it requires the integration of decisions and actions across many independent subunits.… Companies with strong fit among their activities are rarely inviting targets.” (emphasis added)
Intuitively, this makes sense. Take Apple’s in-store checkout experience, for example. There are no lines. While looking at a product, if you’re ready to purchase, the employee who is already helping you takes your payment, gives you a receipt, and you leave the store. It’s beautiful. It’s seamless. It’s amazing. However, if someone wanted to copy Apple’s checkout experience, it wouldn’t be enough to just slap a credit card reader on an iPad and get rid of lines. They’d have to copy nearly every other activity as well, from their service experience to their store layout, to the very systems and activities that come together to create those experiences. More to the point, they’d have to copy the thought in the customer’s mind of “this is just what you’d expect from a company like Apple”, that is to say, Apple’s entire brand.
To be continued
When we revisit the question, “Is your CX strategic?”, we can say that in order for your CX to be considered strategic, the activities of your business must fit together. Conversely, if your activities don’t fit together, it’s fairly clear that your CX can’t be considered strategic. That said, just trying to fit everything together—being “operationally effective at fitting activities together"—may not be enough (or may be impossible) if your company doesn’t have a clear strategy at the top.
Next week, we’ll explore strategic positioning and trade-offs and how those intersect with leadership. By providing leadership on strategy from the top, activities have a cohesive way to fit together, and hopefully we’ll be able to finally answer the question, "Is your CX strategic?”
Etc.
The book club for Chief Customer Officer 2.0 filled up fast! We get started tonight and I’m sure to share some of our musings in an upcoming newsletter.
Things I’ve read:
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Ben McCormack

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