5 minute read 11 Apr 2022

Organizations can turn customer promises into commercial reality by balancing customer experience, productivity and growth objectives.

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How to achieve self-funded customer experience transformation

5 minute read 11 Apr 2022
Related topics Consulting Customer Digital
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Organizations can turn customer promises into commercial reality by balancing customer experience, productivity and growth objectives.

In brief
  • Many customer experience (CX) investments are not keeping pace with changing customer preferences and have failed to translate into sustainable growth.
  • Often this is due to organizations taking a narrow focus on either CX, productivity or growth objectives instead of addressing them concurrently.
  • A holistic approach, with targeted investments in skills and technology, can operationalize commercial excellence and create self-funded transformation. 

Significant shifts in customer engagement preferences and buying behavior have rendered legacy go-to-market models ineffective. Perceptive leaders who want to stay ahead of their competition have recognized this and are working hard to give their customers what they want, when they want it.

But some investments in transformation are failing to deliver their targeted benefits. The biggest reason is that, under considerable financial and resource pressure, many organizations are viewing their CX, productivity and growth objectives as mutually exclusive – however a siloed focus only gets a business so far.

Instead, organizations must take a broad and disciplined approach to transformation, considering how to elevate the customer experience and improve productivity while also driving growth.

Take a holistic approach

During times of uncertainty with pressure to act quickly, it can be tempting to look at CX, productivity and growth objectives as separate business goals. But this mistake will leave organizations floundering while others are flourishing.

Leaders who don’t assess how these objectives intersect, risk overinvesting in non-critical "moments that matter." Those who prioritize cost-out, jeopardize damaging customer and employee perceptions or losing critical growth capabilities. While aiming solely on revenue growth can result in expensive investments, with broad capabilities and channels that aren’t aligned to CX.

In contrast, taking an all-inclusive view will set businesses up to self-fund the transformation. By starting with the customer — identifying high-potential segments and understanding what they value — organizations can reallocate resources to deliver on the "moments that matter" most. At the same time, cost-efficiencies can be made by taking out non-critical capabilities and reinvesting into those that will make an impact and drive ROI.

How EY can help

Customer experience

When it comes to serving the customer of the future, the answers lie in being client-centric, especially in today’s world.

Read more

Three questions to help leaders focus on implementation

Organizations often spend a lot of time working on strategy, but implementation is where the benefits are realized. We recommend taking an agile approach – leveraging a collaborative, flexible and outcome-focused environment to build critical enabling capabilities across people, process and technology.

1. How do organizations elevate the customer experience to ensure our offering is benefiting the customer and building brand advocacy in the process?

Effective transformation must be "outside-in". Leaders first revisit their ideal customer profile based on future potential value. Then, rather than immediately buying technology, they start by understanding the "moments that matter" to these segments, their channel and engagement preferences. This will ensure that any changes are focused on meeting the customer’s needs, at touchpoints that deliver value. The next step is to align marketing, sales and service teams to build the momentum required to achieve the ideal customer experience.

2. How do we meet the shareholder requirement to improve productivity by increasing value and creating profit gains, while also reducing costs?

New cost-out opportunities can be found by reviewing underlying channel economics, rationalizing operating models and streamlining people, process and technology resourcing. For example, leaders can support pull and push-based campaigns that are less reliant on agency spend with high-quality content, leveraging automated workflows. They can also look to outsource non-critical capabilities that don’t align to the new "moments that matter". Importantly, by reallocating inefficient resources to new channels and capabilities to deliver on the "moments that matter" to priority consumer segments — profits increase and costs are reduced.

3. How do we drive growth now — and in the future — while building the underlying capability needed to scale up?

The growth potential of traditional customer bases has changed. Leaders must re-evaluate which customer segments are most likely to drive sustainable growth. Taking another look at underserved customers (i.e., the "long tail") can also unearth new areas of value. Targeted in an efficient and scalable way, these segments have the potential to increase revenue significantly.

Leveraging these steps allows organizations to self-fund transformation, with cost and productivity savings reinvested back into the business, while at the same time:

  • Increasing customer lifetime value
  • Boosting resource optimization
  • Optimizing marketing spend
  • Increasing conversion of new customers
  • Growing revenue from underserved customers

What this looks like in action

  • A telecommunication company

    A telecommunications company had declining revenue and profitability from overreliance on legacy solutions and face-to-face interactions, with large teams of account managers, pre-sales SMEs, product and industry specialists – all with limited capability to solve and convert more complex ICT solutions into sales.

    By mapping customer value, elevating the focus on customer journeys and deploying new digital marketing and remote sales channels, the company met its 30% cost-out target. These savings were then partially reinvested into a scalable, marketing-led demand generation engine. This resulted in a net 8% uplift in ICT revenue, a milestone positive net promoter score (NPS) and an improved EX as employees were energized by the shift in approach.

  • A major FMCG organization

    Similarly, a major FMCG organization was facing margin erosion in its key accounts, representing a large share of revenue. This organization needed to increase penetration and upsell across its medium-sized customer segment.

    Cost reduction

    10 %

    achieved through channel optimization.

    Enabling the organization with scalable marketing automation, e-commerce solutions and a better understanding of customer journeys and buyer personas allowed it to overhaul the B2B2C go-to-market model for these customers. This company now operates a fully integrated, cross-functional campaign and activation model which has already reduced costs by 10% through channel optimization. In addition, underserved customers have been reactivated, delivering an NPS increase in "the tail", translating into scalable growth.

Create sustainable growth

A holistic approach allows organizations to align all program elements to the customer journey in a way that promotes cross-functional communication and leadership buy-in. This results in:

  • Self-funded transformation: taking efficiency savings from non-critical "moments that matter" to re-invest in new channels, capabilities and growth enablers
  • Maximum initiative impact: meeting more needs simultaneously by having greater operational awareness of the relationships and co-dependencies across the different strategic objectives
  • Embedded cultural change: engaging and energizing employees post-transformation to drive uplifted CX outcomes and genuine cultural change

Summary

The pandemic and technology advances have created significant shifts in buyer behavior, with engagement preferences evolving at a rapid pace. Leaders who want their organization to grow and maintain a competitive advantage, need operationally mature, technology-enabled go-to-market models based on an in depth understanding of their customers. By taking a holistic approach to customer, cost and growth — organizations are able to self-fund their transformation, create impact at the "moments that matter", and promote commercial excellence.

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