Customer Strategy vs. business risk: CX Mini Masterclass – E36

This CX Mini Masterclass explains investigates how to find the balance between mitigating business risk without derailing your customer strategy. Show host and customer experience expert, Julia Ahlfeldt, takes you through a practical approach for evaluating customer impact and shares ways that you can engage with business teams to realize this. If you’ve ever found yourself pulling your hair out trying to get a compliance or legal team to “think customer”, this episode is for you.

 

 

 

A tough environment puts risk in the spotlight

When the going gets tough, it’s natural for organizations to looks for ways they can mitigate loses and fend off potential disruptions. That makes sense, but it doesn’t mean that an organization needs to let the risk mitigation or legal teams completely take the reins of the business. These teams are often tasked with identifying and fending off any possible risk, and they’re usually not tasked with measuring this against the impact on customer experience or customer lifetime value.

 

Balancing risk and customer strategy

Even if a business isn’t in defensive-mode it’s important to find the balance between protecting customers, employees and the brand while delivering experiences that create value for both the business and customers. 

This starts with including some sort of customer impact assessment in the organization’s business planning and operational change processes. All too often I find that organizations will make changes to systems, processes, platforms, and even products, without fully evaluating what this means for the customer. In practice, this means that businesses sometimes implement changes to their business that result in bad experiences which have an adverse impact on loyalty.

So how do you prevent these things from happening? The answer is to bring a customer impact assessment into the business planning process, so issues get flagged before they happen, and the teams responsible for mitigating risk have some sort of counter balance for customer experience. It isn’t that theses teams don’t care about the customer, it’s just that they aren’t focused on the customer, so you have to find a way to shine the spotlight on the customer experience and show them how to empathize while they analyze.

 

A practical approach for analytical teams

One way to do this is to implement a customer assessment for any new business risk policy. The details of this will be unique for each business, but this approach incorporates procedural consistency and logic, elements that should resonate strongly with analytically-minded teams.

First off, evaluate if the new risk policy is designed to protect employees, customers or other individuals from harm. If so, your customer impact assessment can be pretty short. If the risk of harm is real and material, the new policy is probably worth implementing, even if it does result in a hiccup to the customer journey in the short term. The brand damaging effects would probably far outweigh a slight inconvenience to the customer.

If the new risk mitigation policy isn’t related to some sort of brand damaging health and safety issue, then it’s likely dealing with a policy that is meant to protect business continuity. This is where organizations can easily get blinded by looking out for their own issues without considering the customer. Customer experience professionals need to figure out how to weigh this against the impact on customer experience and the bottom line.

You can evaluate the impact by evaluating the new risk policy against a couple of criteria:

 

• Will the policy affect customer retention, and if so, what is the value of these lost customers?
• Will the new policy prevent new customer acquisition, and if so what is the opportunity cost of those potential customers?
• Will the new policy impact on customer satisfaction? If there is an impact, to what extent? What is the level of severity? Will it ultimately lead to a decreased share of wallet or will it damage word of mouth recommendations?

This last batch of evaluation questions looks at the “slow burn” impact, while the first 2 looks at the immediate financial ramifications. It’s important to look at both.

 

Want to keep learning about CX?

If you’d like to checkout more of these CX Mini Masterclasses or listen to my longer format CX expert interviews, check out the full listing of episodes for this CX podcast.

And if you are looking to super-charge your CX skills and continue learning, be sure to check out CX University. They have a great array of CXPA accredited training resources available on a flexible monthly subscription plan. Use the code PODCAST10 to get 10% off your first month’s subscription and support this podcast.

Decoding the Customer is a series of customer experience podcasts created and produced by Julia Ahlfeldt, CCXP. Julia is a customer experience strategist, speaker and business advisor. She is a Certified Customer Experience Professional and one of the top experts in customer experience management. To find out more about how Julia can help your business achieve its CX goals, check out her customer experience advisory consulting services (including employee engagement, leadership alignment and CX culture change) or get in touch via email.