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Anticipating a Downturn? Pause, Pivot, and Optimize your CX

Continuing with our series on how customer-centricity can improve business resilience, we spent some time with Phase 5 Partner and Customer Experience Practice Lead, Andreas Noe, discussing how CX can be used as a way to increase loyalty and retention at a time when customers are looking for ways to save. We learned about some of the biggest opportunities for organizations to leverage CX in the event of a possible economic downturn, and some of the steps Andreas recommends for companies looking to recession-proof their business. Read on for excerpts from our conversation.


Q:  Andreas, thank you for taking time to speak with us. Can you please start by telling us a little more about your current role, and the history of that role at Phase 5?

A: It’s my job to lead the CX & Market Insights practices here at Phase 5, which includes delivering insights to clients about what their customers experience and how they feel and act along their journeys. This path begins even before someone becomes a customer, during the acquisition phase, and continues right through the consideration, purchase, loyalty and advocacy phases of the customer relationship.

Over time we’ve learned that the hardest part of achieving great CX is often the execution. Even with compelling insights, it can be difficult for organizations to leverage the data to create plans and make the changes necessary to drive meaningful results. So my team's role has evolved to offer more guidance about how to activate those insights to achieve an organization’s objectives and deliver ROI. We help our clients stay focused on their objectives, engage their peers and leadership, and measure performance to ensure success.

Q: How would you define Customer Experience (CX) as a discipline?

A: CX is about the customer, their perceptions, and all the feelings they have while interacting with a company. It includes anything that affects the customer’s experience, including digital. It encompasses whom an organization should be targeting and how, and then how the organization will deliver on what it has promised.

To effectively manage Customer Experience, you’ve got to be in tune with your customer in good times and in bad. When the environment changes (in a downturn, for example), something fundamental has definitely shifted, and you need to understand how that has affected your customer. My advice is to pause, pivot, and optimize.

Q: Tell us more about that please. What does it mean to “Pause, Pivot, and Optimize”?

A: When things change (or are about to change) dramatically, best practice from my experience is NOT to just hit the brakes. It’s usually more about dialing some element up or down.

In other words, rather than reactively freezing all strategic plans and investment in uncertain times, take a moment (pause) to learn how to adjust (pivot) based on how the environment has changed. Focus on the customer to understand what small changes will have the most impact (optimize).

Revisit the customer journey: jobs to be done, touchpoints and moments of truth. In some cases, companies may find that their target customer has changed, and that long term sustainability depends on a new segment whose journey looks a little different. In other cases, companies may determine that their target customers are the same, but that a point of friction along the journey must be eliminated or those best customers will be lost entirely. Being armed with the right information can make the most of limited resources and help ensure that the decisions made are the right ones to sustain the business.

Q: Can you share any examples of how an organization doubled down on CX during an uncertain economic period and reaped the benefits and/or outperformed competitors?

A: Yes. In fact, I can think of a few! The first one that comes to mind is a B2B client of ours whose business is closely tied to the real estate market. When COVID hit, our client decided to dig deeper into how the pandemic would impact business for both their longest term customers and the newer customers they had more recently acquired. In the process, this organization actually managed to define a new segment that had emerged at the beginning of the pandemic.

With further analysis, our client discovered that this new segment represented a growth opportunity, and so they decided to “double down” and focus resources there. More specifically, the company had already been working to streamline and improve their complex customer experience, but these longer term infrastructure investments had not yet been completed. So to bridge the gap in a cost effective way, our client created a white-glove type service for this new customer segment; it was a special team that could stick handle the trickier parts of the process to make the experience more seamless and convenient. Longer term this special service would not be sustainable, but it was a great short term way to ensure this important customer group was supported and retained, which resulted in sustaining and strengthening our client’s business during those tenuous COVID years.

Another example comes from a client of ours in the charity space. For many years, this client’s best “customer” segment was from an older demographic, and these people responded well to the client’s giving options (e.g., ongoing commitments, legacy gifts). However as one might expect, the size of this group was getting smaller, and there was concern that during a downturn the volume of their donations would not be enough to sustain the organization. Hence the need to appeal to a new, younger segment.

Our client correctly hypothesized that this new segment’s motivations and preferences were different, and that the customer journey might look different for them. Through market research, they were able to identify key elements that mattered to this group, and develop a customer experience that resonated with them (e.g., different outreach initiatives, trial giving opportunities). Whereas the historically successful customer experience may have alienated this new segment, making adjustments to it enabled them to attract new donors and expand rather than contract.

One final quick example is from the insurance industry. We had a client who knew from customer research that the claims process was perceived as a pain point in the customer journey. Views on the insurance industry in general were not very positive in this regard. So our client decided that there was an opportunity to act on this insight, and invest in CX during a downturn to differentiate themselves and gain share. By revising the process and investing in more staff, they worked to change customer perceptions from “they’ll do anything to get out of this claim” to “they’ll do anything to make this process as easy on me as possible”.

Q: What role does market research play in terms of taking advantage of these opportunities?

A: Every time there’s a downturn in the business, something has definitely changed. You need to understand what it is, and market research can shed light on the situation.

As mentioned previously, there is often a knee jerk reaction to reduce spending. But you need to pause to gather insights about what has changed, then pivot using that information, and optimize based on where the data tells you it makes sense to cut and/or to invest.

When initiating research, focus on the customer. One of the key questions going into uncertain periods is who is our target for retention? Who do we absolutely need to keep in order to survive? Some companies will grade or color code their customer segments to prioritize them. I can almost guarantee that those grades will need to be adjusted during a downturn, and the organization may need to pivot and focus on a different segment.

Go back and revisit the journey that customers are on, including touchpoints and key moments of truth. CX is key to driving loyalty and retention, so knowing how to optimize CX for the target group is essential.

And by the way, conducting research doesn’t have to mean undertaking a huge project. We recently worked with a client who did smaller scale insights gathering with a rigorous test and learn approach. They didn’t stop business as usual; they carved out places to do test promotions, gathered the learning, and then moved on to the next, improving and learning a little with each one. It turned out to be a very effective way to react to change in careful, measured steps, generating valuable insights with a smaller budget. This lean and agile approach can be particularly relevant when applied to specific touchpoints within the CX.

Sports and Entertainment companies have become very good at measuring the CX of their events and understanding how to pivot in real time. They leverage social media to “listen” to fans and adjust during the event (e.g., changes to lighting and sound, garbage receptacle availability, restroom lineups). They also know that whether their team won or lost that day can make a big difference in the overall experience. When a loss happens, for example, fans are eager to get to the exits to go home; focusing on the customer means doing everything possible to ease this process, such as redirecting foot traffic with digital signage, and/or adjusting traffic lights for better vehicular flow outside the venue. Leveraging data helps them create a better CX and more loyalty.

Q: Are there places to find helpful CX insights without doing a full scale custom market research project? Other ways or other sources of data?

A: It’s always a good idea to look at the CX data you already have internally to start to identify challenges and opportunities, and/or to add more context to what research is showing (e.g., customers are abandoning at point X in the journey, but only when the interaction is face-to-face vs. online). Sources like post-call feedback surveys, Customer Satisfaction scores, and digital behavior data can provide direction. And our Phase 5 analytics team is great at helping clients work through masses of proprietary data to reveal any insights buried there.

As well, it’s a good idea to monitor relevant external data sources. For some of our clients, business confidence levels are a leading indicator of their own business health, and can signal when to dig deeper into CX issues in anticipation of challenging times ahead.

Thank you once again, Andreas, for taking the time to share your expertise with us today.

Readers, to learn more about how to optimize your CX and create a sustainable competitive advantage for your organization, contact us.

Written by Stephan Sigaud

Stephan Sigaud, MBA, is Phase 5’s EVP of Marketing. Stephan is passionate about partnering with clients to address their challenges and opportunities around customer centricity. Stephan has more than 25 years’ experience in Market Research and Customer Loyalty and Experience and is a Board Director of the Insights Association. He has also been volunteering with the Customer Experience Professionals Association (as past Chair of the CXPA Toronto Network) and the Canadian Marketing Association (as member of the Leaders Network and past co-Chair of the CMA CX Council).