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Woman on iPad HappyThe economic recovery is still chugging along, however tentatively, but sooner or later another downturn will take place, unleashing significant reductions in corporate revenue and spending.

A question I occasionally contemplate is what the next recession will do to the customer-centric strategy that has been widely adopted across industries, an approach that puts the customer’s needs and desires at the center of all business decisions and that has attracted a great deal of attention and investment in recent years.

When times get tough, will businesses back off on customer experience (CX) investing, discounting it as a nicety? Or has CX become so important to the bottom line that businesses will understand that backing off will only accelerate cyclical declines?

I believe that CX is a foundational capability and that treating it as optional is a fatal mistake. But I also believe that many businesses nonetheless will cut CX investing during the next downturn.

Over the past few years, we’ve helped numerous companies develop an overarching CX strategy, enabling them to better manage the full range of customer interactions, including those taking place via mobile devices, websites, call centers, and within stores and other physical locations. The objective is to make it easier for customers to interact with the business, improve brand loyalty, and establish competitive differentiation. All of these help keep the business and its products and services from becoming commoditized and they have a direct and positive impact on the bottom line.

During a downturn, the last thing you would want to cut is something that separates you from the pack and that boosts the bottom line. An article dealing with this question, written during the depths of the last recession, is telling.

The article, “Is Customer Experience Relevant in a Recession?”, written by Lior Arussy in the April 2009 issue of CRM Magazine argues that “Difficult times will test the strength of any kind of relationship, and the one between you and your customer is no different.”  He continues, “If your customer sees you skimping on the customer experience now, she’ll question your sincerity and honesty. She’ll understand that your commitment to the relationship was shallow and not long-term. As such, she’ll apply the same logic and seek the cheaper price.”

In other words, businesses that abandon CX risk commoditization. That was true during the last recession, it is true today, and it will remain true during the next recession.

Some businesses nevertheless may maintain that cutting CX investing is feasible because they are doing CX so well that further spending would be superfluous, particularly during a downturn. Whether or not a company embraces a customer-centric strategy, this reasoning neglects the fact that customers – and their demographics, needs, and objectives – change over time. CX investing isn’t a one-time undertaking. Through good times and bad, it’s critical that businesses continue to focus on CX in order to meet customers’ evolving needs.

In addition to helping nurture long-term customer relationships, CX drives competitive differentiation, and the power of CX to distinguish a business from its competitors won’t change over time, regardless of economic fluctuations. Nor will the power of CX to facilitate consumer interactions, whether via mobile device, call center, in-store, or web.

However, failing to provide satisfactory experiences across these important touchpoints will alienate customers, regardless of the health of the economy. And when customers have a bad experience today, word can spread like wildfire to vast numbers of customers and prospects. If sales are already off thanks to recessionary forces, reputational damage will only exacerbate the problem.

This is one reason I view customer experience as a core function, on par with security. Damage arising through poorly managed customer experiences can be every bit as costly as damage arising through security breaches.

Retaining a steady focus on CX during difficult times will help your business retain valued customers, maintain competitive differentiation, survive the downturn, and come out the other side in a far better position than competitors who regard CX as a nicety.
 

About the Author

Brian Bischoff
Brian Bischoff is a Principal in CapTech’s Customer Experience practice in our Richmond, VA office. He has been with CapTech for over 16 years and currently leads CapTech’s Digital Strategy offering. Brian is a classically trained software engineer who has passion for solving complex customer interactions at the intersection of design and technology.