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Despite sizeable investments in customer experience evaluations such as Net Promoter Scores (NPS), reviews, satisfaction ratings and surveys, companies are neglecting to act when problems are identified across the inflection points of their value chain.  

Despite the critical importance of customer experience and ‘designing for service’, especially in a challenging economy discussed in my previous blog, nearly a third (29 percent) of businesses admit that they report problems but don’t act. A further 18 percent said they are too busy to report an issue across their value chain unless urgent. This is according to Fixing the fundamentals: Understanding new business models and opportunities in the wake of Covid-19”—a new global study of more than 1,700 business executives and 12,500 consumers sponsored by IFS.

Understanding the value chain  

Much of my role at IFS is to help organizations to master complexity, so that they can be their best when it really matters to their customers. Every business has those moments when they get judged, when they either delight or disappoint. Bringing together all the decisions and processes in an organization to deliver at those moments is what it’s all about. We call it the Moment of Service. 

In our service-driven economy, success is determined by how an organization comes together along its entire value chain, from sourcing materials and packaging a product to delivering it to the customer. Companies that take a siloed approach to business and fail to see the direct impact that internal processes have on business outcomes will soon find themselves falling behind. Yet, the study reveals that businesses all too frequently miss critical opportunities to rectify issues across their value chain, hindering service delivery.  

These errors have a lasting impact: In the consumer-oriented section of the study, a resounding 26 percent of respondents revealed they would be unlikely to engage with a brand after just one negative experience. As organizations throughout the world rethink their approach to business, it is vital that they fix the fundamentals by augmenting business processes across the entire value chain, enabling them to thrive in this challenging climate.  

Misplaced spending 

Companies do not hold back when investing in customer experience evaluations. According to the study, 45 percent of organizations surveyed spend between $250,001 – $500,000 each year on tracking NPS, reviews, satisfaction ratings and surveys, while 21 percent spend $500,001 – $1 million. Similar investments are made each year on evaluating internal processes, with 44 percent spending $250,001 – $500,000 annually, and 23 percent spending $500,001 – $1 million.  

So far, so good. However, the research uncovers an urgent issue: Despite these sizeable investments, companies are neglecting to act when problems are identified across inflection points. 

Although some 79 percent of organizations are investing the time and resources to identify where each inflection point is, nearly a third (29 percent) admitted that they report problems but don’t act.  

A further 18 percent said they are too busy to report an issue unless urgent, while 38 percent of respondents only take action when it is urgently required. In fact, only 14 percent said that they are proactively planning for problem prevention across their customer inflection points.  


A Flawed Approach 

These shocking findings reveal a fundamentally flawed approach to business. In neglecting to address the problems they have gone to great lengths to identify, companies risk issues escalating, costing time and money and hindering service delivery. They become unable to execute on opportunities and become focused on reacting to severe issues or detractive customers, rather than proactively looking to deliver what customers want. And crucially, with operations riddled with moments of error, the likelihood of damaging the customer experience at the all-important moment of service is exceptionally high.  

According to the study, some 30 percent of businesses see product/service quality as the single largest determining factor for winning or losing customers, while 25 percent feel success hinges on product/service reliability. By tackling issues with internal processes, enterprises can directly improve both product/service quality and product/service reliability—yet many are still not joining the dots.  

For companies that fail at the moment of service, the ramifications are significant. In addition to the quarter of the study’s consumer respondents who said they would abandon a brand after just one bad interaction, over half (52 percent) of respondents said they would never engage with a company after two or three negative experiences. Businesses have a limited opportunity to get it right, and if they neglect to assure every single inflection point, they are gambling with their outcomes.  

Where the magic happens 

The stakes are high. But with the moment of service approach, we are helping organizations to frame their problems in the perspective of their customer. So, what is the moment of service that you are trying to create for your customer? If a company can generate a detailed and measurable understanding of what an outstanding moment of service looks like, and then orchestrate assets, customers, and people to deliver it, that is when the magic happens. 

There is no question that companies that can do that will win more often, get more repeat business, and be more profitable. What matters is where you focus, and the focus has got to be the moments of service.

To read more about designing for service and becoming outcome-based, download the report for free here. 

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