A great deal of customers and the brands that serve them are facing unprecedented uncertainties; understanding them is key to organizational success, delivering Experience Improvement (XI), and ensuring that your customer experience (CX) program is operating optimally. All of these obstacles affect both customers and brands to some extent. Because half the Experience Improvement process is knowing what these challenges are, today’s conversation addresses five of the most prominent ones that I’ve observed in my work as an experience program designer:

1. Price Increases
2. Efficiencies
3. Off-Price/Discounts
4. Shrinkflation
5. Skimpflation

 Challenge #1: Price Increases

A plethora of international events, crises, and phenomena has produced steep inflation throughout much of the world, and no part of the supply chain has been spared these upticking costs. Brands have had to pay more to produce, transport, and store their wares, which means passing that cost burden onto their customers. I’m sure you can guess how that’s affecting customer experiences the world over.

Challenge #2: Efficiencies

This is another customer experience woe that affects both parties in CX interactions. Many companies have struggled to stay fully staffed amid the job market churn often called The Great Resignation, which translates directly to everything from longer customer wait times to reduced item availability. For brands, this has become an employee experience (EX) challenge that is formidable, but not insurmountable.

Challenge #3: Off-Price/Discounts

The events of the last few years (and their lingering effects) have resulted in a consumer demand collapse for many goods and services. This is an especially adverse problem for the brands that sell these goods, as they now have to offload them at a significant discount. For example, I discussed in a prior article how reduced demand for patio furniture left these goods gummed up in the supply chain. About a year on, a combination of sluggish demand and eventual delivery has resulted in a deluge of patio furniture that brands, frankly, have no room for. Steep discounts can benefit customers, of course, but on this scale they leave a brand’s bottom line weakened.

Challenge #4: Shrinkflation

You’ve probably seen this word plastered all over your local news recently; if not, it’s the media’s new favorite term for paying the same price for a good that is reduced in size or amount. Multiple brands have taken this approach to their customer experiences as a means of attempting to prevent cost increases, but as you can imagine, most customers aren’t thrilled that the same amount they paid yesterday yields less for them today.

Challenge #5: Skimpflation

This one is similar to both shrinkflation and the staffing woes I mentioned earlier. In essence, even when brands manage to keep employee churn low, they must still contend with the possibility that the service their retained employees provide has lost some of its quality. This results in an underwhelming customer experience much like the amount reductions discussed with shrinkflation. 

The Path Forward for Customers and Brands

It’s helpful to understand the territory your brand operates in, and these challenges constitute just that for many organizations in these strange times. However, there is more to the story: what are customers doing to cope with these and other challenges, and just as pertinently, what can brands do to respond in a meaningful way? How can they ensure that they’re displaying that empathy mentioned at the beginning of this discussion?

Click here to read my full-length point of view article on customer coping strategies and what your organization can do to address them. I’ve spent a great deal of time researching both of these CX elements over the last few years and am confident that those learnings can help you on your own Experience Improvement journey.

Customer feedback is critical for helping your customer service agents tackle problems—whether closing the inner loop directly with customers, or closing the outer loop with problems that keep surfacing over and over again.

Organisations are typically quite comfortable tackling inner loop programs. If you have agents that review and action customer feedback, and enough resources to contact unhappy customers, you’re off to a good start. 

However, closing the outer loop means addressing structural issues, and this is where it gets a bit harder.

In the data science department, I’m often asked how an outer loop process should work. My name is Ton Luijten, Customer Success Director + Data Science Lead in APAC—I’m also a Lean Six Sigma Black Belt. Here are my thoughts about how the Six Sigma methodology can be used as a template to help CX leaders close the outer loop and address systemic issues.

What Is Six Sigma? 

Six Sigma is a methodology that uses data analytics and statistics to analyse business processes and services in order to understand how they’re performing and how they can be optimised. The objective is to increase business outcomes (for example, improving customer experiences) by reducing defects and improving services and processes

Since collecting and analysing data is at the core of both Six Sigma and CX programs, it struck me that they seem like a natural fit.

The 5 Steps of the Six Sigma Methodology

Six Sigma follows the DMAIC process made up of the following steps:

1. Define
2. Measure
3. Analyse
4. Improve
5. Control

We’ll go through these one by one:

Define

The first step is to prioritise the pain points that you want to tackle as a business. With Six Sigma we typically ask 3 questions:

• Is there a gap between the current process and the customer expectations around that process?
• Is the cause of the issue understood?
• Is the solution known?

You should be able to answer the first question with your voice of customer data, meaning you should be able to work out what issues are causing the most dissatisfaction across your customer base. You can use a simple approach by looking at NPS or satisfaction by drivers or text analytics’ tags, or you can go with a more advanced approach and run driver analyses to understand what the key focus areas should be. This can be done on both unstructured and structured data.

For the second and third point, you might be able to answer “yes” for some simple issues. If that’s the case, then you can just implement that solution. However, we recommend proceeding with caution, as it’s easy to make assumptions.

Once you have found some issues that are not meeting customer expectations to which you don’t know the root cause or solution, there’s a good chance you can turn this into a Six Sigma project.

Measure

Normally this is where you go and measure the problem to establish a baseline. However, with a CX program, you typically already have plenty of data on your issue, so you can simply use your existing data to create that baseline.

Analysis

This is where it gets interesting—the analysis phase involves identifying the root cause, which is critical if you want to find an effective solution. We typically start with brainstorming different ideas and then once we settle on some hypotheses we can test, we can then check if we have the data available to us to check this hypothesis or if we need to collect more data in order to test it.

It’s important to understand the true root cause. It’s quite easy to find correlated themes that do not directly cause the issue. Driver analysis on both structured and unstructured data can help with this process.

Improve

Once we have identified the root cause, it’s time to come up with solutions to address it. This is where customer experience professionals can use their creative side to dream up all kinds of ideas—then the ideas can be evaluated to identify the most promising ones.

Once we’ve settled on the most promising ideas, it’s time to start A/B testing the concepts, which involves trialing the solution(s) with test groups and then comparing the performance against a control group.

In the end, there’s typically a cost benefit analysis to understand which action would have the most impact. This needs to be contrasted against the relevant investment.

Control

Once the best course of action has been identified, it can be implemented. Now it’s time to track the improvement. At InMoment, we have a tool called Watchlist to help you with this. Watchlist does the work for you by tracking customer outcomes after new initiatives have been launched.

Wrapping Up

Often companies struggle with putting a framework in place to tackle the outer loop in an effective manner. Six Sigma is one method that can be utilised to put a structure in place that can be used to root cause structural issues, identify potential solutions and identify the most effective one. Finally, it can track the effectiveness of the final solutions after implementation.

Want to learn more about how you can take action to close the loop or make other improvements to your customer experience? Check out this guide!

This article was originally posted on Quirk’s Media.

Every successful business outcome benefits from having a reliable, flexible, actionable and amply proven template and improvement guide. This is as true for employee experience (EX) as customer experience (CX).

There is a clear path to greater, more progressive employee experience, insights and greater stakeholder centricity for any organization, and it begins with understanding the concept of experience improvement (XI) as it proceeds and matures.

The most basic definition of employee experience often has to do with overall happiness on the job (or what is generally understood as employee satisfaction). Subsequent stages in EX maturity build upon that first step. Exploring that progression, and how it will lead to experience improvement for everyone in your organization’s universe, is the focus of this discussion.

Employee Satisfaction: Providing a Little More Than the Basics

Employee satisfaction typically encompasses basic job functions like compensation, workload, flexibility, teamwork, resource availability and so forth. It’s built on the basic premise that if employees are happy, they will be productive and remain with their employer. Satisfied employees, then, are generally not aspirational and remain positive if things stay pretty much the same. Much like customer satisfaction, employee satisfaction is largely attitudinal and tactical.

A major challenge with employee satisfaction, though, was identified some time ago. Companies want to keep employees happy and reduce turnover, of course, but it was found that programs and strategies that support improved satisfaction can often result in demoralized staff – especially among employees who either want to perform at higher levels or are unmotivated to contribute more.

Even consultants and professional HR associations like the Society for Human Resource Management have determined that even high-level satisfaction doesn’t necessarily mean closer connection to the employer or greater employee performance.

Here’s a brief example of what can occur through satisfaction-based initiatives, irrespective of intentions. A large national financial services company, concerned that it was experiencing over 30% turnover among new employees, decided to give them a 13% bonus. Those employees who were “satisfied” happily took the additional money, but the result was no discernible decrease in churn.

Employee Engagement: Doing What (Almost) Everybody Else Does

The predominant EX construct that most organizations follow these days is, at its core, to consider employees as necessary costs of doing business. The overall objective of this construct is to optimize employees’ overall fit, utility and productivity within the enterprise. This construct is engagement, which also seeks to quantify emotional and rational job satisfaction (as well as motivation to think, feel, and act). The principal intents of employee engagement, then, are to identify:

• What originally drew individuals to the company.
• What keeps them there.
• What they see as their jobs and how involved they are in them.
• How aligned they are with the company’s overall business goals and culture.

Engagement, however, represents a mix of loosely related concepts and ideas rather than a single, objectively defined term. As a result, it only marginally impacts customer experience and downstream behavior. In 2006, The Conference Board published “Employee Engagement: A Review of Current Research and Its Implications.” According to findings in this report, a total of 12 major studies on employee engagement had been published over the prior four years by top research firms. Each of the studies used different definitions and, collectively, came up with 26 key drivers of engagement. For example, some of the studies emphasized underlying cognitive issues, while others addressed underlying emotional issues. What is absent from these drivers, though, is a focus on how employee behavior connects to, and drives, customer experience. And, though these findings from The Conference Board’s research are, as of this writing, close to 20 years old, the concept of engagement still puts very little emphasis on employees’ role(s) in customer focus and value delivery. In other words, though many companies might infer that happy employees equal happy customers, that relationship isn’t necessarily real or causal.

Further compromising the enterprise value and actionability of engagement is the fundamental issue of measurement. Again, there has never been a reliably clear and consistent definition of employee engagement on which to base performance since the term was first coined by an academic almost 30 years ago. Combine that with the current job market landscape, and it’s clear that employee engagement can no longer be considered a sufficient behavioral standard or organizational goal.

Employee Commitment: Joining the Ranks of the Advanced and Progressive

Employee commitment represents that which most directly shapes and creates the full (and current) EX landscape. It considers employees actively contributing stakeholders who are connected to company culture, derive fulfillment and purpose from their work, and create value for customers. Fundamentally, the concept of commitment recognizes and leverages the employees and their behavior as highly valued enterprise assets and contributions to business outcomes.

Essentially, commitment draws on key elements of both behavioral science and behavioral economics – emphasizing an employee’s emotional connection to the culture, goals, practices and customers of the enterprise – as critical operating resources. Employees have become center stage in optimizing customer behavior and perceived personal benefit in this stage, and have three key traits:

• Commitment to the organization itself, its purpose and its culture.
• Commitment to the organization’s value proposition, its products and its services.
• Commitment to the organization’s customers and fellow employees.

The HR objectives of staff fit, alignment and productivity emphasized in employee satisfaction and engagement are also important in employee commitment; however, this stage of the

employee experience maturity journey recognizes the extent to which employees are in direct and indirect contact with, and providing benefit for, customers. Employees should be enthusiastic and actively supportive representatives of the brand. If, today, employee satisfaction and engagement are not designed to meet this critical objective of the customer experience, then customer-perceived value and customer experience will almost assuredly be impacted.

Employee commitment behavior (and the culture, processes and programs that support it) produce consistently stronger business outcomes (lower staff turnover, more effective experiences for customers, greater loyalty behavior, etc.) in both hard- and soft-cost terms. This more progressive approach to EX also enables companies to directly link, and intersect, employee behavior with customer behavior, making it more powerful than either satisfaction or engagement in creating brand equity.

But there’s even more for ambitious, stakeholder-centric organizations and employees to attain here, and that’s the last, and ultimate, stage of our experience improvement journey: employee advocacy.

Employee Advocacy: Becoming One of the World’s Best

The select brands and organizations that have implemented employee advocacy and its correlating outcomes use stakeholder value creation as the central flow point for operations, processes and culture. Emotional foundations, experience memories and how employees communicate them play a much greater role in employee behavior here (as almost defacto personas). This can be viewed in Figure 1 and Figure 2, which identify levels of both customer and employee value. 

Organizations can use employee advocacy to identify the drivers behind employees’ emotional and rational commitment to both their own experience and that of customers. In some instances, though, brands and groups will emphasize social media, image and other related factors as vital facets of employee responsibility. Such factors certainly have their value, of course, but understanding them doesn’t automatically correlate to meaningful experience improvement.

The advocacy concept optimizes employee commitment to the organization, its goals, its value proposition and its customers. Recognition has become especially pronounced in recent years, at least in part due the upheaval produced by the COVID-19 pandemic and subsequent Great Resignation. This, and the impact on employee dynamics, has incentivized many brands to finally invest substantially in a previously underfunded (or unfunded) myriad of employee support resources.

Additionally, advocacy creates a state in which every employee is tasked with delivering customer value as part of not just his/her job description, but as part of their broader role within the enterprise.

Customer value is delivered irrespective of employee location, function or level. In short, everyone from frontline teams to CEOs must understand how their role affects customer experience and remember that it does so regardless of how far they are from the front lines.

Summarizing the Stages, and Trajectory, of Experience Improvement

Regardless of which of stage your organization currently resides in its journey to experience improvement, it’s imperative to regularly assess both goals and priorities, understand what each of these steps has to offer and then work toward a culture of employee commitment and advocacy. A combination of recent talent landscape dynamic events and extensive research has cemented the notion that merely satisfying your employees is insufficient for retaining them or making them feel valued (let alone improving employee or customer experience).

Figure 3 shows a guide that organizations can follow as they pursue employee experience improvement.

By adopting this more progressive and outcomes-oriented set of approaches, organizations can create commitment within their employees, adopt an advanced culture of stakeholder experience centricity and continuously achieve experience improvement for themselves and their customers. The benefits, and the human connections underlying them, are immense.