When J.C. Penney hired the wiz behind Apple retail stores’ success as its CEO, there were expectations that “what worked well there will do so here”. Pesky promotional discounts (600 per year) were discontinued in favor of coupon-free, discount-absent everyday-value pricing, along with a new “fair and square” logo and ads pitched by Ellen DeGeneres. The result: 33% drop in online revenue, 25% drop in comparable store revenue, and 5 percentage points lower gross margin, with quarterly losses increasing throughout 2012, totaling $985 million loss, and new debt and a new CEO in early 2013.
Why? J.C. Penney’s ecosystem was misunderstood and disrespected.
Ecosystem = living and non-living things that make up an environment and affect each other.
Recent snafus caused by faulty customer experience ecosystem management include United Airlines dragging a paying customer out of his seat and off the plane per a random drawing of passengers to make room for a flight crew to fly on that overbooked flight. And Wells Fargo employees creating phony accounts for customers in order to meet an internal goal of 8 accounts per customer.
All of these mis-steps were well-intended. Yet all of them had tremendous high-visibility that was negative, and essentially erased much of the goodwill that these well-respected brands and their customer experience management efforts had built. This is why you should thoroughly figure out your customer experience ecosystem at the outset of your business’ strategic planning process, integrate it throughout your customer experience strategy, and ensure you’re continually walking the talk.
Business ecosystem (= customer experience ecosystem) includes customers, employees, suppliers, distributors, partners, agencies, competitors, rituals (planning, funding, reviewing, rewarding, reporting, communicating, advancement, training) and the logistics and interactions between all these stakeholders and rituals.
Like a rainforest ecosystem, you must think holistically about the inter-dependencies of all elements. Think about the food chain, what informs what, who influences whom, who needs whom, what makes things tick, what gets in the way of success. In J.C. Penney’s case, its core customers appreciated getting good deals through discount sales. Ellen DeGeneres polarized its core customers: some loved the modern, humorous tone, and others felt a clash with their conservative views. Equally important, they tried to make a 110-year “conservative JC Penney corporate culture jump too far, too fast without energizing employees at all levels to truly believe before taking such a tremendous leap of faith.” (Business Insider)
We’ve all known customer experience programs that have come and gone. All because deep roots were not established by understanding and respecting the company’s ecosystem. Typically, this happens when the customer experience management approach was too narrowly applied in the company, such that it seemed to be a foreign element and was eventually rejected by the ecosystem. Don’t allow that to happen!
Here are the first 2 of 4 prerequisites to a successful customer experience ecosystem:
1st CX Ecosystem Prerequisite: Understand Your Company’s Whole Ecosystem
As Jeanne Bliss recommended in her book, Chief Customer Officer, know your company’s power core — is it product, sales, marketing, vertical business, IT, customer, or other? This tells you a lot about your company’s internal workings.
Take inventory of your company’s rituals (planning, funding, reviewing, rewarding, reporting, communicating, advancement, training) at the corporate level and around your power core, then for the various groups across your company. Why are things done the way they’re done? What are the “sacred cows”? What’s already done within a customer experience excellence context? What isn’t, and why not? How could customer experience context be infused in each ritual? Make note of the logistics and interactions between all the rituals and all the stakeholders.
2nd CX Ecosystem Prerequisite: Respect Ecosystem’s Needs in CX Hierarchy
Your hierarchy should probably be rank-ordered with customers at the top, followed by employees, suppliers, distributors, partners, investors, then competitors. This hierarchy of needs should prevail throughout all your rituals so that everyone’s thinking and actions follow suit automatically, simply as what your culture is.
Why this order? Customers are your primary source of funding, and employees and suppliers comprise your core capabilities. Distributors and partners (channel, alliance) extend your core capabilities. All of this serves the interests of your investors. Competitors are important to your ecosystem because of the expectations they engender with customers and the forces on customers’ decision-making; however, customer expectations are influenced far beyond your industry players. For ecosystem management, follow this hierarchy and you’ll keep the horse before the cart.
The examples mentioned earlier were evidence of this hierarchy going haywire. Customer experience context for everything everyone does is an absolute must!
Stay tuned for Part 2 of this article, with Prerequisites 3-Weave CX into Everything Everyone Does and 4-Maintain Strength of CX in Your DNA, coming next week!
Originally published as an Advisors monthly column on CustomerThink.com as What is Customer Experience Ecosystem?
Other articles in this 12-part series:
- Customer-Centered Business: 10 Keys to Organic Growth
- What is: Customer Experience Strategy? (4-point checklist)
- What is: Walking the Customer Experience Talk? (4-point checklist)
- What is a Customer Experience Ecosystem? (4-point checklist)
- Preventing Customer Experience Process Silos (4-point checklist)
- How Customer Experience Policies Empower Growth (4-point checklist)
- Customer Experience Motives Drive Organic Growth (4-point checklist)
- Customer Experience Collaboration Wins Championships (4-point checklist)
- Customer Experience Treasure Trove via Chronic Issues (4-point checklist)
- What is Customer Experience Value Creation? (4-point checklist)
- What is Customer-Centricity DNA? (4-point checklist)
Image licensed to ClearAction Continuum by Shutterstock.