CX Annuities are the Key to Stopping Skimpflation

By Lynn Hunsaker CCXP posted 08-05-2022 11:02 AM


How much is a chronic customer issue costing your firm? How would you like to stop those costs? When you do, you can re-allocate those previously perpetually dedicated resources to covering today’s rising costs — instead of passing along those costs to customers in one way or another. By doing this, you can generate ongoing value both to customers and to your company.

Chief Customer Officers, along with your senior leadership team, you have the power to stop skimpflation and shrinkflation, which are cost-containment efforts in response to inflation, talent and supply chain shortages, and operational inefficiencies. With these changes in products’ and services’ size and quality, prices may remain stable, marginally increase, or even greatly increase.

“62% of consumers say they’ll stop buying from brands who change product size or quality to cut costs. Only 7% said they would continue purchasing from a brand that cuts costs in this way,” according to a June 2022 survey by Gartner.* This is a wake-up call to executives to re-assess options for increasing value rather than decreasing it.

You can take the lead in avoiding these value-eroding moves. The answer is a phrase I’ve coined: Customer Experience Annuities.

CX Annuities are a gift that keeps giving. Consider your remedial costs to serve customers when things go wrong: remedies, escalations, service calls, success and loyalty programs, marketing enticements, sales acquisition to recover churn, and lost customers. When you stop the cause of a prevailing issue bothering customers, then these remedial costs can be redirected to higher value opportunities.

When researchers compared revenue growth from a 1% gain in positive word of mouth versus a 1% decrease in negative word of mouth, they discovered a 3X revenue advantage to reducing negative word of mouth.** This is the power of CX Annuities!

CX Annuities

Reducing negative word of mouth decreases your costs significantly, freeing-up precious budget. Those newly available funds can now generate new value. As you take the pebbles out of customers’ shoes, you free up their ability to do more with your brand, and revenue increases.

It’s a shift from value-rescuing to value-creating emphasis in customer experience leadership. When you stem the tide of remedial costs, your gains are multiplied.

Chief Customer Officers have the customer insights and organizational influence to stop shrinkflation, skimpflation, and inflation. When I was leading CX transformation company-wide for many years, we started out with a CX Annuities focus. More than 100 plans (2 per organization) were underway simultaneously to prevent the recurrence of CX issues’ root causes. Our business units and functional areas maintained their CX Annuities enthusiasm and progress year after year. Here are some examples of CX Annuities they generated:


Pursuit of CX Annuities is a mindset shift. It directs managers’ attention toward “right the first time”. It’s the wisest cost containment approach. CX Annuities are the heart of CX ROI. This is your best guarantee of ongoing value growth to both customers and your company.

*Gartner Marketing Survey Finds 62% of Consumers Will Stop Buying From Brands That Compromise Products to Cut Costs, Gartner July 2022.
Advocacy Drives Growth (PDF), London School of Economics, 2005.

See the CX Annuities 4-step recipe and the rest of this article at Chief Customer Officers Can Stop Shrinkflation & Skimpflation.