This summer, we finished rewriting a major part of our customer portal software to make it easier to use.
It took a lot of time, money, nights and weekends, and we ran into our fair share of bugs and headaches along the way.
After we had launched the update, I thought “rewrites aren’t for the risk averse!”
But as we received more and more positive feedback from our clients, even those who found bugs we had to fix, it became clear this kind of project IS for the risk averse. Here’s why:
Unless you take small risks today to improve your customer experience, you run a bigger risk that you won’t have much of a tomorrow.
Dialing down your short-term risk means going into innovation and customer satisfaction debt. It swaps lower risk now for the larger risk of customer attrition and pricing pressure later.
Conversely, doing a “risky” project now puts a deposit in your customer loyalty bank account, which pays you back dividends over time.
If you’re involved in proposing or making decisions around customer improvement efforts, I hope by now you’re nodding and thinking: That’s right, we’ve got to go for it, and innovate for our customers! We must keep customer loyalty (and margins) strong!
However, the reality is that it feels safer – for individuals, teams, and organizations – to minimize short-term risk, and this leads to a bias for “no go” and “not yet” decisions.
To help rethink risk and make wiser risk vs. return decisions, consider these points as you sell improvement efforts to yourself and others:
- Quantify the “No Go” Option. At least attempt to quantify the risk of a “no go” decision. Too often, we talk in great detail about the thing we’d like to do and improve, but skimp on the case for why we must do it and the risk of not moving forward.
- Speak in Dollars. Know the average lifetime dollar value of a customer relationship and the average cost to acquire a new customer relationship. Simply stating “doing project X will improve the customer experience” won’t and shouldn’t get past a good CFO! However, if you’re able to estimate the dollar value of won or lost customer relationships, even with heavy caveats around your assumptions, you can better judge the business value of the effort.
- Use Customer Data to Drive Assumptions. This is a prerequisite for step #2, above, i.e. being able to estimate the dollar value of your project. You must have data to support the potential customer loyalty impacts of your improvement, otherwise knowing the dollar value of a customer is meaningless. Use quantitative methods complemented with qualitative approaches to identify these impacts, e.g. customer satisfaction surveys, lost deal data, customer complaints, and attrition, etc. Without data, your assumptions rest on a shaky foundation of anecdotal observations.
- Research Your Competition. It’s one thing to say “our competition may eat our lunch if we don’t act,” but it’s much more powerful to specific examples that illustrate what other options customers have out in the market.
- Build a Sense of Urgency. Remember the world WILL move forward, likely faster than before. It’s less costly to start and grow a business now than it was a decade ago. Competitive moats are harder to come by, and the lifespan of companies is shorter than ever. So, the risk of pushing out customer experience improvements is higher today than ever.
If you haven’t used these points, try applying them to your next improvement initiative. Hopefully, they’ll help you more accurately see the long-term risk of not doing it, as well as the inevitable short-term risk of doing it.
In the end, the risk we took in our software project was worth it: our clients have told us as much. You and your company can do the same thing too. Good luck rethinking the risk of improving your customer experience – if you do it right, your customers will reward you for it.