Navigating Economic Shifts: Tracing the Evolution of CX from Agrarian Roots to the Industrial Service Economy

In this video blog, Lynn Daniel, Founder and CEO, of The Daniel Group, explores the evolution of CX alongside significant economic changes, from the agrarian economy to the industrial service economy.

Learn how the development of customer support within dealer networks has become crucial as products and technologies have evolved, emphasizing the importance of CX in maintaining competitive advantage and customer satisfaction in modern business landscapes.

Transcript

Welcome. In my last video blog, I talked about the various economic stages we have gone through in our country and how that has affected CX. I want to delve into it a little bit more this time because of some comments I received from our viewers. So anyway, bear with me. It is about history, but I think this history helps to inform how we got here with CX and maybe some indications of where the future might take us. I think to understand CX, it’s important to put it in terms of sort of the economic changes, lifecycle changes that our economy went through as we’ve gone over the years. So the first economy, 18 hundreds and earlier was agrarian, mostly farmers raising meat, raising produce, raising wheat, grains, whatever.

There may have been a local store from which to buy or barter things, but it was a really simple transaction and the farmers knew who to go to buy whatever they needed. It was there for them, they could buy it or not, depending on what they thought about the product. Moving forward, we move into what I term a pre-industrial economy. It’s probably 1860s to 1880s, nineties and 19 hundreds. We see a lot of small shops emerging. For example, building bicycles is a great example that some of these bicycle shops evolved into dealerships for automobiles over the years. But I was reminded a pre-industrial economy when I was riding through Pennsylvania, the Amish country a few weeks ago. You still see a lot of shops that make buggies. You see shops that make tack for horses. There are generally two or three or four people there, maybe five working in the shop. The customer knows who to go to to get service, to get answers to place an order. This is a very simple industrial manufacturing operation, but it’s industrial nonetheless. Then we move forward into probably what was the biggest change from an economic standpoint was what I termed the

Industrial manufacturing economy. Let’s think. Ford Motor Company, Ford decided to build cars on an assembly line. So you have hundreds and hundreds of workers that were building these cars, but then when they came off the end of the assembly line, who was going to deliver the service? And I think this largely fell to the dealers, which was an evolving thing about this time that automobiles were taking off. We also had tractors getting introduced. For example, John Plake introduced the first tractor in 1892. Rail Company eventually became John Deere. Caterpillar introduced his tractor in 1926. At that time it was called Holt and Best, but it grew into Caterpillar. Forklifts were introduced in 1927. Beg your pardon, school buses. Motorized. School buses were introduced in 1914, and the first truck was introduced in 1897. By the way, it was a three wheel truck that was built by white auto car.

So all of these new products, they were new products for the time. They were innovative, they were different and required a lot of support for getting those customers to understand how to use them, how to take care of them, how to make them work for them. And this is where the dealer network came into fore. It really developed at that time and really provide a valuable support role and still does for OEMs. But we moved forward to one final stage and we’ll talk about, which is what I call the industrial service economy. While it’s hard to put a specific timeframe on when it happened, I think that it started sometime in the 1970s. I still remember going to business school, well-known business school, and we did not have a single case that I can recall about customer service and certainly not customer experience. It was not on the horizon at that time. Part of the reason that we, I use the term service is that service became more important. Service was necessary to keep these complex products running. But also there was another motivating factor, and that is there was a lot of good competition to have developed. To illustrate my point, in 1975, Switzerland and the US were listed as

Two the most innovative countries in the world in 2023. That group consisted of around 10 countries, and you can think of them now, South Korea, a variety of other companies that have come onto the market with new products, with really good products. So from a standpoint of the OEM as well as others around them, they had to figure out other ways to distinguish themselves besides just selling a product. The product had to be supported well, and that whole service experience became an important strategic advantage if you, if the dealer could pull it off. Well, I want to emphasize, I think product innovation is always going to be important. Customers are looking for new and better things to solve problems. But in the B2B world in which we work, the important thing to remember is that customers are using these products for doing things for their customers.

So they have to keep uptime at a very high level. You got to make sure that the products are working. So they need that partner to help them make sure that it’s working. So I think there’s some implications as we start to think about CX and how we got here. OEMs are looking increasingly for ways to make the product as easy to use as possible. We may not think that sometimes and as dependable as possible. For example, caterpillar introduced the Vision Link monitoring system a number of years ago so that they can keep track, the dealer can keep track of the engine, the transmission. They can anticipate problems before they become more serious. And this is true of a lot of other products. I could name tractors, see it on combines, see it on material handling, some material handling equipment. So this is the kind of change that the OEMs are making in order to improve the customer experience. Second thing, I think dealers are going to continue to become a, continue to be, I should say, a valuable part of the supply chain from the OEM. Yes, I know there’s some who argue that dealers might disappear, and I think in some industries that may be true, but I think that’s a long time incoming, if ever, why dealers provide a very important service to help make sure that these complex products run well.

I will say though, as we’ve already seen, dealers are getting larger. They’re getting both financially larger as well as larger territories. And part of the reason is they need to have that financial wherewithal to be able to support products that are increasingly more expensive and increasingly complex. I think the last thing, observation, conclusion I would draw from the CX is dealers that are part of the supply chain, any supply chain must have first rate customer experience. It is the important arrow in the quiver of a strategy for any OEM. It should be an important arrow in the quiver for any dealer that’s trying to really have high quality service, provide the customers what they want and need and keep those customers returning and make them tell others. So I hope you found my conversation interesting. I appreciate your comments, my email and my phone number at the end of this video. Don’t hesitate to give me a call or shoot me an email. I would appreciate it. Thank you.