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The ‘Secret’ To CX Success: The Customer Experience Value Chain

For the past several years, improving customer experience (CX) has been rightfully viewed as one of the most important things any organization can do to drive value. In fact, the phrase is used with the same reverence (and lack of clarity) as words like strategy, brand, and innovation.

The reason for this goes well beyond making customers happy. The fact is, CX leaders enjoy radically greater top-line revenue per year than their peers (plus greater profits, faster growth, and better marketing results) by doing a better job of managing their customers’ experience.

These leaders have figured out a “secret.” They recognize the importance of a consistent, integrated framework for understanding and managing CX. And by following this framework, they consistently drive better results, including greater value for employees, customers, and shareholders.

This framework is called the customer experience value chain.

Making Sense Of Customer Experience
We know that CX means many different things to different people, with myriad definitions, uses, approaches, and perspectives. So how can we make sense of CX when everything seems to be a part of it?

Simple. By looking at CX through the lens of the value it creates and the activities required to do so.

Much like Michael E. Porter’s value chain framework (articulated in his still-influential 1985 book “Competitive Advantage: Creating and Sustaining Superior Performance”), the customer experience value chain describes the activities that companies undertake to create value (or margin) by delivering a better CX.  

Late last year, our firm collaborated with Aberdeen Group to help define the customer experience value chain introduced below and back it up with their best-practices research. This was done by looking at the performance of business leaders who embrace it. The results are compelling.

The research finds that best-in-class organizations (the top performing 20%) enjoy ROI and benefits like 35.4% greater year-over-year revenue versus 7.7% for all others. And 18.2% better year-over-year revenue customer profit versus 2.9% for the bottom 80%.

Of course, there is a lot to learn about customer experience management and how top companies leverage and optimize the customer experience value chain to realize their outsized financial and operational benefits.

Step one? Better understand what it is.

A Single Lens To Help Manage Customer Experience
The customer experience value chain describes the eight activities companies should undertake to drive value through CX, as well as the interrelationships and dependencies between them.

The four primary activities, or building blocks, of a best-in-class customer experience value chain include:

  • Know your customers: At heart, this means exactly what it sounds like: really understanding your customers’ wants and needs. CX leaders accomplish this by doing things like establishing a unified view of their customer, true segmentation, establishing voice-of-the-customer programs and customer (and employee, and member, and partner) journey mapping.
  • Develop experience strategies: Defining your CX strategy means having a clear understanding of your CX North star, making sure it’s aligned to your brand. Leaders also design CX program execution plans, determine metrics for CX success, and clarify stakeholder roles.
  • Bring your experience strategies to life: This is the ability to consistently design and deliver customer-centric experiences. You do this through things like defining and guiding segment-based persona through their ideal journeys, optimizing CX workflow, and empowering employees with timely insights.
  • Monitor your success: The best way to scale and systematically improve the experiences you deliver is by understanding how well you’re doing and using this data to improve. Leaders do this through reporting tools and real-time intelligent guidance, analytics to determine strengths and weaknesses, and aligning outside-in and inside-out perspectives.

Four critical support activities underpin the customer experience value chain. These are what brings the experience to life, provided they’re guided by the inputs above. They are, of course, well known to every business process team and most executives. What’s less well known is the degree to which success at the primary activities described above informs and guides the cross-functional. They include:

  • Customer data: Through integrated data management, you can connect your audiences, systems, and customer information across processes and channels.
  • Technologies: By creating a digitally connected, omnichannel CX, you’ll deliver a unified, cross-system, end-to-end experience across segments, journeys, devices, and your entire organization.
  • Processes: Agile business and CX processes help connect your audiences, systems, and customer information across processes and channels.
  • People (culture): By striving for and enabling a customer-centric culture, you’ll empower your people to deliver the experiences your customers need, where they are and when they want.


Customer Experience Versus Customer Experience Management
Where CX is how customers feel as a result of doing business with your company, the discipline of customer experience management is the process of systematically designing, delivering, and reacting to customer interactions in ways that consistently meet or exceed customer expectations. And best-practice leaders get there by defining and managing an integrated view, using the activities defined in the customer experience value chain.

Nearly every company acknowledges that it needs to do CX better. In fact, it seems nearly everything a company does to deliver or support any aspect of its business falls under the customer experience banner. Because it does.

That is why the customer experience value chain covers many—if not most—of the front-and-back of house functions inside organizations. Because those that succeed are those who define, understand, and embrace this framework for understanding and managing CX, driving significant value for employees, customers, and shareholders as a result.

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