Introduction
This article describes why and how to implement the peak-end rule to improve the ROI of your customer experience (CX) efforts.
Recently, four separate events happened to me, with the result being what I believe is new thinking about how to make a CX program cost-effective. The four events were:
Event #1 – I attended a Boston CXPA local networking group planning dinner of 12 people. I realized that four attendees were either looking for a new position or gave up looking and started consulting. They believe their jobs were eliminated because the C-suite saw no payback from their CX investment.
Additionally, CustomerThink recently reported that its research revealed that just 7% of CX initiatives had created competitive differentiation. Only 23% have realized tangible benefits. Add it up, and less than one-third of CX initiatives can claim the clear “win” that CEOs demand.
Finally, the 2018 CXPA Annual Meeting theme is CX BUSINESS VALUE: Identity, Measure & Grow!
Lesson #1 – CX ROI is a huge topic within CXPA and the B2B community.
Event #2 – A friend of mine, Professor Gary David of Bentley University, asked me to read a new blog post and give him constructive feedback. As I read his draft, I thought it would benefit from discussing Daniel Kahneman’s peak–end rule.
Daniel Kahneman is a Nobel laureate and a professor emeritus of psychology and public affairs at Princeton University’s Woodrow Wilson School. He is also a fellow at the Hebrew University of Jerusalem and a Gallop senior scientist.
According to the peak-end rule, our memory of the experience (pleasant or unpleasant) does not correspond to an average level of positive or negative feelings. They are generally limited to the most extreme point and the end of the episode.
BTW – Gary disregarded my advice and rewrote the post to eliminate the need for the discussion. The article is now live on his website and titled In Praise of the Mundane.
Lesson #2 – Frequently, we do not want or need a WOW experience. We want a repeatable satisfactory experience. Or, to paraphrase Sigmund Freud, “Sometimes a cigar is just a cigar.”
Event #3 – I rediscovered an exciting pair of charts in the early pages of The Effortless Experience. (This is the book that introduced the Customer Effort Score and proposed it as more valuable than NPS©)
We might expect that customer loyalty will increase faster as customer satisfaction grows (as measured by comparing experiences to expectations). The author’s data from 97,000 customer surveys instead shows that once a customer has had expectations met, there is little additional benefit to continuing to increase satisfaction. It also shows that when the customers were asked about CSAT, there was no correlation between happiness and loyalty. In other words, loyalty quickly plateaus, and further investment in CSAT is wasted.
Lesson #3 – Working like mad to create great experiences does not guarantee that our business will have a corresponding benefit.
Event #4 – I read a fascinating and thought-provoking article on CustomerThink called Disneyland: Why Waste Resources on Things Customers Can’t Recall by Sampson Lee. Mr. Lee lives in Hong Kong and has been President of Global CEM for almost 17 years. In this article, he suggests focusing CX improvement efforts only on the few interactions that will stick in people’s minds. He also means that the interactions can drift into what many of us would call forbidden territory. Here is one of the graphs from his article:
As you can see, Mr. Lee is OK with people having strong negative feelings about a process or journey. There are two problems with this approach:
- The peak-end rule does not distinguish between positive and negative. Our minds treat both the same.
- Very few customer-facing employees will accept being part of experiences that produce negative feelings. They will try to improve the interaction no matter what a manager or leader says.
But, other than this point, I like what Mr. Lee described.
Lesson #4 – Focusing on creating positive feelings at the peak moment of engagement and the final set of the process are the best way to create a memorable experience.
How to increase the benefits of a CX program while reducing the cost
As I thought about these four events, I thought this might be an opportunity for me to behave like Steve Jobs.
As Steve Jobs once put it, “It comes down to trying to expose yourself to the best things humans have done and then try to bring those things in to what you are doing. Because of the saying that ‘Good artists copy, great artists steal’, we have been shameless about stealing great ideas.”
My idea is simple. Implement the peak-end rule in your CX program. Identify the most critical driver of customer satisfaction or effort and work like crazy to make the experience positive. Do the same with the last interaction in the process. Do the minimum work necessary for the rest of the exchanges to make them positive for your customers.
Here is what I think Mr. Lee’s previous graphic should look like:
It sounds easy, but how to proceed?
- Identify the steps in the journey (process) and any data you have available. Also, determine how much the business is spending annually to improve the process and link this expense to one of your company’s primary goals, like reducing costs or increasing revenue.
- Working with your data, customers, and employees, determine the importance of each step of the process and how your customers feel as they complete it. The measurement scale must be the same for each step to compare outcomes.
- If any steps, no matter how unimportant, are generating negative feelings, you must create and implement a plan to make and keep the customer’s feeling optimistic.
- For the most critical driver of customer satisfaction or effort, and the last step of the process, create and implement a plan to make and keep the customer’s feelings highly positive and memorable.
- Implement a simple post-transaction survey. You can monitor the customer’s overall feeling about the process and identify the steps causing customers to have negative emotions.
- Determine how much money the business is spending annually to improve the process. Then try to link this expense to one of your company’s primary goals, like reducing costs or increasing revenue. Compare the results to the results obtained in step 1.
- If your results demonstrate a positive return on your program, then you must communicate the results to the C-suite and other journey owners. That is, share your practice as an internal best practice.
Good luck as you take a peak-end rule-based minimal-cost approach to improve your customer’s experiences when dealing with your business.
Related reading: How Should an OEM Organize Technical Support to Provide Memorable Experiences
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