Customer science: A new CIO imperative

It may be far-fetched to imagine a future where IT professionals morph into customer scientists, but next-gen IT needs to be on a path toward more rigorous and systematic customer analysis to craft cause-and-effect theories of customer behavior.

Every organization claims to be customer-focused, some going so far as to insist they are customer-obsessed. In actuality, for most enterprises “customer focus” is a talking point and an aspiration, not a differentiating capability.

Think about it. In your daily life, how many product/service interactions exceed your expectations? How many even meet them? Customer satisfaction levels have flatlined since 2010. Since then, according to the American Customer Satisfaction Index, almost 80% of companies have been unable to improve their customer satisfaction ratings. So, while organizations may be paying attention to customer experience issues, they aren’t making much progress.

The case for customer science

The Center for Services Leadership (CSL) at Arizona State University’s W.P. Carey School of Business periodically conducts a National Customer Rage Survey tracking customer satisfaction, complaint handling, and the alarming incidence of customer uncivility (i.e., rage). An emerging key performance indicator in the customer experience/satisfaction world is “rage clicks” — for example, when a user click a button sometimes five or six times because a website loads slowly or freezes. Should reducing or eliminating customer rage become an IT metric?

Science is defined by many as the rigorous and systematic identification and measurement of phenomena. In both the for-profit and nonprofit sectors the most important phenomenon is customer behavior and mindset.

Customer science puts customer behavior and mindset under a microscope. Is your organization good at customer science? Does your organization measure customer experience? Does your organization employ “scientists” to observe and explain customer behavior based on the data you have collected?

In a world where every customer has a broadcast platform, failure to meet or exceed customer expectations can have material impacts.

On February 21, 2018, Snapchat lost $1.3 billion in market value in a single day after a Kylie Jenner tweet about unhappiness with the app’s new layout. She simply said: “Sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad.” In 2016, US companies lost $1.6 trillion from customer switching caused by poor service.

The paradox in practice

The path to customer science is fraught with paradoxes. The organizational paradox is that if the “Customer is King” why is there no one in the enterprise with the authority to ensure that every interaction meets or exceeds expectations. Is this the role of the now very much in vogue chief customer officer? The chief experience officer?

Glenn Laverty, now retired and former president and CEO at Ricoh Canada, finessed this responsibility/authority paradox tying every employees’ compensation to customer experience/satisfaction metrics.

What gets measured and what gets rewarded drive behavior. At Boeing, the indication is that production throughput compensation metrics trumped safety considerations. Customer science can inform calibrated and nuanced linkage in everyone’s compensation to customer experience metrics.

Claes Fornell, American Customer Satisfaction Index founder and Distinguished Donald C. Cook Professor (Emeritus) of Business at the University of Michigan, describes the customer science data paradox. Organizations are collecting more information about their customers than ever before and yet, “paradoxically, the more data companies collect about their customers, the less they seem to know about how to satisfy them.” This has to change.

The very term “customer science” presents itself almost as an oxymoron. Several Nobel Prize winners — for example, Herb Simon (1978) and Daniel Kahneman (2002) — have put to rest the erroneous assumption upon which most of mainstream economics is based that customers are always rational.

Brand boffins, CX experts, and customer satisfaction researchers agree that true customer loyalty depends on the enterprise/brand making an emotional connection with buyers. While science and human emotion are certainly not synonyms, I believe that science can be brought to bear on emotions and that customers are understandable.

Economic history as written by B-schools posits that around 1967 — see Philip Kotler, Marketing Management, now in its 16th edition — organizations discovered that customers, not products, should drive decision-making. Customers, customer experience, and customer satisfaction should be the focal point of managers’ efforts. Strategy became a process of identifying target customers and developing a value proposition guiding all tactical activities — including product design, pricing, promotion, and distribution.

The alpha management guru, Peter Drucker said, “the purpose of a business is to create a customer.” CIOs have to make sure systems are in place to ensure we understand the customer the business is creating.