Welcome to Experience TV!
It’s my great pleasure to launch the first episode of Experience TV, a new LIVE show on social channels about the economic revolution we’re living through, the Experience Economy.
While we’re all navigating digital transformation at home during the pandemic, we hope Experience TV is a way for you to stay both informed and inspired. This talk show and news roundup is for CXOs, marketers, sales teams, and service professionals working to create exceptional customer experiences.
Episode air date: 10/14/20
Experience of the week: Pret A Manger
If you’re like me, you’ve spent a lot of time during lockdown with Netflix and Disney+.
One recent example of this business model switch comes from a sandwich and coffee chain, Pret A Manger. The company recently introduced a new subscription membership option intended to stem losses from the pandemic, which saw lockdowns close offices in city centers, cutting the brand’s main pipeline of customers.
In a recent Wall Street Journal article, Briony Raven, the company’s U.K, food and coffee director states, “We saw during lockdown the joy and positivity that subscription services like Netflix and Disney+ brought to people, how they became part of people’s everyday routines, and how they offered real value as well.”
Trend of the week: The end of ownership
This move to subscription-based business models is our trend of the week.
Research from Manifesto Growth Architects finds that 7 in 10 business leaders say subscription models will be key to future success. The number of customers migrating to subscription services will only continue to grow, but, less than 1 in 10 are generating any significant revenue from them today.
Read the full SmarterCX article for the five ripple effects of subscription-based pricing.
McKinsey’s David Malfara shares advice for the CFO and CX
One major initiative among CX professionals is how to frame CX transformation in the language of the CFO and the finance department.
I found the recent Oracle Live session, “Why Your CFO Should Care About the Customer Experience” between David Malfara, Expert CX Consultant at McKinsey, and Rob Tarkoff, EVP of Oracle CX and Data Cloud really helpful.
In it, they discuss the role of the finance team in reimagining the customer experience and supporting new business models. The most important quote from David Malfara:
“Make sure that CX is seen as an investment rather than a science project.”
When asked how CX teams can do this, to strengthen their connection to a financial outcome, David shared some research McKinsey did around the last financial crisis:
They found that businesses considered to be “CX leaders” bounced back faster and delivered 3x greater cumulative returns to shareholders from 2007-2010. There’s clearly real value to be gained from investing in CX.
Watch their full interview for his recommendations on involving finance departments in the process of redesigning a future state for your experiences, including safety protocols around COVID-19.
Quote of the week: What will your legacy be?
Rob Tarkoff makes a second appearance this week as our quote of the week. In a great piece about the mission-critical need for CFOs to partner with CMOs, he says:
“Today’s CFOs will be remembered for either embracing front-office transformation as a critical part of their job or leaving that responsibility to someone else. What will your legacy be?”
Check out the article for examples from companies like Motorola, TOMS, and Hermes.
Research to know: CX budgets
Check out this report from Chief Marketer, revealing how challenging it’s become at F1000 companies to engage with customers.
The study compared the results of two surveys. One was taken before COVID-19 became our new normal, and one a few months later, well into COVID.
Pre-COVID, only 28% of marketers said “creating a positive customer experience” was one of their top three challenges. The latter survey, taken well into the Coronavirus pandemic, found this challenge was cited by 42% of marketers- that’s a 50% jump.
One major reason? Budget. Half of the respondents surveyed post-COVID-19 say that budget is one of the biggest things getting in the way of creating a positive customer experience (up from 45% pre-COVID-19).
The study found that marketing budget declines quickly became the new normal for F1000 organizations. PRE-COVID, only 14% of marketers said their budgets were decreasing. At the time of the 2nd survey, 55% said their budgets were getting slashed.
Featured guest: Sam Melnick from Allocadia
To help further clarify CX / Finance collaboration, I spoke with Sam Melnick, VP of Insights and Growth at marketing performance management firm, Allocadia. Some highlights include:
- “Finance is often a forgotten partner. The secret to a good relationship is to bring them into the conversations about how you’re bringing returns to the organization, and how they can help.”
- “Your budget is not owned by you. You need to remove the idea that ‘I own my budget, I deserve that budget.’ Your budget is rented. The CFO is the right hand to the CEO, almost like a financial advisor. Where are you going to get your best returns for growth, or whatever those corporate objectives are, and how are we going to allocate those dollars?”
- “Once a deal is signed, that relationship is just starting. As you think about subscriptions, it incentivizes brands to think about, ‘how do I continue to engage in a positive way and create a positive customer experience for that customer?'”
- “The language is changing as we move to subscription [models.] Default to the language the CFO is speaking. Define how you’re going to transform, and how you’re going to move to a subscription or continue to drive more value to the customers with the CFO. They might not be executing it, or being the ones that are front-office, but what they’re doing in the back office, it’s very relevant and they should be part of that process.”
Sam also shared some new research with us about the importance of budget agility:
“We asked about 250 marketers questions about operational excellence. What we found was that 50% of the organizations that had their budgets increased by 10% or more post-COVID are creating multiple scenarios around planning and budgeting. Whereas among those that saw budgets actually decrease, only about 12% of them create those scenarios.”
You can learn more in Allocadia’s State of Spend – 2020 Marketing Investment Benchmarking Report.