Is a CX reckoning coming? 3 signs that point to ‘yes’

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This article originally appeared on 1to1 Media:

Many brands lost ground over the past year when it came to customer experience (CX) efforts and results. As economic and costs pressures grew, companies across various industries struggled to deliver the type of quick, easy interactions customer expect.

Coming off a challenging year, there are major headwinds to contend with as 2023 begins, according to a new Forrester report, “Predictions 2023: Customer Experience.”

“Last year was the first year since we started collecting CX data [seven years ago] that we saw a drop in the overall quality of experiences” in the United States, said Forrester Principal Analyst Pete Jacques. Quality dropped in 10 of 13 industries and 19% of brands, he said, and biggest declines came in experiences that relied solely on digital channels.

“In some situations, we saw examples of companies reverting to pre-pandemic policies and practices, while others simply did not maintain practices to which consumers had been accustomed,” Jacques said.

Since CX can have a big bottom-line impact, Jacques said Forrester expects “these companies will see reductions and in revenue and profit as consumers consider their alternatives.”

Some CX programs are going away
Forrester estimates that one in five CX programs will disappear in 2023, and just one in 10 will be stronger than ever.

As cost pressures linger, CX programs likely will hit the chopping block some companies. Those that remain will face increased scrutiny to prove they’re worthwhile. According to Forrester, CX is not a key part of the brand identity at 80% of companies, and those brands will insist on seeing proof that CX investments are worth their costs.

If they don’t see enough ROI on CX investments, companies may decrease their CX teams’ influence or dismantle those teams entirely. But on the flipside, the 20% of brands that emphasize great CX as part of their identity will reward their CX teams if they can show positive ROI, Forrester predicts.

Differentiation is eroding
The difference between the best and worst CX performers in will narrow this year in three-quarters of industries, Forrester predicts. Differentiation has already decreased in 10 of the 13 industries Forrester tracks in the United States.

Why? Top brands are having a hard time embracing CX transformations that improve the customer journey, while lower-performing brands are doing a better job solving CX problems. This narrowing gap will make it harder to stand out from the crowd, and brands will have to be customer-focused and innovative to succeed, Forrester says.

Most CX teams don’t have the right skills
Most (four out of five) teams are going to lack the design, data, and customer journey skills they need this year. As it is, most teams already lack skills in experience design, design thinking, survey design, data literacy, journey mapping, analytics, and management, Forrester found.

Smaller CX teams, which typically have less funding, are going to feel the impact of this skills gap the most. They’ll have to work to retain employees, competing with larger, better-funded teams that offer better support and compensation.

But smaller CX teams offer several advantages, which they should highlight. Smaller teams are great places for employees to build the skills they need and they offer unique learning and entrepreneurship opportunities that larger teams can’t match, according to Forrester.

CX still need to be a priority
Even with all these challenges (and others outlined in the Forrester report), brands can stand out from their competition by focusing on delivering high-quality customer experiences, Jacque said.

"The best path to CX greatness is to become truly customer-obsessed as an organization,” said Jacques. “This means putting customers at the center of how you operate as an organization. It means thinking less in terms of quarterly financial reporting and more about how longer-term strategies focused on the customer will ensure long-term growth and success of the organization.”

Now’s not the time to back away from customer experience initiatives, he said: “Companies should double-down on their CX teams.”