Why is it so important for management to speak and understand customer language? Isn’t that Marketing’s job? Or if we must, perhaps we can just define the resources needed to grow customer revenues and it will magically translate (pun intended) into bottom-line growth, right?
If only it were so easy.
Customer vs Corporate Language
If you’re like most of us, you probably speak one language. And have probably gotten pretty good at it. Maybe you studied a second language in school and can identify it when you hear it being spoken–but unless you’ve become fluent, you’ll just tune it out. Your brain isn’t wired to concentrate and extract relevant meaning from all those foreign words.
Like you, most companies have committed to a single language, and they like to show it off every three months during their quarterly reporting ritual. Company management is adept in the language of accounting, and will effortlessly rattle off terms like EPS, EBITDA, amortization, adjusted earnings, contingencies, etc. on their quarterly conference calls. And in case you want the unabridged version of quarterly earnings, you can page through the company’s 10-Q quarterly earnings report filed with the S.E.C.
Make no mistake–this quarterly accounting ritual is a finely-tuned machine that has evolved throughout U.S. corporate history. While there are more than 3,600 companies listed on U.S. stock exchanges that report earnings publicly each quarter, many times more privately-held companies hold themselves to similar standards.
To help shareholders, investors and venture capitalists make sense of what’s happening to their investments each quarter are armies of financial analysts that will interpret earnings and let them know how the companies in their portfolios are being run.
Who Is Running Your Business?
Don’t we always say things like “it’s the customers that pay our bills” and “we really need to increase our Share of Wallet?” I’m pretty sure the wallet being referred to is not the one in investors’ pockets.
It is and will always be customers that make or break our businesses, but have companies become so focused on making sure we appease investors that they ignore the language that really “moves the needle”? Is management favoring language (and actions) that drive short-term earnings and stock growth?
Case in point: Apple’s 2Q18 Quarterly Earnings Release is entitled: “Revenue Grows 16 percent and EPS Grows 30 percent to New March Quarter Records. New $100 Billion Share Repurchase Authorization Announced, Dividend Raised by 16 percent.”
Before you throw up your arms and scream “what do you expect Apple to say to investors?” Of course, there are numerous customer-focused initiatives behind the tremendous success of Apple in the marketplace. They’ve created something special and are showing off the financial rewards. But that’s not the point. The point is that what Apple’s customers think and say is so foreign to their quarterly earnings communication that it is literally a different language.
How many times have you walked into an Apple Store and thought “I think I need to upgrade my iPhone because Apple needs to increase its stock price and distribute more money to its investors in order to maintain profitability”? More likely you just needed a phone.
While this may be an exaggerated example, the truth is that customers aren’t concerned about (and likely not even aware of) Apple’s profitability, and Apple knows this enough to stay focused on maximizing customer experience.
However, not every company is Apple, and often it’s a challenge to get management to understand customer language when executives are so focused speaking “investor” each quarter. And things can get even more complicated when C-suite compensation is tied to the company’s stock price.
You see, customers have the marketplace at their fingertips. They have a wealth of competitive information on their side. They can see what technologies have been developed, compare other companies’ offers, and seek out the best products/services that fit their needs.
Is Your Value Prop Updated to Current Customer Expectations?
It may not be a simple case of fine-tuning your “distribution channel” or updating your “pricing models”. Customers might be craving entirely new value propositions which your company needs to invest in and begin offering.
“Touchscreen,” “GPS,” “facial recognition,” “social media,” “peanut-free,” “big data” and “A.I.” are all part of today’s consumer vocabulary, to name but a few. These kinds of innovations have become indispensable parts of many products we consume in our daily lives and integral parts of customer experience language. Many companies have no choice but to incorporate and embrace innovations like these simply to survive.
Therefore, it becomes imperative that management at companies understand what language its customers are using and speaking, so that their businesses can react, innovate and capture new demand.
Perhaps the biggest challenge is that customer language has no set timeframe, governing body or organization to help companies navigate the landscape. What customers want today is probably going to be different than what customers want tomorrow, next year, and so on. And there is no way to predict the language customers will be using in the future. One thing is certain–every customer will have an “experience expectation” that continuously evolves, and it is unlikely to fit neatly into the quarterly reporting schedule of companies.
What You Need Is a Customer Experience Translator
The truth is that the prevailing technologies of the day are much more likely to dictate customer demand than the latest S.E.C. regulation or FASB directive. So, which language is more important to the company’s bottom line? Both.
It may take multiple quarters to turn your company’s ship around and catch the winds that are blowing in a new direction. A CX Translator will be able to work with management and strategize about what their company is doing to capture, retain and grow customers in the medium to long-term to meet expectations of the market.
If “Customer Experience” is a buzzword that management and investors are tuning out, the CX translator will needs to provide the proper interpretation so that “Customer Experience” can be translated into an understandable metric like “revenue growth” in corporate language.
For example, starting to measure Customer Lifetime Value (CLV) may be a way to show that customer value is tracked to assess costs associated with customer acquisition. Effectively communicated, the CX Translator shows that initiatives taken to improve CLV have an impact on company cost structure. But every company and every product/service experience are unique, so CLV may or may not be the most applicable metric.
Bridge The Gap Between Your Customers And Your Shareholders
The point is that CX translators are necessary to bridge the gap between customer and corporate languages. Identifying and using metrics that show a realistic correlation between customer experience and earnings is the foundation of effective translation.
The Worthix survey is used to capture and understand the language used by customers who buy your company’s product/service, and it reveals which experiences are impacting their purchasing decisions. Linking the drivers behind key purchasing decisions to initiatives that improve sales revenues is how the shareholders, investors and venture capitalists can begin to understand the customer language.
So, why is it so important for management to speak and understand customer language? The hard-to-swallow truth is that customers don’t care about your profits and shareholders. They care about how you deliver on your offer and how their customer experience is designed.
What is certain is that customer experience expectations will continue to evolve, and companies will need to communicate to shareholders how they are adapting their sales strategies to keep up with the market. If the CX Translator becomes adept at speaking the language of shareholders, they will certainly listen.
Senior Research Analyst, Curtis Smith, began his career in the finance industry in New York, where he was born and raised. His attraction to the intersection of money and human decisions shaped his work as a financial communications consultant, which led him to São Paulo, where he continued his career for over a decade in the financial industry with BNY Mellon. Upon returning to the U.S., Curtis left finance to join Worthix, where he continues to explore the influence of decision making through the application of technology to a new customer experience metric.