Customer Experience Bridges The Revenue Growth-Cost Cutting Gap

One of the issues facing CIOs in 2012 is the apparent conflict between growing revenue and cutting cost. While IT may be asked to do both, in reality plans and priorities fall heavily on the cost cutting side limiting IT’s impact and value.

Customer Experience brings a different perspective to issues of revenue and cost. Executives and strategists assume a mutual exclusivity between customer intimacy (growth), operational excellence (cost) and product leadership (innovation). You can do one or another but not both and certainly not all three. But now each is in service of the other and your strategy is one of emphasising one or another rather than subjugating two to the others.

In 2012 doing both is more important than ever. Revenue growth and cost cutting are top ranked strategic priorities in the 2012 CIO survey. But how is this possible? How do you connect strategies calling for revenue growth with plans for continued cost cutting?
You connect revenue and cost through the customer experience.

Gartner defines customer experience as: “The customer’s perceptions and related feelings caused by the one-off and cumulative effect of interactions with a supplier’s employees, systems, channels or products.”

Think of the customer experience, as CRM on steroids and the problem is one of the tradeoffs. It costs money to create an experience. You are back to an either/or choice: spend more on the experience or spend less and live with that experience.

Leaders see the customer experience as a focal point to grow revenue and cut cost. The customer experience is the focal point where customer intent meets company complexity and that bridges revenue and cost, see figure below.

Create a superior, a simple, an engaging and powerful experience and you will grow revenue. Deliver that experience requires cutting the internal clutter that makes it hard to do business. This view creates a focal point for both rather than a forcing function requiring a choice between revenue growth and cost cutting.

Externally, its logical that in a world of increasing choice customers will chose the best value proportion AND the easiest way to do business – the experience. Marketing knows this and is investing in technologies outside of IT all in the name of revenue, brand and the experience.

Internally, we know that time and accretive leadership have created unnecessary complexity. The case for eliminating any one of part of that complexity is weak as they all had a reason to be there in the first place. Concentrating on enhancing the customer experience challenges gives you new reasons to reconsider internal complexity and a different case for their consolidation.

Managers face tough choices everyday. They trade between options to achieve their objectives. Leaders see things differently and create new connections that find new answers beyond simple choice. Leaders see customer experience as an opportunity for technology to amplify their ability to generate revenue through attracting and retaining customers while cutting costs by eliminating duplications in the business that detract from the experience.

The author is a Group Vice President and Head of Research in Gartner Executive Programs.

For more blogs by Mark McDonald, log on to http://blogs.gartner.com/