Breaking Down Misconceptions About CX, With Gustavo Imhof

Gustavo Imhof, a CX consultant, talks about the most common CX misconceptions he has come across during his career. Gustavo comes with thought-provoking statements, seemingly paradoxical at first glance. For example, advising CX strategists not to be customer-centric.

Episode 41

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Episode Summary

According to Gustavo, one of the biggest challenges business leaders are now facing is a misunderstanding of what customer experience is at its core. He states that customer experience, in fact, is not about the customer. Like with any other strategy, CX is a way that enables businesses to grow faster which leads to another widely spread misconception.

Throughout the years, Imhof has observed that marketers often seem to get carried away by constantly aiming to exceed customers’ expectations. Not only this approach can quickly get a company into financial troubles, as the expectation gap is expanding, but putting too much focus into going viral rather providing an easy and frictionless customer experience can negatively impact CX metrics. Gustavo implied that if we exceed customers’ expectations all the time then delight occurs less often and the cost for creating the experience will increase.

To understand customers’ expectations better, we used the adaptation of Herzberg’s Two-Factor Theory. In this theory, the hygiene factor and motivators play different roles in meeting those expectations. To briefly explain, the hygiene factor will not satisfy a customer nor create a delight but will greatly dissatisfy a customer if it is missing. On the other hand, motivators can delight your customers but will not dissatisfy them if missing. 

Herzberg's Theory and other adaptations like Dixon's Anger-Delight Matrix can help you categorize customers’ expectations and treat them accordingly. The question is, what is which category? At the end of the day, managers will find out by asking their customers. Gustavo used a slightly exaggerated example to simplify his point; if there are chocolates on your pillows but cockroaches on the floor, you know what you are doing wrong.

This article summarises podcast episode 41 " Breaking Down Misconceptions About Customer Experience" recorded by CX Insider. For more information, listen to the episode or contact Gustavo on his LinkedIn profile.

Written by Valentina Svobodova

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Full episode transcript

Valentina: In this episode, Greg and I invited Gustavo Imhof, the consultant to our studio, to talk about his concepts of customer experience is and what isn't. From now on, CX Insider is going to publish an episode each week, each Monday morning. So make sure that you subscribe to our channel so you don't miss out any of our upcoming episodes. And welcome to another CX Insider podcast episode. This is Valentina speaking, and today I am joined by Greg and Gustavo Imhoff. Hello, guys. How are you?

Gustavo: Hey, Valentina, you alright?

Greg: Valentina, how are you?

Valentina: Today? I'm doing very well. Gustavo, you are an expert in customer experience. You're a professional with many years of experience in this field. Would you tell us a bit about yourself and how did you how did you build your profile, your career profile and customer experience?

Gustavo: Absolutely, yes. So, you know, the story of people that said that they kind of fell into it or they started in contact center and then they transitioned. That's not me. I discovered customer experience while at university. It was one model I had in my masters. I loved it so much. It became my thesis for my Masters that then got published in the International Journal of Market Research a couple of years later. But I've been customer experience pretty much ever since graduating and then some. And that's been first, I started on the consulting side with voice of customer programs and then I moved and I've been in customer experience ever since. So my entire career has been surrounded around improving the lives of customers, of the practices of businesses and sharing my thoughts on innovation and best practice in the field. So as you know, I'm quite vocal, rightly or wrongly, but I'm a quite vocal about where I think customer experience is, where it's going, and more importantly, where it should be or shouldn't be.

Valentina: Gustavo, you're also an author and you co-authored this upcoming book called Customer Experience Three, which people can now buy on Amazon in a Kindle, a Kindle version or in a digital format. And I think this book is going to be published in a couple of days, right?

Gustavo: On the 25th of March. Yes.

Valentina: Mm hmm. So I myself happen to have the previous two books at home called Customer Experience One and Two. And surprisingly, I must say, some of the chapters are really interesting. So can you tell us what can we expect or what can the readers expect from your chapter?

Gustavo: Yes. So for people who never came across the series of books, it's essentially a collaborative book where or series of book, I should say, where every chapter is the most up to date and the most provocative thinking of each one of the authors. So in my book, we have 28 different authors across three continents, and you have people working Frontside as well as consultants or independent researchers. And we all share our biggest thinking in the space and my topic, it's all about memories. And the title of the book of my chapter is Experiences Don't Matter, Memories Do. And I'm really trying to challenge the way we as a profession actually look at our field and try to try and address and think, how have we been getting it all wrong all along? And that's the premise of the chapter that I contributed to this to this wonderful project. Great, great thought leaders, some very privileged I feel like the odd one out, but very privileged to be part of this project.

Greg: Fantastic. I really love your thought process there, Gustavo, because I think customer experience is such a broad industry that there are many facets of how we approach customer experience, which probably haven't changed for a long time. And I really we really drawn to your ideas of how you think about customer experience and maybe a different way. And I guess I guess that brings us quite, I guess, onto our first question quite well, which is instead of starting necessarily on a positive note, maybe let's start on a slightly different note. So let's start looking at things from mistakes that organizations make. So I guess a question to you would be, what are the most common mistakes that organizations make when it comes to defining their customer experience strategy or maybe going on a process to completely overhaul their customer experience? What are the major mistakes that the organizations make from your experience? And then I guess turning that into a bit more of a positive down the line? Where do you recommend they therefore start? What are your ideas about places to start or how to redefine that strategy in the right direction?

Gustavo: So the key thing with customer experience is that we often tend to forget what it's all about. And here's the thing that always shocks people. Whenever I talk about it, whether it's for a podcast or topic or anything, I always say that it's not about the customer. Customer experience isn't about the customer because all companies need to run for a profit. And if you don't run for profit, you're not going to go very far. So I always said that customer experience is a means to an end. It's a business strategy that can enable the business to grow faster in a more sustainable way. But it's a strategy. It's not a way of being is not a way of life, is not a philosophy. And it's not something that you're going to hope that karma or altruism pays back in some way. It's a business strategy and like any other, needs to impact the bottom line. I think not having this realization is by far the biggest challenge that organizations face. They think we're going to focus on the customer because they think that the customer is great, is the right thing to do, but they forget that actually is it is the right thing to do, but for the business rather than the customer.

Gustavo: Now, if I had to list out mistakes there, unfortunately, there are quite a few there. And I probably post about one horror story a week on LinkedIn at the very minimum. But the key thing is all is from that perspective of forgetting that the customer is a is a stakeholder of the business and needs to be treated as such. They are not the be all and then all organization. And we need to kind of equate a win win situation. So the typical typically one of the biggest problems, the most frustrating problems I see. Is businesses wanting to exceed customers expectations? It's all about singing and dancing and providing the story that will become viral and make everyone happy. Yeah, that's great. But if I cannot get in touch with your live agent or your chat board is working or I cannot order on your website. What's the point? What's the point of getting in all singing and dancing experience if I don't manage to do what I came to you to do? There's no point. So I always say basics first. I wrote a couple of weeks ago saying boring is now sexy. So, yes, the basics is boring, but that's where the money is. Fix the basics before you go beyond that.

Greg: Very interesting.

Valentina: Yep, think of the basics. I want to do I came across one of your latest LinkedIn articles and for anyone who's interested read it, you can find it on Gustavo's LinkedIn profile and also see inside Arlington Page shared it. And some of the quotes taken out of context were very thought provoking. It's called the article is called Five Bullet Proof Ways to Go Bankrupt with customer experience. And the one very first way that you were talking about was about exceeding customer expectations. And to justify this argument, you used hardbacks to factor motivational theory, which is very interesting because I have learned about this theory at university. And the way this theory was originally built was to understand the key motivating factors for your employees to work in your their workplace. And you kind of transformed it and used it in some in customer experience. Just to explain a bit to the audience, for those who don't know about this theory is that there are two motivating factors which motivate your employee to work for you. The very first kind is the hygiene factors, which won't necessarily motivate your employee to go the extra mile or to be happy. But in this case, if the if the employer doesn't satisfy these needs, it will make them very, very unhappy. So, for example, it could be the minimum wage or some health and safety measures. And then they are the motivating factors which will make your employee very happy and will motivate them to improve their working performance and and customer experience. Or from the customer's perspective, as I understood in your article, you're saying that if the customer if if the customer's motivating expectations will be met or motivating factors, the next time it it will become the very bare minimum. So they will automatically expect these things, that this will become the hygiene factor and it will inevitably become more expensive to keep this customer right?

Gustavo: Yeah, yeah. I think you're mostly there. And as you said, five ways to go bankrupt with customer experience. You can see that I hate drama and I want to be as funny as possible with my content. But you're absolutely right. So that's two-factor is essentially - Some things are going to dissatisfy you if they're not there. And it won't matter if they are. And some things are going don't matter if they're not there and they want to dissatisfy you if they're not. And that's just one theory, right, is if we look at marketing research, there's another model that is also there, but it talks about satisfier far as disatisfiers and. It is four categories, and I just prefer the the hygiene factor, because that's where they're really resonate. It's like it's basic hygiene, right? If you're not happy, you're not going to go far. And they both essentially say the same thing. Now, if I look from the marketing field, you would have something that can only dissatisfy if it's not there, if it's there something that can only satisfy, if it's there or not there. Something that will either satisfy or dissatisfy and then the ambivalent doing it doesn't really matter. So if you were a bit more granularity, but the key concept there is don't try. Well first, don't try to exceed expectations anywhere particular on the hygiene factors. So let's imagine I'm going to go to a burger joint because the lockdown is getting me crazy and I can't wait to go back in a restaurant where the restaurant is clean.

Gustavo: I'm happy, right? If I see cockroaches around, I'm going to be disgusted. If it has been cleaned to the same level as a vacuum room and some nasab a black upside's doesn't matter. I need it to be clean enough. So that's a hygiene factor, right? The restroom being clean is a hygiene factor. I need to be clean enough. What's the point on going all dancing and making completely disinfected, if I don't notice, is going to be incredibly expensive for the business because they need to do a lot more cleaning runs, a lot more expensive products, a more thorough cleaning. But that's not going to impact my experience. So there's some aspects where we may want to delight the customer or it doesn't matter. Now, that's the first point. The other point that, as you said, it's about resetting expectations. So. The light is so when we exceed expectations, we can qualify it as the light essentially means expectation exceeded plus surprise. Right, so it's I'm going beyond what the customer was thinking they would get. When coming in, so they're getting more and they're surprised about it. That's essentially what the light is. And the problem is surprising stuff is not something that you can consistently do when a Hilton Doubletree decided to give a chocolate chocolate chip cookie to people coming in.

Gustavo: That was a nice surprise. No one knew about it. Now, however many years on, if I go to a Doubletree. Probably I would never be able to afford it myself, but if I'm going to go to a conference and they pay for my hotel, if I don't get the cookie, I'd be disappointed. I'd be a let because there's all that noise about that great experience. I'm going to expect that cookie and I'm not going to have it. So, as I said, it becomes the hygiene factor. Here's the problem, it's going to set the bar, the bar is going to be more expensive because I as a supplier, as Hilton, and I'll need to factor in the price of the cookie as part of my costs. And it's not having to do like the fact that. So if I want to continue the lighting, I need to go one step further. I mean, I'm going to give a free upgrade to talk to my customer. And my customer might think, oh, I've been going to Hilton for forever, I'm always going to get a free upgrade so we don't give the upgrades and I lose the margin between the two products or I disappoint the customer so we can quite easily exceed expectations as a process and have it coming back to bite us in the back. And there's a real challenges.

Gustavo: We're setting the expectation. We're increasing the expectation and going further and further. Obviously, I'm simplifying. There are some cases where the expectation won't be exceeded, it'll be exceeded. But you want to reset the expectations, that case where the customer forget about it. And we need to also keep in mind that it's going to hurt the business, but is more likely going to hurt the competition. Why? Because if I am setting a new standard for my industry, everyone else need to to catch up. So if I want to be clever about it, it needs to be financially viable. But I want to make it as hard to replicate as possible, then perfect. I exceeded expectation it might be a bit more expensive. I'm not sure it might actually work out in terms of return on terms of the ROI, but I'm hurting the competition that could mix. But because there's a blanket advice always exceed the customers. While your customers tend to come in and say, wait a minute, stop everything, go back to the basics first, because if your basics aren't working, if the flushing the toilet in the restaurant isn't working, if you see cockroaches on the floor, that's not going to work. You need to get the basics down first and then potentially exceed expectations. But know that there's a very narrow situation, very narrow set of conditions where exceeding customer's expectations actually makes sense.

Valentina: Hmm. It's very tricky, and I can't help but think that I understand what you're saying, but also if you don't create the delight and surprise, what you will then create is a mediocre customer experience. And so then how do you beat the competition? Because the competition will be then better than you. And as you said, like you said, it's about the memory and what the customers will remember is that they got a pretty mediocre customer experience. I guess it's a difficult task to set the right set of expectations or the right set of things that that your customers should expect. But and also so it doesn't increase the cost or it doesn't ruin your business financially.

Gustavo: Yeah, but he is the interesting thing about it tonight is you are making the assumption that the competition is delivering. OK, experiences that the basics are covered, and we know that more often than not, it's not. So essentially what I'm saying is before you try to go in the light, just rise above the competition by consistently delivering what you promise to do, by consistently making the very simple stuff, get it right, just that in the state of customer experience nowadays, just that is going to delight because the bar is so incredibly low then afterwards. Absolutely. If you want to try and find a way to differentiate yourself and create a competitive edge, having a branded experience that is memorable for the right reasons, then that that's the next level. But truth is, about 85 percent of companies and by the way, I'm completely making 85 percent off. I don't have any research to back it. But we said that companies would be much better off trying to fix the basics before they try to. Well, and that's the key thing, is get the basics right before you exceed expectations. And if you want to exceed expectations, be really careful about it. Don't forget, you essentially still have money to make. You need to pay the bills because the customer becomes unprofitable. You mentioned bankruptcy may take a long time, but that's basic mathematics. If you spend more than you get it, there's a gap and that gap will grow, grow, grow until it's taken care of or until it takes care of.

Greg: Interesting and you of I guess, to feed off of that, I guess, why I really, I guess, believe in that approach myself, is that if you focus as an organization, if you focus on getting the fundamentals in place, so getting the basics right, what that does is it gives you the platform to then experiment successfully with the more advanced ideas of how you can improve customer experience. But if you try to do it the other way around, which which I guess is what you are saying here, is that people don't get the basics right and they try to experiment with these new and innovative ideas about how to make the experience a lot better. Ultimately, that's going to fall short, because if all it takes, like you say, is one slip up on the basic level of expectation, and then then even if you've given someone, you know, 50 percent off of their next purchase, make a huge offer, let's say it will fall short if, if, if, if the first basic level of expectation is not met anyway. So I completely agree with you is that although that's not an attractive or let's call it a sexy strategy to actually put in place by a leader is actually so fundamentally crucial, because if you don't put the basics in place, you can't possibly successfully implement more innovative strategies anyway. My opinion.

Gustavo: Yeah, that's what it's about. On top of that, Greg, you were talking about giving 50 percent off as a compensation. And there's a study that came out a few years ago, peer reviewed study that I find fascinating. It's about the will be the price of the competition, kind of the lowest price guarantee kind of discounts. If you see it anywhere else, give you the money back or we'll give you twice the money back, etc.. And that is essentially setting an expectation, right, is setting the expectation the cheapest in an X miles radius come to me because I'm going to spare you the window shopping and compromise and just come to me straight. And what they found is that actually they they trying to do run some studies where they will try to surprise and exceed people's expectations in terms of the reward they get. So let's say I'll give you the money back. Well, what about I give you the money back plus fifty dollars. Amazing, right? Like intuitively you think, oh my God, I had such a bargain. But actually, it's completely the opposite, because to me that it signals the fact that I'm overcompensating on a promise I made that I couldn't keep. Right, so I made the promise, I gave you an expectation I couldn't deliver on it, and I'm trying to be sneaky about it because I'm giving a massive reward. So now I'm actually really pissed off at the organization. I'm not going to step back because they knew that was going to happen and they actually tried to engineer a service recovery Herek service recovery experience as part of the journey. So it's really interesting to have that that balancing act. And even when you do the recovery, after you fall short of expectations, you don't want to make it look overengineered or you don't want to feel overengineered because otherwise the customer is going to catch up to it and it's going to hurt a lot more than than you would think.

Greg: Interesting. And one one question I've definitely got is, is off the back of something you said earlier, which is the customer experience doesn't really matter more about the memories that do matter. So I guess a question for me from a strategist might be why? Why is the customer experience customers memory story more important than the actual experience itself? And in the answer to why, how do how does an organization set itself up for that premise?

Gustavo: So let's let's take a very simple example. Obviously, there's lots of research and that's the core of my chapter, so I don't want to go too much in-depth into it. However, let's imagine. And take take as a given the fact that. Your experiences don't affect your future decisions, right? The fact that we were recording this podcast doesn't impact the way I feel about about your Valentina and how well we got along. What doesn't, but it is what I remember about it is how I'll recall this experience of recording this podcast with you guys, because memory is essentially a playback or recollection of what happens. That's information that I've stored and I can use for my future decision making. But here's the thing. Memories aren't actual fake recreations of experiences, what we experience and what we remember are two different things and therefore what we want to focus on, on what drives behaviors, what doesn't. And that's why I say kind of the experience doesn't matter because the experience isn't going to influence behaviors, is what I remember of that experience that will. So if I want to be really cautious and take my customer experience at the next level, I should make sure that the engineer reads for memorability first and foremost. That's interesting.

Valentina: Yeah, there was one more point I wanted to ask you about the links in the article that you wrote, you said we shouldn't be customer centric. And OK, don't get me wrong, I love the way that you that you explain things. You're like a like a Nietzsche's hammer, right? You come with a hammer and you deconstruct away everyone else's thinking to the basics, and then you rebuild the the way that people should think about it or you own new concepts of it. But really isn't being customer centric the very core of the customer experience approach?

Gustavo: So I'll start by saying that I've been called many things in the past, probably much worse than a hammer, but Hammer is a thinking about what is it to me if we think very carefully about it, customer centric means that the customer is at the center, the customer is at the center, the customer is the first priority. The customer is the first priority on top of everything else. It means that every other stakeholder is second to the customer. And that's where I disagree. A company doesn't exist to serve the customer. A company is an assets that is there to drive value for the shareholders, whether it's a private or on the stock market. I don't care. But essentially a company is made up of investments that are there to grow and drive more value for the owners if they do not. If I get less return investing in a company, then I would do through Treasury bonds. Then why on earth would I invest in the company? When I have uncertainty, I have risk when I can instead invest in the government. That is the key thing, right? Is ultimately a business is an investment for the shareholders. And if the shareholders aren't getting the return they want, they're going to take the money away. And if there's no money, we cannot serve the customer. So I always say that the customer is a super important stakeholder, but is not the first stake. So I don't say let's put customer first because you probably want to put the shareholder first. Now, I know it's a very, very tricky stance to have because a lot of the customer experience industry has been saying stop thinking just of shareholders and think of the customer. But I'm saying that there's room for both, because what you want to do is that through a focus on the customer, you want to think of the shareholders, you want to look at your customer experience strategy as a means to an end to drive.

Gustavo: But the only reason, as an organization that we must care about customer experience because there's something in it for us. That's the thing is there isn't altruism in business, everything and organization does must have a return of some way, shape or form, whether it's greater engagement with their employees, which means greater retention, greater productivity, whether it's investing in the community. So it's about my brands, how I perceive everything an organization does must have some kind of return. And what I'm saying is the customer, the focus on the customer, a customer 1st strategy or customer aware strategy, as I prefer to mention it, customer where strategy needs to drive results. The only reason boards care about improving customer experience is because improving customer experience should improve the bottom line for the top line. That says if you forget the financial element of the strategy, you're doomed. The problem is that when people say customer centric, as has said, they put the customer first and they often tend to forget the rest. They say, oh yeah, if we improve the experience, we'll get more money because ABC. But there's no point. There's just. Wish marketing, right, is I'm praying I'll get some return from this, and that's not good enough with the amounts that are spent on customer experience because we're talking tens of billions every year. The amount spent on customer experience, just being wishy-washy isn't enough. And that's what I see a lot of. And that's why I say, look, let's all be customer centric because you still have bills to be.

Greg: Fantastic, and then we start with the last question I have, I guess, plays on the similar idea here about, I guess, advice that you would have for someone who is, let's say, newer to working in the customer experience industry and potentially is is looking at a longer term career in this space, you know, an aspiring leader. What advice would you give to someone in that position from from your experience?

Gustavo: So rightly or wrongly, customer experience relies a lot on influencing. A lot of customer experience is about convincing people who own processes, who are responsible for processes that their practices need to change. That's essentially in a nutshell with data and so on surrounding it, that's what customer experience is about, changing the business with close to zero authority or direct authority. At least the biggest advice I can give is don't learn just about customer experience. Don't focus just on what you as a customer would want because you're going to be very one sided and you won't forget the perspective of the company. Instead, study business, become a real business person. And what I mean by that is understand the basics of accounting, understand the basics of finance. So why do we need what is it? What is net profit? What is gross profit learned, the lexicon of the key stakeholders and be able to talk to them in their language. So when I talk to an I.T. person and we discuss about reactivates no jobs and APIs, it's a lot clearer to them that I understand a bit of what they do and that can relate to the challenges that.

Gustavo: The same thing if I'm talking counters, if I demonstrate to understand what the PNL is, understand the difference, assets and actives, et cetera, that's going to help. That's going to help me, because if I speak to my state, their language, there'll be a lot more receptive because I've made the investments to understand their world and to portray in their eyes, in their universe what impact the customer has. That's what it's all about. Ultimately, you want to make sure you understand your stakeholders so that you can show to them what's in it for. Show them that they can be the star. Show them how you can enable them through, focus on the customer to look good, to be appreciated and to shine the business. That's the biggest thing, is not about the technical knowledge, about customer experience, because let's face it, the industry still doesn't agree what customer experience. We don't even agree on how to define it. So don't don't focus too much on that. Focus on being a great person, engaging and understanding stakeholders.

Valentina: Interested to get more details on what Gustavo does, feel free to contact him on his LinkedIn profile, and don't forget to check out his latest book called Customer Experience Three. And I will see you next Monday.