Customer Experience as a Byproduct

Value, Profit & Customer Experience

There is well known research on good customer experience’s effect on profitability and revenue. With good customer experience, not only are you able to retain your current customers, you are able to draw in new customers whose main reason for choosing the company is good customer experience. Some companies report anywhere between 2-8% uplift on profitability, and varying amount of revenue when customers have a good experience with their product.

There are three priorities (among other things) for a company: value, profit, and customer experience. Value because it provides a sales point for both investors and customers; profit because it provides value to the shareholders & business owners; and customer experience because it is a key point to profitability & value, as well as good PR for the company. Each one of them are a portion of the corporate output. If we were to do some algebra here and put customer experience as the byproduct of Profit & Value, you would end up with one side of the equation typically inversely related to the other in a healthy economic structure.

There are more permutations, but for now here are three I’m interested in right now:

• Customer Experience ⬆️ = Profit ⬇️ & Value ⬆️

• Customer Experience ⬇️ = Profit ⬆️ & Value ➡️

• Customer Experience ⬇️ = Profit ⬆️ & Value ⬇️

Customer Experience ⬆️ = Profit ⬇️ & Value ⬆️

In order to keep high value/valuation, companies will focus on a high customer experience at the expense of higher profits. Businesses see this tradeoff as acceptable because they see their value increase in their stocks, return customers, customer referrals, and eventually increased profits.

Typically, this experience can happen a few times in a business's life. Once at the beginning of company’s life while profitability is not as important, rather it is more important to increase customer count and value of the business, and again when the business is trying to compete for new customers if competition is tough.

One example I’ve seen of this was Zoom. When I first worked with Zoom I had an exceptional user experience, with responsive customer service reps that were willing to work with me to make me a happy and referring customer as they grew their business (this was back in 2018). I enjoyed this experience and while it probably cost them a decent amount in profitability, their value and their customer experience were high.

Customer Experience ⬇️ = Profit ⬆️ & Value ➡️

In order to increase or maintain profitability, customer experience drops as companies get rid of customer amenities, customer service representatives, or customer facing support.

In this case, customer experience is low. Companies who are in a position to make this change either have a large enough market share or are otherwise not concerned with a lower customer experience, like when profitability is more important than customer experience.

One example I’ve seen of this is Volkswagen, when I was trying to get my headlights repaired on my car. My typical experience with large car manufacturers is that of distain and frustration. Waiting months because of parts shortages and a general lack of empathy or care from “customer care” as customer experience for car repairs was not a priority for VW (or any car manufacturer) even though I’m willing to spend a significant amount of money on the repair. It would be a different experience if you were willing to buy a new car.

Customer Experience as a Byproduct

Here’s my issue. There seems to be a trend, whether new or not, that I think will be extenuated by the changing composition of corporations, investment firms, and the general attitude towards increasing profits at any cost.

Customer experience will become a byproduct at all times with companies focusing on profitability, rather than something that sets the company apart from other businesses, as all companies are focusing on profitability rather than customer experience.

Customers are beginning to live with the frustration because there are no other options as the lack of competition in the market leads corporations to take advantage of customers more than they could in a healthy competitive market.

In a competitive tech market, for example, new industries and businesses challenge the status quo and force the established businesses to adjust their product to better cater to their customers. In the current market, for tech industries to stay competitive, they either buy their competitors or buy innovation, rather than innovating themselves.

Here's some examples:

• Adobe has a large hold on the photography & videography market, leaving customers little choice but to use their product. Customer experience (in the circles I know) are generally frustrated with the lack of human touch and quality of their software leaving customers exasperated but unable to find a similar product, so they stick with the best of the worst.

• Intuit has a complete hold on small business accounting software, making it impossible to find a similar solution. Product marketing for other Intuit products is unabashedly forced throughout their software with posts asking how to turn them off, and no method available, frustrating their users and their customer experience, but increasing Intuit’s profitability as customers see no other choice but to purchase their services.

• Tesla (and other car manufacturers) own a vertically integrated production line for parts on their cars, forcing customers to wait for authorized parts if they are to continue working with the car's software. Customers get frustrated when they are unable to use third party parts and customer service is usually slow, tedious and fruitless unless it affects a wider customer base. Good luck getting anything fixed quickly on any car manufacturers cars as manufacturers are focused more on selling new cars.

Companies “bringing value to the customer” are directly and usually blatantly only linked to their profitability, not their customer success or customer experience, and since customers have no recourse, they noisily or quietly shake a fist to the corporation that is unaware or unwilling to listen to their customers cries for a product that will benefit them than their shareholders.