Many managers are all too familiar with this scenario. A program to improve the customer experience is launched. Customer journeys are mapped out and a journey atlas is created. New key performance indicators are introduced. Teams are trained. Momentum builds.
Then a difficult quarter hits. A cost-cutting program is launched. Priorities shift. Budgets are reviewed. New targets are set. Whilst the vision of prioritizing the customer experience remains, many of the improvements gradually disappear simply because they cost money.
This is neither because the people in the organization no longer care, nor because the initiative was flawed. The real explanation is simple: the operating model has never changed, and nobody is talking about it.
Over the past four years, I have had the privilege of interviewing nearly 300 executives, academics, customer experience experts, transformation specialists and technology innovators as part of the Business Transformation Pitch on the CX Goalkeeper podcast.
Whilst the conversations covered topics as diverse as customer experience, leadership, organizational transformation, artificial intelligence and business strategy, one observation kept cropping up:
The best companies talk about business results, customer retention, customer acquisition, repeat business and brand referrals at every conceivable opportunity. Nobody discusses the 'customer experience' per se; instead, they report on the resulting outcomes.
It is a fact: companies recognized for their outstanding CX rarely talk about journey maps, voice of the customer (VoC) programs or satisfaction scores.
Instead, they talk about leadership. They talk about priorities. They talk about culture. They talk about execution. Above all, however, they talk about making consistent decisions over the long term.
This observation led me to question one of the assumptions that has shaped our profession for years. What if we've been focusing on the wrong problem?
How much does the operating model shape CX?
The customer experience is created by a system, not by a team of five people and herein lies the paradox: companies invest millions in the customer experience, yet customers never notice any of it. They merely experience the consequences of the way a company is run.
Let's be honest: customers don't care whether a company has a customer journey map. What matters to them is whether their problem is solved. They don't care whether a company runs a VoC program. What matters to them is that someone listens to them and acts accordingly. They don't care whether AI is used. They judge whether the outcome is better.
After years of working in the fields of transformation and customer experience, I have come to a simple conclusion:
Every customer experience is the result of an operating model.
The experiences customers have reflect how decisions are made, how resources are allocated, how success is measured, and the behaviors leaders reward. When the operating model changes, so too does the customer experience. If the operating model remains unchanged, the customer experience will ultimately revert to the same level – regardless of how many initiatives are launched.
What kind of operating model creates sustainable customer value?
If every customer experience is the result of an operating model, then the real question become: What kind of operating model creates sustainable customer value? And not: How can the customer experience be improved?
Based on those aforementioned 300 interviews, I have come to the conclusion that six organizational elements deserve particular attention, as they influence how organizations make decisions, allocate resources and create value.
The purpose of these elements is to create an organization that is capable of consistently creating value for customers, for employees and, ultimately, for the company (and its shareholders).
The 6 elements of a customer-focused business model
As outlined in the graphic, this proposed operating model is a system divided into three levels:
- Strategic
- Tactical
- Operational.
At the strategic level, it all begins with direction. Organizations must first define what value they wish to create and what compromises they are prepared to make. Without a clear direction, customer focus quickly becomes more of a buzzword than a strategic decision.
However, direction alone does not lead to results. Governance translates strategic intentions into responsibilities. It determines who makes decisions, who is responsible for customer outcomes and how priorities are translated into actions.
At the operational level, learning provides the feedback loop. It helps organizations understand whether they are creating the intended value and where adjustments are needed. Listening to customers is important, but learning only takes place if that understanding of the customer influences decisions.
Learning is only relevant in conjunction with the associated execution, as this translates decisions into reality. Products, services, processes and interactions are the tangible manifestations of the operating model. This is where customers experience the consequences of organizational decisions.
At the support level, enablement boosts performance. People, technology, data and artificial intelligence enhance the organization's ability to operate consistently and at scale. Whilst they do not create value in their own right, they can significantly increase or diminish the system's effectiveness.
Finally, culture ensures sustainability. Over time, consistent decisions, behaviors and priorities become embedded within the organization and shape how people think, act and work together. Culture is the result of an operating model that has been consistently reinforced over time.
Together, these elements shape whether customers stay or leave, buy more or less, and recommend the company to others or advise against it. Ultimately, customer behavior determines business outcomes such as growth, customer loyalty, profitability and trust.
From operating model to business results
It is already well known: every organization has an operating model, and this model must incorporate the customer experience, as it is one of the clearest indicators of how effectively an organization creates value. As Annette Franz says: "Without customers, there is no business."
When a problem appears in the financial reports, customers have often been experiencing it for months. They encounter friction points before they become visible on operational dashboards. They lose trust even before customer loyalty begins to wane. They start looking for alternatives even before market share begins to dwindle.
Customers are often the first to spot a flawed business model
That is why the customer experience is important far beyond the scope of the CX function itself. It provides one of the earliest indicators that the company is no longer creating value as intended.
When companies make consistent decisions, align incentives, empower staff, learn from customers and use technology effectively, customers notice this: trust increases, friction points decrease and relationships are strengthened.
These experiences influence behavior in several ways:
- Customers stay or leave.
- Customers buy more or less.
- Customers recommend the company to others or advise against it.
- Customers forgive mistakes or switch to another provider.
Over time, these behaviors shape growth, customer loyalty, profitability and trust.
Customers make decisions every day. This happens through their behavior.
Your operating model must align with a common goal
For years, companies have been trying to improve the customer experience through metrics, methods and programs. These tools remain important. But they were never the real goal.
Companies that create a lasting competitive advantage are successful because they have developed operating models that align strategy, leadership, governance, execution, learning and technology towards a common goal: value creation.
As artificial intelligence accelerates the pace of change, this distinction becomes even more important.
Technology can boost performance, but it can also exacerbate malfunctions. The difference lies in the operating model behind it.
The question has never been how do we improve the customer experience? Perhaps the better question is: What kind of operating model creates the experience we want to offer our customers?
After all, customers experience your operating model every day – whether you have consciously designed it that way or not.
This article was written in collaboration with Prof. Nils https://www.linkedin.com/in/nilshafner/Hafner