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from $4.36 billion in 2015 to $10.77 billion by 2020.5 That’s real money. Companies are spending lavishly on comprehensive CX strategies and building or buying high-tech systems in order to mine what they see as untapped veins of growth. And the data insist that this preoccupation with CX is justified: A report by the American Customer Satisfaction Index showed that leaders in customer service outperformed the Dow by 93 percent, the Fortune 500 by 20 percent, and the NASDAQ by a whopping 335 percent.6

      However, the methods that many organizations are using to try to duplicate those glowing figures just aren’t delivering. According to The Consumer Conversation report, only 37 percent of businesses surveyed said they were “able to tie customer experience activities to revenue and/or cost savings.”7 That means the majority are, in effect, just spending money and keeping their fingers crossed. Meanwhile, an Accenture report concluded that, despite ambitious plans, about half the surveyed companies’ CX initiatives actually did little or nothing to retain customers or grow global revenues.8

      What about outside the traditional corporate world, say, in healthcare? The news there is no better. A survey by PricewaterhouseCoopers of more than 2,300 healthcare patients found that only half were satisfied with their overall experience as healthcare consumers. Ominously (for insurance companies, anyway), many were willing to try nontraditional sources for health insurance, including large retailers (40 percent of respondents) and digital companies like Amazon (37 percent).9

      Despite customer satisfaction being rocket fuel for the bottom line, organizations are burning billions in unproductive efforts to create a profit-boosting CX. That’s what we mean by “digging in the wrong place.”

      THROWING YOUR EMPLOYEES UNDER THE BUS

      Consider the Chicago Transit Authority (CTA). In 2013, the CTA spent $454 million to transition its 1.7 million daily riders from its own proprietary fare collection system to a third-party system owned and developed by a company called Ventra.10 But rather than saving money and time, the CTA only succeeded in enraging tens of thousands of Chicagoans.

      The CTA’s mistake was that it focused on improving CX by increasing efficiency but did so without taking into account its employees – you know, the people who best knew its customers’ behavior, who knew that they were happy with the current system, and who would be on the front lines of customer anger and frustration. It was a costly miscalculation.

      For example, buses were redesigned so that riders boarding through the front door would be automatically charged by electronic sensors as they passed by. No swiping cards – great, right? Sure, until you realize that on a crowded city bus, riders tend to use the fastest, most convenient exit. Unfortunately, the CTA didn’t talk to its bus drivers before installing the expensive system. If it had, it would have learned that many riders also exit through the front door. After the new system came online, many riders were inadvertently charged twice. Whoops.

      Technical problems plagued the new system, and the CTA dropped the ball by making customer service available only between 7 a.m. and 8 p.m. on weekdays. Since many people ride the trains and buses in the evenings and on weekends, this decision left huge swaths of time that passengers couldn’t get help from a real person. In some cases, the customer service issues were tragicomic, including the experience of one passenger who started getting email after email telling him his new Ventra card was on the way, followed by a blizzard of mail: 91 envelopes, each containing a new card. The comedy of errors didn’t stop there. “The next day, 176 more [cards] arrived, each one, he later discovered, canceling the last. ‘You have to call and activate it,’ the rider told Crain’s Chicago Business, ‘but I’ve been afraid to do that.’”11

      Eventually, the CTA had to go back to selling its former magnetic stripe cards while it figured out what went wrong, which was something its employees could have pointed out before the costly move to a new system.12 Meanwhile, as riders became more and more fed up and indignant, the agency threw its employees – pardon the pun – under the bus. In December 2013, one call center worker lost her job after the Chicago Tribune published a letter in which a frustrated customer recounted his repeated attempts to get a Ventra card. But customer support calls were routed to a call center in San Francisco, so call center workers had no firsthand knowledge of the city or the system. The sacked worker was merely the last service rep the customer had spoken to, and she had been working for eleven days straight. Nevertheless, she was sent packing – on her birthday – for “bringing bad press to Ventra.”13

      The CTA’s greatest blunder wasn’t choosing faulty technology or dealing with incompetent partners to fix a system that wasn’t broken. It was failing to work with its greatest asset, its employees, to understand and improve its Customer Experience.

      DIGGING IN THE RIGHT PLACE

      It’s clear that in the quest for a stellar CX and the profits it yields, we have become seduced by the hype without really understanding what creates a positive revenue and service-enhancing Customer Experience in the first place.

      Part of the problem is that there isn’t even agreement on how to gauge CX’s impact. How can you directly attribute growth or revenue increases to an improved Customer Experience? By definition, the term is a catchall for every interaction the customer has with an organization: first contact with a company’s website, an interaction with the clerk at the Department of Motor Vehicles, or your wait in the emergency room while your weeping child cradles her injured wrist. Who’s to say that one small sliver of the overall CX – caring service by a kind and helpful call center service rep, for example – might not be responsible for 80 percent of a company’s CX-related revenue spike, rendering the other CX measures mostly meaningless? Teasing out cause and effect can be maddening.

      So we’re not going to try. Instead, we’re going to dig somewhere else and introduce you to a company that’s been doing things differently. Back in 2002, healthcare staffing firm CHG Healthcare Services was average. Growth rates were average. Sales and revenue figures were average. Employee turnover was – you guessed it – average. But the executive team had no interest in simply being average.

      CHG wanted to be the largest and best healthcare staffing company in the country. However, its lukewarm corporate culture was restricting growth, and its turnover rate of 48 percent made it virtually impossible to hire and train employees fast enough to grow substantially. At that time, the CHG culture was similar to that of most companies: Communication was mostly top-down, divisional cultures differed, and HR focused on general administrative practices. It was a “good place to work,” but few employees were passionate about what they did.

      CHG’s transformation started as an initiative to reduce turnover by understanding the issues that caused it. Leaders chose to focus on the value of their people, which led to a “Putting People First” program. They also decided to collect feedback from their employees and implemented an annual employee engagement survey, among other sources of communication. The feedback from employees was sometimes painful for the executive team to hear, but it provided many opportunities for improvement.

      Gradually, CHG built a culture of feedback. Accountability and trust improved. Employees knew that their feedback was heard and acted upon. Today, CHG’s leaders regard the company’s employees as its strategic advantage. “Putting People First” is the defining organizational value, and it influences every decision. Employees rave about how much they love their jobs. CHG is at the top of our list of engaged organizations and has ranked as high as number 3 on Fortune magazine’s “100 Best Companies to Work For” list, in the same league as titans like Google and SAS.

      During the weekend following the announcement that CHG had taken the number 3 spot on the Fortune list, dozens of employees were so proud of the accomplishment that they gathered for the better part of a Saturday – unbeknownst to management

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