Modern organizations are highly competitive when it comes to delivering the best customer experiences; but what is the driving factor behind CX Excellence, and how can it be achieved?
In sectors like retail and travel, brands are often pushed harder to deliver great CX with the threat of competitors hogging their market share. But a less talked-about driver of CX excellence is regulation. Regulation can drive artificial competition in public sectors like blue light and utilities that’s no less, and at times even more effective than commercial competition.
In a fascinating talk with Content Guru‘s Co-Founder and Deputy CEO, Martin Taylor, we explored these two competing narratives, shedding light on how regulation works wonders for the public (which can ultimately benefit the private sector, too).
CX: The Modern Business Battleground
The CX technology market has always been an extremely competitive one. The faster-than-light appearance of new technologies maintains constant pressure, now joined by competition on security standards. Under such conditions, CX has emerged as a key battleground, particularly since the pandemic.
“With face-to-face communication almost eliminated, much more investment flowed into that space,” Taylor notes.
Customer satisfaction went up accordingly, and customer expectations have carried on rising. However, at some point, the pace of improvement has slowed among organizations, giving rise to a new challenge.
“In recent surveys, 86% of consumers reported they’d leave a brand after only two bad customer experiences, and 49% have actually left after just a single bad experience,” he says.
But while the stick is there, there’s also a carrot: 61% said they’d pay an additional 5% for better customer experience, and 31% said they’d be willing to pay significantly more if it ensured better service.
This trend has been leading brands to start renewing their pandemic-days investment in CX, aiming to differentiate themselves in their market spaces.
The question is: Is it possible to replicate this type of competitive pressure in a monopoly-type situation, where service tends to be poor?
That’s where regulation comes in.
Regulation: The Unsung Hero of CX Excellence
In the utilities sector – including services like water, power, and gas– a market dynamic is often absent due to them being natural monopolies. This results in customer service that’s somewhere between mediocre and terrible.
One former monopoly that stands in contrast is telecoms, an industry that lends itself to a market-driven dynamic, with inherent innovation and competition on parameters like service, pricing, and coverage. Others, like water, are at the opposite end of the spectrum.
But there are also organizations occupying the middle ground, which is where things get interesting.
The Energy Sector
Energy is located right in the middle between a natural monopoly and a competitive, commercial-like market:
“There’s the distribution part of it, which is a natural monopoly; but the retail aspect lends itself to a market dynamic,” Taylor explains.
In the UK, there are six Distribution Network Operators (DNOs), each occupying one or more local monopoly situations. Historically, this meant rather poor customer service. Enter regulator Ofgem, who came up with a brilliant idea to transform the way CX is delivered in this sector.
“To try and replicate the commercial pressure in the private sector, Ofgem devised a 14-place customer service league table,” Taylor says.
The method was brutal but effective: Organizations finishing in the bottom slots were fined heavily, and those occupying the upper slots were given the money taken from those at the bottom.
“It was a really interesting experimental model, and that’s actually what brought the two largest DNOs to our door,” he shares.
Since they were dealing with some of the most populated parts of the country, some prone to particularly bad weather, those DNOs were facing many outages. This meant they were consistently occupying the bottom spaces of the table.
“They decided to take a risk to innovate, being the first DNOs to move to the cloud to improve the service offered by their contact centres,” Taylor says.
The result was beyond all expectations: Soon enough, the two DNOs rose to the top of the Ofgem league table; and by July 2022, the largest of them finished top of the entire UK Customer Satisfaction Index annual survey, placing ahead of commercial brands like John Lewis and Ocado.
“This was a demonstration of how a strong regulator can drive CX Excellence with monopolies even better than a competitive market dynamic,” Taylor notes.
The Police Sector
Another challenging-to-regulate natural monopoly is policing, also occupying that middle ground Taylor refers to.
“You can’t privatize the police, and the police force in your area is fixed – the service provider is not going to change,” he notes. “However, in this case, too, a league table has been created for UK police forces to measure their performances.”
The current league table includes the 43 regional police forces, with the initial yardstick measuring performance in handling 999 emergency calls. Much like with energy, this has created a competition dynamic, backed up by external inspections.
With reports being public, people can see the performance of their local police force, which has been driving engagement with CX technologies to improve.
“Currently, Content Guru has two of the largest English forces among our clients, and they were the first two to move into the cloud in October 2023,” he shares.
Following their CX efforts, the two have risen from the mid-30s of the league table to a consistent presence among the top three.
Learning from One Another
In the end, market dynamics and regulation are two major forces working alongside one another to drive CX excellence.
“The market on its own doesn’t do everything – you need to have safeguards and boundaries; while monopolies on their own will tend towards poor customer service,” Taylor concludes.
“Ultimately, the passing across of technologies from one type of sector to another is also already proving beneficial, and it’s expected to continue to drive mutual growth.”
To learn more about Content Guru’s cloud CX solutions, visit their website here.
