It’s getting harder for companies to grow profitably. We know focusing on customer experience (CX) drives long-term growth but that message isn’t always well understood, according to a 2023 report by Forrester.
That’s why Experience-Led Growth (XLG) can be powerful for brands who are looking to transform their growth strategy. Treating your customers well is the best path to profitability, not least because they bring their friends along too.
In this article, you’ll learn how to implement and deliver XLG to shift your customer acquisition, retention, and expansion toward customer experience. We’ll show you:
- The challenges of getting buy-in for CX initiatives
- How to create a direct link between customer experience and results
- The four core areas you need to focus on to build an Experience-Led Growth strategy
- Whether XLG is a good fit for your business
- The three steps to get started with XLG now.
The XLG Challenge: Experience Can’t Be Connected to Results
In a 2022 report, Forrester found that the fundamental challenge with CX initiatives is that it can be hard to link the customer’s experience with business outcomes. This makes stakeholders less willing to back CX activities required for XLG.
Businesses need a growth strategy that provides a way to get closer to their customers and turn customer feedback into profits.
There have been three main blockers to achieving this:
- It’s difficult to effectively connect business objectives with improving the customer experience
Businesses take different approaches to achieving long-term profitability. While some focus on growing the number of new customers, others emphasize customer retention or repeat purchases. Usually, success relies on a combination of these elements.
Making the right improvements to the experience is the key to delivering all of these strategies, but it can be hard to directly connect specific business objectives with initiatives to improve the experience. Without the ability to link improvements to business outcomes, it can be hard to prioritize which areas of the experience to improve. It is also very difficult to show the impact of the work that is being done on the metrics the business cares about.
- Experience is not easily measured, like other common performance metrics
One of the reasons it is difficult to link experience to business objectives is that experience cannot be measured in the way that other metrics can. Different customers can experience the same thing in different ways, so the reality is we are dealing with the customer’s perception of their experience.
Understanding the customer experience means accurately grasping the customer’s perception. The experience an individual has can only be measured by understanding what they thought of it. Yet it is difficult to accurately measure customer perception and very hard to verify if your understanding is correct.
Assessing the quality of experience is also complicated because most organizations don’t have one type of customer. There are new customers, loyal customers, high-spend customers, low-spend customers, and customers from different regions and geographies. Understanding experience means knowing what the experience was and who experienced it. The combination of these challenges means it is a difficult metric to assess.
- Improving the customer experience does not align with standard organizational structures
A 2023 study by MyCustomer found that because most businesses are built around functions such as product, marketing, and customer support, CX is never the remit or responsibility of one team. It is impacted by many teams across the company.
This is why many organizations struggle to deliver XLG; improving the experience does not map seamlessly onto the existing way of doing things. Similarly, this makes it hard to coordinate activity across the business and creates challenges when it comes to assigning targets and responsibility.
So, How Do You Crack the Code for XLG?
These challenges can make improving the experience appear intangible, impossible to align on, and difficult to connect to business objectives. For an Experience-Led approach to be successful it must recognize and address these challenges to create a direct link between experience and results.
To unlock the benefits of XLG, any organization must achieve these three breakthroughs:
- Create a direct connection between improving the experience and business objectives
No two businesses are the same. Every organization must connect improving the experience of the customer with achieving their specific business objectives. This continuous unbroken thread from experience to business outcomes is fundamental to achieving XLG.
- Genuinely understand the experience
The only way to be experience-led is to understand the customer experience. The experience an individual has can only ever be measured by understanding what they thought of it. Understanding experience requires you to consistently quantify and track the customer’s perception of that experience. This ability to accurately measure customer perception is the key to connecting the intangibles of your CX to tangible business outcomes.
- Map the customer experience to your organizational structure and ways of working
Because the customer experience does not map neatly to the standard organizational structure, the ability to quantify and link experience with business objectives is the key to operational success. Although the customer’s experience is inherently cross-functional, focusing on experience-led improvements creates clear alignment across the organization. It is not about removing specialization or dismantling structure or teams. A successful experience-led approach harnesses the existing structure of a business by providing the clarity needed for each team to effectively impact the experience.
Building an Experience-Led Growth Strategy
An XLG growth strategy is the blueprint for any organization to overcome these challenges and successfully achieve XLG. Following this ensures all of the required processes are in place and each individual element is functioning effectively.
A continuous unbroken connection from customer experience to business outcomes is fundamental to achieving profitable growth. The key to unlocking XLG is to start with the experience and to ensure that each link in the chain is in place and operational.
The four core areas that build success with XLG are:
- Understanding the customer’s experience
- Enabling action
- Taking action
- Measuring impact
Now, let’s take a look at each of the links to see how to make them work in practice.
Understanding the Customer’s Experience
The first link is ensuring we understand the customer's experience. This means understanding the customer’s perception of their experience. We need to be able to quantify what the customer thinks and feels and how this differs for different customers.
Different types of customers have different needs and expectations; these needs can be significantly different or contradictory. Understanding customer experience relies on combining who the customer is with what they think.
This is achieved in two ways.
- Creating a robust architecture that captures the breadth and complexity of the customer’s experience at all stages of the journey with your organization. How, where, and when customer feedback is being proactively collected or reactively gathered are critical to success. This goes beyond simply collecting surveys. The goal is to understand the entire experience. You can only achieve this by combining multiple feedback channels.
- Accurately translating raw feedback data into a quantifiable, digestible format that the organization can use to extract insights and make decisions. The goal is to accurately translate the entirety of the customer’s experience that was captured in the feedback. The approach needs to be objective, comprehensive, and consistent over time.
It is working effectively when the right input data is being collected and the customer's perception is accurately translated into a digestible format. When this part of the process is inaccurate or suboptimal, an organization is unable to consistently make the right decisions and will not maximize XLG opportunities.
Enabling Action
Understanding what is important to the customer is only the first step; connecting this with what the business is trying to achieve is the next. Analysis should go beyond simply fixing problems or addressing things that customers don’t like. A finder-fixer approach will not unlock XLG.
Instead, the data must be interrogated to identify which elements of the experience – both positive and negative – have the biggest impact on customer behavior. This is then contrasted with the most desirable behaviors to achieve the business’s objectives.
This intelligence needs to arrive in the hands of the teams who can take the required action to improve the different areas of the experience. Depending on the organizational structure, stakeholders may have direct access to the data. Alternatively, the intelligence may be coordinated and shared between teams who are empowered to take action to improve the experience. Whichever approach is taken, the intelligence needs to be timely, relevant, and actionable.
Taking Action
The previous links in the chain have identified which elements of the customer's experience should be targeted. Now, businesses need to prioritize the specific actions that should be taken to positively impact the customer’s experience. This is the final step needed to connect the intangible of the “experience” with the concrete actions that different teams, roles, and responsibilities can take.
This is a continuous process that needs to be built into ways of working across teams.
To be experience-led, all prioritization and decision-making should factor in the experience of the customer.
Once the appropriate actions have been identified and prioritized, individual teams can then take the required actions to implement the changes. By recording the element of the experience to be influenced, the action to be taken, and the expected result, teams demonstrate that there is a continuous link from the allocation of resources to make the changes through to the desired business outcome. This process also allows for rapid iteration to achieve the desired outcome if further changes are required.
Measuring impact
Once action has been taken, progress is tracked by measuring the impact of the implemented changes. This identifies whether the changes have had the desired impact on the customer’s experience.
The impact of changes must be measured in three ways:
- What was the impact on the customer perception?
The first measure is to understand if the changes have impacted the customer’s perception of their experience. For example, if the customer believes delivery time is too slow, amendments can be made to increase the speed of delivery. Then the question is how have the changes impacted what the customer thinks in relation to the delivery time? The intended consequence as well as any unintended or related impact on customer perception are tracked.
- What was the impact on customer behavior?
Customer behavior is the second metric to track. Stakeholders must ask if changing the customer’s experience has had the desired impact on their behavior. Not all changes will have a direct or immediate impact on behavior.
This is because the customer's experience is made up of different factors. Multiple improvements may need to be made to see a tangible change in behavior. For example, insights may show that rude staff and cold food are preventing customers from returning to restaurant locations. Upskilling the staff to make the service more courteous is necessary to drive repeat visits. However, until the food temperature issues have also been resolved, the desired change in customer behavior may not be achieved. Tracking quantifiable changes in the customer’s perception of the experience shows progress toward the targeted behavioral change.
- What was the impact on business outcomes and KPIs?
The final measure relates to tracking the impact on the business objectives themselves. The specific metrics will differ depending on which business objectives are being targeted for improvement. For example, this could be an increase in the number of customers who go on to complete a purchase or a decrease in the number of customers who cancel their subscription. Tracking this makes it possible to quantify the impact of cumulative improvements to the customer experience on defined business objectives.
XLG Alignment
XLG is a continuous process; it is not possible to “fix the customer’s experience” all at once. Customer expectations are continuously evolving and so is your competitor’s offering. XLG is not a “set and forget” strategy.
Delivering the benefits of XLG is only possible when each link in the chain is functioning effectively on an ongoing basis. Cross-functional alignment is essential to reinforce and develop this process. Exactly how this looks will differ from business to business.
Two consistent fundamental principles of XLG alignment are:
Experience-centric Objectives and KPIs
Different areas within an organization impact the experience of the customer in different ways. Focusing on experience-led improvements creates alignment that is otherwise lacking. Responsibility should always be connected with accountability. All teams responsible for an area of the business that impacts the customer’s experience are incentivized to maintain and improve this element of the experience. The right targets, incentives, and KPIs make alignment a reality.
Experience-centric decision-making
XLG relies on the experience of the customer being factored into organizational decision-making. An XLG growth strategy ensures the necessary experience data is available and the impact of decisions can be measured. Organizational commitment is needed to make the customer’s perspective a non-negotiable consideration for all decision-making.
Is Experience-Led Growth a Good Fit for Your Business?
Before considering the finer details, it’s important to understand whether you will find XLG effective. XLG is most powerful for businesses that are reliant on the choices and behavior of their customers to be successful, for example, businesses that operate in a competitive marketplace where customers have the choice to select an alternative option.
If the behavior of customers is linked to success — for example, customers choosing to switch to a competitor, or choosing to keep rather than cancel a subscription — a business can leverage XLG.
Getting Started with Experience-Led Growth
Any organization can evolve into an experience-led business, regardless of where they are starting from. Three steps are essential to get started:
1. Understand your current XLG maturity
The first step is to understand your current reality as an organization. This is achieved by objectively assessing the current status of each of the links in the XLG framework. It is important to thoroughly audit each stage to ensure that it meets the minimum requirements for XLG. This assessment will show which of the required stages are currently fit for purpose and where the gaps exist.
2. Create your roadmap to close the gaps
Once you have an objective assessment of your current reality, the next step is to define your roadmap for closing the gaps. Prioritization can be simplified by determining the impact of achieving each business outcome and comparing it with the effort required to close the gaps.
Different business objectives may require differing levels of effort or investment to make them operational. Let’s use reducing product returns as an example. The assessment may reveal that although the data available is limited, there are already teams KPI’d and taking action to reduce returns. Improving the data quality used to make decisions could close a gap that could rapidly deliver a better business impact than sticking with the current practice.
3. Implement best practice for each
When the specific focus areas have been identified for your organization, the final stage is to operationalize each of the missing elements of the XLG strategy. Fortunately, there is no need to reinvent the wheel — at this stage you can simply apply best practice to set up each of the links in the chain.
Conclusion
An XLG growth strategy is the blueprint to make long-term profitable growth a reality. It makes it possible for any organization to align around the experience of the customer to unlock profitable growth, regardless of where they are starting from.
