Companies in the United States are failing their customers. Customer Experience Index (CXi) scores have mostly stagnated, and other surveys by Forrester Research show companies aren’t performing even the most basic tasks to improve customer experience. Government can help by creating preferred purchasing programs that encourage agencies to buy from companies that deliver the best customer experience.
Deteriorating customer experience hurts quality of life and the economy. For starters, companies don’t listen to their customers. Only about half of businesses consistently gather customer feedback, and less than a third perform thorough research.
Companies also don’t consider customers when making decisions. Only a third of businesses consistently consider the impact on customers when making business decisions, while other companies let customers’ needs get swept aside.
In addition, companies don’t build customer-centric cultures. Only about a fifth of businesses consistently screen job candidates for customer centricity or provide CX training to existing employees.
The deluge of poor customer service is far more than a daily nuisance. In 2013, customer rage and the number of households reporting bad experiences hit new highs. Waiting for in-home services like cable or appliance installation takes each consumer out of the workforce for two days per year, costing an average of $250 per person and the entire economy as much as $38 billion annually. The companies suffer, too. The stock portfolio of lagging firms performed only half as well as the S&P 500.
Fortunately, government can help. Federal, state and local agencies already use their $1.5 trillion in buying power—more than 8 percent of the gross domestic product—to fuel markets for certain types of products, businesses and corporate behaviors. A great example is the federal Environmentally Preferred Purchasing program, which helps agencies buy green to “stimulate market demand for green products and services.”
CX-preferred purchasing would stimulate companies to improve their customer experience expertise to compete for government contracts. It worked in the 1980s, when the General Services Administration prompted car makers to start selling airbag-equipped vehicles with its intent to buy several thousand of them. It works today in cities across the country, where municipal governments that adopt LEED building standards inspire local industry to follow suit.
Government would benefit, too. Federal employees would have enjoyed far better experiences in fiscal 2012 if their agencies had booked air travel with airlines that had the highest CXi rankings. Instead they spent nearly every penny of their $39 million in air travel procurement on carriers with below-average CX. Although more engaged federal employees is an important goal in itself, Forrester’s research also shows it would provide better experiences for government’s customers.
CX-preferred purchasing is a win-win solution. In addition to being effective, it would also be simple, economical and popular.
Ubiquitous, authoritative CX metrics like the CXi and Net Promoter Score make it easy to compare companies. Contrast this with green procurement, for which standards and measures often had to be built from scratch.
Better customer experience isn’t necessarily more expensive, so procurement costs wouldn’t rise. The same can’t be said for green procurement. Examples abound of companies offering better CX than their competitors at comparable or lower prices.
Agencies that establish preferred purchasing programs can expect positive public attention, just like they do with green procurement. It worked for the Army, when it received positive coverage for its renewable energy procurement plans.
It isn’t often that the government can improve its services, employee engagement, citizens’ quality of life and the economy with just one policy. Agencies should jump at the chance.
Rick Parrish is a senior analyst at Forrester Research.