These days, what Virtual Reality and Artificial Intelligence are to the hard computer sciences, Customer Experience (CX) is to the softer side of the science equation. In other words: CX is the shiny new business principle every organization who is any organization is talking about -- or at least is trying their hand at the game.

While there is certainly a tremendous amount of hype around CX at the moment, rivaling only that of the Digital Transformation variety, it's always wise to take a giant step back and understand the reality of what these terms actually mean, if they are to be applied aptly. What tends to happen when a fundamental business principle (like taking care of customers) becomes popularized, is that a slew of "experts" jump on the talk track and appeal to the emotional side of the equation without much data. These self-proclaimed customer experience experts are easy on the ears, but often lack the ability to help organizations deploy an actual strategy in order to drive change.

"The number one step in any sort of change is understanding one's own ecosystem -- including the competitive landscape -- and then understanding what drives behavior," remarks Luke Williams, Head of Customer Experience (CX) at Qualtrics. Williams, an award-winning researcher and author of the New York Times bestseller, "The Wallet Allocation Rule," and "Why Loyalty Matters," is a statistician and methodologist by training. As both a thought leader and a practitioner in customer experience, strategy, and analytics realm he contends: "The goal is to make changes with fewer moves and outsized returns. A company needs quantifiable data to understand how to compete more effectively, which customer segments to focus on, and from there they must have strategic conversations which can lead to an actual CX execution plan."

According to Williams, if this is done well, a solid CX focus can lead to increased mindshare, higher profits, and ultimately a larger share of the customer pie. In a recent interview with Williams, who I've gotten to know fairly well over the last several months in an attempt formulate a cohesive understanding of the subject, I dug a little deeper to unearth some golden nuggets of information from one of the industry's leading minds.

Iliff: What do businesses really need to understand about the new kid on the block, CX?

Williams: I think that businesses need to understand the era in which they are now competing has fundamentally shifted in two distinct ways. The first is that customers' expectations have been disrupted. Customers are now much more willing to pay for experiences than physical stuff and this has bled over to their expectations doing everyday, routine things. The second is that, for the first time, we are understanding customers as the object of our obsession -- not just our attention.

Competing on customer experience-based strategies is not just a new coat of paint on an old strategy. It's a fundamental shift in how businesses compete. We've gone from thinking about how our products can benefit customers and to which customers we can sell our products, to thinking about our customers' problems; then we design products and services that make their lives better. It's the smallest adjustment, but it puts the customer at the center of the universe and not just an entity within it.

How did you become interested in CX?

Ultimately, I tend to have a logical, engineering-type mindset. But I'm fascinated by behavioral economics, understanding and applying the psychological and environmental aspects of rational and irrational decision-making. My research has always been focused on topics adjacent to these. I was originally focused on methods and analytics in the customer loyalty, service marketing, service science, and marketing science realm. Over time, these field became much more intertwined and, after a few breakthrough discoveries, the obvious path forward for businesses was through customer experience and customer strategy. So the manifestation of my interest now lies in how to improve the odds of a business winning the customers they need and want, as well as how to overcome structural and mental barriers to those gains.

How does Qualtrics think about CX? How does it play into the larger picture of Experience Management?

We think about Customer Experience as the net outcome of several other core components of a business: Employee Experience, Product Experience, and Brand Experience. CX isn't just about whether or not the store is clean, or if people treat you nicely when you walk through the door. It's about building an entire infrastructure to ensure that the needs of the customer are met and somehow their life is better as a result.

This is delivered through an organization's employees, which means they also need to have a good experience at their job. Empowering employees has the proven benefit of improved customer experiences. Additionally, an organization is best served to understand what products and services make the most sense for the customer, and at what price points, variety, etc. Lastly, and somewhat of a precursor to customer experience, is the brand component of an organization. The brand experience is the only thing for a customer to go on before they walk through your door -- whether online or offline.

When these four experiences are viewed holistically, and when organizations can weave strategies together, generally speaking it is much easier to reach achieved business outcomes. This is the culmination of conquering what we call the "experience gaps".

What are some practical tips for small businesses looking to implement a sound CX strategy?

For a small business, the process of putting the customer at the center is crucial for survival. By nature, smaller businesses are much closer to the customer than larger organizations, and tend to be very attuned to their needs and wants. But if a business wants to scale, performance benchmarking early on can be extremely useful. By managing the business early on based on metrics, when it comes time to make decisions, particularly difficult ones, it makes things easier. The other practical tip is to outline the CX strategy, then communicate that strategy back to employees. This begins to build the foundation for the "employee experience" which is so crucial as companies grow -- as employees are your first line of defense in a competitive marketplace.

So in short, start to measure the things you know in order to figure out the things you don't know. And use analytics to help start making decisions. Small businesses are oriented toward action, which can be a huge advantage.

How does above differ from large companies?

Large companies tend to measure everything, but decentralized and distributed management models often make it difficult to have cohesion among the various moving parts. Unlike a small business, many employees at larger companies are far removed from the customer, so it becomes even more important to create a strategy based on all of the data dispersed across various parts of the organization. The key for large companies is to measure, then ensure alignment across silos so that the ship is moving in one direction; and that every stakeholder is clear on the strategy.

What are some examples of companies doing CX well?

Best in class customer experience has been done by a number of brands and in varying sectors. By and large, credit unions lead the way in terms of overall experience delivery often due to their more niche delivery area. USAA has some of the best customer experiences as they are built on the premise of serving those who have served us. American Express has long been the standard in the credit card and financial services realm. Disney is probably the most well-known customer experience brand out there... they've been customer-centric as a "first principle" and flourished because every aspect of their strategy adheres to that. Luxury car brands such as BMW, Porsche and Ferrari have exquisite customer experiences. Airlines like JetBlue, and retailers like Whole Foods and Saks Fifth Avenue, same story.

What are a few trends you think will affect the customer relationship over the next several years?

Here are a few that I think will definitely impact how businesses interact with and ultimately develop their CX strategies:

  1. Power to the people: The ability for customers to communicate directly with a company -- often, loudly and publicly -- subsequently shows a company's fortitude if they're willing to embrace that challenge. The power of a single tweet, and the compounding effects of that, mean that the customers can capture the attention of companies that are both leery of negative attention and eager to please.
  2. Immediacy as an epidemic: At some point, expectations of wanting something and wanting it now are not uniformly realistic. But it's been said that it doesn't matter if the expectations are unrealistic or irrational, it only matters that they exist. Companies built for speed will please customers; companies who aren't will have to make a case in the marketplace that the offering is of high enough value that it's worth waiting for -- and increasingly difficult play.
  3. Customer-centric businesses win: Contemporary businesses with customer experience and customer-centricity as a "first principle" will be rewarded in the market by a growing customer population. Brands that have relied on market barriers to protect them -- rather than competing on the quality of their customer acumen -- should be on the lookout for a stiffer competition.
  4. Creepy tech vs. helpful tech: Your phone now studies your face -- and biomechanics are one of those sciences where an unbelievable amount of information about you can be derived without you knowing it. There is an Apple Watch strap coming out which can passively measure glucose levels in the blood. And new tech is coming which measures how quickly you go through your shampoo and re-orders it for you. Needless to say, the volume of tech forthcoming that has great stated benefits -- and lots of creepy, latent possibilities -- is all less than 2-4 years away. These technologies will each affect the relationships that firms share with their customers.

The question is: Can companies build this technology with their heart in the right place and with supreme attention on what the customer wants?