Three Risky Customer Experience (CX) Initiatives

Forrester reports that customers are willing to spend nearly five times more for excellent customer experience (CX) than they would for poor CX*.

But improving customer service comes at a cost. Besides the time and effort required, sometimes marketers need to take risks to make their company more customer-centric. Here are three examples of companies who have taken a leap in the name of CX innovation.

1) Surge pricing for deliveries

Redmart is an online, home delivery supermarket based in Singapore which provides all the bells-and-whistles that one might expect from a digital leader in 2017. One way it has pulled ahead of the pack, though, is in how it schedules deliveries.

Once customers have finished their shopping, they are asked to choose a two-hour slot for delivery. But instead of offering free delivery at all times, Redmart has made a risky decision and imposed ‘surge pricing’ at popular delivery times.

That is, if you can only accept groceries at a particularly busy time then you are charged for your otherwise ‘free’ delivery. On the plus side, if you can receive groceries at an unpopular time you pay nothing for delivery or even get a small rebate.

This is a risky strategy as most companies do not like to add visible surcharges to services initially offered for ‘free’. 

The customer benefit of this innovation is that those who have a tight schedule can be sure to get the delivery time that they need at a small extra cost. And those who are flexible enough to make the company’s schedule just a little bit easier benefit with a small discount.

2) Using customer rewards to encourage criticism

Qoo10 (pronounced ‘cue ten’) is a popular online marketplace in Southeast Asia.

The company’s main strength is that customers can buy low-cost products from China and find obscure items globally through one shopping and payments hub. This strength, however, is also a weakness as the company’s customer experience is dependent on the performance of its merchants.

To encourage its partners to deliver quality products on time, Qoo10 take a significant risk. The site rewards each customer with redeemable Qpoints when they verify delivery and offers additional points to those who take a photo and write a short review.

The result of this simple mechanism is that every product listing is accompanied by numerous comments about the quality of the merchant’s services, including photographs of the received items. These are largely positive but in many instances customers make it clear when they receive poor quality goods or late delivery.

On one hand, encouraging comments risks damaging the site’s reputation but, on the other, having reviews from multiple, unrelated customers enhances the overall customer experience.

Qoo10 consumers can take comfort that they can order from suppliers outside of their home country without worrying too much about their commitment to customer service.

3) Significant discounts for those working in the sharing economy

As everywhere, south-east Asia is now enjoying the benefits of the ‘sharing economy’ through taxi-hailing apps. In Singapore, one of the main companies in this space is called Grab.

In Singapore, however, Grab drivers must purchase commercial auto insurance even if they are only working for Grab on a casual basis.

In response to this requirement, AXA has decided to take a risk to serve its customers better.  The company now offers an insurance product which reduces the cost of the commercial insurance for part-time drivers by 30% and then charges drivers on a per-km basis.

This means that the firm is, in essence, leaving money on the table so that Grab drivers who work on a part-time basis pay less for insurance than those working full-time.  Customers clearly benefit in this case at a significant and measurable cost to the company.

So…

Whether its risking upsetting customers with additional fees (Redmart), exposing bad merchants in your marketplace (Qoo10) or leaving money on the table (AXA), companies are taking significant risks to improve their overall customer experience.

Whether any of these strategies will pay off is uncertain, but to enjoy the benefits of improving customer experience, it is likely that more companies will have to undertake similar, risky initiatives.

Written by: Jeff Rajeck

Source: Econsultancy