Before we dive into designing your CX strategy, we need to define what it is we're talking about. And this is the point at which people often start to get a little vague...what actually is a CX strategy?

You need to know what you're trying to achieve. What's your vision or purpose? You need to be clear which customers you're targeting. This is something we'll talk about later. You need to know what your proposition is (and how it's different from others in the market, if you're in a competitive market), and you need to understand how you're going to deliver that proposition. Finally, you need metrics so that you know if you are on track.

A good strategy is one that finds the balance between getting bogged down in detail, and being so high-level and platitudinous that it doesn't help you make any decisions.

One test is to think about what you're choosing not to do. Invent a fictional competitor, and think about what an entirely different, but legitimate, vision might be. Which customers are you choosing not to target? Which proposition are you happy not to offer?

As David Ogilvy said, “strategy is sacrifice”. You can't be all things to all customers, and unless you can tell me what your strategy isn't, then I don't think you can meaningfully tell me what it is.

So let's move on from discussing overall business strategy to thinking about our CX strategy more specifically. What does it need to include, and how does it tie in with the overarching business strategy? We’ll work our way around the CX Strategy Canvas, going box by box.

It all starts with customers, and with the simple idea that customer satisfaction, built on memorable customer experiences, pays in the long run.

Thinking about how to place a value on the customer experience starts with retention - it's more cost effective to keep a customer than to win a new customer. So if you know your average cost of acquisition, it's easy to estimate the value of this.

But happy customers are actually worth a lot more than this. Satisfied customers are also likely to buy more from you, after all they now trust you to do a good job for them. They’re more likely to say nice things about you, referring you to friends and family. (Those, by the way, are the “Three Rs” of loyalty identified by Harvard Business School in the late 90s).

Customer satisfaction contributes to far more than retention, and it attacks both sides of the profit equation by increasing revenues and reducing cost to serve. But can we quantify that assertion?

We can, and that’s precisely what Customer Lifetime Value helps us to do. How to calculate CLV is an article for another day (we cover the basics in this free webinar), but the key takeaway is twofold:

• In most industries customers become more profitable the longer they stay with you

• The most long-term profitable customers may well not be the ones making you most money right now

Customer Lifetime Value is useful, in part, because it is forward-looking. What you’re really interested in is not necessarily what customers are spending today, but what they may spend tomorrow or in 5 years. So this gives us the first piece of the puzzle. Which customers do we want?

We can start by taking a design thinking approach: which problems are we solving for customers. Or perhaps a better way of putting it: which problems are we helping them solve? What are customers trying to achieve?

It's important to keep an eye on fundamental motivations here, thinking about the emotional and status needs that your product may fulfil as well as its functional ones. These often relate, at least in part, to who customers are, their values and beliefs, and the role they're playing at the time. People often focus on customer segments, but I think role is often a more revealing idea, because that often opens up those more fundamental motivations that differentiate the needs of different customers.

Two questions that can be very helpful here are:

"Why?" - Why is this important to the customer? What is it about it that matters to them?

"What kind of?" - The example I always turn to here is to imagine that I'm booking a hotel room. On paper it's the same goal whether I'm booking a Premier Inn for work or a boutique hotel for a weekend away, but in fact I'm looking for totally different things. Beyond that surface goal, my needs as a customer couldn't be more different. I haven’t changed, I'm still the same person, but I'm playing a different role...and that dictates different needs that are captured by the question "what kind of" - what kind of hotel do I want to book? What kind of experience am I looking for?

For each customer segment you've identified, what is your proposition?

One tool that's really useful for thinking about your proposition is the three-legged model outlined in the Discipline of Market Leaders. In it, the authors suggest that there are 3 essential components of what you do - Product leadership, Operational excellence, and Customer intimacy. Great companies are good at all three, and world class in at least one.

Ask yourself, first, are there any of these where we're lagging the market? If so, you need to fix that. Where are you going to focus on being the best in the market? Will you be known for your amazing relationships with customers? For your innovative, high quality, products? For your reliable, cheap, delivery?

If you pooled opinions from across your organisation, or even your board, would you get consistent answers? That's a pretty good test of your strategic clarity.

What you do is not just your product or service proposition, but also your brand appeal, and the customer experience you create around your core product. I encourage clients, when designing journeys, to think about their Emotional Value Proposition, in other words how do you want customers to feel while they're going through this experience.

That can open up a whole host of emotional needs and motivations that lie beneath the surface proposition, and reveal lots of details in the design of experiences that contribute to or detract from the emotions we're trying to create.

What resources do you need to deliver your propositions? Who are your key partners? What resources do they have? What do they do (better than you can do it) that helps you deliver value to customers?

Your bargaining power is important, and can often vary from time to time based on other internal and external factors. Who holds the balance of power in your relationships with suppliers? What might cause it to change? How might government or regulatory bodies play a role in that?

What are your costs, and where do they come from? What are your, and your partners', most expensive resources? Think about fixed costs, variable costs, and large capital expenditure items.

To grow your customer base you need to make people aware of you, persuade them to become customers, and then retain them.

Your bargaining power is important, again. Who holds the balance of power in your relationships with customers? What might cause it to change?

You'll need metrics, KPIs to ensure that you're on track, and to highlight anywhere there's a gap between what you set out to do, what customers want, and where you currently sit.

But it's not just about metrics, you need to make sure that you have a rounded customer insight programme that is giving you the information you need. So what kind of measures and indicators are we talking about?

Again, you don't want to overcomplicate this so that you end up stuck in paralysis by analysis, but I think it's useful to think in terms of 4 categories of measure or indicator that are important.

It's nice to have a quantitative measurement, but often something more qualitative is all we can realistically hope for. "Not everything that counts can be counted", as the saying goes.

We also need a combination of internal measures which provide an indication of operational efficiency, and external measures based on outcomes for the customer. 

So there we have the whole CX Strategy canvas, a high level tool designed for you to capture and discuss the essentials that go into building a customer-led organisation. Use it to explore potential strategies, to understand what competitors are doing, and to pool opinions on your own approach.