#83 - Supply Chain Uncertainty, 2025 is 10% Over, Starbucks, Customer Happiness vs the S&P500
Welcome to my 83rd Customer Analytics Newsletter here on LinkedIn. There is a lot going on in the world as we settle into 2025. Quite a bit of uncertainty about global trade, customer experience strategies, uncertain politics, and many, many more things. I cover two of these this time, and also talk about coffee, and the relationship between customer happiness and stock market performance. Here are the topics:
Let's get moving!
Global supply chain uncertainty - Where have we seen this before?
Tariffs here, tariffs there, tariffs everywhere. New statements and counter-statements arrive every day and we are only getting started. Since most companies prioritize short-term cost management over short-term customer happiness, announcements of new import duties will drive many to urgently seek new supply sources, which will also involve using new international trade routes. Where have we seen this before? That's right, we saw it during Covid.
I want to talk briefly about the so-called planning fallacy in this context. In essence, companies already understand that their competitors and other companies around the world are looking for solutions to the exact same challenges. They are likely to jump on the first reasonable alternatives they see to the problematic situations they will now face. Most importantly, the people dealing with this will genuinely believe the timings, cost, and other information new supply sources give them and will fill out and present pretty Excel spreadsheets that suggest these major changes are manageable and won't be too disruptive for your company, your distributors, and your end customers.
This approach is simply not correct. The correct way to plan for major disruptions to supply chains is to start by using the costs and timing information from the last major disruptions. You all need to start by assuming the new supply chains you set up will be a total disaster, like last time, and only change those assumptions when you have concrete proof that this will not be the case.
I suspect we should all be expecting major new tariff and supply chain announcements from governments around the world for the next few months. Please assume the worst, and work hard to improve things as quickly as possible. If you want to get a head start, watch, listen to, or read this CX Iconoclast interview from April last year with Chris Gopal - Breakthrough Supply Chains in Complicated Times.
We are more than 10% into 2025. Is your company more than 10% committed to CX?
Speaking of 2025, now is a good time to check whether your company really is committed to improving customer retention and growth. Yes, your CEO and other members of the leadership team have probably made many internal and external statements about new focus on customers, and how great everything will be for them. So... is it? Try to look back at what your CEO has said on the subject leading up to the new year. Personally, I think statements like "We are all in charge of customer experience" are red lights. When a CEO says this, it usually means that no new resources will be devoted to CX or Customer Success, and that no new initiatives will be launched.
I suppose one piece of what I see as CX-washing may be happening in your company. You may be introducing ChatGPT-based and similar bots to your contact centers. Your leadership may be marketing these to you as being about CX improvement, but they are really about labor cost reduction.
So, I urge you to go to your external and internal websites. Look at your latest quarterly and annual reports, plus any records you have of shareholder calls, if they exist. What has your CEO said about the new investments they are making in customer and partner retention and growth? Do the same with recent all-employee emails. Look at the intranet page for each leadership team member. What do they list as their major new projects and initiatives for 2025? If you see relevant new investments, fabulous! You should have a great 2025. If not, well, perhaps this is a good time to refresh your resume / CV and start to look at what other company say about their new investments in the area. Naturally, I would personally prioritize companies who say that they are implementing AI beyond the contact center to drive these efforts. It's a new year. Make sure the remaining 90% of it is great for you.
Recommended by LinkedIn
How Starbucks Lost—and Can Reclaim—Its "Third Place" Magic
In this episode of the CX Iconoclast podcast, Richard Owen speaks with Joe Pine and Dr. Louis-Etienne Dubois about Starbucks’ journey of rediscovering its core identity as a "third place" — a welcoming environment between work and home. They explore how Starbucks' focus on retail efficiency and loss of employee-customer connection led to its decline, while highlighting the brand’s unique strengths that competitors haven’t been able to replicate. With the new CEO aiming to return to the company’s roots, there’s optimism for Starbucks to reclaim its position in the market.
The discussion emphasizes the vital role employees play in creating memorable customer experiences. Once renowned for treating employees well, Starbucks has seen unionization efforts arise as a sign of declining satisfaction. Louis and Joe stress that investing in employees is essential to reviving the human connections that define Starbucks’ brand.
Finally, they tackle the role of AI in business, warning against over-automation. While AI can optimize operations and augment employee abilities, misapplying technology risks stripping away the human touch that makes Starbucks unique. The key lesson? Authenticity, employee experience, and strategic technology use are critical for businesses aiming to create lasting customer loyalty and meaningful experiences. Read, watch, or listen via this link.
Latest ACSI report on CX versus stock market performance.
Dr. Claes Fornell founded the American Customer Satisfaction Index back in 1994. His primary intention was to create an investment fund, believing that the consumer companies with the happiest customers will perform better than the stock market average. That has certainly proven to be the case most of the time. From 2006 until recently, the cumulative return the ACSI selection of customer happiness leaders has had a cumulative return of 2265%, while the S&P 500 has had a cumulative return on investment of 605%.
Perhaps oddly, that relationship did not hold up well from 2021 to 2024, though it now seems to be turning around. I don't know why. Perhaps there are limits to panel-based research in the modern age. Or perhaps factors other than happy customers have had a greater impact on stock market performance over the last few years. Who knows? If you believe you do, please reply to the online version of this newsletter. In the meantime, you can read what the ACSI has to say about it here.
Notes
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Maurice FitzGerald is Editor-in-Chief, Content at OCX Cognition. He retired from HP where he was VP of Customer Experience for their $4 billion software business and was previously VP of Strategy and Customer Experience as well as Chief of Staff for HP in EMEA. He and his brother Peter, an Oxford D.Phil in Cognitive Psychology, have written three books on customer experience strategy and NPS, all available from Amazon.