In this episode of Executive Connect, host Melissa Aarskaug sits down with customer experience expert Shep Hyken to reveal why loyalty is built on emotion, trust, and consistency. Drawing on research from thousands of consumers, Shep explains how companies are being compared to Amazon, Apple, and the best experiences customers have ever had.

They explore how friction destroys loyalty, why predictable service creates “customer amazement,” how AI should enhance rather than replace human connection, and how CX directly impacts revenue and retention.

This conversation is essential for executives, founders, and leaders who want to turn service into a competitive advantage.

Chapters:

(00:00) Loyalty Is an Emotion, Not a Program
(01:38) Why Customers Compare You to Amazon
(03:17) Becoming World Class in Experience
(04:08) The “Our Customers Are Different” Myth
(06:17) Creating Predictable Customer Amazement
(08:48) What Consumer Research Reveals
(11:38) Eliminating Friction in Customer Journeys
(15:38) Why Most Surveys Fail
(17:45) Generational CX Differences
(21:56) Training Customers the Right Way
(27:58) AI and Customer Trust
(31:40) The Amazon Effect Explained
(33:16) How Small Companies Can Compete
(35:55) Communication as a Growth Strategy
(38:03) AI as an Experience Multiplier
(43:26) Repeat vs Loyal Customers
(46:08) Where CX Initiatives Fail
(48:00) Connecting CX to Revenue
(49:19) Rapid Fire Leadership Insights
(52:16) Restoring Customer Confidence

Shep

(0:10) I think the question I want to answer is why is loyalty an emotion versus a program? (0:17) The companies that have really figured out customer loyalty realize that there’s a difference between a repeat customer and a loyal customer. (0:25) I encourage every company to figure out how they can get that customer to come back, but I want them to be so happy with the experience they have overall that it wouldn’t matter if we had points or perks.

(0:37) They are just coming back because they love us.

Melissa

(0:40) Quick question, when your customers think about you and their last great experience, are they thinking about you or Amazon? (0:50) Today’s guests would argue that that’s real competition. (0:54) Shep Hyken is one of the world’s leading experts on customer service and experience, a New York Times and Wall Street bestselling author, and a trusted advisor to companies that want customers to come back again and again.

(1:11) He surveyed more than a thousand American consumers to understand what people actually expect from the companies they do business with, and findings are both clarifying and a little uncomfortable. (1:25) In the AI-powered world, consumers don’t compare you to your competitors. (1:30) They compare you to the best experiences they have ever had, period.

(1:38) Welcome, Shep.

Shep

(1:39) Well, it’s great to be here. (1:40) Thanks so much for having me, Melissa.

Melissa

(1:42) Happy to have you. (1:43) Now, you make a powerful point that customers aren’t comparing us to competitors in our industry. (1:50) They’re comparing us to the best experience they’ve had anywhere.

(1:54) Why do leaders still underestimate this?

Shep

(1:58) Well, I’ll give you a good example. (2:00) It’s not so much that they underestimate it. (2:02) They don’t understand.

(2:04) Everybody is a consumer. (2:06) I don’t care if you’re in the B2B, selling from business to business, or you’re selling direct to consumers. (2:12) Your customer has bought from a company they love, and that company might be a company like Amazon or Apple.

(2:20) We just did new survey results that we just got in this week. (2:25) Yeah, we do. (2:26) Every year, we survey a cross-section of the U.S. population. (2:30) It’s weighted exactly to the U.S. Census for age, gender, geography, ethnicity, income levels. (2:39) We usually do about 2,000 to 2,200 to make sure we get a pretty good accurate picture within, oh, maybe one or two percentage points variance. (2:47) But what we find is that everybody is a consumer, and they compare you, regardless of the kind of business you’re in, to the best experience.

(2:55) If I’m doing business with anybody, I go, why can’t they be as good as the last great company I did business with? (3:02) They did it, made it so easy for me. (3:04) Yet, here we are looking at a different thing.

(3:07) So why do we get this wrong? (3:08) People think they compete, when it comes to customer experience, they think they compete with direct competition. (3:15) And I think that’s a good place to start.

(3:17) But if you want to be world-class versus just best in class, then you need to take a broader look. (3:24) And by the way, why would somebody want to be world-class? (3:28) It’s not so much that I want to be the best in the world, but if I benchmark myself against a bunch of dogs in a horse race, I’m still going to be a dog.

(3:38) And I want to be better than that. (3:40) So I’ll take a look at what other companies are doing. (3:43) We have a six-step process.

(3:46) I call it the I’ll-be-back conversation. (3:48) What gets customers to say I’ll be back? (3:50) And the first is to look at your competition and directly compare yourself.

(3:54) But then you start looking outside to say, what are companies doing outside of my industry, outside of my direct competition that I like, that we could do if we wanted to do?

Melissa

(4:08) Now, I’ve heard this a lot. (4:10) Our customers are different than their customers. (4:14) Why is that so dangerous?

Shep

(4:17) That is incorrect. (4:18) Thanks for playing the game.

Melisssa

(4:20) Yeah, exactly. (4:21) So why is it different or dangerous?

Shep

(4:23) Oh, well, first of all, our customers aren’t different than other customers. (4:29) Maybe the process in which they go about buying is going to be different depending upon your industry. (4:36) If I’m a defense contractor dealing with the government, you can argue that the government looks at things completely different than a consumer.

(4:43) And I have worked with enough government contractors to know that when they have a great relationship and they’re delivering the experience and the product and a competitive price, not even the lowest price, they will have a leg up on the bidding process. (4:57) The bidding process does look for a low price and economics. (5:01) But guess what happens when you’re the incumbent?

(5:04) The government, for example, will sit down with you, their vendor, their supplier, and say, look, we love it. (5:10) Let’s design the proposal. (5:13) We have to go out and look other people with you being the winner in mind.

(5:17) How do we do that? (5:18) OK, now, I don’t I don’t want this to sound like they’re setting up an unfair advantage. (5:23) But what the government’s saying is this is what we love about doing business with anybody like you.

(5:28) We’re not going to look at anybody else if they can’t do this. (5:32) So if you’re doing a great job, you’ve got a leg up. (5:34) So I think that answers your question.

(5:37) Customers, whoever says my customers are different needs to recognize they’re not so different. (5:44) I love the process.

Melissa

(5:46) I agree. (5:47) Now, how fast do customers expectations really reset after a great experience?

Shep

(5:54) How fast do they reset?

Melissa

(5:56) Yes.

Shep

(5:57) Well, I think what happens, it’s not so much that they reset. (6:00) They just expect. (6:01) So instead of the word respect, let’s call it expect.

(6:05) If I am great today, they expect or at least hope that I will be great tomorrow. (6:11) And when that happens repetitively, it becomes a predictable and consistent experience. (6:17) This is where I start to talk about the concept of customer amazement.

(6:21) People think when I talk about amazement, they’re thinking I’m going to use a word like, wow, incredible, best service I’ve ever had. (6:29) And you know what? (6:30) It might be.

(6:31) But if it is, it needs to be that way all the time. (6:34) So here’s what I tell my clients. (6:37) You’re going to have opportunities to go above and beyond.

(6:39) If there’s a problem, a mistake, maybe it’s not your fault. (6:43) Maybe they’re having a catastrophe and you step in and you go above and beyond the normal things you would do just to take care of that customer. (6:51) That’s great.

(6:52) Those are isolated incidents. (6:54) You know, it’s like if you come to my restaurant every single week and I know that this week is your birthday and I’m going to give you a cake with a little cake with a candle in it at the end, it’s a surprise. (7:05) Don’t expect that surprise next week when it’s not your birthday.

(7:08) Birthdays come once a year. (7:10) Okay. (7:10) So once we get that out of the way, where do we go?

(7:13) We go to what’s the basic average and average is mediocre, not good. (7:19) If you can bump it up just a tiny bit better than average, you’re already operating in the zone of amazement. (7:26) But to make it predictable and consistent, if all you do is meet expectations all of the time, you’re now in a zone of amazement because companies have a difficult time being predictable and consistent.

(7:40) This is what I want my customers to say. (7:43) Whenever I do business with them, they’re always so helpful. (7:47) They always get back to me quickly.

(7:49) They always follow up. (7:50) They’re always knowledgeable. (7:52) They’re always friendly.

(7:53) The word always followed by something positive. (7:56) Even if there’s a problem, I know when I reach them, they will always take care of me. (8:01) And when you’re operating at that level of always that’s consistent and predictable, you are operating in the zone of amazement.

Melissa

(8:08) Ready to lead smarter and invest wiser? (8:11) On the Executive Connect podcast, we unpack executive strategies for wealth and influence. (8:18) Hit the subscribe button now.

(8:21) Don’t just watch, act. (8:23) I love that. (8:23) Now let’s talk a little bit about the 1,000 customers.

(8:27) What have they actually told you? (8:29) So you surveyed over 1,000 American consumers. (8:32) What stood out the most about what they liked, disliked, wanted, and expected today?

Shep

(8:39) Well, I mean, my report has, I don’t know, 30 pages of stats, facts, and findings. (8:45) But let me give you some of the highlights. (8:48) Trust has become a really important part of the experience.

(8:52) If I don’t trust you, it doesn’t matter. (8:55) It’s game over. (8:56) I’ll find somebody that I trust.

(8:59) But great service increases the trust that a customer has with the company they do business with. (9:05) 83% of the people we surveyed said, yeah, you do that. (9:10) I’ll trust you more.

(9:12) 66% said convenient customer service is more important than friendly customer service. (9:19) So they want an experience that’s easy and convenient, and they’ll put up with somebody who maybe isn’t. (9:27) By the way, rudeness and apathy will turn people off, okay?

(9:31) But it doesn’t mean they have to go over the top with their friendly attitude. (9:36) The 59%, which is basically six out of 10 customers, are willing to pay more if they know they’ll receive great service. (9:41) By the way, that number increases if it’s convenient service.

(9:45) And about half the people… (9:47) By the way, this is stats as of just two, three weeks ago. (9:52) These are 2025 stats.

(9:55) So when this airs, I’m not sure when it’s going to go live, our session today, but it’s fairly new and recent information. (10:03) It’s not like from three or four years ago. (10:05) We’ll have even more newer, latest and greatest information probably in the next couple of months as we just wrap up our survey for this year.

(10:12) But anyway, half the people said customer service was worse this year than last year. (10:18) I am starting to see a trend that… (10:21) And I just saw some numbers coming in on our initial results of our most current survey, that I’m wondering whether customers are starting to put up with bad service more than they have in the past.

(10:34) If that is the case, that’s a sorry place for us to be. (10:38) But on the other hand, it’s a fantastic place for the people who want to compete, not only with a great quality product and a competitive price, but an experience that customers like. (10:48) Because there’s no reason a customer should have to say, I’ll put up with them.

(10:54) Who else am I going to use? (10:56) It’s just not good.

Melissa

(10:58) You know, and I agree with you. (10:59) I have spent most of my life living in Las Vegas and working 15 years in the casino gaming industry, which hospitality is by far the best there than a lot of places around the world. (11:15) And when I started seeing that shift, even in that industry and that state a little bit, and other gambling hospitality places, I agree with you.

(11:25) I noticed that myself. (11:26) And I’m actually quite worried, like you said, they’re accepting less these days. (11:30) I’m curious, what do you think that they care more about than people actually think?

Shep

(11:38) Wow, what do they care more about? (11:41) I think friction. (11:43) And by the way, this has probably been around for a while.

(11:46) I just think any time you make it hard for a customer to do anything, friction includes making somebody wait in line. (11:53) Let’s go to the casino. (11:54) How long is it going to take for me to go and get my, I know casinos have their membership cards.

(12:01) And if you’re going to make me wait 10 minutes to go in and start having fun, that’s friction. (12:07) If I go to the restaurant and there’s a long line and it’s 40 minutes before I get seated, that’s friction. (12:15) Friction may come in the process.

(12:18) If I’m going to sign up for something, I’ll give you a great example of friction. (12:23) And by the way, I’m going to use this term to answer your question. (12:26) I think that’s one of the biggest opportunities.

(12:30) And yet it’s also a problem because if you don’t take advantage of the opportunity, it is a problem. (12:34) I wrote a book titled The Convenience Revolution, which I believe was pretty much the first book ever written about the whole idea of being convenient and eliminating friction, not just in the customer support world. (12:45) That book had been written before.

(12:47) I’m talking about every aspect of the business. (12:50) So one of the case studies in the book is with the Wall Street Journal, and they have an online subscriber. (12:57) Like if you, they want you to get your digital subscription, not necessarily a newspaper delivered at your door.

(13:05) So you go online and you start filling out this form. (13:07) And what they realized is that every piece of information you asked your customer is a form of friction. (13:15) I need your name.

(13:16) That’s necessary. (13:17) I need your email address. (13:19) That’s necessary.

(13:21) I need your credit card information, whatever else goes with the credit card information to make sure that I can run your card. (13:27) Outside of that, I don’t need any other piece of information. (13:32) So why are you asking me what color my hair is?

(13:34) That’s an exaggeration. (13:36) But by the way, on my driver’s license, it says what color is your hair? (13:39) It says skin.

(13:41) But anyway, that’s another story. (13:43) I digress. (13:44) But there’s no need to ask for additional information.

(13:48) No other fields need to be filled out. (13:50) And what they learned is for every field they took away and the information they were asking in the checkout form, they gained a small percentage of subscribers than if they left that request for information in. (14:06) That’s the kind of thing I’m talking about.

(14:08) It’s a tiny little thing made a difference. (14:10) So here’s what happens. (14:12) I don’t know if they did this or not, but this is what I would do if I were in the Wall Street Journal’s position or any other magazine or any other subscription.

(14:21) Don’t ask for things you don’t need. (14:23) Once they become your customer, you’ll start to get the information and you can ask for pieces of information little bits at a time along the way. (14:31) They won’t even know you’re asking for it because it won’t seem like a long, arduous, friction-laden process.

(14:38) So that’s an example of where I think companies are missing the mark are the opportunities they have to eliminate friction, make the process easier. (14:47) And this is what you want people to do. (14:49) Why would I want to switch to a different company?

(14:51) It’s so easy to do business with them.

Melissa

(14:54) Yeah, I love that. (14:55) And it’s made me think. (14:56) I’ve been doing business with several companies for many years and they have that difficult process at the front end.

(15:03) And then now they’re moving into getting feedback for me that’s 37 pages long, you know, different experiences, this, that, the meal subscription service, they want me to, you know, rank every meal and what can they do better. (15:18) It takes like 30 minutes to fill their survey out. (15:22) I’ve never filled a survey out once because, but I’ve been a customer for six years.

(15:28) I probably have valuable feedback. (15:30) If it was shorter to your point, I’d, I would definitely fill it out and easy to access, but I love that. (15:37) I think that’s so true.

Shep

(15:38) So surveys are interesting. (15:39) We do a whole section on, you know, how many people, what percentage of customers are willing to fill out surveys, what makes them compelled to fill out a survey. (15:49) So I’m not doing a blatant advertisement because you don’t even have to give me your email address to get this.

(15:54) But if you go to Heiken.com, that’s my website, H-Y-K-E-N, click on the research tab, you can download without even giving me your email address. (16:04) So it’s totally ungated as they call it. (16:08) Once again, low friction.

(16:09) Okay. (16:10) I guess because you have to click on the research tab to open up the report, that’s friction, but honestly download it. (16:17) There’s a lot of information.

(16:19) Here’s what we know. (16:20) If I send you the survey and it’s timely, meaning it’s not a month from now, but it’s the next day, that’s important. (16:27) If it’s too long, it’s not going to be, you’re going to lose a lot of opportunity to get your completed surveys.

(16:35) If it’s too often, you’re never, I mean, I love Clear. (16:41) Clear is the, you go to the airport and there’s the regular security line. (16:46) There’s TSA pre-check, which you pay a few bucks for.

(16:50) And then there’s Clear, which you pay a few more bucks for, and you get to go in front of everybody. (16:55) Okay. (16:55) And it’s usually faster and I love them.

(16:59) And the people are so darn friendly. (17:01) I got to tell you, they hire and train these people well. (17:04) Kudos to Clear for doing this.

(17:07) But here’s what the problem is. (17:08) Every single time I use them, and sometimes it’s twice a day. (17:13) If I’m flying out of one airport and then having my meeting and then going out the same day, I will get two surveys for those two experiences.

(17:22) And by the way, they’re short, but I don’t care. (17:24) I’m not filling them out anymore. (17:26) So do it once every month or two.

(17:28) If they see I’m a somewhat active customer, that’s fine.

Melissa

(17:33) I love that. (17:33) I agree with you. (17:34) Now there’s a lot of noise around generational differences.

(17:39) Curious from your research, what differences actually matter most?

Shep

(17:45) Well, first of all, there’s a huge difference in the way Gen Z responds to everything. (17:51) And I’m opening up my report because I want to give you some accurate information. (17:55) But let’s just talk about, for example, the phone.

(17:58) And I think for the last, gosh, five, six years, we’ve been doing these surveys. (18:04) About seven out of 10 customers still prefer to use the phone to call a company rather than reach out in a digital experience on self-service, chatbot. (18:14) I predict this year coming, 2026, 27, 28, we’re going to see it start to go away from that because people are becoming more comfortable with it.

(18:24) But get this, 68%, which is about seven out of 10 customers, prefer the phone. (18:30) 82% of those are baby boomers, the older generation. (18:35) And then I guess there’s the one beyond that, but we keep within the boomers.

(18:40) Now, Gen Z, it’s 52%. (18:42) So about half of Gen Z says, I want to go to the phone. (18:45) And about eight out of 10 of the older people say, I’m only going to go to the phone.

(18:50) That’s where I want to go. (18:51) But here’s what’s really interesting to me. (18:53) So there’s a big generational difference.

(18:55) While the phone is king, 63% reject self-service completely. (19:01) Okay. (19:01) And you can guess what the age group is at.

(19:03) And 34% will stop doing business. (19:06) Even if they prefer to use the phone, if you don’t offer them the digital solution. (19:12) So here’s what happens.

(19:13) I’ve got a problem and I can go online and I’m looking for the customer support number. (19:18) And while I’m there right next to it says, what’s your question? (19:22) And I type it in there and they go, well, log in.

(19:24) We’ll give you the answer. (19:25) I don’t need to call. (19:27) And I can get my information right away without having to make a phone call being put on hold.

(19:31) The younger generation is more willing to do that than an older generation. (19:36) Great. (19:37) That’s fine.

(19:38) But you’ve got to make it available. (19:40) And then you’ve got to, you know, I know I’m kind of going down a rabbit hole here, but the basic gist of it is, if you don’t offer me that digital self-service option, even if I don’t necessarily need it, you’re going to turn me off as a younger customer. (19:53) So know who your customers are.

(19:55) If you cater to women, you’re not going to advertise men’s clothing in your woman’s clothing boutique and vice versa. (20:03) Okay. (20:04) So you have to know who your customers are, the demographic that you’re serving and cater to them.

(20:09) And their needs are going to be different. (20:12) You know, if you’ve got people who are, I know a great organization, Double AARP, which is for retired people. (20:20) You know, I’ll guarantee that those people are doing it the same way they, many of those customers that they ever doing it the same way they did in the 1970s and 80s and 90s.

(20:29) That’s because that’s the way they grew up. (20:31) That’s what they’re comfortable with. (20:32) And that’s what they want to do.

(20:33) So know your customer.

Melissa

(20:35) And you train your customers the way you want to engage as well. (20:39) I think once kind of AARP, that’s a perfect example, because if they’ve been, you know, mailing them something and they got to send something back, that’s something they’re used to every year. (20:50) But if they’re used to doing it online or sending it in, however they’re doing it, I’m curious, what are, what expectations are the same, regardless of if you’re Gen X, baby boomer, is there anything that’s the same?

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Shep

(21:56) Oh boy, great question. (21:59) I’d have to take a look. (22:00) What I think is tolerance levels are different between the generations.

(22:07) And sometimes it’s not what you think it is. (22:13) You know, Jen, you think a younger person would, you know, just because they’re, you know, I guess they’re wanting information quicker, faster, whatever, they would be less susceptible and get irritated quicker. (22:27) But the reality is, no, it’s the other way around.

(22:30) Like boomers, older generations say, you know what, I’m, I have a higher demand than Gen Z does. (22:38) So I, but I do think everybody has a certain level of expectation. (22:42) You have to meet it.

(22:43) And it just depends on the search, on the circumstance, the type of company you are. (22:48) By the way, we can train our customers, unfortunately the wrong way. (22:52) And, you know, I jokingly say the airlines, some of them have the motto, we’re not happy till you’re not happy.

(22:59) You know, as long as everything’s going well, then it’s easy to do business with anybody. (23:07) But in the airline business, if there’s a weather delay, that’s completely unrelated to the airline’s ability to deliver a great experience, I’m not going to put you up in a plane that’s going to get hit by lightning or send you into a storm. (23:21) I mean, I think that’s a pretty good idea not to get on an airplane, right?

(23:25) Unfortunately, customers have a low tolerance level. (23:28) They want to get where they want to go. (23:29) They’re upset, but this is what makes it worse.

(23:33) When the airline, maybe they’ve got a digital experience that’s great. (23:38) They send you a text or an email that says, we’re really sorry due to weather circumstances beyond our control, your flight’s canceled. (23:46) Here’s three flights that you get an option to get rebooked on.

(23:51) What a great experience that is. (23:53) That’s the way it should be until I look at those three flights and I go, you know what? (23:57) None of those are going to work for me.

(23:58) I’m going to go online or jump on the phone. (24:01) I’m going to call them and see if they can actually book me maybe two days from now instead of, you know, today, because I don’t need, you know, whatever. (24:08) And I realize the phone call is going to take 90 minutes of wait time.

(24:13) They’ve just destroyed that great experience. (24:16) By the way, I’m not picking on the airlines. (24:18) That could be any industry, any company, but that’s something that I see quite often because I travel every single week and I’m stuck in storms every once in a while.

(24:26) And I watch the frustration level of customers toward a company that has absolutely no control over what caused the problem. (24:34) Now, the people that work for these airlines, I watch how well they handle irate customers. (24:41) And I have to say what an incredible level of patience knowing that there’s a line 50, 75, 100 people deep and they’re dealing one person at a time trying to not be distracted by all of the anxiety and anger and whatever is being experienced by all of these other customers.

(24:58) So kudos to them.

Melissa

(25:00) Yeah, but to your point, that text is clear and kind. (25:05) It is, we’re having a weather problem. (25:07) Here’s, you know, otherwise I get texts from other airlines that say you’re delayed an hour.

(25:13) Yep. (25:14) You’re delayed two hours. (25:15) And so that’s where the irritation starts, right?

(25:18) When you’re flying, you know, you can’t control the weather. (25:20) So you’re at ease quicker than just the text that says you’re two hours later. (25:26) So to your point, clarity is the key.

Shep

(25:28) Right. (25:29) I agree with you, but let’s, let’s take it a step further. (25:32) If you don’t get the information, we know from the, just the work that we do, not giving you the information is going to give you a higher anxiety and levels of mistrust and all the negative feelings you’re having far worse than if I give you the information.

(25:48) I’m sitting at the airport. (25:50) I know my flight’s due to leave at four o’clock in the afternoon. (25:53) It is now 25 minutes to four.

(25:56) I know that they board the plane 30 minutes ahead of time. (26:00) The plane’s not even at the gate yet. (26:03) The gate agent has not made the announcement that the flight will be delayed.

(26:08) Everybody in the whole area knows that plane’s not here. (26:12) And it’s, and what’s interesting is if the gate agent, and when they finally do make an announcement, as you can tell the plane’s not here, let me tell you where it is and when it’s coming in and when we’re going to board. (26:25) And even if we are going to be 30, 45 minutes late, you can look around the room and you get this collective sigh.

(26:32) Now I know what’s going on. (26:35) So information is really important. (26:38) My cable company or my internet company, when there is an outage, they have multiple ways to reach me.

(26:44) Obviously, if there’s an outage and I’m strictly using email online, they’re not going to reach me if they email me. (26:51) But if they have my phone number, they can text me. (26:54) If they have my landline number, they can send an automated message that when I pick up, there’s a recorded message.

(27:00) They can send it to my Facebook account and direct message me to different social accounts that I have, which is why, you know, I talked to you about filling out forms and getting information when, and I know this because one of the major cable companies is my client. (27:14) And they said, we try to get as many ways to contact the customer. (27:18) So when there’s an outage in their area, we inform them ahead of time.

(27:21) We know so they don’t have to call us. (27:24) Okay. (27:24) We give them automatic updates every, I don’t know, it’s 30 minutes, every hour, but we let them know they will be updated every hour on the hour.

(27:33) So they’ll know what’s happening. (27:35) Everything’s beautiful. (27:37) I’m in control of my knowledge, and that is good enough to make me say, boy, I appreciate that proactive experience that I’m getting.

(27:46) By the way, that’s a convenient experience being proactive. (27:50) So I don’t have to pick up the phone. (27:52) I don’t have to shoot an email out to find out, hey, what’s going on in my area.

Melissa

(27:58) Yeah, I agree. (27:59) Let’s talk a little bit about AI experience. (28:04) Helpful.

(28:05) Is it helpful? (28:05) Is it harmful? (28:06) So AI touches every customer interaction now, it feels like.

(28:11) Where does it genuinely improve the experience and where does it damage trust?

Shep

(28:18) So 50%, basically 51% of customers say they’ve received bad information from a digital AI-fueled experience. (28:31) And guess what happens? (28:32) They don’t trust AI anymore.

(28:34) Have you ever talked to somebody in a customer support role that gave you bad information? (28:39) Of course you have. (28:40) Everybody has.

(28:40) You haven’t?

Melissa

(28:41) No, I haven’t.

Shep

(28:43) You’ve never received the wrong information from somebody?

Melissa

(28:47) Maybe I haven’t called a bunch and maybe I used more of the digital stuff.

Shep

(28:54) And by the way, digital could be a live chat experience. (28:59) But regardless, when executives say we’re not going to implement AI because it makes mistakes, I go, yeah, it does. (29:06) So does everybody on the front line.

(29:09) If you ask them, have I ever given, by mistake, bad information? (29:13) And by the way, it could be subtle. (29:15) It doesn’t need to be like a big mistake.

(29:17) Everybody’s going to say, yeah, once in a while, I misunderstand the customer. (29:21) I don’t give them what they want. (29:23) So that kind of thing happens.

(29:26) So I need people to realize that even though AI makes mistakes, so do human makes mistakes. (29:32) But because we’re so focused on it and expecting it to be right and perfect before we let it go and do its thing. (29:40) The other day Waymo, which is the car company that has the autonomous cars and it’s like Uber, but nobody’s driving.

(29:49) I go to Phoenix, Arizona for business a lot. (29:52) And I just love all these autonomous cars driving around. (29:55) It’s really crazy.

(29:56) Well, there was some type of an electrical outage and every single car in the system just came to a complete stop. (30:02) Now, if that happened and I mean, is that mean I’m never going to drive in another Waymo again? (30:10) Occasionally one of those cars will have a fender bender or maybe some other even more severe accident.

(30:17) Are you telling me that humans don’t make the same mistake and have accidents? (30:21) Of course they do. (30:22) Anyway, back to AI and the question, what you said, what eliminates the trust?

(30:27) On the flip side, half the people we surveyed said, yeah, I’ve used AI or the digital experience. (30:34) They don’t necessarily refer to it as the AI experience, but I’ve gone on, done a chat bot, gotten the information. (30:40) It was perfect.

(30:42) I liked that experience. (30:43) Half the people say that’s a great experience. (30:46) 60% believe it’s got potential to actually create a better experience.

(30:50) And I believe that number is going to increase more and more. (30:53) The reason it is still in flux is there’s lots of what are referred to as legacy systems out there, old systems that are the way, and they’re digital self-service systems, and they’re just old and not up to date. (31:07) And today’s system is so inexpensive to implement compared to what it was a long time ago, like six, eight, 10 years ago.

(31:16) But we invested all this money back then. (31:18) We are going to get our money out of it before we switch to anything new. (31:21) That’s not a good way to think.

(31:23) Meantime, your competition is implementing the latest and greatest at a very reasonable cost compared to what you paid. (31:30) And guess what they’re doing? (31:31) They’re creating the experience that gets their customers and some of yours who’ve moved over to keep coming back to them.

Melissa

(31:38) Yeah. (31:40) Let’s talk about the Amazon effect. (31:42) You say it doesn’t matter what industry you’re in.

(31:44) Customers still measure you against Amazon or Apple. (31:47) What does that mean for companies without their size and scale?

Shep

(31:52) Yeah. (31:52) Well, we’re going full circle and we’re going back to the original concept you had at the beginning. (31:56) We’re no longer compared to the direct competition.

(32:00) Our customers are saying, why can’t we be as good as Amazon? (32:03) So what Amazonation of the customer, it’s a hard word to say. (32:07) It’s not a real word, by the way, but it’s the word that we could use to describe that Amazon has trained us to expect that we’re going to be open 24-7 because Amazon’s open 24-7.

(32:20) And Amazon communicates with us beautifully. (32:24) We don’t love getting our email boxes blown up with all kinds of unimportant information. (32:30) But when you’re telling me my order was received, my order is shipped, here’s the tracking information, here it is a picture of it delivered in front of your doorstep.

(32:40) Here’s a picture of the porch pirate stealing it from your… (32:43) No, they don’t do that. (32:44) But seriously, that kind of information is great.

(32:48) When we do it with such incredible speed, where I order it in the morning and oh my gosh, I didn’t expect it, it’s here already. (32:55) My gosh, it’s only been four hours. (32:57) Guess what’s happening?

(32:58) You’re resetting my expectations of this is what great service, timely service, effective service looks like. (33:05) Why can’t a lot of the other companies I do business with? (33:08) Why is it that when I do a place an order for this company, they tell me it’s going to be one week before I receive it?

Melissa

(33:16) Now, what can smaller companies do better than Amazon does?

Shep

(33:20) They can do local better than Amazon. (33:23) And by the way, Amazon has a huge local presence in so many cities. (33:28) They have their warehouses and distribution and all those drivers that are now, I mean, they’re putting people in business driving for Amazon.

(33:36) A lot of these people own a business that happens to be an Amazon truck, which is really cool. (33:42) They’re doing local well from that end. (33:44) But when I say do local well, a local small store can compete.

(33:50) Now we’re talking retail because you asked to compare against Amazon. (33:53) Let’s take a retailer who’s local. (33:55) They can do things locally.

(33:57) And, you know, it’s like the owner goes to the same church or their kids go to the same school as my kids, you know, whoever owns Amazon, all the shareholders. (34:08) But let’s say the CEO of Amazon kids probably not, you know, going to the same school I am here in St. Louis or my kids are going. (34:16) So we do local.

(34:17) Well, one of the one of my clients is Ace Hardware. (34:21) And Ace Hardware is a network of stores, many of which are owned by a mom and pop, a family. (34:28) Oftentimes it’s one, maybe two or three stores.

(34:31) There’s a few Ace Hardware dealers that have more than that, but they’re owned individually. (34:38) And there was a store in, I believe it was near Houston, Texas. (34:42) And it’s I was maybe 12,000 square feet.

(34:45) That’s a nice size store. (34:46) Guess what goes up directly next door? (34:48) Home Depot, 150,000 square feet, more than 10 times their size, a better selection, lower prices, maybe.

(34:58) And guess what else they do? (34:59) They advertise 30 times more dollars are spent than this guy could afford to spend on advertising. (35:05) How does a guy like this survive?

(35:07) This is what he did. (35:09) He thought about it. (35:09) He pulled all of his ads on the regular traditional way because they’re going to disappear in the sea of ads that are being paid for by the competitor.

(35:20) That’s huge. (35:21) And he said, I’m just going to take all this money. (35:23) I’m going to start sponsoring baseball teams for kids, soccer teams.

(35:26) I’m going to go to the school dance and I’m going to pay for the food and sponsor the school dance. (35:32) I’m going to make sure that the community knows I’m here and that I love them and I’m giving back to them. (35:37) And guess what?

(35:38) That store thrived in the shadow of a big box store. (35:42) Why? (35:42) Because that owner did local well.

Melissa

(35:46) I love that. (35:47) That’s great. (35:49) Um, now what’s one Amazon behavior companies should start following immediately?

Shep

(35:55) Nobody’s ever asked me that question, but I’m going to give you a quick answer. (35:59) Communication. (36:00) And I’ve already mentioned it.

(36:01) Uh, and that, uh, many companies are afraid to over communicate with their customers. (36:08) But when the communication is of real importance or, um, something that a customer would desire, I think it’s important. (36:16) If you send me emails and communicate and text messages about your latest and greatest products, you’re selling me.

(36:22) But if you give me information about something I need, that’s important and relevant to me, you’re helping me. (36:28) You’re telling me, you’re making me feel comfortable. (36:30) Uh, so like Amazon, as I mentioned, the three or four emails you get as a result of placing an order, uh, until the time you actually get your, your order is a crucial importance to that customer.

(36:44) What they don’t do in between is bombard you with messages about, Hey, you’ve bought this in the past. (36:49) You know, uh, why don’t you buy it again? (36:52) So those, those types of messages are marketing and promotion, and there is some place for that.

(36:58) But in your typical experience that you asked me, what’s one thing Amazon can do? (37:03) I think just send the customer the most relevant information they need.

Melissa

(37:08) That’s great. (37:10) So some companies are looking at AI is a cost cutting shortcut. (37:16) You frame it as an experience multiplier.

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Shep

(38:03) So first of all, let’s take a look at what AI does. (38:06) It does many things. (38:07) It’s much more than just a customer experience tool.

(38:10) It’s an employee experience tool as well. (38:12) It’s a process improvement tool. (38:15) Everybody asks me, isn’t AI going to take away all the jobs and let’s just use customer support because that’s the world I live in.

(38:23) What’s going to happen to the customer support department now that AI can answer all the questions? (38:28) Well, that’s wrong. (38:30) AI can’t answer all the questions.

(38:32) There will always be a question that AI has never heard of before. (38:35) And the only way that AI gets better is because we as a company train it to get better. (38:40) So we keep giving it the information that it needs because customers are telling us what they need.

(38:46) Some customer is going to come up with something new. (38:48) So that’s number one. (38:49) Number two, the flaw isn’t that AI is going to deliver bad information.

(38:54) Sometimes the way the customer is asking it is hard to understand, even though it’s so much better and contextually, it can understand. (39:02) I get on chat GPT all the time and it’s my friend. (39:07) It’s not my therapist, but it is my support.

(39:10) I write articles every single week. (39:12) And what I love to do is I’ll say, hey, I want you to scour all the articles that are in, you know, that have come out this week and all different publications that are focused on customer service or customer experience. (39:25) And I just want you to tell me the titles of these.

(39:29) Okay. (39:29) Now, boom, it does this within moments. (39:33) I have 30 titles of articles that are written by colleagues and, and by publications that I’m familiar with.

(39:40) Oh, that’s a great title. (39:41) I don’t even need to read the article to start writing about that because this is the way my brain works. (39:48) So if I want to write a five, 600 word blog post or a news article, I’ll take that first little piece of spark.

(39:56) I’ll write it. (39:57) And I don’t care about the grammar. (39:59) And by the way, AI grammarly type programs, fixed grammar for me.

(40:02) I don’t care about grammar. (40:04) I’m just going to throw this information from my brain into the computer. (40:07) And I get down to that last paragraph and I go, okay, I got to write the last line.

(40:12) It brings it all together. (40:14) Please help me. (40:17) I’ve written a great article.

(40:18) I just want to close it off perfectly. (40:21) And oftentimes I already have the answer myself, but I always go for verification. (40:26) That experience has made me a better writer.

(40:29) It’s made me a more efficient writer. (40:31) And that’s exactly what companies are using it for. (40:34) Become more efficient.

(40:36) Realize that you’re not going to replace people because people are still, it’s important. (40:43) ATMs were put into banks in 1960s, something with Barclays Bank. (40:49) And when they said, oh, the ATM, people are going to be able to get their money, deposit their money.

(40:53) We’re not going to need tellers anymore. (40:55) There’s still tellers in almost every bank. (40:57) There will always be a customer support person.

(41:00) The company that chooses to go all in 100% digital is making a big mistake. (41:06) And you’ll see that companies who did that are now going back to realizing, can AI and digital support be friendly and caring? (41:16) Yes.

(41:17) Can it be empathetic? (41:18) It could appear to be, but it’s an act. (41:20) It’s a machine that’s talking to you.

(41:22) And customers know that it’s a machine. (41:25) And if they want true empathy from the company, they need to talk to a person. (41:30) The more complex problems, which one day will be able to be resolved with AI, but there will always be more complex problems after today’s complex problems.

(41:41) People are still in a role. (41:43) Employees are saying, hey, I love that AI is taking care of the simple things like tell me where my order is. (41:50) Did it ship?

(41:51) What’s my bank balance? (41:53) Did you receive my check? (41:54) That kind of thing.

(41:56) As a customer support rep, I don’t need to deal with that anymore because AI is handling it. (42:01) Give me the good stuff. (42:02) Let me really take care of the customer.

(42:04) And by the way, on the inside, give me a tool that’s AI fueled that when the customer asks me a question, I don’t have to be searching through pages on my screen to get the information. (42:18) I know how to ask the right question for AI to give me the information right away, or maybe AI is listening to the conversation, feeding me the information I need to share with that customer. (42:29) And now you’ve just eliminated the time it takes to say, hold on just a moment.

(42:33) Let me see. (42:35) And if you’ve had this experience, you hear somebody typing, they’re asking a question, they’re reading something on a screen, not liking what they see, realizing it’s the wrong answer, going to another answer. (42:47) You’re going to make me more efficient.

(42:49) Support calls are going to get longer because the problems that they’re dealing with are more complex. (42:55) However, they are shorter than they could have been a few years ago without AI supporting the employee. (43:01) Find ways for AI to save you time with processes.

(43:06) The data that it can mine and pull together and make special reports with is phenomenal. (43:11) Used to take two, three days to do that. (43:13) Now it only takes a few minutes to do it.

(43:15) And guess what happens? (43:17) You make people smarter when you give them the right information quicker and they don’t have to waste the time to get the information.

Melissa

(43:24) Yeah, absolutely. (43:26) Let’s talk loyalty. (43:28) You said loyalty isn’t a program, it’s a feeling.

(43:33) What surprises you most about leaders that actually make customers come back?

Shep

(43:39) Well, I think the question I want to answer is why is loyalty an emotion versus a program? (43:47) The companies that have really figured out customer loyalty realize that there’s a difference between a repeat customer and a loyal customer. (43:57) If you give me a punch card that if every time I go into the restaurant, you punch my card and I’m getting close to the free sandwich, okay, you’re getting me back because you’re giving me something.

(44:07) Essentially, that’s a discount program. (44:09) For every five sandwiches I pay for, you’re going to give me one free. (44:13) So that’s about an 18, 20 percent, discount.

(44:16) That’s the way if you look at it. (44:19) Frequent fire miles or hotel points or whatever, the more I stay with you, the more points I get, the free trip I get as a result of that. (44:27) That’s driving my behavior, but it’s not driving my emotion.

(44:31) So I want to create the experience. (44:34) How about do both? (44:35) By the way, there is nothing wrong with creating repeat customers.

(44:39) I encourage every company to figure out how they can get that customer to come back. (44:43) But I want them to be so happy with the experience they have overall that it wouldn’t matter if we had points or perks. (44:51) They are just coming back because they love us.

(44:54) So I look at different companies like Restoration Hardware, my personal experience with them. (45:00) Yes, I pay to be a member. (45:01) As a result, being a member gets me a small discount.

(45:04) Okay. (45:05) I love it. (45:06) But you want to know what I really love?

(45:07) We had a couch that came in and it was wrong. (45:10) And we called them up and they said, oh my God, we’re sorry. (45:13) I can’t believe that this was shipped.

(45:15) Keep it. (45:16) And we’re going to make you a new one. (45:18) It’s going to be three months, but in the meantime, enjoy the one that’s wrong.

(45:21) Okay. (45:21) We’re going to get it. (45:22) Guess what happened?

(45:23) The next one came in. (45:24) It was wrong. (45:26) Okay.

(45:27) They were embarrassed as can be, but guess what they did? (45:31) They completely replaced it again. (45:33) Okay.

(45:34) And without a hassle, with nothing. (45:37) And I say to myself, you know what, they are expensive. (45:39) They’re a premium luxury brand.

(45:42) Maybe not super high end designer, you know, but they’re a very high end brand for the typical consumer. (45:49) And I’m going to say to myself, it’s worth spending the money to know that they’ve got my back when there’s a problem. (45:54) They’ve created this emotional hook with me based on my experience, not just the fact that I’m a member of Restoration Hardware and I get that discount.

Melissa

(46:04) That’s great. (46:06) Let’s talk CX. (46:08) Based on the research you’ve done, where do CX initiatives fail most?

Shep

(46:14) Boy, I think that everybody thinks that CX is an end result and it’s not. (46:21) I shouldn’t say everybody. (46:22) Many companies who get it wrong, think of it as an end result and it’s not.

(46:27) There’s, it’s a journey. (46:28) It’s continuous. (46:29) As good as it got today, there’s going to be something new that’s got to make it better.

(46:33) The second big mistake they make is that they are focused on the end result and not what’s happening in the company. (46:42) If you want to have, it’s more than the frontline taking care of customers. (46:48) It is complete culture immersion.

(46:50) Customer service is not a department, it’s a philosophy. (46:54) Customer support is a department. (46:56) So let’s not get that wrong.

(46:58) The philosophy needs to be embraced by everybody from the CEO who’s at the top all the way to the most recently hired employee. (47:05) You’ve got somebody in the warehouse that thinks I have nothing to do with customer service. (47:09) Oh, you absolutely do.

(47:11) Because if you pull something off a shelf and you put it into a box and you forget to put something into the box that also needed to go there, guess what happens? (47:19) You’ve created a bad experience. (47:21) Now the customer has to call customer support.

(47:23) The support people have to do whatever it is, give a refund, reach out to the warehouse, get another package sent. (47:30) Look at what it costs the company due to a person who had nothing to do with interacting with that customer. (47:37) It costs the company.

(47:39) People need to recognize it’s philosophical, it’s cultural, and it needs to be embraced by everybody in an organization. (47:46) I think that’s probably one of the biggest mistakes is that companies don’t include everybody in their customer experience initiatives.

Melissa

(47:53) I love that. (47:54) So how should leaders link CX decisions to revenue outcomes?

Shep

(48:00) Well, it’s important to recognize, you know, there’s different places we can go, but I think the most obvious place is people see customer support. (48:09) Leaders see customer support as a cost center versus a revenue center. (48:14) And for the last couple of years, my predictions and trends have seen leaders start to recognize that if we empower our front line to not just answer questions, but to make suggestions to customers about other products and upgrades that they can have when it’s completely 100% appropriate, it’s going to be a revenue enhancer.

(48:34) Number two, if we get the right people, and by the way, so many times the customer support people are the lowest paid people. (48:41) They’re just there in a call center answering questions, but guess what? (48:44) If they do it wrong, you’ve just lost the customer.

(48:48) So recognize if they do it right, they’re keeping the customer. (48:53) So the retention is so important. (48:55) It is far less expensive to retain a customer than it is to go after market, sell, and onboard a new customer and get them comfortable with doing business with you.

(49:05) So I’d say, you know, that’s what I would be focused on.

Melissa

(49:10) I love that. (49:11) So much great information, Shep. (49:13) Thank you so much today.

(49:14) I want to do some rapid fire questions I’m going to throw at you based on what we talked about.

Shep

(49:19) I’m getting down. (49:20) I’m ready to go. (49:21) Hit me.

Melissa

(49:21) Let’s do this. (49:22) Are customers loyal to brands or experiences?

Shep

(49:26) They’re loyal to experiences that are driven by the brand and therefore they will eventually be loyal to the brand.

Melissa

(49:34) I love that. (49:35) A CX myth that needs to be killed immediately.

Shep

(49:40) Customer service is not a department. (49:43) I already mentioned that. (49:44) It’s the philosophy.

Melissa

(49:47) Speed or empathy?

Shep

(49:50) I think, boy, that’s a tough one. (49:54) I think efficiency will trump personality at least a little bit. (50:01) So I would go with efficiency if you call speed efficiency.

(50:05) Customers don’t want hassle and they’re willing to give up a little bit of that friendliness and if they get what they want quicker, faster, more efficiently. (50:15) Why not give them both, by the way, right?

Melissa

(50:18) Exactly. (50:19) Loyalty starts before or after the sale?

Shep

(50:24) Loyalty starts before. (50:26) The experience begins the moment the customer thinks about doing business with you. (50:30) They’re on your website.

(50:31) They see an ad. (50:31) It starts to create an experience in their head and it follows through. (50:35) That’s why we do a lot of sales kickoff meetings in January to talk to salespeople about how to deliver an experience that gets you closer to making the sale.

Melissa

(50:46) What frustrates customers more than waiting in line?

Shep

(50:53) I think rudeness and apathy are one of the top reasons customers don’t come back. (51:00) But yeah, if you disrespect their time, that one’s right at the top as well.

Melissa

(51:05) What will they never forgive?

Shep

(51:09) What will they never forgive? (51:12) Wow. (51:13) Total failure.

(51:17) You know, treat them like a person. (51:19) Give them respect and dignity. (51:21) You do anything opposite of that, they’re gone.

Melissa

(51:25) I love it. (51:26) What will they forgive the fastest?

Shep

(51:29) If you make amends with your customer, they will give you another shot at it. (51:34) As a matter of fact, I’ll share with you the stat that I would have shared with you at the very beginning, because it was one on my page of all the many stats, but many, M-A-N-Y, not many. (51:45) Eighty-one percent, that’s eight out of ten, said they’d return to a company if they actively sought to make amends for a bad experience.

(51:52) So hey, nobody’s perfect, but if you make it right and you restore the confidence, and that’s important. (51:58) You don’t just fix the problem, you restore the customer’s confidence. (52:02) Sweetwater, a music company, I interviewed their chief sales officer.

(52:06) He says, we got a problem, we don’t fix the problem, we fix the customer first. (52:11) Then we go out and fix the problem. (52:13) We want that customer to love us.

Melissa

(52:16) All right, last question. (52:18) Great experiences feel like what?

Shep

(52:22) Great experience, give me the emotional high, like a little buzz that says, yeah, that was nice.

Melissa

(52:29) I love that. (52:30) Even my four-year-old understands great customer experience, right?

Shep

(52:34) They do. (52:35) You take them into the grocery store and the person at the bakery says, here’s a cookie. (52:40) Mom, I want to go here.

(52:42) They don’t give me cookies over there, right?

Melissa

(52:46) Exactly. (52:46) Thank you so much for being here and sharing your knowledge and time with our listeners. (52:51) What is the best way to connect with you and learn more about the great work you’re doing?

Shep

(52:56) Just go to Heiken.com, as I mentioned earlier in the interview, H-Y-K-E-N. (53:00) I’ve got plenty of information. (53:02) I’ve got a newsletter.

(53:03) It’s free to subscribe to. (53:04) The research that we’ve talked about today, as I mentioned, you can just download it without any effort at all. (53:10) If you love watching videos, every week I post videos on my YouTube channel.

(53:15) You can go there by going to ShepTV.com. (53:19) And there’s, gosh, well over a thousand videos that I’ve posted on the channel. (53:25) So read, learn, listen, watch.

(53:28) It’s all there.

Melissa

(53:29) I love it.

Shep

(53:30) And you know what else? (53:31) They should listen to this podcast more than once.

Melissa

(53:36) I agree. (53:37) There’s so many nuggets that you’ve left with our listeners today that one small nugget of what Shep talked about could be a game changer for your business. (53:47) So thank you so much.

(53:49) That’s the Executive Connect podcast.