Creating Your CX Strategy

Autumn 2022

There’s a problem that I see in a lot of organisations. They talk about being customer centric, or customer led. They talk about the importance of the customer experience, and the value of creating satisfied and loyal customers. They talk about how important customer metrics are to their board.

Far too often though, the reality is that the customer experience is seen as a purely operational matter. Customer surveys are used in closed loop reporting on specific transactions or events, but no one ever takes a step back to look at the broader picture. Customer experience and strategy are kept miles apart. Needless to say, I think that's a huge missed opportunity.

In this article I want to talk about what a CX Strategy is, how it fits into a broader organisational strategy, and how you can go about creating your own. I'll introduce the CX Strategy canvas that we've developed as a tool to work on these questions with your colleagues, and I hope I'll leave you with a mission to make CX the strategic heart of your organisation.

What is CX Strategy?

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?

First of all, it's really important to accept that you can't have a CX strategy that works in isolation. It has to tie into your overall business strategy, so let's think about that. What are the elements of a business 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.

We're advocates of what we call a loyalty strategy, as excellently articulated by books such as the service profit chain. This basically means that our business model is geared around getting and keeping the right kind of customers, the kind of customers who will reward good experiences by coming back, telling their friends, buying more, and so on.

We build a proposition that's attractive to those people, tailored around their needs, and make sure we deliver on it. Our key tests of success have to include customer metrics such as satisfaction, NPS, retention, lifetime value, and so on.

If your strategy includes trying to keep hold of customers, and you believe that the customer experience has a role to play in that, then CX strategy is one key aspect of how you turn that plan into action.

When it comes to business strategy, it can quickly get so complex that it's impossible to see the wood for the trees. That's why it's useful to adopt a model, not because any one model can capture everything about strategy, but so that you and your colleagues can have a framework to organise your discussions and capture your thinking.

That way of thinking underpins our CX strategy canvas (which, I would be the first to admit, owes a great deal to the business model canvas).

"Strategy is sacrifice"

David Ogilvy

CX Strategy

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.

Which customers?

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).

You may also find that satisfied customers are willing to pay more. This doesn’t mean you should identify your happiest customers and put your prices up…but it does mean that if you can differentiate yourself on service that you’ll find yourself having far fewer conversations about price.

Satisfied customers complain less, which saves you money, and they also tend to be more efficient to serve, because the “better fit” they are, and the more you get to know each other, the better your processes work for them.

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?

If you're building a loyalty strategy, we want customers who have the potential to have high lifetime value, who are a "good fit" in the sense that they like what you do and how you do it, and they're willing to reward good experiences with loyalty.

Once you have a clear idea who your ideal customers are, most of your other strategic choices become radically simpler. It hinges on making sure that your value proposition and delivery is tailored to the needs of the customers you want, and not wasting time trying to make it work for customers you don’t want.

We like to say that customer experience is “doing best what matters most to customers”. Strategic customer experience is “doing best what matters most to the customers who matter most”.

Strategic customer experience is “doing best what matters most to the customers who matter most.

Knowing who your target customers are will help you to craft propositions that suit their needs, and deliver in the ways that work best for them. Let's work our way around the rest of the canvas...

Strategic customer experience is “doing best what matters most to the customers who matter most“.



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?

You also need to think about the barriers that prevent customers from using your product or service.

These can be real, like the cost and difficulty of switching supplier, or perhaps learning new software or ways of working; or perceptual — like the inertia that prevents us from switching bank account because we're vaguely worried about all our direct debits.

Whether or not they're real, you have to be aware that it takes effort for customers to come to you, and the more you can do to lower the perceived effort, the more customers you'll take on board.



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.

Delivery is a very big box, because it covers essentially everything you do. Some key things to think about are...

Channels: How do we reach our customers? How would they like to be reached? How do channels vary throughout the customer relationship, from marketing through purchase and after sales? Which are the most cost-effective channels?

Activities: What are the key things that we need to do to deliver our propositions, serve those channels, build those relationships and so on? What do we do that's different from what others do?

Agility: Your resilience, and therefore your chances of survival, are strongly influenced by your cash position, your ability to scale, and your agility in being able to change when you need to.

Partners & Resources


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 make a profit, you've got to start by making money from customers. Think about your revenue model (for example are you selling a one-off product, or charging a subscription for access to a service?), and also your price and the volumes you can expect to sell.

How much are customers paying, and how much are they willing to pay?



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 almost certainly don't operate in isolation, so what market category are you in and where do you operate? Who are your rivals, existing or potential?

What alternative solutions might customers use, including doing it themselves or choosing not to do it at all?

The more clearly differentiated you are, the more sustainable your business is. How can you sustain your advantages through legal protection, durable advantages such as a unique supply chain, or simply by moving faster than your competitors?


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. 

Let's say we've introduced a new algorithm to optimise our delivery routes so that we can improve our delivery performance. We'll very quickly start to pick up anecdotal feedback from drivers and customers about whether it's working. Then we'll start to see a change to our internal measure of delivery performance (hopefully in the right direction). Only after a while will we start to see the improvements feed through to the scores that they give on their survey.

Ultimately it's that outcome measure that really matters, but all four types of indicator are valuable, and it's the others that tend to give you the quickest sign that you are going in the right (or wrong) direction.

Getting the right balance of internal and external measurement, as well as both quantitative and qualitative indicators, means that you don't have to wait until the next customer survey to be confident that you're on the right track, or course-correct if there are signs that you're heading off the rails.

Your strategy


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.

One of the benefits of having it all on a page is that it helps to highlight how the boxes link together. There are often decisions to be made, trade-offs and compromises where changes to one box lead inevitably to changes in others.

For example a manufacturer could change its revenue model by going direct to customers, creating a new proposition for new target customers, but how might that affect relationships with distributors? What would that involve in terms of new competencies in logistics, customer support, and so on?

Putting your CX Strategy on the canvas means that you can talk about your strategy as it currently is, understand how it places you in a market and consider what strategies competitors or potential competitors might adopt, and design and evaluate new strategies for the future.

It's a design thinking approach to building a customer-led business, focused on meeting the needs of a clearly defined group of customers, and building an efficient organisation to deliver against those needs.
I hope you find it useful!

Stephen Hampshire

Client Manager
TLF Research