Tariffs and CX: Hold on to customers during an economic storm

Tariffs are here, but CX leaders and frontline workers still have to do their jobs: Satisfy customers, keep them engaged and retain them despite price increases, supply chain disruptions and overall uncertainty.

Mario Matulich, president of Customer Management Practice (CMP) -- a research and advisory firm whose events division hosts Customer Contact Week -- has advice for beleaguered CX teams trying to make sense of the U.S. tariff situation for their companies.

Mario Matulich

He also discusses how CX teams can persevere in a situation that has seen daily fluctuations, reprieves and increases in the costs of goods from certain countries whose effects on prices and the economy are still developing.

If tariffs eventually stick, how do you think they will affect customer experience?

Mario Matulich: Tariffs are not any different from any major macroeconomic event. What's interesting about any scenario -- whether it's an inflationary economy, the [2008] financial crisis or the pandemic -- is that you can go back and identify massive economic inflection points.

The tariff situation is not dissimilar in that it causes consumers and customers to take a step back and reassess where they're spending their money, what brands they're working with, and who's going to gain their loyalty and who's not. The bright light of scrutiny is shining more than ever in these instances.

Where does customer experience strategy fit in?

Matulich: The general direction that we provide here is that customer experience becomes a differentiator and a competitive battleground. Don't get me wrong -- it's always there. But when a situation like [uncertainty around tariffs] arises, you start thinking, 'OK, we'll pull back. I don't know exactly how this is going to play out or exactly how it's going to affect me financially.'

Generally, you see customers take that step back, and then they decide, truly based on the customer experience that's been delivered. The brands that exceed their expectations and overdeliver are the brands that will gain their loyalty. So many brands fail to see that, and they actually pull back. They become more financially driven and make penny-wise, pound-foolish decisions where the customer is left behind. Then they wonder why they're left with far less market share.

What are customer experience teams supposed to do when they're working for companies affected by these tariffs? Maybe their company imports goods from China that suddenly drive costs up.

Matulich: Loyalty, personalization, ease and speed are the [experience factors] that will keep customers coming back time and time again. Obviously, there are going to be circumstances that sometimes fall outside of the control of the customer experience leader in terms of what they can and cannot do with their physical supply chain.

However, their ability to deliver exceptional customer experience communication, what they're doing to ensure that their customers are getting a personalized experience, how they enable their customers to get an easy experience and the speed in which they're working with their customers to resolve their issues are the opportunity areas that will keep customers coming back.

It's just a fact, even in tough times, that when a brand must pass on some of those costs to the customer because of changing macro environment, those customers will continue to pay more if the experience is exceeding their expectations versus saving money with an inferior experience.

Have you heard panic among CX leaders over the trade war? None of us were alive when President William McKinley launched his trade war in the 1890s, so it's new to us all.

Matulich: So you want to go back and study McKinley's approach versus Trump's approach? [laughs] This isn't the first macroeconomic challenge that's happened in 100-plus years. When the pandemic arrived, we had a similar scenario that came with its own set of unique challenges, but there was an incredible amount of uncertainty. So there's not a lot of playbooks that you can refer to in these instances. When they do arrive, and they're dramatic in nature, they definitely cause unease.

Our community of customer service leaders is the bedrock of organizations. They've weathered many distinctive and significant [economic] inflection points over their careers, even if they're not exactly the same things. Tariffs might be an issue that they're coming across for the first time in a century, but CX leaders are the people who have been asked to have that steady hand and to lead organizations out of the dark and into the light. In this scenario, they're going to do the same.

How do you get the CEO and CFO to invest more in CX during these times of economic uncertainty? 'We'll be able to retain market share' might not be enough of an argument.

Matulich: CMP Research brings a lot of data to the table, and we're not the only resource for that. Today, if you're occupying a CFO, CEO or COO seat, there's a good chance you come from an analytical, statistical, data-driven background. The customer experience leader has adopted the same approach. They are coming with strong business cases around certain tech investments, certain trainings, the frontline resourcing and organizational structure.

The knee-jerk reaction is the CFO who says, 'We must pull back. We should cut CX.' This is a low-value function in their mind. It's the job of the strong CX leader to be able to say that [investing in experience] is why we're going to win and come out looking better than we are now, and this is the opportunity. This focus is on personalization and ease and speed that can ensure the customer base not only remains loyal, but potentially grows spend and increases their customer lifetime value potential -- if we play our cards right.

Don Fluckinger is a senior news writer for Informa TechTarget. He covers customer experience, digital experience management and end-user computing. Got a tip? Email him.