DCX #100 | Don't Let Sunk Costs Sink Your CX
Why letting go of past investments can accelerate your cx approach
Weekly inspiration, education, and coaching for customer-obsessed leaders.
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Celebrating the 100th Edition of the DCX Newsletter
Wow, I can hardly believe it - this is the 100th edition of the DCX Newsletter! When I started this journey in June of 2022, it was just an idea born out of my passion for customer experience and my desire to help others in the field.
I still remember nervously hitting "publish now" on that very first newsletter, wondering if anyone would read it. Fast-forward to today and we've grown to nearly 1,000 subscribers—I'm blown away and so grateful!
Over these past 100 issues, my goal has been to inspire, educate, and coach you, my fellow CX professionals, on how to put the customer at the center of everything we do.
I've loved sharing insights, strategies, and real-world examples to help you level up your CX game. I've also been so energized by your comments, questions, and feedback along the way—please keep 'em coming!
I want to take a moment to say a heartfelt thank you to everyone who has been so amazingly supportive throughout this journey. 🙏
To those who subscribed from day one, those who joined along the way, and those who shared the newsletter with colleagues, I appreciate you all more than you know.
Your encouragement and engagement keep me going.
As I look ahead to the next 100 issues (and beyond!), I'm more committed than ever to bringing you valuable content to help you become the best CX professional you can be.
Let's continue pushing the boundaries of what's possible in CX!
Thank you again for being part of the DCX community. Your support means the world to me.
Now let's dive into this week's insights...
This week’s newsletter takes a look at a mindset that plagues many a CX professional and business:
The Sunk Cost Effect
When Good Intentions Go Bad
Tales of Sunk Costs
Don't Stay Loyal to Practices That Don't Inspire Loyalty
The Power of the Pivot
The Sunk Cost Effect
Ever held onto a technology or initiative far longer than you should have simply because you couldn't bear admitting it's a bust?
Welcome to the Sunk Cost Effect—a cognitive trap that even the most experienced customer experience professionals can fall into.
Think about that movie you sat through, even though it was awful from the get-go. You stayed because you paid—sound familiar?
That’s also the Sunk Cost Effect at work—a powerful force that can skew any personal or business decision, leading to lost time, money, and missed opportunities.
In customer experience, this bias is a significant obstacle to innovation and satisfying your customers.
Whether it’s clinging to outdated technologies or ineffective service processes, the Sunk Cost Effect can make us prisoners of our past investments.
This week, I explore how to understand this tricky bias and how you can free your business strategies from its influence.
Read on to learn how recognizing and overcoming the Sunk Cost Effect can transform your approach and dramatically improve customer and business outcomes.
When Good Intentions Go Bad
Have you ever invested a lot of time and resources into a total website redesign? You pour your heart and soul into creating this slick, modern website that's supposed to be the ultimate expression of your brand. It has all the bells and whistles—video backgrounds, parallax scrolling, and works.
So, you launch this masterpiece, expecting customers to be blown away. But instead, you start hearing complaints.
The site is too slow to load, so people can't find what they're looking for. And don't even get me started on how it looks on mobile. It's like a punch to the gut.
Now, the knee-jerk reaction might be to defend your baby.
You put so much time and money into this redesign, and the thought of starting over is enough to make you break out in hives. So, you start making small tweaks, hoping you can salvage the situation.
But deep down, you know you're just delaying the inevitable. You've fallen head-first into the Sunk Cost Effect trap.
Tales of Sunk Costs
I actually saw this play out with a client a few years back. They'd invested a ton into this flashy new website, but it was a total flop with customers.
They kept clinging to it, though, because they couldn't bear to admit it was a mistake. It took months of poor performance and customer complaints before they finally accepted that they needed to go back to the drawing board.
When they finally did bite the bullet and redesign the site with customer feedback in mind, the difference was night and day. Bounce rates went down, conversion rates went up, and customers were actually sending in positive feedback for once.
But the Sunk Cost Effect isn't just limited to big, flashy projects.
It can rear its ugly head in all sorts of sneaky ways when you're working on CX. For example, maybe you've been white-knuckling an outdated customer service script even though your reps keep telling you it's falling flatter than a pancake.
Or perhaps you've been throwing cash at a fancy-pants AI system that's supposed to read your customers' minds, but so far, the insights have been about as groundbreaking as "water is wet."
It just goes to show that no matter how much you've invested in something, if it's not working for your customers, it's not working, period. And the sooner you can accept that and pivot, the better off you'll be.
The point is, it's easy to get so attached to an idea or an investment that you become blind to the blaring red flags. But the bravest, most boss move you can make is to admit when something just ain't working, no matter how much you've put into it.
Don't Stay Loyal to Practices That Don't Inspire Loyalty
You've probably heard the phrase, "Don't throw good money after bad." It's a reminder not to keep investing in a losing proposition just because you've already put resources into it.
In customer experience, we might rephrase that as: "Don't stay loyal to CX practices that aren't inspiring customer loyalty."
In other words, if your current strategies aren't delivering the experiences your customers deserve, don't stubbornly stick to them just because they're familiar or because you've invested in them in the past.
The Power of the Pivot
If you ever find yourself in this situation—whether it's a website redesign, a new product rollout, or anything else—remember that sunk costs are already sunk. And the opportunity is to take a new path.
Stay laser-focused on the future and what's going to make your customers do a happy dance, even if it means bidding adieu to something you've poured your soul into. Your customers (and your stress levels) will be forever grateful. And who knows? You might just whip up something even more incredible in the process.
Ready to shake off the Sunk Cost Effect?
Spot these warning signs and get ready to make some moves:
1. Despite lackluster results, you’re sticking with a CX initiative or technology solely because of the time or money already invested.
2. You’re resisting change or exploring alternatives because of the effort put into the current strategy.
3. You’re making decisions based on past investments rather than evaluating future potential or current realities.
Spotted the signs in your operation? Great!
Now’s your moment to step up and make some changes.:
1. Embrace "failing fast." If a CX initiative isn't working, cut your losses and move on. The sooner you address the issue, the better.
2. Regularly reassess your CX strategies. Are they still aligned with your goals and delivering customer value? If not, reconsider your approach.
3. Foster a culture of experimentation and learning. Encourage your team to try new things and view "failures" as growth opportunities.
4. Always involve customers in the decision-making process. Seek their feedback and adapt based on what they tell you.
5. Focus on the future, not the past. Instead of dwelling on sunk costs, consider the potential benefits of exploring new approaches or technologies.
By being mindful of the Sunk Cost Effect and actively working to overcome it, you can make more objective, customer-centric decisions that lead to better experiences for everyone involved.
Remember, investing time or resources into something doesn't obligate you to see it through. Sometimes, the best course of action is to cut your losses and pivot to a more promising path. Your customers will appreciate it, and your business will be better off in the long run.
So, the next time you find yourself clinging to a CX initiative that's not delivering results, take a step back and ask yourself: am I falling for the Sunk Cost Effect? If the answer is yes, embrace change and chart a new course. Your customers (and your bottom line) will thank you.
Now, go forth and create amazing customer experiences without being bogged down by sunk costs!
You've got this.
This week’s newsletter is supported by Dojo Partners
FACTORY is an organic approach to designing, validating, and implementing AI-driven experiences. We believe the lab is the best environment to establish AI learning and develop an efficient path to productization.
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P.S.
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P.P.S.
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-Mark