Customer Experience: Number one brand differentiator

KPMG Saudi Arabia has published the results of its 2022 global annual Customer Experience Excellence (CEE) survey. This 13th global edition, and the second to run in Saudi Arabia, is based on inputs from 1,550 consumers in Saudi Arabia measured against inputs from 89,000 consumers across 25 countries worldwide.

The Saudi version of the survey included 96 brands across nine different sectors and provided the respondents with the ability to evaluate those brands based on their personal customer experiences with them.

The survey was based on the CEE methodology, developed by KPMG’s global CEE Centre of Excellence, and is made up of six pillars; Empathy, Personalization, Expectations, Resolution, Integrity and Time & Effort.

Those pillars represent the core of this research as they make up the fundamental components of an ideal customer experience.

In terms of overall CEE performance, the non-grocery retail sector emerged as a leader among other sectors in Saudi Arabia with a score of 8.08 in 2022 and beat its last year’s performance; Followed closely by the grocery retail sector with a score of 8.05. Such results indicate notable progress in those two sectors and point to the essential role they play in consumers’ lives.

Moving down the chart, the financial services sector marked a noticeable decrease to a score of 7.94 from last year’s 8.07, indicating growing customer expectations that brands in the financial sector need to consider.

Travel and hotels, restaurants and fast food, and entertainment and leisure followed with close scores of 7.92, 7.91 and 7.90, respectively.

Finally, telecoms, utilities and logistics sectors trailed the ranking with scores of 7.82, 7.70 and 7.66, respectively.

In the area of Net Promotor Score (NPS) index, non-grocery retail, grocery retail, and the financial services scored the highest among the other sectors. In contrast, logistics and entertainment & leisure obtained the lowest NPS scores.

“As we know, these sectors have been highly commoditized over the last few years, and ‘opportunities to delight’ have become significantly rarer,” commented Adib Kilzie, Head of Customer Experience, Cloud and Enterprise Solutions at KPMG in Saudi Arabia.

“Today’s customers are better informed, better connected and more demanding than ever before. In some cases, customer experience has overtaken price and product as the number one brand differentiator. Although many organizations are investing record amounts in customer-related initiatives, not all are seeing the desired ROI in the absence of a clear CX strategy.”

Having the right customer insight through segmentation and persona development remains as a leading challenge among businesses; a challenge that is likely to hinder the business’ ability to personalize their services and orchestrate exceptional customer journeys.

“Although most businesses appreciate that need and its impact on their market share and profitability, they continue to face challenges in data collection and customer insight. The market has witnessed a rise in the use of Voice of Customer (VoC) solutions, surveys and questionnaires; however, many businesses have not been able to leverage the needed real-time data collection and decision capabilities,” Kilzie noted.

Companies are now acting purposefully, deciding what to take with them into the future and what to leave behind, he stated, adding that this points to a significant transition underpinned by new ways of working for most firms.

“The hierarchical silos of an industrial past are giving way to an agile culture for a digital future,” Kilzie concluded.

 

Drone attack on Iranian weapons factory termed phenomenal success

Despite Iranian claims, the drone attack on Iran at Isfahan was a tremendous success, according to a mix of Western intelligence sources and foreign sources, The Jerusalem Post initially reported on Sunday.

Several hours later, The Wall Street Journal came out with a similar report, stating that Israel and the Mossad were behind the attack, citing US officials.

There were four large explosions at the military industry factory, documented on social media, against a facility developing advanced weapons. The damage goes far beyond the minor roof damage that the Islamic Republic claimed earlier Sunday.

Iran's response matches responses to similar incidents. Iran’s foreign minister said the cowardly attack was aimed at creating insecurity in Iran. Their defense ministry said the explosion caused only minor damage and no casualties. The extent of the damage could not be independently confirmed.

Israel is playing mum, but most Western intelligence and Iranian sources have credited the Mossad with similarly successful attacks against Iran’s Natanz nuclear facility in July 2020, a different Natanz nuclear facility in April 2021, another nuclear facility at Karaj in June 2021 and with destroying around 120 or more Iranian drones in February 2022.

Few organizations globally, besides the Mossad, are believed to possess the advanced and surgical strike capabilities displayed in the operation.

Multiple large drones with significant amounts of explosives were involved and hit their targets with pinpoint accuracy.

In each of the prior incidents, Tehran tried initially to pretend that the attacks failed and only acknowledged the extent of the damage when satellite photos or other evidence broke into the public sphere, outflanking their denials.

It is still unclear whether the advanced weapons damaged related only to conventional warfare, or might have nuclear relevance, such as for use in ballistic missiles or explosives which can be used for both conventional and nuclear weapons.

Isfahan has been used on and off for various nuclear issues as well as non-nuclear military issues.

Iran even at one point told the IAEA that some of the nuclear activities being carried out at the Karaj nuclear facility until June 2021 had been moved to Isfahan.

The WSJ noted that there was an Iranian aerospace facility nearby, which could also be utilizing dual-use items for space launches and nuclear weapons, used for escaping and reentering Earth’s atmosphere.

Speculation centered on whether the attack was meant to set back Iran’s advanced drone program or a new program, such as the development of hypersonic missiles, with Russian help.

Hypersonic missiles fly so fast and have such advanced maneuverability that many experts believe they could penetrate all of Israel’s air defenses.

Another theme raised during the day was that the US and the CIA may have been involved this time.

Experts noted that the US and Israel just spent an entire week conducting military exercises around attacking targets, such as Iran, so carrying out such an attack immediately after these exercises could be meant to send a message as to their seriousness.

They estimated that the visit of CIA Director William Burns to Israel just before the attack was evidence of a need for a special face-to-face meeting between the CIA and Mossad chiefs preparing the attack.

The US has adopted a more aggressive tone with Iran since it provided drones to Russia in the war with Ukraine and has demonstrated even more impatience recently with Tehran’s failure to return to the 2015 nuclear deal.

 

Pakistan: Central bank Justifies decline in remittances and export proceeds

There has been a narration in print and electronic media suggesting that capping the price of US$ caused loss of US$3 billion in remittances and export proceeds. State Bank of Pakistan (SBP) termed that the view was incorrect due to a number of factors.

First, export of goods have been facing headwinds due to moderating demand in international markets as most of Pakistan’s major trading partners are going through a period of monetary tightening. For instance, US Fed increased interest rate to 4.5% to date from 0.25% in March 2022; suggesting a noticeable global monetary tightening.

Meanwhile, inflation has been significantly higher in developed world, eating into the purchasing power of consumers. These, together with domestic factors like devastating floods and ensuing supply disruptions, have negatively impacted exports. In this backdrop, linking decline in exports to relatively stable exchange rate is not appropriate, said SBP.

Second, workers’ remittances were gradually tapering off from all time high level of US$3.1 billion achieved in April 2022 due to Eid related flows. This decline is primarily attributed to global economic slowdown as higher inflation in developed countries has led to higher cost of living abroad, thus reducing the surplus funds that could be sent back to homeland as remittances.

Moreover, with the resumption of international travel post COVID, some remittances have switched back to FCY cash transfers via overseas Pakistanis travelling to Pakistan.

Thus the decline in Pakistan’s exports and remittances is a result of numbers of exogenous factors and domestic reasons and it wouldn’t be appropriate to ascribe it to exchange rate only.

Iran: Drones Attack Military Factory

A loud explosion was heard at a military industry factory near Iran's central city of Isfahan. Tehran said it was a drone strike by unidentified attackers.

There was no immediate claim of responsibility for the attack, which came amid tension with the West over Tehran's nuclear work and supply of arms for Russia's war in Ukraine, as well as months of anti-government demonstrations at home.

The extent of the damage could not be independently confirmed. Iran's Defence Ministry said the explosion caused only minor damage and no casualties.

Iranian media video showed a flash of light at the plant, which the official IRNA news agency described as an ammunitions factory. Footage showed emergency vehicles and fire trucks outside the complex.

"Around 2000 GMT on Saturday night, an unsuccessful attack was carried out using micro Aerial Vehicles (MAVs) on one of the ministry's workshop sites," the Defence Ministry said in a statement carried by Iran's state TV.

It said one drone was shot down and the other two were caught in defence traps and blown up. It caused only minor damage to the roof of a workshop building. There were no casualties."

The attack has not affected our installations and mission...and such blind measures will not have an impact on the continuation of the country's progress.

Separately, IRNA reported early on Sunday a massive fire at a motor oil factory in an industrial zone near the northwestern city of Tabriz. It gave no information about the cause of that blaze.

Iran has in the past accused its arch enemy Israel of planning attacks using agents inside Iranian territory. In July 2022, Tehran said it had arrested a sabotage team made up of Kurdish militants working for Israel who planned to blow up a sensitive defence industry centre in Isfahan.

An Israeli military spokesperson declined comment when asked if Israel had a connection to the latest incident. Israel has long said it could attack Iran if diplomacy fails to curb Tehran's nuclear or missile programs, but has a policy of withholding comment on specific incidents.

Several Iranian nuclear sites are located in Isfahan province, including Natanz, centre piece of Iran’s uranium enrichment program, which Iran accuses Israel of sabotaging in 2021. There have been a number of explosions and fires around Iranian military, nuclear and industrial facilities in recent years.

Talks between Tehran and world powers to revive a 2015 nuclear pact have stalled since September 2022. Under the pact, abandoned by Washington under President Donald Trump, Iran agreed to limit nuclear work in return for easing of sanctions.

Iran has acknowledged sending drones to Russia but says they were sent before Moscow's invasion of Ukraine last year. Moscow denies its forces use Iranian drones in Ukraine, although many have been shot down and recovered there.

 

Iran 3rd train of South Pars refinery goes operational

The third train of the South Pars phase 14 refinery has gone operational, according to the operator of the phase 14 development project, Mohammad-Mehdi Tavasoli-Pour.

Tavasoli-Pour told Shana that the fourth and last train of the refinery is also scheduled to be put into operation by the end of the current Iranian calendar year.

The first train of the phase 14 refinery went operational in mid-March 2022 and the second train was inaugurated in late November last year.

Phase 14 development is aimed at producing 56.6 million cubic meters per day of rich gas, 75,000 barrels/day of gas condensate and 400 tons/day of sulfur, and 1 million tons/year of liquefied petroleum gas and one million tons/year of ethane to be fed to petrochemical plants.

South Pars Phase 14 Refinery can be considered the final refinery to be completed in the South Pars complex. Before the construction of this refinery, 12 refineries received gas from the offshore platforms of the field and processed it.

However, after the inauguration of four offshore platforms of phase 14, the need to create more refining capacity in this complex was felt more day by day. Accordingly, the 13th government has put it on the agenda to complete the South Pars Phase 14 refinery by the end of the current Iranian calendar year and make it fully operational.

South Pars gas field, which Iran shares with Qatar in the Persian Gulf water, is divided into 24 standard phases of development in the first stage. Most of the phases are fully operational at the moment.

The huge offshore field covers an area of 9,700 square kilometers, 3,700 square kilometers of which are in Iran’s territorial waters in the Persian Gulf. The remaining 6,000 square kilometers, called North Dome, are situated in Qatar’s territorial waters.

The field is estimated to contain a significant amount of natural gas, accounting for about 8% of the world’s reserves, and approximately 18 billion barrels of condensate.

 

Brazil and Argentina planning common currency for the region

Brazil and Argentina are planning on a common currency for the region in a bid to distance themselves from the US dollar. Brazil and Argentina are the first and second largest economies in Latin America respectively. How the plan will be implemented remains to be seen, but the statement of intent is a very powerful move itself.

Washington has been using its currency as a weapon to advance its own hegemony around the world. As a result, many civilian populations have suffered from unilateral American sanctions imposed on countries that are independent or have taken the course toward independence.

President Lula, who has made Buenos Aires his first foreign trip since taking office, says that early talks are focused on developing a shared unit of value for bilateral trade to reduce reliance on US dollar.

Under the plan, the Brazilian currency (the real) as well as the Argentine currency (the peso), for example, would continue to exist, with the new tender aimed at trade transactions between different Latin American countries.

In a joint letter, the new Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said they wanted to advance discussions on a common South American currency to be used for financial and trade flows.

South America’s two biggest economies will try to advance the plan during talks at a summit in Buenos Aires this week and will invite other Latin American nations to participate.

Not only Lula is reversing the policies of his predecessor, Jair Bolsonaro, by distancing Brazil from the United States he is also putting more focus on the region itself.

The idea of making trade transactions in local currencies as opposed to the US dollar is not limited to Brazil and Argentina, or Latin America for that matter.

Over the past decade, more countries have made or started similar initiatives to trade in their own currencies in a bid to ditch the US dollar.

Where the US cannot create instability through invasions, it wages wars through proxies or using other hybrid warfare mechanisms. It has also resorted to sanctions to fuel unrest in countries that don’t see eye to eye with Washington. The US goal is to destroy the economy of its adversaries with the hope of turning local populations against their governments.

Last year, the governor of the central Bank of China said Beijing will work with Asian countries to beef up the use of local currencies in trade and investment, as part of plans to strengthen regional economic resilience.

For the first time, Saudi Arabia and China have also discussed pricing oil deals in the Chinese yuan instead of US dollar.

Iran and Russia have already started trading in their national currencies after Tehran first decided to reduce use of dollar in its foreign trade.

India, among other countries, has also decided to allow rupee payments for imports and exports, which could also boost trade with other countries under American unilateral sanctions.

India's central bank has also unveiled a rupee settlement system for international trade; a move which many have said will reduce New Delhi’s demand for US dollars.

Tehran has been subjected to unprecedented unilateral sanctions by Washington. The measures, which include sanctions on Iran’s banking sector, have prevented the country from importing vital humanitarian supplies for cancer patients and children with rare diseases.

Likewise, the West has imposed unprecedented sanctions on Russia over the Ukraine war. Analysts have said that the US sanctions against Moscow could speed up the move by countries to reduce their reliance on the American currency.

The United States and its allies froze about US$300 billion belonging to Russia’s central bank’s foreign currency reserves and severely limited Russia’s access to the SWIFT payment system. Similar measures have been taken against other countries including Afghanistan, Iran, and Venezuela.

In a report, Bank of America analysts led by Michael Hartnett pointed out that US dollar debasement is the ultimate outcome as dollar weaponized in new era of sanctions.

As a result of Washington’s sanctions, countries have been seeking alternative monetary systems which have dealt a blow to the dollar itself. The role of the American currency has been declining over the past two decades, with reports indicating its share of reserve currencies have gone down to 60% from 70% over that period.

In the summer of 2021, the International Monetary Fund issued a report warning that the share of US dollar reserves held by central banks fell to 59% - its lowest level in 25 years - during the fourth quarter of 2020, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) survey.

Some analysts say this partly reflects the declining role of the US dollar in the global economy, in the face of competition from other currencies. 

Despite multiple warnings, the US has been pursuing illegal economic policies by weaponizing its currency.

A Washington-based think tank says the US has been extremely happy with its economic measures, and central banks may decide to diversify their foreign reserves instead of relying on the US dollar.

The co-director of the Institute for the Analysis of Global Security, Gal Luft has said that central banks are beginning to ask questions, and that they are wondering if their dependence on the dollar and putting all their eggs in one basket is an intelligent idea.

The removal of the US dollar as a dominant foreign currency will save more civilian lives around the world and help bring about global peace and security.

 

What if United States fails in honoring its payment obligations?

In China, Beijing maintains capital controls. The Chinese Communist Party (CCP) has been tightening its influence over the economy for years, raising questions about just how secure it is to use the yuan. This is good news for the US, but it may soon be old news. Failure by the US to honor its payment obligations, or even the possibility, would put such concerns in a very different perspective.

An outright default by the Treasury Department on US government debt would be enormously disruptive to the global financial system. Michael Feroli, Chief US Economist at JPMorgan Chase says, “It is quite plausible that it would precipitate a severe financial crisis.”

If Congress doesn’t raise the debt limit, the Treasury can employ a variety of highly questionable maneuvers to keep honoring US obligations. But doing that might shake investor confidence in the rule of law in the US, Feroli wrote in a note to clients Friday. By autumn, Wall Street analysts predict, the Treasury will be forced to decide whether to use those tricks or default on payments.

Biden and Xi Jinping have been sparring over whose political-economic system is a better model for human development. In his first address to a joint session of Congress as president two years ago, Biden said, “Xi and other autocrats think that democracy can’t compete in the 21st century with autocracies because it takes too long to get consensus”.

Washington has gone through debt-limit battles repeatedly over the years, and yet the role of the US$ and broader credibility of the US in the global financial system has remained strong. What’s different this time is the leverage far-right Republicans in the House have thanks to concessions by Kevin McCarthy in his desperate fight to become speaker. 

“Even the best case will probably see the sort of brinksmanship that occurred in the 2011 debt ceiling crisis,” Feroli said. And that episode resulted in a stock-market selloff that went global.

As compared to 2011, China today offers a much more attractive alternative to US financial markets. For one thing, it’s now open to foreign bond and equity inflows in a way that it wasn’t back then. After China finishes its abrupt, wrenching and catastrophically deadly reopening, the economy ought to be humming. It is near US$4 trillion central government bond market has plenty of scope to boost overseas ownership.

The potential contrast could have long-term effects, at a time when even some Western money managers question the relative merits of the two systems.

“Given the bickering in the US, it is no longer clear that the US form of democracy clearly works better than the autocratic CCP approach,” said Stephen Jen, who runs Eurizon SLJ Capital, a hedge fund and advisory firm in London.

US political partisanship is a major factor from which the Chinese Communists have derived considerable confidence in themselves.