What is Customer Experience

Why does customer experience matter?

We live in an era of endless customer choice. Empowered by recent developments in technology, customers today find it easier than ever to make educated choices between competing services and products, and they only choose those that meet their high expectations.

Realizing that customers are the lifeblood of their work, companies are adopting a customer-centric approach to marketing, trying to create the best possible customer experience they can. But despite the fact that 96 percent of companies have already adopted a customer experience strategy, according to Avanade and Sitecore research, only 14 percent are ahead of their customers’ expectations.

This means that a large percentage of companies are at high risk of becoming irrelevant and going under. To prevent this from happening, companies must not only understand why the customer experience matters so much in this day and age but also know how to improve it, and this article provides a convenient starting point.

What is customer experience?

BusinessDictionary defines the customer experience, often referred to simply as CX, as the entirety of the interactions a customer has with a company and its products. “Understanding the customer experience is an integral part of customer relationship management. The overall experience reflects how the customer feels about the company and its offerings.”

Fundamentally, creating a good customer experience is about asking “How can I help?” instead of “How can I sell,” as Ted Rubin, CMO of Brand Innovators and co-author of Return on Relationship, puts it. From customers’ perspective, products and services that offer a good customer experience share three common characteristics: they deliver value, the value they deliver is easy to find and engage with, and they are so enjoyable and emotionally engaging that people want to use them.

It’s important to see the customer experience as the sum-totality of how customers engage with a company, instead of treating it as a single snapshot in time. For Zappos, an online shoe and clothing retailer that was acquired by Amazon in 2009 for around $1.2 billion, it starts with a simple, easy-to-use website and continues long after a customer has received his or her package. Zappos encourages its employees to go above and beyond traditional customer service, often surprising its customers with free overnight shipping upgrades.

Because Zappos and other companies that have successfully adopted a customer-centric approach to marketing don’t abandon their customers post-purchase, they are perceived as trustworthy, which, in turn, helps them stand out among other competing brands.

What makes customer experience so important?

According to the Customers 2020 report from Walker, the customer experience is forecast to surpass price and product as the key brand differentiator by the year 2020, and 75 percent of people already expect a consistent experience wherever they engage with brands.

While most CXOs have noticed that customers have come to expect a great customer experience, not many are ahead of the curve. “Executives have been slow to put their customers first. Even though communication behavior has changed so much over the past 10 years, most marketing departments are still set up the same way they have been over the past 50 years. Sure, we’ve added social media and digital teams, but those haven’t been truly integrated into the organization,” says Joe Pulizzi, one of the leaders behind the content marketing movement.

Unless companies start taking the customer experience seriously, they can expect their revenue to decrease significantly because totally satisfied customers contribute 2.6 times as much revenue as somewhat satisfied customers, and 14 times as much revenue as somewhat dissatisfied customers.

What’s more, customers with strong brand attachments are known to deliver 23 percent more profit and revenue than average customers, and returning customers spend approximately 67 percent more than new customers.

When a company creates a good customer experience, it produces far more brand advocates, people who talk favorably about a brand or product and pass on positive word-of-mouth (WOM) messages to other people, than companies that fail to make their customers fall in love with them. Considering that 74 percent of consumers identify word-of-mouth as a key influencer in their purchasing decisions the revenue opportunity that a good customer experience creates is simply too attractive to ignore.

In summary, a good customer experience can:

Create loyal customers and reinforce brand preference.
Reduce customer churn since satisfied customers are less likely to leave.
Produce brand advocates for a company and thus increase word of mouth referrals.
Boost revenue with positive word of mouth and greater customer satisfaction.

How is customer experience different from customer service?

We’ve already explained that the customer experience is the sum of all the interactions a customer has with a business and its products, but how does it really differ from customer service?

Customer service can be defined as the provision of service by a company to customers before, during and, after a purchase. It is often thought to be a single department in a company, the one that interacts with customers at certain points and assists them with the installation, maintenance, or disposal of products, among other things. However, this view of customer service is no longer grounded in reality. Today, customer service is a critical area of the customer experience that plays an important role in the customer journey. Although companies must ensure that all parts of their customer journey are equally impressive and none is lacking, it’s customer service that often negatively influences the entire customer experience.

“The quality of support a customer receives fundamentally affects customers’ perceptions of brands. Customers evaluate the overall value proposition of service providers on an ongoing basis, especially as they are presented with competing offers. Given these realities, customer service leaders must focus on and demonstrably improve their part in customer experience,” writes content marketing specialist Jordan Bryan.

According to a study by RightNow Technologies, 73 percent of customers leave because they are dissatisfied with customer service. What’s surprising, companies believe that only 21 percent of their customers leave for this reason. We also know that a well-crafted customer service approach can boost customer retention to 92 percent, which is why a growing number of companies focus on treating each engagement as a unique conversation to create personal, positive, and genuine connections with their customers.

Digital channels play an important role in customer service today, and experts estimate that they can bring a return on investment of up to 272 percent. Recently, companies have started providing customer support via AI-powered chatbots, and Accenture now estimates that this is how 80 percent of customer engagements could be handled in the near future to improve the overall customer experience.

Why should one have a customer experience strategy?

All companies that want to improve their customer experience, regardless of their size, should thoughtfully form a plan on how to deliver an excellent customer journey over time and in the most optimal manager.

As Phil Klaus, customer experience and strategy expert for Design Management Review, points out, “Customers will always have an experience—good or bad—and it will influence their purchasing behavior significantly.”

A well-thought-out customer experience strategy helps ensure that a company is able to deliver an outstanding customer experience across its interactions with customers and measure the results to continuously make strategical adjustments. The right customer experience strategy can make a company stand out from the pack, and it also increases brand value and reduces costs.

How to create a successful customer experience strategy

Let’s take a closer look at 5 ways how to create a successful customer experience strategy capable of driving growth and fostering a culture of excellence.

Engage Frontline Employees

From the customer’s perspective, frontline employees represent one of the most important touchpoints. However, nearly 8 in 10 frontline employees are not motivated by the way they’re managed, according to Gallup’s State of the American Workplace Report. When a customer meets a frontline employee who isn’t motivated to do his or her job, the customer often interprets the disinterest of the employee as the disinterest of the entire company, which is a sure-fire way how to ruin what otherwise might have been a positive customer experience.

To engage frontline employees, it’s paramount to establish a clear vision and provide feedback and recognition. Most millennials deeply desire their managers to listen and value their ideas, which might require a change of company culture, but the reward is worth it. Why? Because engaged workers are 17 percent more productive and receive 10 percent higher customer ratings than disengaged teams, according to a 2016 Gallup study entitled The Damage Inflicted by Poor Managers.

Change Mindsets to Sustain at Scale

“Too many companies assume that all they need to do to enact proactive customer service is to buy some new technology. The reality is that making the shift to proactive customer service first requires a change in mindset and strategy,” writes Adrian Swinscoe, a customer experience consultant and author of “How to Wow: 68 Effortless Ways to Make Every Customer Experience Amazing.”

The very same philosophy also applies when it comes to sustaining an exceptional customer experience at scale. Companies must understand that the customer experience has become the main driver of sales numbers, which is why it’s so critical to adopt a customer-centric mindset. The right mindset can then support the adoption of various technological solutions to scale customer experiences as needed.

Improve the End-to-End Customer Experience

Many leaders today consider improving the end-to-end customer experience to be their number one priority, and for a good reason: ensuring that every touchpoint comes with a positive experience is crucial for success.

As the International Data Corporation states in its report, “Customer experience strategies that not only include the direct customer-facing employees but incorporate traditional back-office processes aligned to the customer and business requirements are key to building a comprehensive and seamless experience.”

Every end-to-end customer experience must be supported by a solid customer experience strategy that takes into consideration all points on the customer journey and addresses them in the context of the whole company.

Close the Customer Experience Gap

According to a survey by Harvard Business Review, nearly three-quarters of business leaders said that delivering a relevant and reliable customer experience is critical to their company’s overall business performance. However, the same business leaders often feel chained by legacy systems that are rarely capable of ingesting and analyzing growing volumes of data in various forms, which is essential for delivering a superior customer experience.

To close the customer experience gap, companies must turn to technology and training. “Make use of big data to paint a complete picture of a person’s preferences—and make this information easily accessible to the appropriate employees—so customers feel appreciated and understood the next time they open an email from you, talk to a company representative, or decide to make a purchase,” advices Matthew Lieberman, advisory marketing leader at PwC.

Track Engagement to Clearly See Why Customer Experience Matters

To see why creating a good customer experience matters, it’s necessary to establish a baseline and then measure customer experience improvements. There are many metrics a company can focus on, including churn, average resolution time, average handle time, number of customer replies, percentage of escalations, call wait time, customer effort score, knowledge base views, number of positive votes, and others.

Each customer experience action plan and initiative should be tracked, and notable customer experience improvements should be recognized and rewarded. The good news is that there are many excellent solutions today that make tracking customer experiences effortless and can provide companies with rich data and information they can act upon.

Conclusion

Today, customer expectations are higher than ever, and companies that fail to meet won’t likely stay relevant for a very long time. However, this environment creates a tremendous opportunity for forward-thinking companies to stand out and differentiate themselves based on their ability to create positive customer experiences, which are known to boost sales, improve customer satisfaction, reduce operating costs, and improve customer retention.

While each company must carefully consider its own unique needs and capabilities when creating a customer experience strategy, we recently created the Art of Customer Experience ebook to,

Provide a solid foundation for understanding next-generation customer experience and its impact on the dynamics of customer acquisition, retention and business performance.
Guide enterprise leaders like you to reimagine their customer experience strategy and construct the right person to succeed on the new competitive battlefield.

In this ebook, we have also laid out a simple 6-step plan to help businesses like your reimagine and refine your customer experience strategy to not only keep pace but to eventually outperform.

Download your copy of this ebook to create a culture of customer experience excellence in your firm.