For companies to differentiate themselves from their competitors, they must invest in customer experience – to not only engage with customers but to also retain them in a loyal long-term relationship. Investing in customer experience will increase customer satisfaction and loyalty, which will result in increased customer lifetime value (CLV).
Customer experience has been crowned the most exciting opportunity for businesses in 2020 by Econsultancy’s Annual Digital Trends report. Customer experience even beat content marketing, video marketing and social. It is easy to see why: 36% of companies who invested in customer experience said they exceeded their business goals by a significant margin.
When companies have good customer experience, it leaves the consumers feeling heard, seen, understood and ultimately happy. In PWC’s report “The future of CX”, 73% of the 15,000 customers surveyed pointed to customer experience as an important factor in their purchasing decisions. Customers were also willing to pay a price premium of 13% - 18% for luxury services, if they receive a great customer service. If a company has great customer experience, it will lead to returning customers and reduced customer churn without having to lower their prices.
What is Customer Experience?
Customer Experience (CX) is the entire experience the customer has had with the company before, after and while they are using a product or service. It is this experience that builds brand perception in the eyes of the customers. This perception will become the deciding factor in whether the customer chooses to be a returning customer for the particular company again.
When companies ignore customer experience
If a company does not focus on providing good customer experience it can end up costing much more than one lost customer. If a customer has had a positive experience, 72% of them will share this with 6 or more people. On the other hand, if a customer has had a negative experience 13% of them will share this experience with 15 people or more.
Companies can think that a lack of negative feedback equals good customer experience. However, the customers may not be sharing their bad experiences with the company – instead, they may be doing so with their friends and family. Only 1 in 26 unhappy customers will actually complain directly to the companies, leaving them with very little actionable insight in a competitive market.
These experiences and lack of actionable insight will damage the perception of the company and lead to customers (both current and potential) going elsewhere - 67% of customers cite bad CX as a reason for churn.
How to create a strong strategy for great customer experience
Customer focused vision
Having a clear customer-focused vision that can be communicated within an organisation will help maximise the customer experience offered. Create a set of statements that will act as guiding principles. Embed these into the company culture and into all areas of training and development of new team members. This will create a sustainable customer-focused environment where everyone inside the organisation is focused on delivering the best experience for the customer. Being customer-focused is not only the job of the employee who has first hand interaction with the customer, it is everyone’s job.
Companies who excel at customer experience have understood that customers are active participants in the business. The customer relationship is directly tied to their profit, and it should therefore constantly be measured, tracked and improved.
Know who the customers are
Understanding the customer’s needs is a great way to empathise and connect with customers. A tool often used is the customer persona. A customer persona is a fictional archetype that represents the key traits, goals, frustrations and jobs-to-be-done of a large segment of customers.
As an example:
Meet Gary Hillock. He is a 34-year-old drummer from Brooklyn NYC. Every Monday to Friday he takes the L train to Williamsburg from Bedford-Stuyvesant to practice with his band. It is a 12 minute train ride but the walk from his apartment to the metro station is 9 minutes long. Before his commute begins, he likes to visit his favourite coffee shop which is only one block away. He will pick up his coffee to go (medium oat milk cappuccino), and maybe a doughnut. Everything will be eaten before he reaches his station.
By giving your customers an identity, a name, purpose and a job to be done, a business is able to better understand and empathise with their customers. When you are able to imagine your customers, their routines and their lifestyles, it gets easier to picture what they might find appealing, interesting and ultimately what they will be willing to buy. These personas drive important company decisions by taking the customer and their point of view into account, which will help companies get more money out of existing customers and acquire new customers through meaningful, relevant and appropriate brand experiences. In the example of Gary Hillock, the coffee shop he visits might want to improve his experience to encourage him buy more. By understanding Gary’s lifestyle and routines, the coffee shop would have a powerful insight into how they could potentially market themselves as a place that Gary buys not only coffee and doughnuts from but also, perhaps, a take-away lunch as well.
Connect with your customers and their emotions
The best customer experience is achieved when a customer feels an emotional connection to an organisation. The Journal of Consumer Research found that more than 50% of customer’s experiences are based on emotions. Emotions shape the attitudes that drive decisions. Customers can become emotionally connected to an organization or company on a variety of motivators:
- Because they remember how great it feels to use the product or service,
- Because the service makes them feel secure,
- Because their products help them be more creative.
Businesses that have customers with strong emotional connections outperform competitors by 85% in sales Growth. A study titled “The New Science of Customer Emotions”, found that emotionally engaged customers are:
- At least three times more likely to recommend your product or service.
- Three times more likely to re-purchase.
- Less likely to shop around.
- Much less price sensitive (33% said they would need a discount of over 20% before they would defect).
Customers who are fully emotionally connected to an organisation are 52% more valuable on average, than those who are just highly satisfied. This value is defined over a variety of metrics such as purchases and frequency of use. Companies who invest in increasing the emotional connection with their customers will discover that it is a great source of competitive advantage and growth.
Capture feedback in real time
It is essential to capture feedback in real time and companies who stay connected with customers and their experiences with the brand will discover valuable insights. According to The Peak-End Rule, the typical consumer’s memory of a customer experience is the feelings they experienced at the peak moment and at the end of the interaction. It is not the average of all moments. This means sending out customer feedback surveys long after they have interacted with a company or service is not going to give accurate insights. By receiving feedback during or right after a customer is using a service, the company will receive more accurate insights into how to improve the customer experience. Furthermore, asking for feedback from a customer during or right after an experience may result in the customer feeling appreciative that their feedback was sought. Even if the customer has had a bad experience, the experience might be replaced by a positive one, which can change the customer’s memory for the better.
To create loyal customers in 2020 and beyond, companies must create a great experience at every step by adapting to their customers' needs. Give customers a great experience and they will buy more, be more loyal and share their experience with friends and family. Make every interaction with customers smooth, engaging and always improving. With this, companies will not only gain new customers, but drive brand loyalty and increase revenue.