Remember when “the customer is always right” drove how brands and customers interacted? Then, it was all about customer service; meeting their needs in that particular moment. Well, that was before the internet age. What used to be a very simple interaction that had a beginning, middle, and end, say, in a physical store, is now an open-ended relationship that can happen spontaneously anywhere and anytime—in your product, a brick and mortar store, a mobile app, a web portal, or your contact center. The term for this business-customer ongoing dynamic today is customer experience (CX).
But, what is customer experience really? CX refers to the ongoing relationship between a customer and your company. Ultimately, CX is about the perception and emotion that a customer is left with after interacting with your brand. And because nowadays these interactions happen across multiple channels and touchpoints, CX ends up being the sum of those interactions and the lasting impression they leave with them.
Why Is Customer Experience Important?
The reason customer experience has been getting so much attention recently is that empirical evidence amounts that being customer-centric has very real payoffs.
According to a PwC report, customers are willing to pay a premium of up to 16 percent for good customer experience. Furthermore, Watermark Consulting reports the companies they identify as the Top 10 Customer Experience Leaders in the U.S. outperform the S&P and have returns that are three times higher than those they identify as CX laggards.
Customer experience shifts the business perspective from a sole focus on profit to one that is focused on customer needs, wants, and goals. Making that shift lets you align your investments, products, and services accordingly, ensuring that they solve not only the right problems, but also the ones customers are willing to spend money to get solved.
This, in turn, impacts the following two metrics that are critical for any business wanting to maintain a healthy bottom line.
Improving Customer Retention and Decreasing Churn
Customers are armed with readily available information about their options and have the power to switch providers at the click of a button. This means that having satisfied customers is key if you want to ensure they keep coming back and buying more from you. A lost customer means not only a loss of revenue but also an increased cost in other areas to compensate for that loss. In fact, research shows it costs five times more to attract a new customer than to retain an existing one.
Decreasing Customer Acquisition Cost
Great customer experience also has an impact on how effective your company is in acquiring new customers. A happy customer is more likely to become an advocate and refer you to other customers. And in an age where people no longer trust advertisements and where 20–50 percent of all purchasing decisions are based on word-of-mouth (McKinsey), customer advocacy is shown to increase marketing effectiveness by as much as 54 percent and significantly decrease your cost of acquiring new customers.
What Makes a Good Customer Experience?
With more than 80% of companies expecting to compete solely on the basis of CX, ensuring your customers have a great experience is key if you want to keep your competitive edge. The thing with competing based on CX is that you aren’t just designing an experience that is better than others offering similar products and services; you are also building experiences that are judged (even if only subconsciously) with all the other experiences they have in their daily lives and with companies such as Uber, Amazon, and AirBnB. This “circle of influence” is what ultimately shapes their expectations about what “great” really means.
Shep Hyken, a customer service and experience expert in the U.S., sums it up like this:
“Your customers no longer compare you to your competitor. They compare you to the best service they ever had from anyone.”
And learning from these brands shows delivering a great customer experience really boils down to a few key ingredients. Let’s take a look.
Make It Effortless
Your customers are impatient, and they expect everything to be easy and “right now.” In fact, Google data shows that searches for “same day shipping” have grown 150% since 2015. So, a great customer experience is all about effortlessness and speed: how easy you make it for customers to do business with you and how quickly you meet their needs or solve their problems.
A great example of effortless done right is Amazon’s 1-click to buy. Amazon took the checkout process, which is the biggest point of friction for customers, and made it just as easy as selecting the item for purchase. As a result, Amazon has been able to massively increase conversions of existing customers and generate billions of dollars of additional revenue. If your goal is to improve customer experience, identify the biggest points of friction in your customer journeys and reduce the effort customers have to expend there.
Make It Consistent
According to Forrester, 95 percent of customers use three or more channels to connect with a company in a single service interaction. This means their experience is shaped, not by their interaction with a single channel, but rather by what McKinsey calls a cluster of interactions that spans multiple channels. And thus, their satisfaction and propensity to buy again from you will be the result of their overall experience across all of them. That is why consistency is so critical.
According to McKinsey, to ensure consistency, you should focus on three main aspects of customer experience:
- Customer Journey consistency: Ensuring customers have a good experience that spans all the channels they interact with in their individual journeys.
- Emotional consistency: Ensuring you elicit consistency-driven emotional connections with customers.
- Communication consistency: Ensuring communications and key messages convey the same values at every interaction point.
Make It Self-Service
Customers expect to have the power to solve product or service problems on their own—and they want to do it instantly. In fact, 50 percent of customers think it’s important to solve product or service issues themselves and 70 percent expect a company’s website to include a self-service application. So, delivering functionality that helps customers help themselves can have a huge impact on their satisfaction. In an analysis by Gartner, web self-service portals emerge as one of the digital CX projects with the highest impact on customer experience and one that more easily shows a positive ROI.
What About Delight?
You might have heard the word “delight” a lot when it comes to customer experience. Delight refers to those “feel good” moments you get when a company provides you with memorable customer service that’s above and beyond your expectations. The Zappos 10-hour long customer service call is one of the most well-known CX delight anecdotes.
In a world where only about 20% of brands are perceived by customers as truly differentiating, many companies are betting on “delight” customer service strategies as a way to stand out and retain customers. However, research shows that, while delight may have its place in customer experience, it has negligible impact on customer loyalty. And, it can increase operational costs by as much as 20 percent. So, if you have to focus on something, focus on reducing customer effort as this is the key to improving loyalty and repeat buying behavior.
Easier Said Than Done
Being customer-centric is easier said than done. An analysis by Bain and Company suggests that while 80% of companies believe they deliver “super experiences,” only 8 percent of customers agree. There is clearly a big gap here.
And while 80 percent of CEOs say they want their companies to be more customer-centric, Gartner data shows that most companies (65% of B2Cs and 75% of B2Bs) are still lagging behind in their CX transformations. One of the main challenges of achieving CX transformation being that Customer Experience is not a one-department thing—like it once was, mostly with customer service—but rather something than spans all departments within an organization.
(If you want to learn more about Customer Experience Transformation, I encourage you to watch this joint HBR and McKinsey webinar—it's chock-full of best practices to help keep you on the right track in your own transformation.)
The Right Tools for Improving Your Customer Experience
Because customer experience is so heavily dependent on emotion and perception, you’d think you need to master some sort of magic to achieve it. However, there are a few strategies and tools you can use that will help you get there, and I promise, they don’t involve magic at all.
Collecting Customer Feedback
Defining a CX strategy that is not based on deep customer knowledge is like driving with your eyes closed. This is why it’s important to have a systematic method and regular cadence for monitoring and collecting customer feedback and data across channels—most commonly known as a “Voice of the Customer” program—to gain a comprehensive view of their needs. Send surveys after key brand interactions, such as asking customers how helpful their interaction with a call center rep was. Conduct one-on-one interviews. Run focus groups. Monitor how customers interact with your site. Talk to support teams to understand your customers’ main issues. Then, use what you learn from the feedback and data to inform your CX strategy.
Customer Journey Mapping
Customer journey mapping boils down to that old adage of walking in your customers' shoes. If you want to impact the way your customers perceive and feel about you, you need to understand the sequence of events from their perspective. How did they find you? What was their main motivation? What channels did they interact with and what were they trying to achieve? It’s not enough to make customers happy at each individual interaction. A McKinsey survey of 27,000 American consumers found that measuring satisfaction on end-to-end customer journeys is 30 percent more predictive of customer satisfaction than measuring each individual interaction.
The reason for this statistic is that you can give your customer an amazing experience on one channel—say your customer can easily find their bank balance on your mobile app—without it meaning that the end result will be good. The same customer might find an issue with a transaction and ring your call center only to be told that it will take 5-10 business days to resolve the issue. Customer journey mapping helps you look at the whole picture. As a result, you can locate the biggest points of friction or dissatisfaction and determine the actions you need to take to remove them.
Personas are fictional representations of groups of customers that will typically use your services, products, sites or brand similarly. But to use customer personas effectively, you should aim beyond the demographics. After all, “50-year-old white male” tells you very little about how a given person will behave or what their needs or wants will be - just think about the differences between Ozzy Osbourne and Prince William of England.
Instead, you should enrich your personas with research that shows what a given customer typically wants to achieve, what their goals are, what their biggest pain points are, and what motivates them (the jobs to be done framework can be a really useful tool here). This will give you actionable insights into how you can best meet the needs of your customer and prioritize the areas you need to improve on.
Customers expect to interact with your brand over an increasing set of touchpoints, and the number of those that are digital is also on the rise. Just think about the number of internet-enabled devices you have nearby right now. In fact, having a strong digital presence is key in improving your overall experience. Forrester reports that companies who have updated their customer digital properties are the ones who’ve seen the biggest increases in Customer Experience Index (CX Index™) and revenue.
But omnichannel is not just about having a great presence on multiple channels. It’s also about giving customers an experience that is seamless and integrated, allowing them to move from channel to channel without friction. Companies with the strongest omnichannel customer experience strategies retain an average of 89 percent of their customers, compared to only 33 percent of companies whose omnichannel strategies are weak (Aberdeen Group). And this is why the number of companies investing in omnichannel is also on the rise, having jumped from 20% to 80% (PwC). (If you’d like to know more about omnichannel, I’d encourage you to read this blogpost about omnichannel and CX strategy from my colleague Forsyth Alexander).
Creating Great Digital Customer Experiences
At OutSystems, we’re on a mission to eradicate bad experiences—and ensure that any company can deliver high-quality digital omnichannel CX without needing to boast the unlimited resources of Google or Amazon. You can learn more about how OutSystems can help your company deliver brilliant digital customer experiences, as well as discover some of our customers who have found great success in doing so, in our Creating Brilliant Digital Experiences with Low-Code e-book.