When companies prioritize the experience customers have with their brand, everyone benefits in the long run. So why isn’t every company hyper-focused on delivering a great customer experience? We’ll explore why customer experience is the new battleground for business differentiation—and how companies can compete.
What Is Customer Experience?
As consumers, each time we interact with a company, it leaves an impression. Whether we’re placing an order, chatting with a live agent, visiting a store, or browsing a website, these brief encounters have a major impact on how we perceive that brand. As we move through each stage of the customer journey, we’re exposed to countless customer touchpoints that ultimately make up our overall experience with that company.
Today, we call the sum of these touchpoints and interactions the customer experience, or CX. Though the term is somewhat new, the concept isn’t—customer experience has been around as long as businesses have. But as new technologies have emerged and customers’ needs have evolved with them, our expectations for what a great customer experience looks like have also changed radically.
Once upon a time, buying a new blender meant driving to the store after work and choosing the most affordable option that looked like it could crush ice without exploding. Nowadays, you can run a search on Amazon and get thousands of reviews that compare blenders on price, quality, warranty, packaging, and more—then get it delivered to your door in hours.
CX in the Modern Age
The rise of new technology has changed the way we communicate too. First, the web put information at the tips of our fingers. Now with mobile devices, social media, and smart technology, we get a constant stream of content through many channels. This incredible accessibility has driven consumers to crave experiences that are both instant and convenient, and the most successful companies have risen to meet and exceed those expectations.
As a result, consumers and companies are continually setting a higher bar for customer experience. We’re creating on-demand products and services that place customer convenience above all else, and developing a culture of radical transparency that humanizes once-faceless brands. Experiences are no longer between the company and the customer. Any customer experience can become public news overnight.
We see it happen all the time. A great customer interaction gets blogged about and the company starts getting kudos from all corners of the internet, or a tasteless tweet becomes a PR nightmare that warrants a public apology. The good, the bad, and the ugly can turn into a viral story in just a few clicks.
Source: Zendesk
What’s more, other consumers are ready to listen. Nielsen found that 66% of global consumers “somewhat or completely trust” the consumer opinions they read online. That makes it the third most trusted form of advertising, preceded only by “recommendations from people I know” (83%) and “branded websites” (70%).
For even the most modern companies, this presents a tough problem. You can’t prevent every issue that springs up, and you can’t predict the impact that the inevitable grievances will have on your company as a whole. But these brands are beginning to realize that when they focus on delivering better customer experiences across the customer journey, they suddenly gain more control over their brand.
CX Is Not Just About Customer Service
Customer experience is a pretty new term to many, so it’s often lumped in with concepts we’re more familiar with, like customer service and customer success. But the truth is, the customer experience begins well before a customer is even an actual customer.
Think about your own experience evaluating brands. Before you ever talk to a company’s customer service team, you’ve probably browsed their website, received marketing emails, or been in contact with a sales rep. Those customer touchpoints impact your perception of that brand and guide your future decisions.
Let’s consider an all-too-common online retailer scenario from the consumer perspective.
A company sends you a 20% off promo code, so you visit their website, find something you like, and go to check out. You don’t see the coupon field, so you go through the normal steps—creating an account, inputting your billing and shipping info, and confirming. When you get to the final step, you see the coupon field and enter the promo code, but you get an error: Coupon not valid. With 10 minutes to spare,
In this example, you didn’t even interact with a human or buy a product, but you’d probably rate the brand pretty poorly. Unfortunately, the company is none the wiser. They might fix the promo code, but they’ve already lost your business. And if you tell other people about the experience, they’ve indirectly lost even more potential customers.
Though customer service tends to impact customers more than any other department, customer experience is much larger than customer service. Every department impacts the customer experience in some way—even the non-customer-facing teams. But few businesses think beyond customer service when evaluating their customer experience, and as a result, customers end up with inconsistent, fractured experiences that drive them out the door.
Why Companies Should Care About CX
Fortunately, there are new ways to capture and quantify the customer touchpoints that make up the customer experience. More and more, businesses are launching customer experience management (CEM) programs to measure customer experience holistically, across departments, roles, and customer types.
In 2014, Gartner predicted that half of all consumer product investments would be redirected to CX innovations by 2017. What’s more, 89% of the companies surveyed said that they expected to compete primarily on customer experience—a 53% increase over the course of just 4 years.
This major shift toward CX spend is backed by customer data too. By and large, customers now care more about the experience they have with a company than they do about price or product. Why? Because it’s easy enough to find a great product for a decent price these days. What’s harder to find is a seamless, customer-centric brand experience.
Source: Kolsky
Brand Loyalty Is on the Decline
In practically every industry, customers are ready and willing to switch providers, and it’s easier than ever to do so. Switching brands can be as simple as uninstalling an app or clicking a “cancel plan” button. Combine that ease of switching with consumers’ growing desire for better experiences, and you get what experts are calling a “switching economy.”
In the past year alone, over half of U.S. consumers have switched brands because of a bad experience, and Accenture estimates that this provider-switching costs around $1.6 trillion yearly.
Source: Accenture
Stats like these have led people to question if customer loyalty is even relevant these days. But the fact is, customers aren’t switching brands just to mix things up—they’re looking for experiences that make them want to stay. Companies can inspire loyalty by taking the time to understand the changing needs of their customers, and then gradually improve the touchpoints that are damaging customer satisfaction and customer retention rates the most.
If there’s one reason we have done better than of our peers in the internet space over the last six years, it is because we have focused like a laser on customer experience.
― Jeff Bezos, Amazon CEO
Challenges of Launching a CX Program
Ask any business leader if they care about their company’s customer experience, and you’d be hard-pressed to find someone who says no. Most companies recognize the value of happy customers and hope to create more of them. But when it comes down to taking real action by designing a customer experience program, there are plenty of reasons businesses back down.
Getting Executive Buy-In
Whether you’re a department head at a Fortune 500 or one half of a 2-person startup, it’s your responsibility to turn limited resources into profitable growth. Justifying a major CX spend isn’t easy when you’re facing imminent expenses in other areas, like hiring a new director, building a strategic partnership, or even paying the electricity bill.
Most startups can relate to this, but it’s true for practically every business, large corporations included. It’s hard to rationalize new customer experience initiatives when you’re operating on a tight budget. Every dollar spent is a dollar lost from something (and often someone) else.
Looking Long-Term
For many companies, customer experience is a “next year” priority. Everyone wants to focus on it, but no one feels they have resources to do it. Plus, there are plenty of other ways to hit pressing goals. You can run a monthly sale, compensate customers for referrals, and reduce spend on frivolous projects.
Though this short-term approach can drive revenue effectively, it’s rarely sustainable in the long term. A company that counts on sales to meet its margin is probably devoting more resources to the quick wins than it is to the long plays like customer experience. Compared to a more customer-centric organization, it likely won’t evolve at the pace of its customers’ expectations, and eventually it will fall short.
Familiarizing Your Team
Risk-averse or not, most businesses prefer profit-drivers that they know will work—and work quickly. Since customer experience is a fairly new concept in many industries, launching a customer experience management (CEM) program can feel daunting. Where do you start? How do you start? Which customers should you prioritize, if any? How do you measure and report on your success? And who on your team should actually own the entire initiative?
These questions, among many others, often put a quick halt to companies’ aspirations of broad CEM programs. It’s just too hard to convince the boss, let alone a board of investors, that you should redirect sales or marketing spend toward CX initiatives this quarter when there are so many seeming unknowns.
But the fact is, customer experience is not the short play, the quick fix, or the bandaid for losses—it’s a systematic way to produce long-term growth through customer retention. When you think of CX in terms of actual metrics—like churn rate, Net Promoter Score, or customer lifetime value—it begins to feel real. These metrics correlate directly to revenue gained and lost.
Getting Started with CX
We know both CX and pricing are critical brand differentiators, but there’s a marked difference between the effects of competing on each. When companies race to the bottom of the pricing ladder, they aim to sweep up new revenue quickly and at maximum capacity.
On the other hand, when companies compete on customer experience, they play the long hand, focusing on gradual improvements across customer touchpoints that ultimately boost customer satisfaction, rekindle customer loyalty, and improve customer retention rates down the line.
While both approaches are valuable, competing on customer experience is more sustainable down the line. Improving and iterating on customer experience requires a holistic view of not just your customers, but your organization as a whole. After all, as we noted above, every branch of a company impacts the customer experience in some way, whether it’s through direct interactions or indirect actions.
Listen to Customers the Right Way
So how do companies develop an understanding of their customers that leads to positive change? First, by asking the right questions. Brands can tap into their customers’ minds in several ways:
Sending customer surveys consistently to capture feedback on key processes and touchpoints
Conducting regular customer reviews (much like you would employee reviews) to stay in touch with key accounts and offer some human contact
Offering multi-channel or omni-channel customer service that gives customers a voice when and where they need it
Accepting feature requests and service feedback from customers
Encouraging collaboration between customer-facing and non-customer-facing teams
Sustainable competitive efforts are essential—and those aimed at experience improvement pay off. Rather than competing on price alone, companies can design a strategy around customer experience that produces long-term benefits, not just quick but costly short-term wins.
Customer experience is your only source of sustainable competitive advantage.
― Harley Manning & Stephen Powers, Forrester
Count on Customers to Talk
When it comes to word-of-mouth and referrals that turn into new business, we also have to consider the power customer experience holds in the age of the connected customer. Deliver a poor experience, and it’s almost guaranteed that others will hear about it. But if you deliver an amazing experience, you could earn referrals, generate a social media buzz, and even elevate your brand reputation permanently.
If you want to win the attention of prospects, price and product probably aren’t going to be what gets your current audience sharing and talking about you. However, make a customer happy with a fantastic customer experience or an impressive support interaction–and that’s sure to get talked about.
Take a page out of Zappos playbook for example, where they’re going above and beyond for customers and getting lots of attention for it. From delivering flowers to a customer to waiving overnight shipping, they’ve discovered the power of CX.
Start With Customer Service
Rather than jump into a massive CX initiative that aims to transform every department and touchpoint, companies can grow their customer experience programs incrementally. Customer service is a logical place to start, since it often has the most direct and tangible impact on customer relationships. Plus, customer service teams typically already measure their success on key customer experience metrics, like customer satisfaction (CSAT) and Net Promoter Score.
Give customer service leaders the opportunity to lead the charge and demonstrate how small changes can inspire powerful progress. Then, make sure other departments take note. As every leader begins prioritizing the customer experience, your company will gradually move toward a customer-centric future that paves the way for loyalty.
GetFeedback for Salesforce
Understanding how CX is changing the competitive business environment is the first step—and now that you’re up to speed, it’s time to start thinking about how you’ll approach your own CX strategy to outpace the competition.
Let your customers be your guide: Get started by reaching out to your customers with timely customer surveys, and feed that data back into your CRM using GetFeedback for Salesforce. Contact us to learn more today.
