There’s no doubt that customer loyalty is married to a good Customer Experience. Break one and you’ll break the other. Strengthen one and you’ll strengthen the other. But while it sounds simple enough, making meaningful and profitable changes to your customer experience without blowing your budget is one of the toughest jobs in marketing, according to the authors of The Customer Experience Factbook (published by the global marketing source, The Marketing Factbook) who have identified dozens of key areas in which businesses can turn existing customers into ‘Super Customers’ by improving the customer experience to build up and multiply customer loyalty, word-of-mouth advocacy and brand ambassadorship.
While it’s easy to look at any business and list maybe a dozen areas that are ripe for building a more effective and profitable CX strategy, there are many less obvious areas that are all too often missed. But fear not: here, the factbook’s authors share 20 of the key learnings from their comprehensive guide to CX Improvement (click here).
Anyone who has been tasked with improving their organization’s Customer Experience – or is considering CX as a long-term driver of profit – will find their efforts rewarded well, but not necessarily from day one. Customers do have a tendency to distrust any “grand new initiative” and big promises a brand makes and, perhaps ironically, the more suddenly and loudly they’re introduced, the less they’re trusted. Sitting at the heart of any customer’s experience with a brand is their own trust in that brand and what it stands for, and that trust is built on earlier experiences rather than today’s big promises about what will happen tomorrow.
It’s vitally important, then, that C-Level executives back the initiative should understand that their ROI (return on investment) will come in the form of a slow start, followed by an upward growth curve. However, unlike most growth curves, there doesn’t necessarily have to be a diminishing return over time. In fact, if you continue to innovate and improve the customer experience, the rewards should continue growing. So while it is completely valid to improve CX working toward a defined timeline or specific business goal (such as ‘a 20% reduction in annual customer defection’), an ongoing CX Improvement strategy has the potential to be the initiative that keeps on giving.
Customers have more power than marketers
Every marketer, every executive, every business owner… they all know that customer satisfaction is inextricably linked to customer retention. In simple terms, a happy customer will tend to come back while an unhappy customer will tend to go elsewhere next time. It always used to be the case that customers would “vote with their feet”. The problem today is that they also “vote with their social media”, which greatly multiplies the impact of a customer’s feelings about a brand or supplier. One customer who has a really poor experience could potentially reach billions of others with their story. The problem is that you can never know which customer that’s going to be, or when, or where, or why.
The flip-side of that coin is that one customer with a really amazing experience can also go viral with it. It’s probably less often that it happens (after all, ‘bad news makes a better headline’) but there are still plenty of ‘feel good’ customer stories out there that turn ordinary brands and their human front-line staff into urban heroes – forces for good regardless of other commercial interests
What we’ve learned about Customer Experiences
To help you understand and take advantage of the experiential nature of the customer journey, the Customer Experience Factbook identifies your organisation’s potential CX weaknesses – that is, those easily-missed opportunities for incremental sales – and shows how to build a robust CX Improvement Strategy. It even shows you how and where to prioritise the changes that need to be made to get the best ‘bang for your buck’.
There are always new studies and research projects being carried out to keep marketers up-to-date on what works, what doesn’t work, and how to gain the best advantage from what are often simple changes to the way things work. In the Customer Experience Factbook, that research has been carefully tabulated and compiled into a comprehensive resource for marketers seeking to build and justify a CX improvement program.
Below we’ll discuss a small selection of the key learnings from the factbook (available online now at www.marketingfactbook.com/cxfactbook)
Core Lesson #1: Why invest in Customer Experience Improvement?
- A Good Experience is worth three times more
CX is very important, and this cannot be overstated. Even back in the good old days of so-called ‘Mom & Pop’ stores, the customer experience was both personal and personalised, friendly, well planned, consistent, convenient, competitive, and honest. In fact, today’s best marketers still strive to achieve the same kind of CX at today’s commercial scales, through today’s myriad channels and customer touch points, as Mom & Pop used to achieve in their small-town stores. Over a complete decade, Customer Experience Leaders delivered a total cumulative return that was nearly three times that of CX Laggards, according to a cross-industry Customer Experience ROI study by Watermark Consulting. The study, which examined the aggregate stock performance of several CX Leading and CX Lagging firms, provided compelling evidence for the business value of a great customer experience, with Leaders far outperforming Laggards across the board. As for Customer Experience Leading firms, what do they do differently to achieve their out-performance? Simply put: They aim for more than customer satisfaction; They nail the basics, and then deliver pleasant surprises; They understand that great experiences are intentional and emotional; They shape customer impressions through cognitive science; and they recognize the link between the customer and employee experience.
- What are the Key Drivers of a Good Customer Experience?
In today’s so-called ‘Experience Economy’ the customer controls the market. For companies to retain customers and keep them returning as brand loyalists, developing an emotional connection between company and employees, and employees and customers is key. According to a study by UserTesting, there are five key qualities understood by the world’s CX Leaders. First, the employee experience is the foundation of building a great company culture, and taking the time to make genuine and emotional connections with employees goes hand-in-hand with providing world-class customer experiences. Second, 60% of consumers surveyed said they preferred to shop with brands that have physical locations rather than those with only an online presence, and the desire to have in-person interactions with brands demonstrates the importance of high-quality, in-person customer experiences. Third, consumers connect with brands using multiple channels, so providing a seamless omnichannel customer experience across devices allows a brand to earn true customer loyalty rather than losing out to competitors whose channels provide a better, more consistent experience. Fourth, inspiring brand loyalty begins with making customers feel both understood and valued, so the entire customer experience needs to appear both intimate and personalised – and above all, sincere rather than contrived or automated. Fifth, you can never under-estimate the power of an emotional connection with your customers, as 60% of loyal customers surveyed tended to use emotional words and phrases to describe their connection with favourite brands, and 62% felt that they “have a relationship” with their favourite brands.
- Better customer service drives up to 30% more customer loyalty
We’ve already seen the benefits of a Customer Experience that’s done well, but the impact of a poor experience can’t and shouldn’t be underestimated. According to a survey by Oracle’s Communications division, consumers worldwide are fed up with poor customer experiences and outdated approaches to customer service, with 68% saying they would buy more from brands that put the ‘service’ back into ‘customer service’. Most consumers polled said that the ability to connect immediately to the relevant associate, interact via digital channels, and to receive contextual, personalized messages, would increase convenience and improve their overall experience. In fact, brands that capitalize on this shift could see as much as a 25% – 30% increase in loyalty from their customers, with 75% of consumers feeling that more modern engagement methods would enhance their customer experience with brands.
- Digital customer experiences are the new frontier for customer loyalty
There is apparently nothing worse than an unhappy customer, with 71% of shoppers that had poor digital shopping experiences having taken some form of action as a result: Two in five (39%) had decided to shop at a different store, while 38% said they had told family and friends about the negative experience. About a quarter (27%) had contacted customer service with feedback, and 26% had returned an item they had purchased. A worrying one in five (19%) had posted scathing reviews online.
Core Lesson #2: How Customer Experiences drive Customer Loyalty
- Brands will Rise or Fall on their Customer Experience
The customer experience is the top reason consumers cite for choosing a particular brand when making a purchase, according to an international survey from Medallia, which found that consumers are quick to both penalize or reward a brand based on their experiences. In fact, 77% of respondents claim to have chosen a product or service from a company because of good experiences they had with it, while 64% of respondents said they have avoided a brand because of a bad experience. Moreover, 64% said they had switched brands after a bad experience (rising to 70% for Millennials). The study concluded that today’s consumers do their research before buying, and they expect to have a seamless and positive experience with their chosen brands. If that basic expectation isn’t met, they know they can easily go elsewhere.
- Five ways Customer Experiences will drive trust and customer loyalty
Consumer behaviour, likes and dislikes continue to change. So what will the customer experience look like in the near future, and what is likely to keep your customers coming back instead of trying out the competition next time? First, according to a study by Futurum Research and SAS, we can expect to see a massive shift toward the automation of customer communications, with smart machines replacing humans and handling about two-thirds of customer engagements, and with decisions being made automatically in real-time. Second, consumers will increasingly feel at-ease with new technologies that improve their shopping experiences, with 80% expecting delivery drones or autonomous vehicles, 81% expecting to deal with chatbots, and 78% expecting to use AR or VR apps to see how products look. Third, CX will be shaped in large part by evolving technologies, with 62% of brands already investing in AI assistants and 54% investing in AR and VR technologies. Fourth, while 58% of brands now cite “high quality” as the greatest driver of customer loyalty, most consumers cite “low cost” or “discounts” – but in the future, consumers feel that mobile apps, high-speed access, and ordering via smart home systems will be their top three loyalty drivers. Fifth, the biggest challenge for brands today is how to overcome the trust gap between them and consumers. Consumers are wary of how brands treat their personal data and feel powerless, with only 54% trusting brands to keep their data private and safe. In fact, 73% of consumers believe the use of their personal data is “out of control”, so this is the next big challenge for brands as they try to balance data-driven customer experiences with the customer’s trust concerns.
- Don’t rely on Points or Prizes to earn customer loyalty
Brands are struggling to retain customers as consumers increasingly have zero tolerance for a poor experience, according to a study by Klarna. In fact, 55% of shoppers said that just one bad experience would stop them returning to a brand, while 29% said that shopping “isn’t as fun as it used to be”, and 36% felt that what shoppers today have gained in convenience, they’ve lost in experience. Where brands used to think of loyalty in terms of reward schemes or points, the true drivers of customer loyalty now run much deeper than transactions or offers – and when it comes to what drives disloyalty, a bad returns process (46%) or a lengthy online checkout (28%) rank much higher for shoppers. In the end, the shoppers surveyed said they simply want a better customer experience, craving things like brand values they can align with (49%), human engagement (28%), and flexible payment options (36%).
- Consumers prefer a good retail Customer Experience above low prices
Two-thirds (66%) of consumers care more about experiences than price when choosing a brand from which to purchase, according to research by Merkle, which found that 52% of online shoppers had stopped shopping with a brand due to a poor web site experience. The study concluded that marketers must focus on developing customer experiences that put customers squarely at the centre, starting with a comprehensive understanding of the entire customer journey, then identifying and responding to their interests and needs. This approach leads to more valuable and longer-lasting customer relationships and a less-assailable competitive advantage.
- Consumers prefer a good online Customer Experience above low prices
Nine out of ten consumers feel that a positive digital shopping experience affects their brand loyalty just as much as the brand’s prices, according to the Retail Digital Trends Survey from Riverbed. One of the biggest problems brick-and-mortar retailers face today is declining foot traffic, which is driving closures of physical stores. However, brick-and-mortar retailers have a huge opportunity to attract new customers to their stores, as 47% of consumers say they have specifically visited a store for the first time because of the enjoyable online digital experience that the brand provided. And that number jumps to 60% for Millennial shoppers.
Core Lesson #3: How lesser Customer Experiences are driving Customer Defections
- Consumers say brands’ Customer Experiences need improvement
Despite increasing investment from brands in marketing technology, nearly half of consumers say brands aren’t meeting their expectations when it comes to the customer experience, and even fewer remember the last time a brand exceeded expectations, according to a global survey from Acquia. Marketers have expanded into new channels and adopted new technologies to keep pace with consumer expectations, yet that very technology has become more of a barrier than an enabler for a great customer experience. Some 74% of marketers feel that technology has actually made it harder, not easier, to offer customers better, more personalized experiences. At the same time, while consumers do prefer a well-personalised experience, they remain sceptical about whether brands have their best interests at heart. The study concluded that blindly investing in clever marketing technologies isn’t always the best answer because marketers and consumers aren’t always on the same page when it comes to data or privacy, and that needs to change before personalisation can truly augment the customer experience.
- In-store and digital Customer Experiences should be indistinguishable
The digital customer experience doesn’t start and end online, as consumers want brick-and-mortar retailers to offer in-store digital services and features that enhance the overall shopping experience. The most popular digital offerings that consumers typically take advantage of while shopping in-store include in-store Wi-Fi (34%), using a store-specific mobile app (27%), opting for digital receipts via email at check-out (25%), and using third-party mobile apps for things like digital coupons, discounts or price comparison shopping (22%). Using ordering kiosks and in-store virtual assistants rated lower at 14%.
- Even brands say their own Customer Experiences need improvement
There’s never been a greater need for companies to quickly empathize with their customers and understand their experiences than now. Great customer experiences can drive brand loyalty, customer growth and revenue, while poor experiences can result in lower margins and customer attrition. According to a survey of CX issues by UserTesting, 85% of businesses felt that their overall customer experience needs improvement, with key areas being digital transformation, choice of technologies to support better CX, and customer research initiatives. The study concluded that companies have to find ways to bring customer insights into every decision, in real-time, and a need to empower all teams within the organization to gather customer insight quickly so they can make high-confidence decisions at the speed of digital business.
- Brands urgently need to understand their customers’ expectations
Companies of all sizes lack the capabilities needed to keep up with ever increasing customer expectations, according to a report by Zendesk which found that nearly half of the customers surveyed (46%) said their expectations were higher than they were one year earlier. But while good customer service outranks convenience and reputation when people are considering which companies to do business with, there has also been a global dip in overall customer satisfaction (down 2.2% over five years). Not surprisingly, CX-leading businesses were found to stand out for their ability to simplify the purchasing experience, communicate directly with consumers with digital tools, and use data analytics to improve operations.
- Customers’ expectations are increasing steadily
Customer expectations are on the rise with four out of five consumers saying they are comfortable with a company using their past purchase history if it results in a higher level of customer service, according to research from Five9 which found that 80% of consumers are comfortable with a company using their past purchase history if it results in a higher level of customer service. But expectations are high: Despite their increased willingness to share data, 76% will defect if “a lot of effort” is required to resolve a customer service issue.
- Poor customer service experiences are driving costly defections
Brands that make their customer service staff a top priority can improve both productivity and customer loyalty, according to global research from Gartner which found that, by making customer service agents a priority within the company, many businesses can increase their productivity by up to 19% and decrease their ‘customer intent to leave’ (potential defection rate) by up to 25%. But because an above-average customer experience correlates will with increased customer loyalty and satisfaction, this also translates into more technologies and tools for customer service agents to use, not only to be more productive but also to provide a more seamless and effortless customer experience. Sadly, the way things currently stand, 69% of customers said they have difficulty navigating automated systems, while 62% have needed to multiple contacts to resolve an issue, and a worrying 10% said their problem was never resolved at all. The top priorities consumers recommended for businesses are: “reduce waiting times”; “better training for service agents”; and “make customer service available 24/7”.
Core Lesson #4: Drivers of the most successful CX strategies
- Customer Experience initiatives work best if led from the top
C-suite led CX initiatives are best at increasing revenues and customer satisfaction while also reducing costs, according to a study by the Economist Intelligence Unit and Genesys, which showed a direct correlation between CEO engagement in CX and subsequent profitability. More than half (58%) of companies reported much higher profitability than their competitors when the CEO was in charge of CX, and 59% experienced better revenue growth as a result of prioritizing CX investments. The Customer Experience Factbook explains in detail why marketing teams should seek top level buy-in before finalising their CX improvement strategy, and how that extra “drive” from the top can help embed a better customer experience into the entire company’s ethos. In fact, in practical terms, the study revealed that 63% of executives who had made CX a priority actually delivered a better customer experience than their competitors and, consequently, more than half of companies said would be increasing their CX investments by more than 10% over the following three years.
- Seven ideas shaping tomorrow’s Customer Experiences
Facing an explosion of digital clutter resulting from two decades of rapid technology growth and innovation, people and organizations are rethinking what they really want, according to a report from Accenture. In an attempt to declutter, people are being more selective about which products and services they incorporate into their daily lives, choosing to disconnect, unsubscribe or opt-out if the value exchange is not mutual. That isn’t as bad as it sounds… It just means it’s time to rethink products, services, and experiences that people actually want and value. First, embrace ‘mindful design’ to reach consumers in more gentle and relevant ways; Second, focus on sustainability or risk being rejected; Third, minimize the amount of data you collect and clearly explain that which you do collect; Fourth, start unifying products and services to work together to meet real everyday needs; Fifth, stop thinking of people as ‘types’ or ‘demographics’ and start considering ‘mindsets’ and ‘life choices’; Sixth, redesign both retail and work spaces with an intelligent focus on digital tools; Seventh, carefully consider the impact of ‘synthetic humanization’ such as IVR systems, AI customer service, automated calling, and automated web-chats. Consumers increasingly want to be seen and treated as having human value as well as financial value.
- Creativity is vital in a successful Customer Experience strategy
According to a survey by Isobar, most CMOs believe that ‘creativity’ is critical to transforming both the customer experience and their business overall, with 85% believing that ideas which ‘build the brand and create an emotional connection’ are important to the future success of their business and 47% are now investing more heavily in creativity. However, 57% said that the currently increasing expectations of customers are the biggest barrier to improving customer experiences. In other words, the customer experience is a ‘moving target’ – you can’t just fix it once and forget about it. You have to keep innovating, creating, re-creating, and re-innovating. Because people quickly get used to novelties, the process must continue and the creativity needed will naturally increase. But what this increasing expectation also means is that the level of service and benefits that customers come to expect is also increasing, which explains why 64% reported that good customer service delivered improved business outcomes consistently.
- Emotional Customer Experiences create stronger customer relationships
As consumer interactions become more digital, customers are looking for more human, stronger emotional connections to the people and organizations they do business with, according to a study from Deloitte, with 70% of consumers expecting a more two-way relationship with brands. In fact, emotional factors were found to be the primary drivers for brand loyalty and brand advocacy, with nearly 60% using emotional language such as “love”, “happy” and “adore” to describe their connections to their favourite brands. Trust is the most important emotional factor that influences consumers’ connections to a brand, and trustworthiness (83%), integrity (79%) and honesty (77%) are the emotional factors best align with consumers’ favourite brands. Brands must therefore take a structured approach to understanding customers’ emotions and automatically interacting with them at scale.
- Customer Experiences must be Honest, Ethical and Transparent
By 2019, only half (49%) of consumers had used the same technology service providers for more than three years, according to an 18-country survey from Verint Systems. While customer retention rates across the board have fallen sharply across all age groups in recent years, the results for ages 18-25 showed particular cause for concern. For example, only 28% of this group had been loyal to their current service providers for 3+ years, and 14% had switched providers within a year. So what could keep this fickle age group loyal? The study found that 69% felt that a company’s ethics were a “major deciding factor” when choosing brands, and 49% said they were more likely to defect “for ethical reasons”. The conclusion was that companies must increasingly be honest and transparent, both of which are key qualities that must come through in every element of the customer experience.
How to begin a Customer Experience Improvement Strategy
As explained in The Customer Experience Factbook, improving the customer experience requires a strategy that differs from most other business strategies in one important way: It is an intensely practical and specific strategy rather than the more general kind of ‘road map’ guideline that would normally guide future policies and decisions.
To begin with, for example, in any customer interaction there are basic requirements that need to be fulfilled that won’t usually provide any particular satisfaction (such as having the items in stock, the store being open for business, or there being enough parking available outside at busy times), and there are other factors that will provide customers with the feeling that they’re glad they did business with you (such as a really helpful members of staff, or a truly special personalized offer). These basic requirements are known as ‘hygiene factors’, and it is absolutely critical to address any outstanding problems in those areas before even considering improvements in other areas. After all, if a customer never bothers visiting your store because they know there won’t be any parking available, they’ll never find out how helpful your staff can be or how good your offers are.
The CX Improvement Strategy can be researched, decided upon, and assembled stage by stage and culminates in a comprehensive, practical strategic manual that clearly defines and prioritizes how improvements must be made, along with the “where, when, how, why and who” for each step. It must also set the targets, metrics, success-or-failure standards and accountability for each way-point in the plan, as well as laying out the budgetary implications and expected ROI (return on investment) throughout the whole process.
“While not every company can easily address all of their basic hygiene factors without some effort and expense, the key lies in correcting and improving everything that is possible and practical, and to then make plans to improve other areas when possible,” said Peter Clark, Editor of The Marketing Factbook. “But there has to be a starting place, and creating a clearly defined CX Improvement Strategy is the only effective way to do it cost effectively and without losing focus on those all-important bottom line results.”
The answer is 42. The question is how many steps are there?
While it’s easy to look at any business and list maybe a dozen starting points for building a better and more effective Customer Experience strategy, the Customer Experience Factbook details 42 main areas – dubbed the ‘CX Keys’ – in which businesses can start a genuinely transformational CX Improvement Strategy.
Many of the CX Keys identified apply to organizations in every market and sector while some will more readily apply to specific sectors (such as retail). Regardless, the areas in which customers have contact with an organization – the ‘touch points’ – are usually the most obvious places in which CX improvements can be made. These are termed ‘Direct CX Keys’.
In fact there are potentially hundreds, if not thousands, of Direct CX Keys that will need to be addressed depending on your sector, business model, channels, supply chain, distribution, business processes, customer service options, and so on. But, starting with organizations in most business-to-consumerand business-to-businessmarkets, and without focusing too much on global cultural differences, there are 24 main Direct CX Keys which form the basis for a truly effective – and profitable – CX improvement strategy:
- Sales & Marketing Channels
- Advertising & Copy Writing
- Sales Funnel Roadmap
- Purchase Journey Roadmap
- Customer Lifetime Journey Roadmap
- Consistent Multi-Channel Messaging & Offers
- Usability, Features, Availability & Reliability of Digital Channels
- Geographical Locations & Proximity
- Trading/Opening Hours or Restrictions
- Parking/Parent & Child/Disabled Access/Pet Friendly
- Internal & External Signage & Displays
- Store Cleanliness & Lighting
- Employee Presentation, Knowledge & Empowerment
- Merchandising/Store Layout
- Product Range/Selection
- Items In-Stock, Frequent Re-Stocking
- Competitive Pricing, Offers & Service
- Customer Loyalty/Reward Programs
- Personalized, Timely & Relevant Offers, Rewards and Benefits
- Online or Mobile App-based Store-finder/Stock-checker
- Purchasing Online or In-Store, for Delivery or Collection
- Ease of Check-Out, Payment, Minimal Queueing
- On-Receipt Messaging (Transactional Marketing)
- Product Returns & Refunds
- Customer Service & Complaints
- Customer Feedback Solicitation
However, there are lots of other areas of any business that can indirectly affect the customer experience – such as hiccups in the supply chain, resulting in frustrating out-of-stock situations – which are termed ‘Indirect CX Keys’, and are all too often forgotten or under-played even in modern CX strategies.
The same rationale that applies to Direct CX Keys also applies to Indirect CX Keys: for example, while not every organization has a supply chain that could affect its customers (e.g. a pure consulting services provider), all organizations have staff who – at the most basic level – are responsible for the services provided and for ensuring that the delivery process is smooth and satisfying for the customer.
The following Indirect CX Keys are areas which don’t necessarily have a direct effect on a customer’s interactions with the business itself, but which can have a significant knock-on effect due to their influence over other more Direct CX Keys:
- Overall Business Model
- Corporate Policies and Processes
- Back-Office Personnel (i.e. out of customer sight)
- Business Continuity & Disaster Recovery Plan
- Business Partners & Sponsors
- Market Forces/External Influences
- Product/Service Planning and R&D
- Manufacturing Facilities & Personnel
- Supply Chain & Logistics
- Quality Assurance
- Packing & Shipping
- Technology & Infrastructure
- Data Handling, Compliance, Privacy & Security Measures
- Mystery Customer/Customer Feedback Program
- Ongoing Employee Training
- Employee Happiness, Health & Well-being
Getting started on your CX Improvement Strategy
The Marketing Factbook’s 200-page guide to CX improvement, ‘The Customer Experience Factbook’, expands all of the findings discussed here – among hundreds more vital concepts and practical steps – and and provides guidance for building and executing your own game-changing CX Improvement Strategy. The full guide is available as a PDF document, as well as in print and on Amazon Kindle, at https://www.marketingfactbook.com/cxfactbook Original Source – used with permission