- Customer experience is a top priority to businesses for the next 5 years and the reason is simple; the companies that focus on customer experience reduce churn and increase revenues – leading to higher profits!
- For many, customer service and customer experience are seemingly interchangeable. Yet, one is a single touchpoint with a brand, while the other impacts feelings and emotion, and encompasses the entire customer journey.
- The customer experience impacts all areas of your business, but how do you get started? Here, we provide you with 7 steps, along with examples and case studies to help you create a great customer experience strategy.
We surveyed 1,920 business professionals and asked them what the top business priority is for the next 5 years – and once again, the same answer came out on top.
Can you guess what the top priority for a business is?
If you guessed ‘customer experience’ (or CX), you guessed right.
It’s no surprise that customer experience is so high.
Research by American Express found that 86% of customers are willing to pay more for a better experience.
While recently, the Temkin Group published a study and found that companies that earn $1 billion annually can expect to earn, on average, an additional $700 million within 3 years of investing in customer experience.
That’s a 70% increase in revenue within 36 months!
Companies who successfully implement a customer experience strategy achieve higher customer satisfaction rates, reduced customer churn and increased revenues.
Sounds like a win-win, right?
Surprisingly, less than half of all organizations will be investing in the customer experience next year.
In fact, our own research found that only 44% will increase the investment in their CX initiatives.
Ready to increase your investment and improve the customer experience?
Let’s get started.
What is customer experience?
Customer experience (also known as CX) is defined by the interactions and experiences your customer has with your business throughout the entire customer journey, from first contact to becoming a happy and loyal customer.
CX is an integral part of Customer Relationship Management (CRM) and the reason why it’s important is because a customer who has a positive experience with a business is more likely to become a repeat and loyal customer.
In fact, according to a global CX study by Oracle found that 74% of senior executives believe that customer experience impacts the willingness of a customer to be a loyal advocate. If you want your customers to stay loyal, you have to invest in their experience!
Simply put, happy customers remain loyal.
It makes sense, right?
The happier you are with a brand, the longer you stay with them. So, if you treat your customers poorly or ignore their customer service emails, then they are more likely to stop doing business with you. This is why companies that deliver a superior customer experience outperform their competitors – and this means they’ll be spending more with your business (and less in theirs!).
For example, here’s a few statistics that caught our eye:
- Customer experience is set to be the number one brand differentiator in 2020 (and beyond)
- 1 in 3 customers will leave a brand they love after just one bad experience,
- Customers are willing to pay a price premium of up to 13% (and as high as 18%) for luxury and indulgence services, simply by receiving a great customer experience,
- 49% of buyers have made impulse purchases after receiving a more personalized customer experience.
- Customers that rate companies with a high customer experience score (i.e. 10/10) spend 140% more and remain loyal for up to 6 years.
So, it’s extremely important that you focus on the experience you deliver to your customers.
And we’re not just talking about customer service….
Is customer experience the same as customer service?
No. And here’s why.
In most cases, a customer’s first point of contact with a company is usually by interacting with an employee (either by visiting a store or by speaking on the phone). This gives your business an opportunity to deliver great customer service.
However, customer service is only one aspect of the entire customer experience.
For example, if you book a vacation on the phone and the person you are speaking with is friendly and helpful, that’s good customer service. Yet, if your tickets arrive early and the hotel upgrades your room, then that’s a great customer experience!
That’s how the two are different!
Like most things in today’s market place, customer experience has changed – it’s more than person-to-person service and thanks to technology, companies can connect with their customers in new and exciting ways.
For example, using CRM software, you can view customer purchase history and to predict future needs even before the customer knows they need it. Having the ability to predict a future need will let you be proactive and attentive and, it means you can do things like;
- Provide related products based on purchase history
- Create and deliver targeted email marketing campaigns
- Understand the 360 degree view of the customer
Customer service is still as important as ever, but it’s no longer the sole focus of the customer experience. Now, the customer experience brings new ways to strengthen customer relationships through technological breakthroughs.
How important is the customer experience?
A business cannot exist without its customers, and this is why companies are focusing on how to win new business and, perhaps more importantly, retain existing customers.
A survey by Bloomberg Businessweek found that “delivering a great customer experience” has become a top strategic objective. And a recent Customer Management IQ survey found that 75% of customer experience management executives and leaders rated customer experience a ‘5’ on a scale of 1-5 (5 being of the highest importance).
The challenge here is that even though it’s a high priority, most companies are failing to deliver a good customer experience.
When Bain & Company asked organizations to rate their quality of customer experience, 80% believe they are delivering a superior experience. This is compared to only 8% of customers who believe they are receiving a great customer experience.
So how many brands are truly delivering an excellent customer experience?
Surprisingly, not too many.
In fact, less than half of all companies deliver a good (or excellent) customer experience.
Each year, the Temkin Group release their Customer Experience Ratings study.
By analyzing feedback from 10,000 consumers and recording their experience with more than 300 companies, the latest Temkin Group report shows a decline in the number of companies that scored a ‘good’ or ‘excellent’ rating, down from 45% in 2017 to only 38% in 2018.
Customer expectations are rising, and faster than the speed that companies can improve their customer experience. Customers expect every interaction, end-to-end, to be the best experience they have with any company – not just yours!
Impact of bad customer experiences
If a great customer experience is focused on ensuring all interactions and touchpoints with your business is easy, enjoyable, and seamless, then the exact opposite is true when it comes to a bad customer experience.
More than $62 billion is lost each year to bad customer service. Meanwhile, another study found 91% of unhappy customers leave a brand without complaining.
It doesn’t get any better. Only 10% of consumers say brands meet expectations for a good experience.
Some of the most common causes for bad customer experiences involve:
- Difficult purchasing processes
- Negative experiences with customer support
- Compromising a customer’s personal security
- Waiting too long on hold
- Ignoring customer feedback
So, the question remains, how can your organization create a great customer experience strategy?
7 ways to improve the customer experience
Let’s take a look at seven ways to create a great customer experience strategy to help you improve customer satisfaction, reduce churn and increase revenues – including examples.
1. Create a clear customer experience vision
The first step in your customer experience strategy is to have a clear customer-focused vision that you can communicate with your organization. The easiest way to define this vision is to create a set of statements that act as guiding principles.
For example, Zappos use their core family values and these values are embedded into their culture; which includes delivering wow through service, being humble and embracing change.
Once these principles are in place, they will drive the behavior of your organization. Every member of your team should know these principles by heart and they should be embedded into all areas of training and development.
2. Understand who your customers are
The next step in building upon these customer experience principles is to bring to life the different types of customers who deal with your customer support teams. If your organization is going to really understand customer needs and wants, then they need to be able to connect and empathize with the situations that your customers face.
One way to do this is to segment your customers and create personas (or customer profiles). Try to give each persona a name and personality. For example, Anne is 35 years old; she likes new technology and is tech savvy enough to follow a video tutorial on her own, whereas John (42 years old) needs to be able to follow clear instructions on a web page.
By creating personas, your customer support team can recognize who they are and understand them better. It’s also an important step in becoming truly customer centric.
3. Create an emotional connection with your customers
You’ve heard the phrase “it’s not what you say; it’s how you say it”?
Well, the best customer experiences are achieved when a member of your team creates an emotional connection with a customer.
One of the best examples of creating an emotional connection comes from Zappos:
Research by the Journal of Consumer Research has found that more than 50% of an experience is based on an emotion as emotions shape the attitudes that drive decisions.
Customers become loyal because they are emotionally attached and they remember how they feel when they use a product or service. A business that optimizes for an emotional connection outperforms competitors by 85% in sales growth.
And, according to a recent Harvard Business Review study titled “The New Science of Customer Emotions“, 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 (44% said they rarely or never shop around)
- Much less price sensitive (33% said they would need a discount of over 20% before they would defect).
4. Capture customer feedback in real time
How can you tell if you are delivering a WOW customer experience?
You need to ask – And ideally you do this by capturing feedback in real time.
Use live chat tools to have real time conversations and when done, send a follow up email to every customer using post-interaction surveys and similar customer experience tools.
Of course, it’s possible to make outbound sales calls to customers in order to gain more insightful feedback.
It’s also important to tie customer feedback to a specific customer support agent, which shows every team member the difference they are making to the business.
5. Use a quality framework for development of your team
By following the steps above, you now know what customers think about the quality of your service compared to the customer experience principles you have defined. The next step is to identify the training needs for each individual member of your customer support team.
Many organizations assess the quality of phone and email communication, however, a quality framework takes this assessment one step further by scheduling and tracking your teams development through coaching, eLearning and group training.
6. Act upon regular employee feedback
Most organizations have an annual survey process where they capture the overall feedback of your team; how engaged they are and the businesses ability to deliver an exceptional service.
But, what happens in the 11 months between these survey periods?
Usually, nothing happens. And this is where continuous employee feedback can play a role using tools that allow staff to share ideas on how to improve the customer experience and for managers to see how staff is feeling towards the business.
For example, using project management software or social media tools, you can create a closed environment where your organization can leave continuous feedback.
7. Measure the ROI from delivering great customer experience
And finally, how do you know if all this investment in your teams, process and technology are working and paying off?
The answer is in the business results.
Measuring customer experience is one of the biggest challenges faced by organizations, which is why many companies use the “Net Promoter Score” or NPS, which collects valuable information by asking a single straightforward question:
“Would you recommend this company to a friend or relative?”
NPS, which was created by Rob Markey and Fred Reichheld at Bain and Company, is a highly suitable benchmark for a customer experience metric because a lot of companies use it as the standard customer experience measurement. And the fact that it’s simple to implement and measure makes the NPS a favorite with company boards and executive committees.
Optimize the customer journey
When it comes to creating a great customer experience, it’s important to consider the entire customer journey.
McKinsey research suggests that customer journeys are significantly more strongly correlated with business outcomes than are touchpoints.
This means you need a clear understanding of the end-to-end experiences with customers and how interactions at each point are received.
Focusing on a customer’s journey, and identifying the problems within them, offers new opportunities to create a great customer experience. This also enables your teams to brainstorm ideas to reduce friction, improve business relationships, and increase growth.
When it comes to performance, a customer journey is “30% to 40% more strongly correlated with customer satisfaction than performance on touchpoints is—and 20% to 30% more strongly correlated with business outcomes.”
Customer expectations are higher than ever and word of mouth travels fast!
And as the customer becomes even more empowered, it increases the importance of the customer experience.
Customer experience is an area that needs constant nurturing and care and, with a greater focus on customer experience strategy, companies will realize a positive impact on customer loyalty, higher retention and increased revenue growth.
Source: 7 Ways to Create a Customer Experience Strategy (superoffice.com)
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