- Mar 21, 2020
- Posted by: Claire
- Category: Customer Experience, Customer Service Strategy
Analytics, IoT, AI, Virtual Reality, Augmented Reality technology together with company culture, has brought a shift in the way businesses do customer experience.
Companies that fail to prepare for a future fueled by these technologies, are headed for trouble, because the customer experience is the only differentiating factor in a saturated market.
Innovative and forward-thinking companies like Amazon use technology to provide smooth and exceptional journeys, and as such, are key in pushing the change. Because consumers are being exposed more and more to digital innovation, they are demanding personalised, frictionless experiences.
Companies that have worked to improve the customer experience have seen on average, a:
- 42% increase in customer retention
- 33% customer satisfaction improvement
- 32% increase in cross-selling and up-selling
What is customer experience NOT?
Customer experience is not customer service or surveys.
While customer service is part of the experience, it is not the only experience customers have with a company. Surveys in and of themselves give understanding about customer’s needs, but are only a tool and useless if the information is not used to make improvements (which is often the case).
Customer experience is not about marketing or sales, although both are included in the experience.
Customer experience is the complete journey a customer has with your company. Every time any of their senses are “touched” by the business, that is part of the journey.
This includes pre-sales, purchase, service and post-sales, and covers both digital and physical touchpoints of not only your company but any third parties you use.
Image Credit: Crownpeak
What customer experience entails.
Why bother with customer experience?
Revolving your business around the customer experience is initially time consuming, requires committed resources and may involve cost.
So why bother? Let’s take a look:
#1: Save costs in the long-term
According to McKinsey, companies that improve the customer journey see revenues increase as much as 10 to 15% while also lowering cost to serve by 15 to 20%.
That’s because of higher customer retention: satisfied customers stay customers.
Now, it costs at least 5 times more to acquire a new customer than it does to keep a current one, and only 40% of companies have an equal focus on both acquisition and retention.
Also, because an improved customer experience leads to more satisfied employees, you save costs by retaining your top talent instead of replacing resources, which can be very expensive.
#2: Increased profit
Did you know that according to studies, 86% of buyers will pay more for a great customer experience?
With an enhanced experience, you can charge more.
You’ll also be retaining more of your customers, and gaining new ones due to word of mouth advertising. You’ll upsell more easily because 50% of your customers are likely to buy more, compared to new customers.
To boot, word of mouth advertising is a consequence of dazzling service, and it’s 100% free so you can cut down on formal advertising methods and their ensuing costs.
We’ll go into more detail about word of mouth advertising in the next section.
#3: Free and powerful advertising
When you yourself are at the other end of shockingly bad service, I’m betting you told others about it, right?
When you receive an average, or good service experience, you probably tell no one because good service is the least you expect from any company. But when you experience truly exceptional service, you look for people to share that with, don’t you?
In the same way, when your business provides poor service, your customers will tell on you to their friends and family. When you give them service that they expect (average and good service), they will probably shut up, because “nothing to tell here, y’all”. But when they are on the receiving end of service that delights, they share it on Facebook and tweet about it on Twitter.
And what, prey tell, does that do for the company? It builds instant trust and credibility. That’s because 92% of people trust what your customers say about you more than they will ever trust what a brand says about themselves.
It’s why Google, for instance, places so much emphasis on the written review; good online reviews also increase your website ranking. Why? It builds credibility for your business.
Word of mouth advertising is free, but it’s also the most powerful form of advertising. Never mind fancy ads and marketing events; rather focus on building your reputation through amazing service, and you’ll spend a lot less on advertising.
#4: Attracts the best talent
A study found that high performers are 400% more productive than average ones.
When companies aim to dramatically improve the customer experience, they will need to address company culture. This leads to higher levels of employee engagement because a good company culture will always seek to retain the company’s champions.
When your business becomes a great place to work at, not only do your employees provide better service to clients and follow company standards, processes and procedures, but your organisation becomes one where the best talent wants to work.
Ritz Carlton, Trader Joe’s and Virgin America are all classic examples of companies known for their amazing customer experiences because every employee has a role to play in the customer experience process. It’s interesting to note that for champion employees, so long as they’re getting a fair wage, job fulfillment is more important than a fat cheque.
#5: Improved customer retention
In industries that were analyzed since 2009, it was found that when the customer experience is average, 5 to 10% of businesses will keep doing business with that company, and that amount decreases over time. But when the customer journey is improved to make it a “wow” experience, in those same industries, 30 to 50% of clients are likely to stay rather than move.
It costs more to find new business than keep existing clients.
In fact, Smallbiztrends reports that there’s 60 – 70% more chance of selling to an existing customer than to a new prospect, where the chances of making a sale is between 5 – 20%.
Summary: benefits of improving the customer experience
Organisations can no longer simply pay lip service to service. Instead, in a saturated industry, it’s the customer experience that will separate your business from your competitors, due to:
- Decreased cost
- Increased profit
- Word of mouth advertising and brand reputation
- Best talent
- Increased customer retention