What is customer experience?
With the experience economy taking a stronger hold, it is imperative for organizations, regardless of industry, to understand what "customer experience" means. This phrase has been defined in many ways, but our definition aims to explain the scope of customer experience:
Customer experience: the interactions between an organization and a customer over the duration of the relationship, and the customer’s perception of their engagement and the supplied products or services.
To effectively address the entire scope of the customer experience, organizations need a 360-degree view of the customer. The very core of a customer experience strategy (CX strategy) is understanding the behaviors, needs and wants of the customer, posing the question, “What does a great customer experience mean in the eyes of the customer?”
According to survey conducted by the CMO Council (1), a great customer experience includes:
Quick response times to customer requests or complaints
Rapid response to issues and challenges
Products that reflect their own needs and wants
Consistency of the experience across all touchpoints
This customer viewpoint has created a divide in the experience economy between businesses that quickly address customers’ changing behaviors and those who do not.
Implementing a CX strategy is a necessity to thrive in the experience economy
Today’s customers exhibit unprecedented new behaviors. Incumbent companies suffer without a 360-degree view of their customers or a more flexible and nimble framework to accommodate new behaviors, falling further behind competitors. Slow improvements to increasing customer demands widen the gap between business goals and customer needs.
In response to the emergence of the experience economy, influencers in their respective industries are leveraging digital technologies to become more customer centric. These forward-thinking players are breaking down the silos between departments and operatives to unify employees in delivering experiences that match or exceed those of industry leaders. As a result, businesses can no longer use traditional business models to preserve customer loyalty.
It’s not enough to simply know adapting to the experience economy is a necessity. Businesses need to take the next step and actually invest in a new strategy to fully embrace the marketplace shift.
Investing in a customer experience strategy is not spendthrift
In response to the experience economy, the roles of CFOs and CIOs are changing, shifting focus from reducing costs to enabling organizations to become more flexible and scalable to grow revenue. Customer experience spending has become the top investment priority for accelerating businesses, and such investments are paying off. For a company with $1 billion in annual revenue, a moderate increase in CX generates an average revenue increase of $823 million over three years (2).
The saying, “What’s good for the customer is good for business,” is truer than ever. Providing positive customer experiences is directly correlated with customers who purchase again, don’t switch to competitors and recommend the company, resulting in loyalty-based revenue (3) and evident ROI.
Investing in the right digital strategy and technology ecosystem creates more access and engagement with brands, increasing opportunities for a better customer experience. These technologies are being used implement CX strategy by converging people, processes, and technology. Companies have linked CX improvements through digital to reductions in service, acquisition, processing, and engineering costs. Forward-thinking companies like Airbnb and Tesla Motors are great examples of this, using new digital tools and systems to add immense value and gain a competitive edge.
Customer-centric strategy also translates into an investment in employees. Employees are happiest when they feel like they have a purpose, and this is especially true for millennials, who have surpassed Generation X as the largest share of the American workforce (4). A unified aim to provide great customer experience gives employees a purpose, ultimately lowering employee turnover, while adding value and productivity to business process.
Where to start
An effective CX strategy means mastering engagement opportunities with new customers and nurturing existing customer relationships. Customer journey mapping uncovers what your customers need and when they need it along their end-to-end journey.
Misunderstandings of customer behaviors and preferences, along with low adoption of the evolving digital technology, serve as barriers to an effective CX strategy. Customer journey mapping breaks down these barriers to help organizations design, develop, and deliver experiences that meet or exceed customer expectations, all while aligning to the business strategy by shifting the focus from immediate sales to delivering value to customers.
Now that you know what customer experience is, why it is needed, and where to start, your business can begin gearing up for the transition into the experience economy and gain the competitive edge required to thrive.
2014. Survey fielded by the CMO Council. http://www.marketingcharts.com/online/how-do-senior-marketers-define-customer-centricity-46160/
2016. Study by Temkin Group, 10,000 U.S. Consumers and Experiences with and Their Loyalty to Different Companies http://temkingroup.com/research-reports/roi-of-customer-experience-2016/
2014. Forrester report. http://resources.moxiesoft.com/rs/moxiesoft/images/Business_Impact_Of_CX_2014.pdf
2015. Pew Research Center analysis of U.S. Census Bureau data http://www.pewresearch.org/fact-tank/2015/05/11/millennials-surpass-gen-xers-as-the-largest-generation-in-u-s-labor-force/