Why Customer Experience should be the focus of companies
This is based on an article originally published on refineandfocus.com
Customer experience, or CX, is not just one of the most recent buzzwords in the business world, it is one of the most important ones if you want to position your organization for growth. In 2017 businesses lost $75 billion to competitors only due to poor customer experience only in the US. Up from $62 billion only in 2016. This shows the growing importance of remembering the entire customer life-cycle and that it needs constant improvement and nurturing. As well as you have an increasing amount of customers that are willing to publicly give you bad reviews on social channels. In this article you will learn why customer experience is important, and what characteristics you should see in your company if you wish to become a CX-frontrunner.
The answer is in the numbers
Wondering why you should care about customer experience when there are so many other things on your mind? Here are some numbers that might convince you:
- CX-leaders outperform the market
- Client-centric organizations are 60% more profitable
- Revenue growth of 10 to 15%
- Lower cost to serve by 15 to 20%
- Customer Satisfaction up 20%
- The average Net Promoter Score is 10.6 points above the industry average
- On average, companies can gain 775$ million over three years by modestly improve the experience they give to the customer
- 2X return on investment
Source: Genesys (https://genbin.genesys.com/media/a854875f-journey-mapping-eb-en.pdf)
Despite the apparent benefits of optimizing your companies customer experience, the expectation of the importance of CX is rising; CX budgets are not. It is not ideal, as it means that you will have to work more efficiently to make sure it does not affect customer satisfaction negatively and continue improving. It is crucial to ensure that the efforts you do don’t end up stagnating; this can easily harm the future success of the company.
Benefits of a CX-approach
Through a CX-approach, it will be easier to anticipate the needs of the customer at each step of the journey and can create target campaigns based on where the customer is in the journey. If you target the customer with Content-to-convert, and he is in a phase where he is still browsing, the chances are that the content you are providing will be ignored, and you will be among the other 95% of content that is ignored. IBMs Industrious is an excellent example of content worth reading. It was awarded the best Content Marketing campaign at B2B-awards USA 2018.
You have probably heard that content must be ‘relevant,’ and that also counts for different parts of the journey. You can have high-quality Content-to-Educate, but if the customer is ready to purchase and you don’t have Content-to-Convert, the customer will most likely start ignoring you or will continue to read your content without doing any action. Hubspot is a leading example of how to customize your content for each lead, depending on where in the customer journey, the lead is.
Adapt or fail
The truth is that you must either adapt or fail. In the future, customers will dictate the experience. Acceleration of innovation and progress is having a profound impact on customer expectations. The customers expect that the companies know their personal needs and will receive personalized experiences. And it is essential to emphasize that this is not only a CMO’s responsibility, even though this is the case for most organizations, but this is also the responsibility of an entire organization and one that the CEO should be a part of. Optimizing CX is about making improvements throughout the whole life cycle of the product.
Blockbuster is a prime example of companies that did not provide the expected customer experience and had to pay for it. In meeting with a more customer experience friendly Netflix, that understood the consumer pains of going to the store, browsing, and paying late fees. Netflix understood these issues even before they started their streaming service when they introduced their Mail-order DVD. They continuously improved their use and introduced their streaming service as they realized customers wanted instant access.
Customer journey
Consider starting by leveraging your data to create a customer journey map, which is a helpful tool to understand your customer and your customers’ touchpoints. That way, you can understand where, when, and what state the customer is in. Through the efforts listed above, you will be able to get clarification about where, when, and how to influence customer behavior in a way that is useful to the customer and when the customer needs it and is most likely to convert to the next step of the journey with your brand as top-of-mind.
Source: Genesys (https://genbin.genesys.com/media/a854875f-journey-mapping-eb-en.pdf)
How much is enough?
The more and the longer you work on improving your CX, the better result you will get. There is a strong correlation between CX and repurchase, and there is a big difference in perceived results among the practitioners depending on how often and how long they have worked with their customer journey. In organizations that have spent 5-10 years working with customer journey mapping, 66% have had extremely positive results, compared to 29% among those who have spent 1-3 years. In the same way, among those who map their customer journey monthly, 56% have seen extremely positive results on their CX-impact. At the same time, for those organizations doing it annually, the number is 22%. In IBM’s example, they realized that they also had to interact with the people who were going to use the software - not just the decision-makers, to convert and create loyalty.
What is in it for me?
Optimizing CX for the entire journey can seem like a daunting and resource-demanding task. Still, the long-term benefits you have from being able to personalize and customize for the different journeys will be impactful for the efficiency of your marketing and product development. This means that you can allocate the marketing resources in channels and content you know will work for each stage of the journey. Every budget has its limitations, and being able to use your resources in a way that impacts the customer experience the most is essential for a business to reach its potential.
But CX is much more than just design, sales, marketing, and onboarding. What characterizes the CX of a company that has success with their customer experience is that they create an end-to-end experience, and not just focus on single touchpoints. For instance, if you have made a great customer experience through the entire onboarding process, you get the sale. Still, if you have not optimized the customer service, you will have a hard time retaining those customers. In fact, 66% would be more loyal, 65% would recommend it to others, 49% would spend more money, and 39% would do business more frequently if they were provided with better customer service.
Source: McKinsey Digital (https://www.mckinsey.com/business-functions/operations/our-insights/the-ceo-guide-to-customer-experience)
Customer acquisition is expensive, and high churn-rates are not only a sign of a bad experience, but it also means that you have lost income through existing customers with no onboarding costs. That’s not a profitable business. Only a 5% improvement in customer retention will have a significant impact of between 25 to 95% increase in profit growth.
Your CX role-model
There are a few characteristics that repeat themselves among the companies that work with improving their CX and have had success doing so. They are often having an ‘old school’ approach to CX-strategy. This means that they are talking directly to their customers and clients; they are recruiting and developing employees to make sure they are the best. They do much more market research than their less experienced competitors. They are also using more methods when they want to understand their customers. While those that ignore CX rely on social media listening and live chat to best understand their customer, the mature companies use more sources and use them more balanced. IBM’s cloud service is an excellent example, where every customer gets assigned their team of specialists to help them integrate the system.
Source: Hotjar (https://www.hotjar.com/customer-experience/trends-and-stats)
The lack of understanding and awareness of benefits is a barrier for 54% of organizations, and 36% do not have the relevant skills within the organization to perform customer journey mapping. Many companies strive for good consumer experience, but strivers are unable to capitalize on their CX-efforts fully. 49% of them try, but struggle to deliver the relevant experience their customer craves.
If you do not already work on improving your CX, I think it is time to start.