What is Customer Experience?
At its core, customer experience deals with how customers feel when they interact with an organisation (business, charity, institution etc). That interaction triggers an emotional state. This may be as expected or different, in a good way or bad way. It can be routine, or exceptional. And with much of the processing of digital interactions away from the customer, it may not even be realised.
Whichever it is, it belongs to the customer it happens to. An organisation can influence the type or design, and can even predict the outcome. Still, the customer’s context and expectation will mean the customer experience at that moment in time is unique to only them. Their situation will impact how meaningful or memory-creating it is.
Organisations can deepen relationships with their customers through the customer experience by understanding and anticipating their needs and removing the barriers that can get in the way of their fulfilment.
The complexity comes when you consider the scope of a customer’s experience. This invariably differs from the organisations. Customers don’t think at a company level, they think at a journey level.
Understanding the full experience
Consider a business executive traveling from Paris to Milan. Their experience hinges on the success of the business trip, intertwined with the people met, places visited, and the ease of travel modes (plane, train, walking, taxi). While aspects may be positive, going underdressed in wet and cold weather could overshadow everything. It’s complicated.
For a restaurant, airline, or hotel in this scenario, the focus is vital. Is it the overall trip success—the ultimate measure? Understanding your specific impact on the customer’s experience is crucial. Without appreciating the broader context, biases may influence the experience you’re narrowing in on. But understanding the wider context allows for consideration of the customer’s broader needs. A restaurant might offer ‘business lunch’ menus for faster service, or a hotel could provide complimentary umbrellas.
Beyond a customer’s journey, the relationship with your organisation matters. Consider an airline: an app and website for easy flight selection, clear extras, transparent purchase breakdowns, user-friendly personal data entry, instant tickets, and reminders to check in. Details align with airport departure boards, friendly staff at the gate, and efficient boarding. All pre-flight experiences, but crucial. This may repeat across different airports, demanding consistency. Organisations must know what matters most to meet customer expectations.
A definition of CX
After all, the customer experience is the sum of all interactions a customer has with a company throughout their entire journey, encompassing every touchpoint, from initial awareness and consideration to purchase and post-purchase support. It includes both the rational and emotional aspects of the customer’s experience, such as the payment terms and transaction, the quality of the product or service, the ease of use, the level of customer service, the speed of delivery, the overall feeling of satisfaction with the decision made, and it goes on.
Why focus on customer experience?
Tracking studies such as the Watermark series show companies that prioritize customer experience tend to have higher customer loyalty and market value. Since 2007, Watermark Consulting have been publishing their ‘Customer Experience ROI study’ which tracks the shareholder return of companies that rank highest and the lowest in customer experience. The CX Leaders portfolio consistently outperformed the broader market by 100 percentage points. So in measurable financial performance, we can see CX is worth investing company resources in getting right.
Many aspects of a product and service can be copied, such as price, features and service, but the customer’s experience (remember its unique between them and the organisation), is much harder to emulate. Customers are increasingly valuing the the experience of engaging with the company alongside other more conventional decision-making criteria
There are benefits to be gained from valued customer experiences
- reduce marketing spend on customer acquisition
- keep customers for longer, and increase the share of wallet they commit
- reduce sensitivity to price
- reduce your customer service (CS) costs for issues
- reduce your operational costs for reworks or workarounds
- reduce complaints and negative reviews, increasingly the overall balance and perception of the brand to be favourable
- Switch the time spent with customers from dealing with issues, to meeting their needs better than others
- Increase the contentment of others involved, such as colleagues (which leads to retention) or suppliers (which leads to favourable terms)
The list goes on.
Where to begin, when trying to improve CX?
Probably here we should flag a spoiler alert. If you start with customer experience, your investment will be high-energy and repeatable effort with short-term, unsustainable returns.
You should really start with customer centricity. This relates to how companies organise themselves around their customers’ priorities. This ensures focus on customer experience is strategic rather than transactional.
Good customer experience requires a customer-centric approach, where the customer is at the center of every decision and action taken by the company. It’s not just a job of frontline customer-facing staff, but of everybody in an organisation. Without leadership being openly committed and demonstrating a customer-centric mindset, this will not effectively filter down your organisation.
To become customer-centric, everyone in your organisation needs to understand the focus is not about sales targets and selling products, and instead focuses on the people who use them. Those who apply improved customer experiences to drive sales are soon found out. As soon as subsequent experiences fail to meet that delivered to secure the sale, customers sense a disconnect. This results in lost engagement, returned orders, negative reviews and a drop off in repeat sales. All of which impacts brand perception, and increases the cost of customer management. The combination of which almost certainly erodes any gain from the increase in sales achieved.
Turning the Tide: Best Buy’s Customer-Centric Transformation
Here’s an example of a company that was struggling but managed to turn things around by becoming customer-centric:
Best Buy, a US-based electronics retailer, faced adversity in the early 2010s amid the surge of e-commerce and the dominance of online giants like Amazon. With declining sales and profits, experts predicted the company’s demise.
In a pivotal move, Best Buy’s CEO, Hubert Joly, recognised that the root of their challenges lay in neglecting the customer experience. Determined to reverse their fortunes, he set out to make Best Buy more customer-centric.
Joly implemented several customer-focused practices. He urged employees to prioritise building relationships over mere sales, investing in training programmes to enhance expertise in product knowledge and customer service.
Moreover, Joly revamped the in-store experience. Best Buy’s stores became more inviting and navigable, featuring product demos and dedicated sections for popular items like Apple products and gaming consoles.
These changes weren’t groundbreaking, but they required careful management to ensure employees embraced the shift willingly.
The outcomes were significant – Best Buy’s sales and profits rebounded. The company weathered the e-commerce storm by excelling in what online competitors couldn’t: delivering a personalised and engaging in-store experience.
Today, Best Buy stands as a thriving and profitable entity, recognised as one of the most customer-centric retailers in the US. By prioritising the customer, Best Buy not only reversed its fortunes but also built a loyal customer base.
Without customer feedback, you are in the dark
Customer feedback is an input. There are many considerations here though (which are covered throughout our ‘the modern A-Z of CX’ series. For example, not all customers’ voices are equal, responding to feedback is as important as what you learn. If you don’t update customers on your decisions, they won’t trust you anymore with their feedback. And importantly, collecting feedback is not just a research exercise – it’s another customer experience, so all the rules and guidance shared in this article apply again here.
Companies must find ways to understand what matters most to their customers in order to find ways to meet their needs and fulfil their outcomes in a more meaningful way.
Continuous efforts to provide customers with positive experiences are important, however, prioritising the mitigation of negative experiences should be the primary focus. The model we use is Fix -> Build -> Grow. For customers to value the positive experiences, the negative ones need to be removed first.
It is of no value if our airline serves free refreshments on short flights if the process of getting passengers onto the plane is so slow half of them miss it. Fix the onboarding process first.
It will also help you understand where to focus first. You might find one touchpoint is the catalyst for all others going wrong. Or you may find a lot of noise about a touchpoint but it has no impact on their custom e.g. the Q&A on the website is deemed unhelpful by customers, but 100% of these customers still go on to buy through the website.
- The customer is the one who experiences something when they interact with a company
- The better an organisation knows its customers’ needs and expectations of the outcomes they seek, the focus can move to finding solutions
- A customer experience is complex. It can be several with the same company during one purchase, or across the lifetime of that relationship, or the entire customer’s experience (e.g. buying a house involves experiences from different companies; solicitors, the bank, removal company, energy providers, removals).
- The more strategic the focus is on improving customer experiences (to improve outcomes), the greater the long-term contribution is from CX.
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Exploring CX Essentials: Our ‘Back to Basics’ Series
Are you embarking on your Customer Experience (CX) journey? Welcome to our ‘Back to Basics’ series, designed specifically for newcomers. Amid CX’s diverse interpretations, we offer clarity based on solid experience. Our series is your reliable companion whether transitioning fields or seeking CX fundamentals. We present straightforward CX concepts, focusing on core principles. Join us in uncovering insights, dispelling myths, and navigating CX confidently. We’re here if you need an ally to guide you in this space.