Make customer experience your differentiator
An executive's guide to exceptional customer relationships
Quick: What’s the difference between customer service and customer experience?
For most companies, it’s difficult to define, and even more difficult to determine the transition point between the concepts. But for customers, it’s the difference between brand apathy and brand enthusiasm. And for an organization’s bottom line, it’s the difference between struggle and security.
“Most businesses around the world are being forced to take a hard look at their budgets, thanks to the coronavirus pandemic. The smart ones, however, have realized that increasing spend on things like customer experience could be highly valuable in keeping their businesses afloat during this tenuous business climate,” says Daniel Newman, principal analyst of Futurum Research and CEO of BroadSuite Media Group.
By shifting focus to customer relationships and prioritizing customer experience strategy, especially in times when budgets are tight and human connections are vital (albeit virtual), your organization can distinguish itself as one that prioritizes its customers in the best and worst of times – thus deepening and strengthening those relationships far into the “next normal.”
A Walker study found that by the end of 2020, customer experience will have surpassed price and product as the top brand differentiator. Even in the era of globalization and nearly endless options, customers care more about how an organization makes them feel – and the control they have over their interactions with that organization – than what it offers or even how much they have to pay.
Instead, reports a PwC survey on the future of customer experience, the core demands of consumers – speed, convenience, friendliness and knowledge – are opportunities for organizations to “improve how people interact with, embrace and spend with their brand.”
“Think about, say, insurance,” says Ed McQuiston, executive vice president and chief commercial officer at Hyland. “We all used to want the big insurance companies, because we knew they kept our money safe and that our claims would be paid out. And now, I don't even know if people check to see if the insurance company is actually solvent, if they could even pay a claim. They focus more on the ability to get approved instantaneously, file a claim, and get rate and coverage updates – all through their phone.”
What’s more, the 86 percent of buyers who told PwC they are willing to pay more for a great customer experience also indicated the more expensive the product or service, the more they are willing to increase that purchase price in parallel.
75 PERCENT OF ORGANIZATIONS ARE “ABLE TO SHOW THAT CUSTOMER SATISFACTION LEADS TO REVENUE GROWTH THROUGH INCREASED CUSTOMER RETENTION OR LIFETIME VALUE.”
That attitude is measurable and holds the key to the future of competitive differentiation.
A study by the Temkin Group found that organizations earning more than $1 billion annually can expect to earn an additional $700 million within three years of investing in customer experience. And analyst firm Gartner.com found that 75 percent are “able to show that customer satisfaction leads to revenue growth through increased customer retention or lifetime value.”
Especially for enterprise organizations that measure sales cycles in years instead of weeks, stay profitable thanks to perpetual licenses or multi-year engagements, or prioritize lifetime retention over exponential growth, that means customer experience management isn’t just a safe investment – it’s an absolute imperative.
The rise of the
Customer satisfaction has always been a corporate objective, but it often fell secondary to production and traditional prospect marketing. Because consumers were more limited to local companies, those companies didn’t have to try as hard to keep their loyalty – they knew that the customers didn’t have many (or any) other options. Essentially, customers were at the mercy of the company. In 2020, the opposite is true.
“The shift that occurred through society’s ubiquitous use of the smartphone in particular, has changed everybody's perspective on nearly everything,” says McQuiston. “People have come to expect the ability to do everything instantaneously, from wherever they are. Everything! If one company doesn’t let them do that, they’ll find one that does. And these new expectations aren’t being left at home. They don’t just apply to personal transactions. They're being carried forward into every sector of business. People have so many options for where they shop, where they go to school, where they bank and where they get their medical care that their primary decision factor ultimately comes down to something less tangible than price or product – it comes down to customer experience.”
From customer service to customer experience
Many organizations use the terms customer service and customer experience interchangeably, but in reality, the two are leagues apart. Though good customer service is a significant contributor to customer experience, it is just one factor.
Customer service occurs at each individual touchpoint, such as an organization’s response to an email, a phone conversation with a support representative, an online bill payment, or a visit to a brick and mortar office. It is by definition, reactive.
Customer experience is about the journey – the threads that weave each of these touchpoints into a more complete understanding of how an organization treats its customers and focuses on the proactive behaviors of the organization providing that experience.
Consider, for example, a smartphone provider. When a customer chooses her provider, it offers her a discount on her monthly rate. When she needs a new phone, the provider offers all of the latest models. When she calls to make a payment, the representative she speaks with is pleasant and accommodating. When she checks on her usage data, the interface is user-friendly. Each of these incidences are indicators of good customer service. But even combined, they don’t make up customer experience.
What if that smartphone provider’s competition costs a bit more each month, but the customer didn’t have to call in to pay her bill? If she didn’t have to actively track her usage, but got an automated reminder when she was reaching her limit? If, when she called in to inquire about changing her plan, the representative was able to recognize her account by the phone number and address her by name?
The whole – even at a slightly higher price point – would be worth more than the sum of its parts.
At its core, customer experience is the feeling each customer has about an organization and that customer’s relationship with that organization. Excellent customer experience is built on care, trust, comfort, attention and – most importantly – consistency. And it matters in every possible type of business interaction, whether making a restaurant reservation or a massive B2B transaction.
At every single touchpoint, and in the spaces between, customers need to feel they are:
- Sure of the organization’s values, priorities and vision
- Able to get a personalized response when needed
- Seen and understood as more than a number and a dollar sign
- Aware of how they will be treated
Even when customers aren’t interacting with an organization, they need to have faith that the organization cares about them, respects their privacy, understands their needs and keeps their personal information secure and accessible.
Gauging customer satisfaction
Every interaction customers have with a company, from first consideration through brand loyalty, affects how they perceive the organization. This perception is built on more than just a collection of positive touchpoints. While a third of customers said they are willing to walk away from a brand they love after just a single bad experience, the opposite doesn’t hold true.
1 OUT OF 3 CUSTOMERS ARE WILLING TO WALK AWAY FROM A BRAND THEY LOVE AFTER A SINGLE BAD EXPERIENCE.
One terrible customer service interaction will absolutely affect customer experience, but one good customer service interaction doesn’t equal good customer experience. True customer experience requires consistency across communication, anticipation of the customer’s needs, and personalized attention and understanding throughout the life of the relationship.
Especially within organizations whose product or service is perpetual, continual or sporadic (say, SaaS, higher education and healthcare, respectively) the absence of negative feedback may be considered a sign of satisfaction. Instead, it’s often the absence of engagement. Without touchpoint consistency and trust in the relationship, customers are much more willing to shop around. Exceptional customer experience shifts them from merely contented to loyal champions.
Sure, not all customers can be champions. A solid percentage of a customer base may consider a product or service a background process, chugging along smoothly behind the scenes; there when they need it and unobtrusive when they don’t.
At its worst, a lack of customer contact may imply active dissatisfaction. According to Esteban Kolsky, CX Strategy leader at SAP, only one in 26 unhappy customers actually complain. The rest, he says, just leave. Paradoxically, an organization’s most loyal customers may be the ones most willing to raise their concerns. And according to Harvard Business Review, “loyalty leaders grow revenues at roughly 2.5 times as fast as their industry peers.”
So how can an organization determine its current customer experience and strive for increased loyalty? Start with three easy steps:
Three ways to gauge customer satisfaction
It may seem obvious that a value prop, management buy-in and a plan for the future should be necessary components of any major operational shift. But, because of the nebulous definition of digital transformation, the lag time between concept and implementation, and the inability to define its role in true organizational change, enterprises often suffer from a disconnect between digital systems and a digital-driven culture.
80% OF ORGANIZATIONS BELIEVE THEY ARE DELIVERING A SUPERIOR EXPERIENCE. ONLY 8% OF CUSTOMERS AGREE.
That’s a striking difference. So where is the disconnect? Often, it’s in the process – or lack thereof. Simply wishing for and talking about superior customer experience isn’t enough to actually make it happen.
“It is a significant challenge to reorient a company toward the customer,” says Ron Ritter, Partner at McKinsey & Company. “That’s the hard part. The good part is you actually do have a customer to rally around and, as you go through this, you get to know your customers increasingly well — analytically, and also as humans, as people having an experience. Building that alignment and closeness to the customer brings the organization together and keeps it together. You stop talking about yourselves and your processes and the things that you want to do and you start talking about customers and their experiences instead.” The scale and legacy of the organization matter, too.
“In many ways, customer experience is more difficult for enterprise companies because they don’t have the same ability to pivot and change, and any customer experience strategy needs to have buy-in and implementation by thousands of employees,” McQuiston says. “The process by which they begin the shift to excellent customer experience, the tools and safeties they have in place, everything tends to be more onerous. A startup competitor, on the other hand, may have 100 employees born to give customers the experience that they expect. They're starting today, standing at the whiteboard, asking what their audience wants, and building it. Larger companies need to develop the same mindset. It’s an adjustment, and it will take more effort to shift the collective attitude toward experience over product, but it can be done. It has to be done.”
But … how?
The evidence is undeniable. Customers are telling companies, over and over again, with their words and their actions, to focus on customer experience. And when done right, investment in customer experience pays off. A study by Adobe and Econsultancy found that organizations that prioritized and effectively managed customer experience were three times more likely than their peers to have “significantly exceeded” their top business goals in 2019.
Remember, however, Gartner’s finding that CX budgets are not increasing in accordance with customer expectations.
Why not? Why isn’t everyone investing in customer experience? Because they don’t know how customer experience drives business growth, so they focus on the wrong things. More than 70 percent of CX leaders – the people hired specifically for this function – said they struggle to design projects that increase customer loyalty and achieve results, says Gartner.
Consider these eight tactics a starting point for driving more excellent customer relationships:
1 Identify your customers and the experiences they desire
Exactly what constitutes an excellent customer service is sector-dependent and unique to each organization. While one bank may prioritize white-glove concierge service for high-net-worth individuals, another may prioritize instantly approved checking accounts for the unbanked. Their ideal customer experiences will be different, because the customers are different.
Regardless, organizations should develop a deep understanding of what matters to their customer groups and work to improve those aspects of the business. Anticipate needs before they’re raised, keep track of competitive advances, and communicate proactively to improve the customer journey.
And don’t necessarily assume customers know what they want. Consider what Henry Ford (reputedly) said about the Ford Model-T: If the people had been asked what they wanted, they would have said faster horses.
Gurmeet Singh, chief digital, information and marketing officer at 7-Eleven, cites a more recent example: “Netflix did not eliminate Blockbuster from a tech perspective,” Singh says. “They went after customer issues, like late fees, and then evolved over time into streaming because they followed where the customer is going and where the customer needs to be, even when broadband wasn’t ready for streaming.”
2 Determine who is responsible for customer experience
Hint: It’s everyone. While an organization may hire a chief customer officer or similar function to drive customer experience strategy, its success is dependent on every employee. From the support representatives redirecting questions, to the developers building a user interface or patient portal, to the marketing team responsible for keeping customers aware of corporate goings-on, the entire organization contributes to customer experience.
“In a world increasingly built around collaboration, CX outcomes tend to diminish when marketing or any other single department attempts to lead and execute CX alone,” says Gartner. “CX leaders need to partner and collaborate with other departments to make improvements throughout the entire client life cycle.”
3 Focus on fast response time
More than any other criterion, customers point to response time as an indicator of customer experience. 75 percent of CMO council survey respondents named fast response time the most important aspect of customer experience, followed by consistency across channels, knowledgeable staff, clear consistent messaging, a person to speak with, multiple contact points and easy-to-use tools.
A paper by McKinsey indicates that 75 percent of customers expect service of some sort within five minutes of making contact online. If they reach out via email, 88 percent expect a thoughtful response within an hour, and 30 percent expect a response within 15 minutes. But through research of 1,000 companies, SuperOffice found 62 percent of companies don’t respond to customer emails at all, and the average response time for those that do is 12 hours.
For employees to respond – correctly and helpfully – to these customer outreaches within the expected timeframe, those employees need access to a complete view of the customer. For businesses, this information might include how long the customer has been active, what products they own and how much they’re being used, and a history of previous interactions. For hospitals, the information would include medical history and any relevant imagery. For schools, transcripts, GPA and scholarship status. With this information at their fingertips, organizations can provide customers with a more personalized interaction and answer their questions more smoothly and quickly.
4 Create a customer experience journey by focusing on consistency between touchpoints
As the need for consistent experience increases, so does the difficulty of maintaining that consistency. “Cross-device shopping via a wide range of channels has made it difficult for companies to maintain consistency,” says a report in the British Journal of Marketing Studies. “Processes and technologies need to change in order to provide a consistent experience across all platforms.”
A “siloed focus on individual touchpoints misses the bigger – and more important – picture: the customer’s end-to-end experience,” says McKinsey. “Only by looking at the customer’s experience through his or her own eyes – along the entire journey taken – can you really begin to understand how to meaningfully improve performance.”
A content services platform that connects all of an organization’s systems and information is one of the best ways to create this type of omnichannel consistency. Assuming a customer isn’t going to interact with the same employee via the same channel at every interaction, giving every employee the same access to customer information is key to ensuring up-to-date, personalized interactions that build to create a better journey.
5 Use technology to enhance customer experience
In its 2020 report, PwC found that the number of companies investing in the omnichannel experience jumped from 20 percent to more than 80 percent.
While organizations should absolutely invest in technology to provide a more consistent experience, they shouldn’t rely on it. The technology should be a tool to bolster human connection, not to replace it. Companies that get customer experience right prioritize technologies that foster or provide speed, convenience, helpful employees and friendly service over adopting technology for the sake of being cutting edge, says PwC.
And while branding is important, it should come second to functionality across the omnichannel. McKinsey found that 70 percent of app users prefer added functionality over look and feel.
6 Allow customers to create their own experience via self-service
Leverage added app functionality into self-service features that enhance the customer journey without taxing human capital. Today, 67 percent of customers prefer self-service over speaking to a company representative, says Zendesk. In order to keep these customers happy, many companies are investing in artificial intelligence (AI) that supports self-service.
In 2018, “25 percent of all customer interactions were automated through AI and machine learning,” says Gartner. But “with 90 percent of companies now planning to deploy AI within three years, this number is expected to grow to 40 percent by 2023.” And by 2030, Gartner estimates that a billion service tickets will be raised automatically by customer-owned bots.
In the short-term, investment in AI improves the chances of customers being able to answer their own questions and solve their own problems, rather than waiting for a support representative to do it for them.
But, enabling self-service doesn’t lessen opportunities to improve the customer experience. After all, self-service is part of the experience. And allowing customers to answer their own questions when they can frees up corporate representatives to provide a more personalized, dedicated answer.
7 Establish metrics, measure results, use data to drive action
Customers can’t always articulate what constitutes an excellent experience, but organizations should be able to. Begin to track, measure and analyze the effect your customer experience efforts are having on the business. Are they contributing to increased retention, more referrals, better engagement? Figure out what’s working and do more of it.
8 Consider the customer’s customers
Many organizations struggle with customer experience because they don’t think beyond their own customers. But many businesses, products and services are actually designed to benefit someone beyond the user.
When we interact with our customers and they interact with theirs, expectations have changed all the way down the line," says McQuiston. "Customer experience is a domino effect. The better one organization serves its customer, the better that customer can serve their customer, and the happier everyone will be."