Customer experience: What it is and how to win customers over
It’s easy to remember the fantastic experiences we have with companies. More importantly, it’s downright impossible to forget the negative experiences you’ve had. Between those two extremes, you have numerous average experiences that leave little lasting impression.
Today’s market has raised the stakes as customers no longer accept “average” experiences. If you run an organization or play a part in how an organization delivers customer experiences, you want to provide as many amazing experiences as possible.
Easier said than done.
Delivering a fantastic customer experience takes a cross-organizational effort involving every department. It’s not an initiative you can outsource or gloss over in quarterly meetings. And at the end of the day, it can be the difference between your organization's end or growth.
This guide will show you why customer experience is important, what makes a great customer experience, how to improve customer experience, and more.
What is customer experience?
Customer experience involves every interaction someone has with your company along the customer journey. The customer experience journey starts when they contact your company through any channel (offline or online). The quality of their experience is determined by how they perceive your brand.
| “Customer experience is the new marketing battlefront.” - Chris Pemberton
Why is customer experience important?
Customer behaviors and attitudes are rapidly changing since the adoption of social and mobile technologies. Customers are more sophisticated and have more choices when purchasing goods and services. Traditionally, companies took a marketing and sales approach to customer acquisition. Even during the early growth of the internet and social media, the paradigm was that the first to reach the customer won.
Furthermore, companies could bank on their customers’ experiences taking place in a vacuum. If they slipped up and failed to meet a customer's needs, the cost was just the loss of a customer and maybe their friends and family.
The customer feedback echo chamber no longer exists. This is why customer experience is more important than ever.
With endless options, customers have more power. Now, customers include their experience with the company when determining how they feel about the product or service. To prove it, customers use their voices to influence the success of companies they do business with.
By now, you should know why customer experience is essential. Unfortunately, knowing its importance is not enough to deliver a stellar customer experience. Companies with successful customer experience strategies achieve higher customer satisfaction rates, higher customer LTV (lifetime value), and increased profit margins.
Improved customer loyalty
Deliver on a customer's wants and needs, and you may have a repeat customer. Make an effort to align your brand with a customer's core identity and have their back better than your competitors, and you may have a customer for life.
This is what client experience is all about. Acknowledge that many companies likely do something similar to what you do. You’re in an endless tug of war for the best product and marketing. To win, you also need the best customer experience to win your customers’ loyalty.
| “Customer Experience Management = The art and science of coaxing lifetime loyalty from daily transactions.” - Steve Curtin
Loyalty means higher LTV
In any given market, there are only so many customers. Customer loyalty is valuable because you only have to pay once to get a recurring customer. A customer's lifetime value (LTV) represents the total amount of money they will spend with a business over a lifetime. Recurring customers are the lifeblood KPI of successful companies, as they drive profits up while driving down marketing and sales costs.
Aside from offering a market-leading product or service, customer experience management is the best way to ensure that number increases. Later on, we’ll discuss key performance indicators (KPIs) your organization can use to track the success of your customer experience initiatives.
LTV may be the best metric.
Customer loyalty drives word-of-mouth marketing
Word-of-mouth marketing (WOM) is one of the most potent forms of marketing, and we have the data to back it up. WOM marketing is when a consumer’s interest in a company’s product or service is reflected in daily interactions. Word-of-mouth marketing drives a whopping $6T of annual consumer spending and is estimated to account for 13% of consumer sales.
There’s also data to suggest that customers gained through word-of-mouth marketing are more loyal. One reason is that customers who identify with your brand likely have friends and family who share similar beliefs. The rise of social media has multiplied this effect as WOM marketing is no longer restricted to communities.
Improved crisis management
An unfortunate part of doing business is the risk of your brand making a mistake that potentially affects customers. You spend so much time and money building a product and customer relationships. One errant social media post, a product recall, or a data breach can threaten it all. A deep relationship with your customers is an asset if your organization finds itself in a crisis, regardless of the cause.
Loyal customers who value their experiences with your company may act as a shield when the outside world comes crashing into your organization. We’ve all seen viral media's positive and negative effects on the business world. Lukewarm customers won’t go to bat for your company when your reputation is on the line. How do you turn lukewarm customers into raving fans?
You guessed it, customer experience!
There is a positive correlation between your customers and your employees' happiness. Empirically, if your unhappy customers run your employees ragged daily with complaints, it will affect morale. When customers have to sit through long wait times, elevator music, and multiple menus, they’ll feel highly agitated when they reach someone. These experiences aren’t fair to your customer or customer service agent.
The inverse is your employees coming to work knowing they’ll have positive experiences with customers. When issues arise, they’re empowered with the tools and autonomy to make things right.
This correlation works both ways. Glassdoor found a strong link between employee well-being and customer satisfaction.
Customer experience stats
To bring home the importance of customer experience, let’s take a quick intermission and look at some customer experience stats.
- American Express found that 86% of customers are willing to pay more for a better experience.
- 1 in 3 customers will stop doing business with a brand after just one bad experience.
- 54% of U.S. consumers say customer experience at most companies needs improvement
- 65% find a positive experience with a brand to be more influential than great advertising.
- 49 percent of shoppers made impulse buys after receiving a personalized recommendation; 44 percent will become repeat buyers after personalized experiences.
Customer experience vs. customer service
You’re halfway through this guide and may be wondering, “What the heck happened to customer service?” Customer service is still important, but it’s not the same as customer experience.
According to Drew Davis of The Loyalty Loop, customer service is interpersonal advice or assistance given to someone during or after the sale of a product or service.
Customer service is a part of the customer experience journey. In the past, customer service played a large role in commerce because much of it occurred face-to-face. Now, customers have fewer interactions with real people and more experiences with websites, videos, social media profiles, checkout pages, and more.
Even if a customer’s first point of contact with a company is in-person (customer service), the next interactions may not be. This means your organization can connect with customers in new and exciting ways.
How to improve customer experience
You’ve heard from every business leader, podcast, and research group why customer experience is essential. Now, it’s time to discover HOW to improve customer experience.
First, create a fantastic product or service
Customer experience vs. product development is akin to the chicken or the egg dilemma. To create a great product/service, you need to know the experience your customer expects. To create a great customer experience, a great product/service should do most of the leg work. So how can you create a great product/service?
Let’s break it down into four components
- An amazing offer is undeniably better than any legacy alternative. If it’s even a debate, you’ll at best create a lukewarm experience for the majority of your customers
- Your offer is cheaper than alternatives and costs less to maintain and implement
- Your offer is more convenient, meaning easier to adopt and frictionless compared to competitors
- Your offer has a deeper emotional resonance that touches something deep inside of your customers.
Delivering on all four components will lay the groundwork for an amazing customer experience. If you don’t, your product is the first place you should always look. As your business grows, you should invest more resources into understanding your customers' wants and needs so you can quickly implement those changes into your product.
Create a customer success plan
The customer experience movement has ushered in a new term - customer success. Innovative companies realize that if they want to retain customers long-term, they should invest in their success. Customer success is part of the customer experience and differs from customer service because it’s proactive instead of reactive.
A customer success plan is an actionable list of items that lays out an ideal process for customers to get the most out of your products and services. The first step in your customer success plan depends on what you offer.
- Physical products may have instructions on a package insert with a QR code to instructional videos.
- A SAAS company may employ a customer success manager to walk new customers through the product via video chat and answer questions.
A customer success plan aims to improve product usage and provide an additional feedback loop between the customer and the product development team.
Follow this four-step framework to create an amazing customer success plan.
- Understand what success looks like for your customers
- Create a customer journey map that tracks each step from beginning to success
- Identify the highest ROI activities with your products and services
- Set metrics and benchmarks for your customer success team
Capture customer feedback in real-time
Earlier, we shared that only 1 in 26 unhappy customers complain, while the other 25 leave. There are two main reasons customers don’t reach out to companies after a negative experience.
- They don’t think they’ll get a satisfactory resolution, so they don’t bother
- The process is too complex, so they give up before speaking to someone
With a customer experience plan, you can directly impact both scenarios with one strategy. Online customer experience tools allow our organizations to collect real-time feedback by meeting customers where they are. “Real-time” is the key here because the more time that goes by, the more time customers have to lose interest in your company or find a competitor.
The changing paradigms around customer success have shown that it’s not the end of the world when a company gets something wrong. Most unhappy customers leave not because of a mistake but because of a lack of accountability. In fact, messing up (never on purpose) is a chance to build a deeper connection with customers and drive loyalty.
What are some strategies for collecting real-time customer feedback?
- In-app surveys
- Live chat
- Email surveys
- NPS surveys
- Feedback widgets
Be responsive and consistent at every step
Sometimes, organizations shoot themselves in the foot when they embark on customer experience initiatives. An influx of customer feedback can increase wait times, which can be worse. This creates an echo chamber, telling customers their openness isn’t respected.
| Real-time updates are just as important as collecting real-time feedback.
If a customer submits a feature request or wants to speak to a sales representative, don’t let customers feel like their message landed in a black hole. Online customer experience tools can help streamline this process.
Listen to employee feedback about customer experience
Just like customers want to be heard, so do your employees. Customer-facing team members will determine some of their job satisfaction based on customer interactions. Giving them time and space to be heard allows them to advocate for themselves and your customers. They will have insight into ways your product or service affects the customer and how you can improve their experiences. Set up a direct feedback loop with your employees so you can address their customer-related concerns.
Aside from you, your employees are the only ones who know your business better. Reward them when they go to bat for your customers and when they take customer experience personally.
Offer self-service options
Another facet of the “real-time” phenomenon is the ability of customers to solve basic issues themselves. Customers often prefer solving minor problems independently before talking to a live agent. You can help them help themselves with a knowledge center.
What makes a bad customer experience?
Only 10% of customers strongly agree that most brands deliver on what they consider a “good experience. If excellent customer experience is focused on creating an enjoyable and seamless process at every touchpoint, bad customer experience is the opposite.
Let’s explore why customers feel like brands fail them on the customer experience front:
- Difficult checkout process
- Unknowledgable or rude customer support
- Customer support that’s too busy and unresponsive
- Multiple transfers and irrelevant automated phone prompts
- Blaming customers instead of taking accountability
- Agents offering zero empathy
How to measure and analyze customer experience
You understand why customer experience is important, and you now have the tools to transform how your organization delivers positive customer experiences. Lastly, you need a framework to quantify what customers want and if your customer experience initiative is improving. Ideally, you should have metrics at all customer touchpoints within your organization, from recognizing the need to becoming a repeat customer.
Recognizing The Need - > Purchase - > Use - > Recommendation - > Repurchase
With these metrics, you can answer two questions “Where” and “Why.” You’ll know where your customer success is working or breaking down in your organization. And through clever analysis, you can eventually determine why.
- Customer Effort Score: Customer effort measures how easy it is for customers to do business with you. The metric is captured by asking customers, “How easy was it to get the resolution you wanted today.” on a scale of 1-7. Customer effort is an important metric when tracking customer satisfaction.
- Net Promoter Score: NPS is a measurement system that helps companies track the likelihood of customers recommending an organization. The NPS is popular because it asks customers a short but decisive question, “How likely are you to recommend our product to a friend or colleague?”.
- Customer Satisfaction: Customer satisfaction (CSAT) is measured through reviews your company receives online on places like Google, Yelp, and the Better Business Bureau. Customers leave reviews for two reasons. One, they had an amazing or poor experience with your product or service. Two, they had an amazing or poor customer experience.
- Churn Rate: Churn rate reflects how many customers have stopped using your products or services. If your company has 800 customers remaining from an initial batch of 1,000, you have a 20% churn rate. Following this metric matters because retaining customers is cheaper than getting new ones.
- Lifetime Value: Lifetime Value (LTV) tracks the profit attributed to the lifetime relationship with a customer. LTV is a significant growth lever for companies that want to increase profitability.
- First Contact Resolution: First contact resolution (FCR) tracks how many customers resolved their issues within one interaction. Increased FCR may result in an increase in CSAT and a decrease in customer support operational costs.
- Average Resolution Time: Average Resolution Time tracks the average time it takes to resolve customer issues. The longer customers wait, the less satisfied they’ll be with their experience.
- Product Activation Rate: Product activation rate tracks the percentage of new customers that actually use your product or service. If you sell a digital service or physical product, tracking this metric can help you determine ease of use and usefulness. It’s hard to earn repeat customers if they never use your products or services in the first place.
Elevate your customer experience
Improving customer experience is not easy, but what worthwhile initiatives in business don’t require a little bit of sweat equity?
Before you run off to your next meeting, digest this fact.
Most customers don’t tell you they’re unhappy. In fact, only 1 in 26 unhappy customers actually complain. The rest just leave without saying a word. If you create an environment where customers feel empowered to speak up about their experiences, you can lower that number, increase LTV, and improve your business.