What is customer experience and why does it matter?

What is customer experience

Trick question: what does crowdsourcing, social media and shopping apps have in common? I'm going to give you some time to think about it! Tick, tack, tick, tack! Ok, have you given up already? All of them are part of the evolutionary timeline of customer experience. Confused?

I'm sure that you believe that customer experience is the result of the customer interaction with the company, or how the client perceives this interaction. And yes, you are right, to a certain extent! This is the easiest definition. However, there are some technologies that made it possible to improve the concept of customer experience as we know it.

Just think about it: before 0800 numbers, there weren't easy ways to reach companies to complain about services or products. Back in 1967, this was the solution invented by airlines to improve customer satisfaction and achieve retention. Since then, new ways of delighting prospects have been enhanced by innovations. To name a few: email and chat support, self-checkout, social media and so on.

But changes are not only due to technology improvements. The whole concept of customer is evolving! And that's why what was customer experience 10 years ago is not, and cannot be, what it is now.

What is customer experience?

As I was saying, the definition of customer has changed. Nowadays, everyone's a customer. From employees and investors to partners, buyers and their networks. In other words: all are stakeholders. With this in mind, we are faced with two concerns: the first one is that the experience has become even more crucial for any business' success. The second is that the customer experience is now shaped by numerous factors that escape the “control” of a business.

I mean, in the past, customer experience was perceived as a sum of things: face-to-face contacts, interactions across several channels, customer service, and so on. But now, well, you can add to the count word-of-mouth and other types of referrals, for example. Besides, it's never enough to remember that the customer's experience core element is emotion. So, yeah, it's quite difficult to control an individual's feelings.

The good news is that many companies are trying to, and are in fact managing to do, a good job. I mean, what can we say about Airbnb? Can anyone compete with the customer experience innovation offered by them?

The company allows you to interact with them, as well as with the hosts that are providing the experience—via message through the app. It feels like you are talking to a friend rather than a company.

These are good examples of startups that have CEOs focused on managing the customer experience. Actually, a recent report says that this is the secret to success. According to the research, 58% of companies that are much more profitable than their competitors have CEO in charge of customer experience management.

So what is really customer experience? Or better yet, what's a good customer experience? As Bruce Temkin describes: "The perfect customer experience is a set of interactions that consistently exceed the needs and expectations of a customer". And it doesn't really matter if that perfection eventually becomes a referral or not. "I don’t think an experience is any less great if a customer keeps her satisfaction to herself".

"The perfect customer experience is a set of interactions that consistently exceed the needs and expectations of a customer"Bruce Temki

Benefits of a good customer experience

Ok, so the first benefit is pretty obvious and I just mentioned it above: advocacy. If your customer is satisfied and happy with the experienced provided, chances are he will refer your product/service to friends or family members.

In addition to that, if the experience exceeds his expectations and needs, he is more likely to remain a customer. In other words: retention. With this comes another good news: less churn.

Competitive advantage is also a powerful benefit. A good experience is a point of differentiation and it has become today's business benchmark.

Thanks to social networks, price comparison websites, and online reviews, the typical customer has higher expectations and greater knowledge than ever before. Moreover, regulators, new technologies, and new entrants have lowered the switching barriers, making it easy for customers to jump between companies.

A study from Pitney Bowes shows that the main reason for churn in American and European countries is poor customer service (51%), followed by late delivery service (37%) and lack of concern for customer needs (30%). If you think about it, putting together all the three reasons, we have a bad customer experience, but not an uncommon one.

So what do you have to do to reach a high score on the customer experience competition? To start, try to do nothing wrong, and do some things exceptionally well. There are also a few things that you can do to differentiate yourself from the competition. Let's take a look at some of them.

Key attitudes to differentiate your customer experience from the competition

Although every company should have its own strategies to differentiate itself from others, it doesn't hurt to know a few secrets that might help on leaving a good impression on the customer.

Simplify: your product/service should be simple to use and to understand. Make your customer's life easier. People don't want to struggle with new things;

Listen to your customers: I mean really listen to them. There is nothing more reassuring than knowing that someone is actually listening to your thoughts, ideas, complaints, and so on. This leads to the next item;

Show your commitment: there is no point in listening if you don't do something about it. Do everything you can to meet your customer's needs and expectation, or, if you can, even exceed it. Why not surprise them with innovative services, for example?

Charismatic branding or 'shooting for the customer's heart: yeah, I know it may sound like a low blow, but this is part of marketing, right? Who can resists ads with babies or puppies, for example? Discover your audience's likes and dislikes and create an emotional connection with them. A business with charisma gives customers something very special, and they want to tell others about it.

Demonstrate the value of your product/service: to be able to do that, you need to know exactly what your customer needs and wants and his pains. With this information, you can then think of ways to demonstrate how your product/service can solve these issues and create a trustworthy and credible connection with the customer. Remember that if the customer sees real value, price is just a number worth paying.

Of course, this is not a set list and new technologies and business innovations will always bring new opportunities. On this subject, creativity is key. Bear in mind that delighting customers is not an easy task and it doesn't happen overnight. It requires long-term commitment. Try not to focus only on the short-term revenue results. Improving your customer's lifetime value should be your main goal. After all, loyal customers generate over 10X more revenue !

Customer experience is indeed THE new path to go. Especially because companies with the highest customer experience typically grow at more than double the rate of their competitors. So, my friend, if you are not investing on it yet, my advice is to begin right now. Not sure how to do that or where to start? Fear not. Our next blog post is all about that.

So stay tuned!

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