Why customer experience leads to success

Amazon, Netflix, and Uber are just a few examples. They all offer consumers the greatest possible shopping convenience with an excellent customer experience (CX).

What do these companies have in common? They use customer data to make their offerings and the shopping experience better, more personalized and more convenient. Compared to other market players, they seem like dream catchers. With their example, they challenge other companies to design connected experiences - regardless of the channel or customer touchpoint. The customer can and should enjoy the experience wherever and however they choose to interact with the company. 

In short, organizations that manage the customer experience with the utmost care maximize customer satisfaction and thus improve their revenues. 

We have compiled the most important reasons for an excellent CX¹: 

Differentiation

Companies that offer a unique customer experience differentiate themselves from the competition. According to forecasts customer experience will be the most important differentiating factor for companies in 2020.

Promotion

Studies show that customers who have had a good brand experience, on average nine people tell about it. Customers with a bad brand experience tell 16 people. This means that with only one bad brand experience of a customer, the company loses sales and, conversely, a good brand experience with zero acquisition costs ensures new customers and further sales. 

Customer turnover

Customers who look back on the best customer experience give 140 percent more from compared to those with the worst experience. They also have a 4.5x higher willingness to pay a premium price. In addition, they have a 3.6x higher readinessto purchase additional products and services from that company.  

Loyalty 

Customers with excellent experience have a 2.7x higher readiness, continue to do business with that company compared to those who have had a bad experience.

Cost to Serve

Companies that deliver great customer experiences reduce cost to serve by 33 percent. Recommendations from customers bring with zero marketing acquisition costs new customers.

Getting the customer experience right is no easy job. A company needs access to Relevant data from key customer touchpoints. What are the biggest challenges a company faces in the process?

Lack of customer centricity

Even when top management shows a clear willingness to become customer-centric, old thought patterns such as inside-out thinking still dominate the rest of the company. This prevents customer-centric initiatives that turn the differentiated customer experience into a business advantage. 

Insufficient data insights (data insights)

Although there is broad access to customer data, companies are not able to extract insights from the data. They lack the know-how to huge amount of data optimally with each other and in Insights (cognitions) to transform.

For this reason, customer experience initiatives are not efficient because they do not work without qualitative data on consumer preferences and behavior. Decisions are therefore still made on the basis of a gut feeling rather than solid evidence. 

Silo thinking and organizational barriers

Departments often lack a common understanding of the CX strategy. They have not sufficiently defined and aligned the internal processes, functional interfaces, CX principles and responsibilities. This inevitably leads to a misunderstanding of "who actually has to do what".

Incomplete CX measurement

In order for budget managers and executives to commit to customer experience, they need a substantial statement on the return on investment. However, many companies stumble when it comes to determining the appropriate metrics. This makes it difficult for them to measure the value of customer experience efforts with meaningful business key figures to link. 

Outdated technological infrastructure

Most companies have now understood that with the current phase of digitization, they need novel, flexibly deployable technology platforms to keep up with the dynamics of change. But they are not managing to renew their existing IT architecture fast enough to keep pace with changing business requirements. They also need employees who have the know-how to seamlessly integrate the new applications and systems into the overall enterprise architecture.

If the company lacks these resources, it operates on outdated, disconnected technologies that cannot provide executives with the data they need for the right metrics. 

Online mania

In recent years, many physical touchpoints have been replaced by digital interfaces (websites, apps, chatbots, etc.). This has resulted in too much focus on online touchpoints and, conversely, neglect of the holistic customer journey.

The customer journey includes both online and offline touchpoints. The two worlds are now separate and managed in their own silos. This prevents cross-channel and seamless customer experience consideration and processing. 

Customer Experience Hyperactivity 

For most companies, improving the customer experience is a top priority. This leads to countless projects and programs aimed at optimizing the CX. But trying to do everything at once does not lead to an improvement of the customer experience, especially for large market players. 

Leading the company through the digitization transformation process takes a lot of time and resources. But time may be too short to align all initiatives and execute them successfully. If you want to secure the future of your organization in the long term, you have to place the customer experience issue at the center of your value creation activities and set it in motion in a targeted manner. If this does not succeed, dynamic market players will overrun the company. It loses relevance.

The two key success factors for achieving sustainability are:  

1. Relevant data and insights from customer interaction points to know and understand the customer need at any time. 
2. Capable managers who derive meaningful measures from the findings.

The basis for this is provided by an insights platform. It delivers data and insights across the entire customer journey and across all key touchpoints (online and offline). The integration time is short because it can be deployed almost immediately, detached from data integration difficulties and existing technology environment. Innovative Customer Insights Solutions are equipped with an open API. This can also be subsequently integrated into the modernized IT infrastructure.  

With an Insights solution, a company tackles the customer experience initiative efficiently: Every relevant touchpoint is mapped in the Insights platform, and customer experiences are continuously and automatically collected for each interaction. Executives have access to real-time customer experiences via dashboards. They are able to immediately share their insights across the organization and proactively take action. Their optimizations are based on real customer needs and solid evidence. 

In the last article of the customer experience three-part series, Felix Horner explains how to measure CX.