The 3 Most Powerful Customer Experience Best Practices

Summary

  • Customer experience best practices start with strategy. The strategy aligns with the company's brand, identifies experiences that create differentiation and allocates resources in a way that directs actions to priorities. A good strategy makes it clear what staff need to start doing, stop doing or do differently.
  • Best practices follow with technology. Market leaders pursue technology differently. Rather than taking a tools-based approach and acquiring a mix of point solutions, they leverage their customer system of record – the CRM system – to deliver consistent and superior experiences.
  • Customer analytics are an essential best practice. Market leaders apply data and closed-loop reporting to link investments to revenue impact. They demonstrate the causation of one to the other and know when to stop making investments that will not be recovered.
Johnny Grow Revenue Growth Consulting

Most readers that follow our research know that we publish quantitative best practices derived from research and benchmarks or qualitative best practices sourced from experience. This post is going to be a bit different as we're going to include a mix of both.

1

Customer Experience (CX) Success Starts with Strategy

The first best practice is to adopt a customer experience strategy to make CX effective and sustainable.

Customer experience research shows the lack of strategy is why most programs fail, and why  IDC reports that 87 percent of companies state they provide excellent CX, but only 11 percent of customers agree.

Most consumer-based companies have implemented some type of CX program. They make improvements, get client feedback (usually Net Promoter Scores) and measure progress. That’s a good start but insufficient to make CX sustainable.

Findings from the Growth Strategies research show that the Best-in-Class performers were 3.5 times more likely to go a step further and connect the delivery of superior CXs to revenue results. They have figured out how to monetize CX. Once CXs are directly linked to revenue growth, they become something the company cannot live without.

CX ROI Measurement
Best-in-Class CX ROI Measurement | Source: Growth Strategies Report

However, improved CXs don't always create profits. Some industries are more captive than others. Some products are unique or differentiated. Sometimes there's just an absence of customer choice.

The key is to make investments where this is a payoff, and recognize the point of diminishing returns whereby additional investment is not recouped.

CX ROI is most influenced by industry and by which customer segments receive improvements. The below graphs show how CXs impact revenue growth for several industries.

Customer Experience Investment and Profit Relationship
Customer Experience Investment and Profit Relationship

See how the same customer experiences impact company revenues differently for different industries.

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The other factor that impacts payback is the customer segment that is improved. Customer segments are often measured by customer lifetime value, profitability or Net Promoter Score (NPS).

In an NPS scenario, a retail bank will earn the biggest profits by designing CXs that get Passives to become Neutral, which essentially elevates infrequent and disengaged customers to become more engaged. This impact is driven by a large volume of customers and somewhat capped by the number of low or moderate margin financial products.

For example, a wealth management firm will incur the biggest profit uplift by getting Neutrals to become Advocates. You will see this effect in industries where a minority of customers deliver the majority of margins and profits.

To figure out whether you should target your CX investment to raise the dissatisfied to become satisfied, or the satisfied to become loyal is a data driven equation. And most companies have the data, although they may first need to transform that data into some key metrics such as customer lifetime value.

2

Customer Experience Technology Best Practices

A common mistake in evaluating customer experience software applications is confusing CX software with customer service software. The latter is a single service or departmental application commonly used in call centers to deliver customer support while the former is enterprise-wide and used to deliver CXs.

A second common mistake is pursuing a new market category of CX software applications. A slew of CX technology companies have ascended to capitalize on the wide scale adoption of this business growth strategy.

However, these software apps tend to be best of breed or point solutions. While they can add value, pursuing an IT strategy of fragmented point solutions leads to a cascade of downstream challenges such as different user interfaces, difficulties in building workflow processes across apps, complex system integration and complications in retrieving data across multiple apps for centralized reporting.

A better approach is a holistic IT strategy built on a solid infrastructure and broader software platform. And the good news here is that most companies already have the bulk of the CX software they need as it's their CRM software system.

If the CRM system is a platform solution, which means it is designed for extensibility and offers a broad ecosystem of integrated third-party solutions, it may be the overwhelming technology. Salesforce with its AppExchange and Microsoft Dynamics 365 with its AppSource are the top CRM ecosystems.

Customer Experience Technologies
Top Ranked Customer Experience Technologies

Aligning technology with business outcomes, orchestrating fewer applications that deliver more capabilities and mapping the relationship between investment and impact will minimize your IT investment and maximize your ROI.

3

Customer Experience Analytics

Analytics identify the experiences that are working and not working. They reveal the opportunities that will yield the most customer satisfaction and financial impact.

They can define the delivery of optimal CXs, whether by people or technology automation, for every touchpoint in the customer journey. That’s important because every interaction either improves or erodes the customers perception of the brand.

Customer experience analytics also calculate ROI. That's essential because demonstrating a payback is the needed proof that the company's investments are working. Without this verification, increased investments are less likely and existing investments will come under increased scrutiny when budgets get tight.

Maybe most importantly and as illustrated in the dashboard below, analytics show how activities impact each other and roll up to achieve the company’s financial goals.

Customer Experience Predictive Model
Customer Experience Predictive Model