The Customer Experience Business Case

Summary

  • Customer Experience (CX) is the customers perception of the brand based on the totality of interactions. That's important because achieving customer affinity is one of only four sustainable competitive advantages.
  • Delivering superior CXs increases customer purchases, referrals, customer lifetime value and retention; all factors that deliver significant and sustained revenue growth.
  • This business growth strategy is best suited to highly competitive consumer industries where customers perceive multiple substitutable alternatives and where repeat purchases are essential to company revenue objectives.
Johnny Grow Revenue Growth Consulting

A Revenue Growth Problem

There is a perfect storm challenging customer retention. Customer expectations are rising, customers are readily sharing their poor experiences publicly and they are switching brands at a dramatically increased pace.

Buyers are more connected, informed, empowered and demanding. They have more knowledge and options and they know it. Alternative suppliers are a mouse click away so customers can get want they want in more places. Access to more and better online information about products, many verified by independent people within the buyers' social circles, has shifted the balance of power from vendors to customers.

As competition and buyer empowerment compounds, customer experience itself is proving to be the only truly durable competitive advantage.” — Jake Sorofman, Research VP at Gartner

A research report by O'Keeffe found that 49 percent of executives believe customers will switch suppliers due to a poor CX, while 89 percent of customers say they have switched brands because of a poor experience.

Recognize the customers did not report that they may or would switch suppliers, but they already have. Customers are clearly beyond idle threats and demonstrating a propensity for change at an increased pace.

The problem is real, the business impact is big, and executives are taking note. A Bloomberg Businessweek survey found that 80 percent of company's rate CX as a top strategic objective.

The O'Keeffe report advised that 93 percent of executives say that improving CX is one of their top three priorities and 97 percent state this goal is critical to their business success. They also advise the cost of failure is large and estimated at 20 percent of revenues.

Research shows the cost of a failed Customer Experience program is 20 percent of revenues.

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Deloitte advises that many executives have revised their competitive advantage and differentiation away from low price, free returns, fast shipping, bundled services or ease of use, to delivering superior CXs.

And that's in big part because traditional competitive advantages are eroding at an accelerated pace.

  • Product innovation still counts, but competitors copy products in shorter and shorter cycles, thereby decreasing the duration of unique products.
  • Lean manufacturing still counts, but the financial benefits are being eroded by global outsourcing and its labor cost arbitrage.
  • Smart supply chains still count, but online channels with dropships sourced from the around the world delivered in even small increments are lessening distribution advantages.
  • Brand value still counts, but online consumer comments and opinions render brand advertising investments less potent. Brands do not get to decide how customer centric they are; that will be decided by customers and shared globally in social media.

A customer experience business case is built on creating differentiation and competitive advantage.

Competitive advantages from products, manufacturing, distribution, brand and even IT are fleeting as they are universally achieved, deliver less differentiation and have become table stakes.

A sustainable competitive advantage is to know your customers better than your competitors and use that knowledge to deliver a consistent and rewarding CX that keeps them coming back for more.

Understanding, engaging and delighting customers is a business strategy that is not easily duplicated by competitors or displaced with new technology innovation. Growing customer relationships for mutual value creates a connection that can withstand disruptive technologies, competitor encroachment and the erosion of other competitive advantages.

Your Competitive Advantages Are Becoming Less Competitive

A Customer Experience Business Case can define customer experience management in measurable terms and quantify the customer and company financial impact.

Measurable objectives and quantifiable payback are essential. As espoused by CustomerThink, customer experience is a fad without a measurable business case.

The business case must also start with context.

The CX is the customers perception of the brand based on the totality of their interactions. It's important to recognize that CX is an emotion that is not based on any one touch point but instead builds over the entire customer journey.

Customer Experience Management (CXM) has become the go-to business growth strategy to satisfy customer demands, deliver consistent and rewarding experiences, retain customers and grow profitable customer relationships. This strategy is easily understood but difficult to implement. That's why a customer experience framework is needed to bring prescriptive actions and measurable results.

The framework will show how to apply strategy, technology and analytics to achieve the goal of delivering timely, contextual, relevant and personalized information or knowledge at every customer touch point across every engagement channel.

For example, customer experience technology brings consistency and automation by applying the right mix of business applications to:

  1. capture customer data,
  2. integrate, centralize, standardize and sync the data so it is accessible,
  3. expose the data through intuitive search and integration tools, and
  4. automatically deliver the data to the person or touch point (based on a triggering event, push-based scenario, workflow configuration or other business process automation) where it can satisfy a customer request or contribute to a CX. These processes and automation are usually designed with customer journey maps.

Once you consider the customer use cases you begin to understand the factors that challenge the goal. Customer, product and other information often reside in fragmented systems, such as CRM software, ERP software, MDM applications, legacy systems, shadow systems and probably a few more data siloes, including external repositories such as social networks. Integrating this data is a technical challenge that many businesses haven’t yet resolved.

Also, distributing the right (relevant, personalized and contextual) customer data to the right person at the right time in a workforce delegated across departments, geographies, lines of business and time zones, or directly to a customer over an increasingly growing number of online channels (mobile, Web, self-service, contact center, social network, kiosk and more) at exactly the point in time where it can be useful is a complex exercise.

But despite the complexities, the delivery of rewarding CXs is not really optional for businesses that seek to satisfy and retain their customers. Even better, successful customer experience programs deliver impressive ROI and earn significant revenue growth.

The Business Solution

Customers are more connected, informed and willing to replace suppliers that no longer meet their expectations. But at the same time they are keen to engage brands willing to create mutual value.

The upside of a successful CX program is more than just keeping customers from leaving. In a Forrester research report the analyst firm found a very high correlation between CX and customer loyalty, and the financial impact of loyalty included increased repeat purchases, higher customer share and a much higher likelihood to recommend the brand.

Maybe even more compelling, CX is a differentiator that is very difficult to duplicate, which is why it is often called the last remaining competitive advantage.

Here's the Point

Customers are more connected, informed and willing to replace suppliers that no longer meet their expectations. But at the same time they are keen to engage brands willing to create mutual value.

The upside of a successful CX program is more than just keeping customers from leaving. In a Forrester research report the analyst firm found a very high correlation between CX and customer loyalty, and the financial impact of loyalty included increased repeat purchases, higher customer share and a much higher likelihood to recommend the brand.

Maybe even more compelling, CX is a differentiator that is very difficult to duplicate, which is why it is often called the last remaining competitive advantage.