How a Customer Experience Program Creates Customer Affinity and Company Profits

Summary

  • A customer experience (CX) program delivers CXs that go beyond basic satisfaction and achieve more emotional goals, that make customers feel delighted, appreciated, valued, engaged or rewarded, and make those experiences memorable.
  • Programs are designed to systemically deliver differentiated and profitable CXs.
  • The three biggest financial opportunities from a customer experience program are to accelerate company revenue growth, lower cost to serve customers and create a sustainable competitive advantage.
Johnny Grow Revenue Growth Consulting

The CX is the customers perception of the brand based on the totality of their interactions.

Research performed by Salesforce found that 80% of customers now consider the experience a company provides to be as important as its products and services.

Delivering differentiated CXs isn't just good for customers. It creates a 3-prong opportunity for brands.

  1. The first opportunity is to apply CXs for accelerated revenue growth. CX research shows that every $1 invested into a customer experience program yields $3.56 in additional company revenue. The research also shows that CX programs deliver several benefits that directly impact top line revenues.
Customer Experience Benefits
Customer Experience Benefits Research Results

Successful CXs create an emotional connection that results in customers that make repeat purchases, stay longer and recommend the brand to their friends. They are also less price sensitive and more willing to purchase new products.

  1. The second opportunity is to lower cost to serve. This opportunity is missed or not fully appreciated by most companies.

It cost less to support and sell to satisfied customers. These customers use company self-service channels 31% more than other customers. The cost of sale is 40% lower for satisfied customers compared to others.

A research advisory published at Harvard Business Review found effective customer experiences can lower the cost of serving customers by up to 33%.

Another study by Dimension Data titled the Global Customer Experience Benchmarking Report found that companies with improved CXs reported 79% cost savings.

Those cost savings flow right to the bottom line.

  1. The third opportunity is to compete based on the CX.

Competitive advantages used to be things like products, price, staff, service and location. But in the minds of customers these are all easily substitutable and highly commoditized.

Customer top decision-making criteria have shifted to wanting innovative products and services, providers that know how to engage and build relationships with them, and brands that know how to deliver consistent, rewarding and memorable customer experiences. Growth leaders are using CX to alter the competitive landscape.

But despite the financial benefits most companies struggle to deliver differentiated and profitable CXs. According to an IDC research report, 87 percent of companies state they provide excellent CX, but only 11 percent of customers agree. That’s a seismic gap.

Analyst firm IDC reports that 87% of companies say they provide excellent customer experiences, but only 11% of customers agree.

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Until companies advance from wishful thinking to success as determined by customers, their customer experience program will be more of a talking point and less of a strategy that increases revenues, decreases expenses and creates competitive advantage.

What Gets Measured Gets Done

Here's the underlying crux. Until you can measure the value of CXs – to both the customer and the company – you are flying blind.

To make the shift from CX as a self-proclamation to something that delivers economic benefits consider this 3-step approach.

  1. Start by measuring what a differentiated CX is actually worth to your customers and your company. Without the answer this question it's impossible to justify expenditures or demonstrate an ROI for your program. That puts the program at risk when budgets get tight.

You will need to acquire customer feedback to understand what's most important to your customers. And then you will need to turn that engagement into measurable value. For example, what is the financial impact of shortening long wait times, improving on-time delivery or making products easier to use?

  1. To prioritize your biggest uplift opportunities, correlate the experiences important to the customer and profitable to the company. Below is an example.
Customer Experience Value Matrix
Customer Experience Value Matrix | Source: Business Growth Report, N=121
  1. Finally, use dashboards to prominently display real-time progress and flag variances for swift remediation. You will need to bring focus to the most important customer experience metrics such as customer health score, CSAT (customer satisfaction) or NPS (Net Promoter Score).

As illustrated in the below dashboard, it's also helpful if you can apply predictive analytics to forecast how improvements to these key performance indicators impact company financials.

Customer Experience Predictive Model
Customer Experience Predictive Model

Our experience in working with clients is that if you did the first two steps it's pretty straightforward to show how a 1% or 1 basis point improvement impacts customer repeat purchases, customer lifetime value and customer retention.

Or for an alternative approach, these analytics can also show the cost of inaction. Sometimes that’s the bigger motivator.