Summary
- The Customer Experience (CX) is the customers perception of the company based on the totality of interactions. It is important because CX directly impacts customer affinity, which is one of only four sustainable competitive advantages.
- Pursuing customer experience objectives is best done with precision and that starts with prioritizing the experiences that create value for both customers and the company. There's no sense in investing in experiences that don't impress customers or deliver a financial return to the company.
- It's a two-step approach. You want to fix broken interactions that frustrate customers and deliver new or improved customer experiences that improve the company's financial performance.
How does Starbucks charge triple the price for a regular cup of coffee? It's not the coffee. It's the customer experience. The same answer applies to Apple, Burberry, Disney, Nordstrom, Salesforce, The Ritz-Carlton, Trader Joe's, Zappos, the list goes on.
But while it is clear customers are willing to pay a price premium for superior customer experiences, it's less clear which experiences customers most want and are willing to pay for. That's why the Business Growth Report used a survey to identify and rank the specific CXs that most satisfy customers and deliver a profit to the company.
A sample of the results is shown below.
We know that for companies to invest in CXs they must get a return on their investment.
We also know that a boil the sea approach doesn't work. To maximize the financial return any company must direct their investments to where they will do the most good.
So, the journey to deliver superior CXs starts by identifying the specific experiences that customers want and provide a payback.
The survey data found that the most desired CXs vary widely by industry but consistently fall into the following five categories.
- Brand. The most cited brand experiences that influenced purchase decisions included things like the company being an innovator, sustainable, socially responsible or otherwise being an agreeable brand pursuant to the consumers values. The data also turned up brand attributes such as being fun or cool, but customers did not agree that they were willing to pay more for these attributes.
- Products. Experiences in this category could be plotted along a continuum. Customers wanted products that are functional, reliable, usable, convenient, pleasurable and meaningful. The later attributes in this list delivered a much higher price premium than the former.
- Transactions. These experiences included things like frictionless order processing, easy payment processing, accurate item availability, easy returns, on time delivery, correct invoices, no restocking fees and the availability of loyalty rewards. The data showed that customers were willing to pay incrementally higher prices for several types of transactions. But the data was also clear that getting basic transactions wrong was unacceptable and would cause the customer to abandon the company.
- Engagement. These CXs are based on emotions and behaviors. Customers cited things like "make me feel valued", deliver social web experiences, mobile-first experiences, omnichannel accessibility, personalized engagement, relevant promotions, customer managed communications (i.e., email topics and frequency), data privacy and don't sell my data. Kind of like the transaction's category, getting these last two items wrong were more correlated to customers defecting the brand than earning increased revenues.
- Customer support. Call center and customer service experiences were extremely influential in customer willingness to pay more. Customers cited timely support, accurate support, social network support, low effort support, friendly staff and self-service support.
See the 5 Customer Experience categories that most influence customers willing to pay a price premium for superior customer experiences.
Click to TweetThe research results provide an excellent starting point in determining where to make your investments and how to forecast your customer experience ROI. However, to really maximize the investment and the ROI it's best to filter the customer experiences by customer segment. This helps steer investments toward the most valuable customers that deliver the most margins and profits to the company.
Since the research was completed, we've used this value matrix approach to focus on customer requested experiences that delivered the highest payouts.
Working with a retail client we learned their high value customers wanted a gift registry service. That implementation increased customer experience scores, high margin product sales and total revenues in less than 90 days.
Working with a SaaS (Software as a Service) client we discovered that a large and growing customer segment wanted to pay invoices by phone. Once implemented, this service raised customer experience scores 11 percent after 90 days, increased renewals and lowered customer churn. We later expanded this service to allow pay by mobile and website which removed labor cost from the service.
In both cases the companies successfully increased their prices during or following the new services. The research supports that price premiums are afforded to those brands that listen to their customers and deliver experiences that are meaningful and different from competitors.
In fact, the absence of relevance and differentiation is what creates and accelerates commoditization. But knowing and delivering exactly what customers want allows you to create an emotional connection that slows commoditization and accelerates revenues.