If you want to know what is customer experience, also known as CX, let me first tell you a short story.
Let’s assume you are the end-user of some specific products and your mother is perceived as a company that buys from another source some goods for you to use freely. Consumers have changing habits over their lifetime and want unforgettable experiences, and companies, if they want to survive in a competitive market, will eventually change their business strategies consequently to maintain customer loyalty.
Imagine you’re five years old and your mother is throwing you a birthday party. She is carefully choosing every ingredient, maybe buys some from whatever organic farm: you are only 5, and you really need special treatment.
Now you are 12, and your mother is a working mom two steps away from a big promotion. She doesn’t have much time to bake, but she still cherishes that special cooking smell in the kitchen on occasions. So she bought the premixed ingredients and put them in the oven — more time for her and cheaper ingredients.
But for your sweet 16, the option is obvious: outsourcing. She needs to impress your friends with the icing and special decorations that only an expert can manage. Plus, having the event away from home saves her the time to clean up the after-party mess.
Now it’s time to enjoy the experience, so happy birthday to you, dear experience economy! Make a wish to remember!
What is customer experience? CX definition
Customer experience represents the way that a customer perceives a brand based on his interaction with it across the customer life cycle. Is the perception with their experiences with a business or brand and a result of all interactions a customer has with customer support, or the process of buying or returning a product/service.
Why do people really buy?
Humans are set to avoid pain and chase desires. Take your brain to the mall, and it will thank you! Dopamine is associated with feelings of pleasure and satisfaction, and it’s released when we experience something new, exciting, or challenging. And for many people, shopping is all those things and more, such a rewarding and enjoyable consumer experience.
Take that birthday cake, for example. We didn’t mention it just to make you drool, but because it’s the way Joseph Pine explained the entire history of economic progress. For every layer, he associated a stage: the agrarian economy is the bottom layer, one of the farm commodities (flour, sugar, butter, and eggs), the good-based industrial economy is one of the premixed ingredients and the service-based economy is the “outsourced” layer. But the most pleasant one, the layer with all the candles and decorations, well, that’s the one you enjoy the most: the experience economy. And that is exactly what we’re experiencing today, and it has a name since 1998, after Joe Pine’s definition:
“From now on, leading-edge companies – whether they sell to consumers or businesses – will find that the next competitive battleground lies in staging experiences.”Joe Pine
Try any brand you like, and you will see the truth in this statement. Because humans don’t only want the coffee, but they want to associate it with the Starbucks experience: an open working environment with free wi-fi and people with matching interests. Just as they don’t want a MacBook, but the association with the Apple brand. The simple act of owning a Mac makes the user feel like Steve Jobs himself: black turtleneck and jeans, round glasses, perfect speech. Oh, well…
The importance of customer experience
“The purpose of a business is to create and keep a customer.”Peter Drucker
Unfortunately, many companies only focus on the first part of this statement. Like when Vince Hanson went to pick up his Audi A4 from Titan Motorsports in Orlando, and the technician took it for one last, very expensive test-drive. He made an illegal U-turn, crashing into another car. But they’ll fix it, right? Not at all.
Rather than accept responsibility and offering to fix the damage, the shop told him that the contract he had signed absolved them of any responsibility. It’s a great example of a company that is more interested in a customer’s wallet than the customer himself.
Many agree that, in business, there is only one boss: the customer, and he can fire everybody in the company from the chairman on down, only by spending his money somewhere else. So it’s only natural for you to understand what drives people to take their money elsewhere.
Price and product quality is a given—79% of U.S. consumers say they might switch from one brand they like to another for a better price, 52% for product quality. Such drivers often dictate initial choices too—and in many instances, switching brands can be hard. For many, it’s not worth the hassle for small improvements. But for others…
7 reasons why Customer Experience management is vital
In 2018, Hurricane Irma destroyed half of the homes on St. John, one of the Virgin Islands. After the airport closed, Marriott sent a ship to rescue travelers who were stranded nearby on St. Thomas. But the crew only let Marriott guests on board, despite having room for guests staying on other properties.
“It was really hard to see people with kids and elderly people who don’t have anywhere to stay get turned away by this boat,” Cody Howard, one of the people Marriott left behind, told The Washington Post. “For some people, that was the only hope. After the boat left, they just felt hopeless and helpless.”
Maybe some of the people left behind have used a Marriott property before. Didn’t it qualify them as customers? After all, all people are customers, not only if they buy today.
Loyal customers are 5 times as likely to repurchase, 5 times as likely to forgive, 4 times as likely to refer, and 7 times as likely to try a new offering.
1. A higher chance to be overlooked is one of the reasons Customers Experience management is vital.
2. Customer Retention: is the essence of any thriving business, because the equation of growth involves a logical evolution of the relationship with your audience: first, how many customers you acquire, then how many customers you retain, how many you delight and how many of them became your brand ambassadors, ready to voluntarily promote you. The better the experience, across all the value chain, the more chances they buy, come back, and advocate about your company.
3. More money to spend: if Customer Retention is better, your company will have more money to spend. That means better marketing budgets or expansion to other markets or investments in R&D.
4. Word of mouth: customers will be more open to recommending your company to their friends. Word of mouth is the cheapest and most efficient form of advertising. 78% of consumers trust online reviews as much as personal recommendations.
5. Consumers will pay more for a better experience: According to PwC’s “Future of Customer Experience” study, customers across a wide variety of industries said they were willing to pay as much as a 16% premium for better service. That means you will be able to launch different new product lines and charge premium to the most willing and satisfied.
6. Better Brand reputation comes with more partnership opportunities. If your customers are happier, they will be more open to trying out bundles or cross-promotions from companies that are targeting the same buyer persona.
7. Your employees will be happier: We are spending a third of our time at work. It makes a whole difference to see the smiles on the face of the customers. This is the hidden fuel for employees’ motivation
And if the employees are happy, they will provide a better customer experience. Another positive customer experience example happened to Vicky Chasse. Hoping to fulfill her 86-year-old mother’s dream to see singer Chayanne live in Las Vegas, she had booked a flight, but they ended up missing it. The last-minute prices on the only other plane available were $1,000 extra. But after hearing the story, Christy from the ticket counter gave them two of her personal employee “buddy passes” so could make it to Vegas at no extra charge.
How to measure customer experience
“If I had asked people what they wanted, they would have said faster horses.”Henry Ford
Henry Ford’s statement made history, same as his invention.
“We care for our customers, and we really want to know and meet their needs.” We hear that statement so often that we usually tend to take it for granted. Do you really? Do you really want to know and meet your customer’s real needs?
Take Walmart, for example. In 2009, they thought about doing something new and transformative, something that would help them surpass their business competition, Target, which was cleaner and less cluttered. So, they went to ask their clients about this idea: Hey, would you like Walmart aisles to be less cluttered? And the clients say, “Yes, now that you ask, yes, that would be nice.”
Great! The customers like the idea, Walmart thought, so they spent hundreds of millions of dollars, removing 15% of inventory, shortening shelves, clearing aisles. Yes, it’s expensive and time-consuming, but this is what customers said they wanted, right?
Well, not quite… Walmart didn’t pursue the question of what loyal customers wanted, but came up with the answer first, then asked customers to agree to it. That’s precisely the wrong thing to do because it ignores customers while attempting to fool stakeholders into thinking that the strategy is customer-centered. Ignoring the customer experience is an expensive mistake. Sales went way down. From the beginning of that project until today, Walmart has lost over a billion dollars (close to two billion) in sales.
Walmart based this incredibly expensive misadventure on what customers said, rather than what they did. And the customer experience strategies is all about what customers do.
It’s true, you can not measure human emotions, but there are specific customer experience metrics. You can make a pretty good idea about your customers’ experience through ongoing monitoring or qualitative research.
A 69-year-old Kentucky doctor was forcibly removed from a flight by two security guards because he refused to give up his seat for one of the airline’s employees. A seat that he paid for. They broke his nose, gave him a concussion, and knocked his teeth out in the process, and needed reconstructive surgery to be able to breathe correctly. Obviously, not a good rating from this one!
Still, the voice of the customer is one of the most essential references for a company, and it can be measured.
Voice of the Customer Metrics:
Product Reviews: Amazon encourages buyers to review the products they like and dislike to help customers make informed decisions about the products they purchase. It was actually one of the mechanisms that ensured the success of this business. However, the company puts a lot of effort to fight against abusive or fake reviews.
Simply put, these are human emotions translated into stars. Or grades. Or whatever symbol you can think of. The thing is, they may sometime reflect just a bad day at the office or, luckily, an overpolite customer.
Customer Satisfaction Score: it measures customer satisfaction with a business, purchase, or interaction by asking a question, on a corresponding survey scale (1 – 3, 1 – 5, or 1 – 10). Easy and straightforward, but without any explanation, just as the example below (source: Hubspot.com)
Net Promoter Score: is a metric that reveals how many customers are willing to recommend a product or service to other people. You can use a straightforward formula: NPS=Promoters (%) – Detractors (%).
Regularly assessing the NPS of your company will help you consistently improve CX. You’ll glean valuable insights from every single question, and because the process is simple, you’ll get actionable insights faster than satisfaction surveys. Using NPS, you can drive more growth by segmented marketing, field testing ideas, fixing the most painful problems, or motivating your team to perform better.
More about NPS here: Net promoter score
Customer Effort Score: is a metric that measures the amount of effort for a customer to use a product or service, find information, or get a solution for a problem they have. They rate the experience through a numerical scale, but more creative and visual solutions can include an emoticon anger-to-happiness scale.
Barbara Carroll bought some toilet paper from Amazon, and she paid $88.77. But then she was charged $7,455 for the shipping costs. She complained to Amazon six times, and she even wrote a letter to CEO Jeff Bezos. But only after she appeared on local television and the story went viral, Amazon finally reimbursed her. That is a really long customer experience map!
Customer Service metrics
First Response Time: 42% of consumers are complaining on social media for a 60 minutes response time, and 50% of them expected an email reply within a day.
Resolution Rate: t’s the percentage of requests you solved in a reporting period and reflects your effectiveness, but don’t set your requests as ‘resolved’ until the customer actually confirms it is.
Mean Time to Resolution: tells you how long it takes your team to resolve issues. The faster, the better, in order to maintain positive customer experience and brand loyalty.
First Call Resolution: that is resolving a customer issue in a single interaction, by phone, email, social media support, or live chat support. Service Quality Measurement Group’s data suggests that a 1 percent improvement in FCR yields a 1 percent improvement in customer satisfaction.
Fill Rate: the percentage of a customer order that is filled on the first shipment. Also, the shipping time and the delivery rate are two important metrics to evaluate.
Outcome CX metrics
Product Return Rate: Your return policy can make or break your eCommerce business. Statistic from eConsultancy show that:
- 56% of shoppers want a hassle-free return policy.
- 81% of shoppers want simple, easy, and free return returns.
- 92% of shoppers say they would rebuy something if they are happy with the return policy.
- 67% of shoppers say they usually check the return page before making a purchase.
- 62% of shoppers are more likely to make an online purchase if they can return an item.
Lifetime value: is the metric that indicates the total revenue a business can reasonably expect from a single customer account.
As an example, using data from a Kissmetrics report, we can determine Starbucks’ lifetime value to be worth of 25,272 $.
The average Starbucks customer spends about $5.90 each visit. The average purchase frequency rate was found to be 4.2 visits. After calculating the average customer value and the average customer lifetime span, you have all de info you need to estimate the customer lifetime value. Pretty good business, Starbucks!
All you have to do now is to invest in customer satisfaction and customer retention. Making your customers happier will usually result in them spending more money at your company transforming them in loyal customers. It should be easy when your business is taking people out for coffee, right?
Retention Rate: new customers are good for business, but you can’t grow if you keep losing them. So don’t forget to put a lot of effort into keeping your clients happy. Calculating your retention rate helps you predict revenue, analyze customer service, and re-strategize loyalty programs. In other words, it keeps you on the market and also enables you to grow.
You can calculate your customer retention rate for a specific period by adding up the number of retained customers at the beginning of that period, the number of customers retained at the end of that period, and the number of new customers your company gained during that period. Then, use the formula below:
x existing customers at the end of the period ( – ) x newly acquired customers during that period ( / ) x existing customers at the beginning of the period ( * ) 100
Measuring against your own CRR month after month and year after year reveals trends and helps you anticipate your customers’ expectations. And that means being better than the competition.
Days Between Transactions: to increase marketing efficiency, we need to understand customer behavior, and by analyzing this value is also a way to do it.
Determining the average number of days between orders involves finding two consecutive orders from the same customer and calculating the number of days between them.
Companies often focus heavily on the customer relationships metric, which is typically used by the marketing department. However, this metric can be influenced by a whole host of external factors, making it challenging to identify the drivers as they might be either motivations or barriers.
Just like in love: don’t spend your time and money on the wrong person. You better find The One (aka your buyer persona).
Understanding your buyer persona is a complex process, but it definitely pays off on the CX process. After all, one single true lover of your store values as much as 389 new customers.
True Lovers: your ideal customer profiles. They bought from you the most recent, placed the highest number of orders compared to others and of the highest monetary value.
Ex-Lovers: customers you shouldn’t have lost and on which you must be focusing on to find out who they are and why they dumped you.
What you give is what you get, so being a careful lover yourself will help you avoid a break up with the ones About to Dump you.
Also, if you want to learn how to create customer satisfaction surveys using Omniconvert, you can check out this article written by one of our CRO experts, Mara Gavrilescu.
How to make an exceptional customer experience
It all starts with a better Journey mapping, from “as is” to “to be”. Rich and Julie Morgan used to go out for Steve’s Pizza every Friday, but then they moved to Indianapolis. Still, they missed their pizza and planned to take a drive a few months later to celebrate Rich’s birthday with their favorite pizza. Unfortunately, they found out that he had a severe and fatal form of cancer.
Julie’s father called the restaurant to surprise them with a charming message. But 18-year-old Dalton Shaffer jumped in his car with two pizzas and delivered it to the couple, 360 km away. “I just wanted to make them happy,” he said. And that’s what we call a journey.
KPMG Methodology describes the customer journey in six pillars: Personalization, Integrity, Expectations, Resolution, Time and Effort, and Empathy, and this example has it all.
- Integrity means that customers need to perceive the company as a safe, trusted environment. Or as a great pizza provider.
- Resolution is when the company has a solution whenever a problem occurs. Or, at least, a right answer. Or an employee with a nice car.
- Expectations are crucial when your customer compares your company with all those big brands. But you need to deliver to your promise. And maybe an extra mile.
- Time and effort to satisfy their needs as easily and as quickly as possible. And as far as it takes.
- Personalization, because neither you or your customer want to feel like another face in the crowd. Make them feel special, show them they deserve the best, and you will earn their loyalty for good.
- Empathy is the strong, positive emotion that will last for a long time.
Often, a better customer journey is also a better company journey, and it doesn’t necessarily involve a car.
Deloitte Methodology explains it in three simple steps:
- Diagnose the ‘as-is’ consumer experience: understand what is working, what is not, and why for existing customers. The ‘pain points’ and ‘magic moments’.
- Set a realistic ‘to-be’ goal once the current customer experience performance has been measured.
- Set out clear and actionable next steps: Correct – Optimise – Disrupt.
Factors that affect customer experience
Dorothy Wickenhiser of San Francisco found her MoviePass account suddenly closed, with no possibility to contact someone about customer service. When she finally managed to reach someone, who informed her that she had violated the terms of the agreement. Only she hadn’t.
When San Francisco’s ABC News 7 investigated, they found over 1,500 complaints. MoviePass’s response to all of them was to deny that there was a problem. They did not mention the bit about their customer service department being virtually impossible to reach.
Globally, 60% of respondents said they would stop doing business with a company due to unfriendly service, 46% said unknowledgeable employees, and 50% said a lack of company trust would force them to sever the relationship.
About 32% said they would walk away from a brand they love after a single bad experience. And the range is wide:
- Employee’s attitude and behavior
- Resolution time
- Product price
- Unpacking experience
- Delivery experience
- Friends/relatives feedback
- Buying experience
- Brand’s image
- Product Quality
- Customer Support
Studies show that only 16% of the customers will recommend your business, even though 70% will say they would.
Keep in mind that growth is not an accident, but the natural consequence of customer retention and an improved customer experience that will make them actually recommend your company after purchase. However, 63% of the companies still allocate most budget towards customer acquisition, ignoring retention. You can find here more relevant figures.
How to make your customers recommend your business?
1. Deliver on your promise. The video hosting and analytics platform Wistia not only uses the power of video to help tell company stories but also uses videos to provide excellent customer service, too.
They create personalized how-to videos and individualized thank-you notes to help customers and demonstrate how to use different aspects of the software using a visual medium. They basically practice what they preach.
2. Make them remember you – attach a positive experience (under-promise, over-deliver). For example, the Ritz-Carlton’s service policies are so legendary that the stories of satisfied customers have even made it into a book. Here’s one of them:
“I left The Ritz-Carlton Sarasota in such a rush for the airport that I forgot my laptop charger in my room. I planned to call when I got back into my office, but before I could, I received a next-day air package from The Ritz-Carlton Sarasota. In it was my charger, with a note saying, ‘Mr. DiJulius, I wanted to make sure we got this to you right away. I am sure you need it, and, just in case, I sent you an extra charger for your laptop.” The note was signed by Larry K. Kinney, in Loss Prevention.'”
Oh, maybe you should also know that any employee is independently authorized to spend up to $2,000 per day to improve guest experience.
3. Verify if they are happy with the product/service. Emily Weiss built her Glossier business by reading and engaging with real women readers on her blog and social media about the beauty and skincare products they loved.
But she always kept that crowdsourcing prowess when the business has grown. Not only she uses it to bring new products to market, but also to receive feedback on the product’s performance. Weiss says she received “so many D.M.s from people on Instagram writing to say, ‘Thank you so much for listening; we’ve been waiting for this moment.'”
4. Provide them ways to promote your business. Warby Parker produces glasses, and its most famous customer service story is when a customer forgot his glasses on a train. He got home to find his glasses and a replacement pair waiting for him, but only because Anjail Kumar, former Warby Parker General Counsel, was sitting next to him on the train. Sure, this is not easy to replicate, but you can do smaller things to impact your customers’ loyalty.
Upon arriving at Warby Parker’s website, visitors can immediately take a fun quiz that gets them excited about the variety of products. They can choose five options to try on, free of charge, at home, and they can customize frames and lenses to suit their needs. But when Warby Parker sends customers glasses to try on, they recommend sharing selfies on Instagram using the hashtag #WarbyParkerHomeTryOn to get opinions (and, of course, to spread the word with friends).
5. Give them extra-incentives to recommend you (referral programs do work). When Luka Apps lost his toy during a shopping trip, he thought he would never see it again. But under his father’s advice, he wrote a letter to Lego’s customer service department, telling them the whole story.
“With all my money I got for Christmas, I bought the Ninjago kit, he said. My Daddy told me to leave the people at home, but I took them, and I lost my Jay XH at the shop as it fell out of my coat. I am really upset I have lost him.”
Lego’s customer service agent played along and sent a message in return:
“Luka, your father seems like a very wise man. You must always protect your Ninjago Minifigures like the dragons protect the Weapons of Spinjitzu!” I will send you a new figure and something extra because anyone that saves their Christmas money to buy this must be a huge Ninjago fan.
And they just sent the boy some new Minifigures to replace the lost one. With one free giveaway, Lego obtained two lifetime customers: Luka will recall this experience whenever he thinks of Lego and Luka’s father that will probably spend more money with Lego.
And when you mess up, because you will, respond immediately with a full, humble acknowledgment of your mistake and remorse. In the end, your customer relationships work a lot like any relationship, and when you hurt a friend, you don’t offer them a vague, insincere apology. For the same reason, when you upset your customers, it’s important to apologize correctly in order to repair that connection and respect the CX principles. Just try not to do it again.
What is the concept of customer experience?
Customer experience (CX) is a customer’s perception of their experience with a brand or business, the result of every interaction, from accessing the website to talking to customer service.
What is the difference between customer experience and customer service?
The definition of customer service is the objective support provided by a company to customers when they are buying or using its products or services, while customer experience is the subjective perception of a brand as a result of these interactions.
Why is customer experience so important?
Because it is the customer who has the power, not the seller, they have more options and a higher ability to influence a brand or a business than ever. As a company, you have to offer them more customer experience benefits, to understand CX, and why people feel the way they do about you. It will dramatically help you grow your business.