FORTUNE Partners Article

The Hidden Value of Customer Experience

As companies realize the true value of their customers, shifting from a reactive customer service approach to a proactive customer experience approach is proving to be invaluable.
 
 

Introduction

Consumers today want more than a just a good product or service—they want to be treated as partners in the buying experience. And as consumer choice expands, and brands with a singular customer focus emerge from the pack, responding well to customer complaints is no longer enough. In other words, customer service is now considered table stakes. And with consumers in control, companies who’ve shifted their focus to the entire customer experience are already seeing the dividends.

“Customer service is a reactive mindset. Customer experience is more proactive,” says Ian Altman, an expert on integrity selling and a best-selling author. “Customer experience is more about how you make a customer feel at every interaction.”

The hidden value of CX

Statistics show that 70 percent of all buying experiences are based on how the customer feels they are being treated — and more than half say they’re willing to pay extra for it. What’s more, according to a global survey conducted by Avanade & Sitecore called Customer Experience and Your Bottom Line, customers who encounter positive customer experiences are almost three times as likely to recommend the brand to someone else.

More companies are realizing the implicit value here. Recent industry studies show customer experience is poised to take over price and product as the key differentiator for brands by the end of the decade. And that can have a significant impact on a company's bottom line. In fact, according to the Avanade & Sitecore survey, companies can expect a $3 return on investment for every $1 invested in the customer experience.

The best companies today are offering cumulative experiences across multiple touch points and in multiple channels over time, including in-store, online and mobile, as well as feedback channels from social media to the phone.

“In the past, there’s been a misconception that customer service is the same as customer experience. It’s not,” says Blake Morgan, a customer experience futurist and author of More Is More.

“Customer experience is shaped by the many interactions the customer has with the brand. And those interactions are shaped by much more than what happens after the sale. Everyone at your company has an impact on customer experience. Customer service is the way we put out fires. Customer experience is shaped much earlier by the many people and processes long before the credit card is swiped.”

Why consistency is king

A recent Salesforce survey shows 73 percent of consumers are likely to switch brands if a company provides inconsistent levels of service across departments. The fact is, customer experience doesn’t have to be over the top to be effective. What consumers really want are familiar, trusted transactions—and consistency.

“You don’t need an exceptional customer experience. What you need is a good and consistent experience,” says Curtis Bingham, founder and CEO of the Chief Customer Officer Council. “Many companies can’t even do consistent very well and their attempts at making something exceptional backfire because they’re only able to make one piece of the customer’s journey exceptional.”

Bingham cites big-box retailer Costco as a company that may not roll out the red carpet at its stores or e-commerce sites, but has high net promoter scores because of its consistent customer experience. Disney’s theme parks are another example of a brand that offers a consistent experience around the world. It’s that reliability that keeps families coming back.

Challenges with a CX transformation

The shift from being a customer-service based organization to a customer experience based one can be more challenging for well-established companies, many of which are being disrupted by startups created with a focus on customer experience. Examples include the bed-in-a box brands popping up in the mattress industry, low-fee and technology-driven robo advisors taking market share in the financial services sector, and the countless clothing retailers making the customer experience their key brand proposition.

For more traditional companies, offering a positive and consistent customer experience “requires a shift in mindset and culture,” says Adam Toporek, a customer experience strategist, author and founder of consulting company CTS Service Solutions. “The primary challenge is execution across departments and functions.”

Even when a company has a well-designed customer experience, “if the execution isn’t right, it creates inconsistency,” Toporek says. He recommends companies provide regular, across-the-board training and communication to build and maintain a consistent focus on customer experience across all divisions, and even tie it into the overall business strategy.

“The best companies seem to have founders or CEOs that evangelize customer experience throughout the company,” and are willing to take risks that go beyond quarterly performance metrics, Morgan says. “The priorities of the company start at the board level; often stock price, financial performance and shareholder value. And everyone at the company becomes focused on the metrics that relate to the board’s priorities. It takes a gutsy leader to say, ‘we’re not going to chase money, but rather provide value to customers and build long-term relationships.’ It takes a fearless leader to say, ‘we don’t care about quarterly profits.’

Answering the call of the customer

With their instant access to social media and other open communication forums, consumers are more empowered than ever to shape a company’s reputation—good or bad — based on their experiences. And given the expectations of today’s consumers, this means most companies have little choice but to take a longer-term view and shift their business models towards customer experiences.

“Brands who get this and are doing it well are capturing market share,” says Altman. “Effective customer experience is about proactively helping clients have better trust and less anxiety every step along the way.”

That’s good news for consumers. It’s also good news for companies who recognize the role of customer experience in building the value of their brand. And, it turns out, Wall Street ultimately recognizes that value, too.

As a leading indicator of customer satisfaction, the American Customer Satisfaction Index provides information that can be used to measure the relationship between customer satisfaction and a company’s financial performance. According to ASCI data, customer satisfaction has a direct impact on stock market performance.

As more and more companies understand the economic impact of customer experience, staying focused on the customer may be one of the most valuable decisions they’ll ever make.

Customer Experience and Your Bottom Line, 2016 Avanade & Sitecore global survey conducted by Vanson Bourne
 

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