What Is Customer Experience: An Introduction
In the world of fierce brand competition for attention and loyalty, there’s a silent orchestrator shaping the destiny of companies – customer experience (CX).
Picture a scenario where you’ve purchased two comparable products from distinct companies. Upon reaching out to their customer service, one neglects you, failing to offer adequate information, leaving you feeling disoriented.
Conversely, the other delivers outstanding customer service, attending to your needs promptly and providing comprehensive information. Given these experiences, which brand would you opt for in the future: the one that provides poor experience or the one that makes you feel valued?
These experiences are some elements of microcosm of what we call customer experience.
Table of Contents
- What Is Customer Experience: A Definition
- What Are the Factors that Can Influence Customer Experience?
- The Benefits of Superior Customer Experience
- Customer Experience Metrics and Measurement
- Common CX Challenges
- Customer Experience and Innovation: AI Solutions
- Doing It the Right Way: CX Transformation
- Summary
What Is Customer Experience: A Definition
Shortly, customer experience refers to the comprehensive perception customers form during their interaction with a brand, encompassing every touchpoint from initial awareness to post-purchase engagement. It’s the sum of feelings, insights, and judgments a customer develops throughout their journey with a product or service.
In other words, customer experience is a holistic concept that goes beyond individual transactions, focusing on building long-term relationships and customer loyalty.
The significance of CX for businesses becomes evident when considering that around 74% of consumers make purchasing decisions primarily based on their experience.
More and more businesses recognize the value of customer experience. McKinsey & Company reports that a substantial majority, specifically 70% of senior executives, view customer experience as a top priority in the coming years. Moreover, in the fiercely competitive domain of financial and insurance services, 62% of participants, as per Statista, stated that their organizations regard customer experience as a pivotal factor that distinguishes them in the competitive landscape.
Let’s move to discussing key components of customer experience.
Customer Journey
The customer journey represents the entire lifecycle of a customer’s interactions with a business.
It includes the following stages:
- Awareness stage
- Consideration
- Purchase
- Post-purchase engagement
- Potential advocacy or repeat business
The customer journey and customer experience are closely intertwined concepts, with the customer journey being a fundamental component of the overall customer experience.
It specifically focuses on mapping the stages a customer goes through during their interaction with a brand, from initial awareness to potential advocacy or repeat business. The customer journey serves as a structured representation of the various touchpoints and stages that contribute to shaping the overall customer experience.
It helps businesses identify critical moments, pain points, and opportunities for improvement.
Customer Touchpoints
Touchpoints are specific interactions between a customer and a brand, such as:
- Website visit
- Social media interaction
- Phone call
- In-store experience
Touchpoints are the moments of contact where customers form perceptions about a brand, and they collectively contribute to the overall customer experience. The cumulative impact of multiple touchpoints determines the customer’s holistic experience with a brand, influencing their satisfaction, loyalty, and likelihood of advocacy.
Consistency builds trust and reinforces the brand’s values at each interaction. Positive touchpoints can serve as differentiators for brands, setting them apart in a competitive market. Identifying and addressing customer pain points presents an opportunity for businesses to improve overall experience and customer satisfaction.
Yet, inconsistencies across touchpoints can lead to confusion, poor customer experience and diminish the brand’s image.
Emotional Connection
The customer experience is not solely transactional; it involves creating positive emotional connections with customers. Businesses aim to evoke feelings of satisfaction, trust, and loyalty through their products, services, and interactions.
Let’s take Apple as an example. Every time Apple unveils a new product, a familiar sight unfolds: groups of people line up outside Apple stores globally. The price of the latest device or the presence of similar offerings from other companies becomes irrelevant; Apple consumers are eager to demonstrate their unwavering loyalty to the brand, serving as a prime illustration of how brand loyalty operates.
In marketing, this phenomenon denotes a strong inclination towards a particular brand, regardless of pricing or competitive alternatives.
Devoted consumers cultivate a positive sentiment towards the brand, consistently choosing to make repeat purchases.
Post-Purchase Support
The customer experience extends beyond the point of purchase. Providing excellent post-purchase support, addressing issues promptly, and maintaining open communication contribute to overall a positive experience.
According to Statista’s report Top Brand Loyalty Drivers among U.S. Consumers in 2022, the primary reason why U.S. consumers remained committed to their preferred brands was the quality of customer service. Approximately 83% of those surveyed deemed excellent customer service a crucial or highly significant factor in fostering brand loyalty.
In the report by Deloitte on Customer Service Excellence in 2023, 45% of respondents emphasized the importance of solving the case on the first contact. The promptness and effectiveness of customer service are key.
According to Deloitte, customer expectations continually increase, posing challenges for customer service. This necessitates the deployment of the right mix of modern and traditional channels to allow all customer groups convenient access while maintaining operational efficiency.
Customer Feedback and Measurement
Businesses actively seek and utilize customer feedback to measure and improve the customer experience.
Consequently, metrics such as Net Promoter Score (NPS) and Customer Satisfaction (CSAT) are commonly used to assess customer sentiment.
What Are the Factors that Can Influence Customer Experience?
Several factors can significantly influence customer experience, and they play a crucial role in shaping customers’ perceptions and satisfaction. Here are some of them:
Product/Service Quality
The core offering’s quality is fundamental.
According to the study The Effects of Product Quality and Service Quality on Purchasing Decisions, the quality of a product positively and significantly influences purchasing decisions.
Ensuring sufficient equipment, maintaining a high level of personal professionalism, and offering supportive facilities contribute to an enhanced service quality for customers.
Convenience and Accessibility
Providing convenient ways for customers to interact, purchase, or get support can greatly impact their experience.
This includes accessible websites, easy checkout processes, and multiple contact channels. Ensuring that the shopping procedure is swift, user-friendly, and dependable is key.
According to PwC report Customer Loyalty Executive Survey 2023: Customer Experience 54% of executives say focusing on the buying experience is a high priority in activating customer loyalty.
Personalized Customer Interaction
Customizing experiences to match individual preferences can create a sense of value for customers. Personalized recommendations, communications, and services contribute to a more positive customer experience. Personalization involves adjusting the customer experience based on individual preferences, behavior, and demographics. This may encompass:
- Personalized recommendations
- Targeted marketing
- Tailored customer service interactions
The pivotal role of technology in personalization is unmistakable, contributing significantly to the noteworthy growth observed in the relevant tech market. This evolution is particularly evident in the realm of global customer experience personalization and optimization software and services. In the year 2021, the industry’s worldwide earnings, encompassing software and services dedicated to personalizing and optimizing customer experiences, reached an approximate total of $7.6 billion.
Projections for the subsequent years reveal a substantial surge, with an anticipated increase to $11.6 billion by 2026. This signifies a remarkable growth, underscoring the escalating significance and demand for personalized customer experiences facilitated by cutting-edge technology.
Customer Service
It serves as the frontline interaction between a business and its customers, directly influencing their satisfaction, loyalty, and perception of the brand.
Customer service acts as a communication channel, providing customers with information, updates, and assistance. Clear and transparent communication enhances the customer’s understanding and trust in the brand.
Further, the customer support team addresses and resolves customer issues, inquiries, and complaints promptly. A quick and effective resolution contributes positively to the customer’s overall experience.
Moreover, customer service serves as a valuable source for collecting feedback. By actively seeking and listening to customer opinions, businesses can identify areas for improvement and implement changes to enhance the overall customer experience.
It is crucial to mention the role of multichannel customer support which refers to providing assistance through various communication channels, and it can significantly improve customer experience in different ways.
Examples of multichannel customer service include a company offering support through:
- Phone calls
- Live chat on the website
- Social media platforms (Twitter, Facebook, etc.)
- Mobile apps with in-app support features
- Self-service options on the website (FAQs, knowledge base)
Although call centers have traditionally been the main avenue for customer service, there is a clear trend toward omnichannel engagement. The Global State of Customer Service Sophistication Report by Microsoft reveals that nearly 40% of respondents express a preference for contacting brands through various channels. Furthermore, close to 60% of companies employ a combination of voice and web channels to meet customer expectations.
Providing a consistent level of service across multiple channels ensures a uniform customer experience. Regardless of the platform, customers should receive the same quality of service and information. Offering multichannel support plays a role in demonstrating to customers that their needs and preferences matter, as according to Zendesk’s CX Trends 2023 Report, 70% of consumers are inclined to spend more money with companies that deliver fluid, personalized, and seamless customer experience.
For that reason, businesses frequently opt for external providers of customer service due to their flexible resources, expert knowledge, and proven operations. To learn more about relevant companies in the sector check out this Customer Service Outsourcing Companies Guide.
Brand Reputation
The overall perception of a brand, encompassing its reputation and public image, can significantly impact the customer experience (CX).
Positive associations and a robust brand reputation contribute to a favorable experience. According to the report on Company Reputation’s Impact on Consumer’s Decision to Purchase a Product or Service by Statista, as of September 2023, a notable 58% of surveyed adults in the United States agreed that a company’s reputation plays a crucial role in their decision to purchase a product or service.
Innovation
Companies that consistently innovate and stay ahead of industry trends can capture customer interest and loyalty. Offering new and improved features or services contributes to a positive customer experience.
Self-service portals, FAQs, and interactive guides powered by innovative technologies empower customers to find solutions independently. This not only enhances the customer experience but also reduces the burden on customer support teams.
The Benefits of Superior Customer Experience
- Customer Loyalty: Satisfied customers are more likely to remain loyal, make repeat purchases, and become brand advocates. In the mentioned above PwC report on customer experience, the quality of the product or service is identified as the primary driver of loyalty across industries.
- Increased Customer Retention: When customers have positive interactions and experiences, they are less likely to switch to competitors, leading to higher customer retention rates.
- Higher Customer Lifetime Value (CLV): Satisfied customers are likely to spend more over their lifetime with a brand, thereby increasing the overall customer lifetime value.
- Enhanced Brand Reputation: Brands known for exceptional customer experiences build a positive reputation in the market. A good reputation attracts new customers and strengthens the brand’s position.
- Increased Cross-Selling and Up-Selling Opportunities: Satisfied customers are more open to exploring additional products or services from the same brand, leading to increased cross-selling and up-selling opportunities.
- Positive Online Reviews and Ratings: Exceptional customer experiences contribute to positive online reviews and high ratings, attracting new customers and building trust in the online community.
Customer Experience Metrics and Measurement
a. Net Promoter Score (NPS)
Definition: NPS gauges the likelihood of customers recommending a company’s product or service to others. It is measured through a simple survey question: On a scale of 0 to 10, how likely are you to recommend us to a friend or colleague?
Significance: A high NPS indicates satisfied and loyal customers, while a low score suggests potential issues that need addressing.
b: First Call Resolution (FCR)
Definition: is a metric used in customer service to measure the ability of a support team to resolve a customer’s issue or inquiry during their initial contact, without the need for the customer to follow up or make additional calls.
Significance: FCR reflects on the efficiency of customer support operations and has a direct impact on customer satisfaction, loyalty, and operational costs.
c. Customer Satisfaction (CSAT)
Definition: CSAT measures how satisfied customers are with a specific interaction or overall experience. It is often assessed by asking customers to rate their satisfaction on a numerical scale or through a multiple-choice question.
Significance: CSAT provides insights into the immediate satisfaction levels of customers, helping identify areas for improvement.
d. Customer Effort Score (CES)
Definition: CES evaluates the ease with which customers can complete a specific task or resolve an issue. Customers are typically asked to rate the effort required on a scale, ranging from “very easy” to “very difficult.”
Significance: A lower CES indicates that the customer found the process or resolution easy, contributing to a positive experience.
e. Analyzing and Interpreting CX Metrics
Assessing customer experience goes beyond mere data collection; it involves the thorough analysis and interpretation of metrics to measure customer experience effectively and extract valuable insights.
Common CX Challenges
Implementing and maintaining an effective customer experience strategy comes with its share of challenges.
Acknowledging and addressing these challenges is crucial for businesses striving to deliver exceptional customer satisfaction. This section explores some of the common obstacles faced in the pursuit of a seamless customer experience.
- Inadequate customer data management: Incomplete or inaccurate customer data can hinder the ability to understand and meet customer needs effectively. Solution: Invest in robust customer data management systems, ensuring accurate and up-to-date information is accessible across the organization.
- Inconsistent multi-channel experiences: Providing a consistent experience across various channels (online, in-store, social media) can be challenging, leading to disjointed interactions.
- Lack of personalization: Failing to deliver personalized experiences can result in customers feeling undervalued and may lead to disengagement. One of the solutions to this challenge can be utilizing data analytics and AI to personalize interactions, tailoring products, services, and communications to individual customer preferences.
- Scaling personalization efforts: As businesses grow, maintaining personalized interactions with an expanding customer base can become challenging.
- Difficulty in measuring CX effectively: Identifying and quantifying the impact of customer experience initiatives can be challenging, especially when relying solely on traditional metrics.
- Employee engagement and alignment: Ensuring that employees are aligned with and actively contribute to the customer-centric culture can be a persistent challenge. More and more companies recognize the need to invest in employee training, recognition programs, and internal communication to instill a customer-centric mindset at all levels of the organization.
- Rapid technological changes: Adapting to the continuous evolution of technology and incorporating new tools can pose challenges in maintaining a consistent and up to date CX strategy.
- Balancing automation and human touch: Striking the right balance between automation for efficiency and maintaining a personalized, human touch can be challenging.
- Cultural resistance to change: Resistance to change within the organization can impede the successful implementation of customer-centric strategies.
Customer Experience and Innovation: AI Solutions
The intersection of customer experience and innovation has become increasingly prominent, with Artificial Intelligence (AI) emerging as a transformative force.
AI, a game-changing technology, plays a pivotal role in reshaping CX. Machine learning, natural language processing, and automation are key components driving AI’s transformative impact on businesses, enabling data-driven insights and intelligent decision-making. AI solutions are tailored to optimize various facets of CX. Here some of the common AI solutions:
Voicebots
One of the innovative AI solutions that can enhance customer experience is a voicebot.
Voicebot also known as a voice-activated bot or voice-activated assistant, is a type of software application that uses voice recognition technology to understand and respond to user voice commands.
Firstly, voicebots provide hands-free and eyes-free interaction, making it convenient for users to access information or perform tasks while on the go. This accessibility is particularly valuable for people with challenges. Voicebots can streamline customer interactions by providing quick and efficient responses to inquiries or performing tasks. This can lead to faster problem resolution and a more seamless customer experience.
Secondly, voicebots can be integrated into various channels, including phone systems, mobile apps, and smart home devices. This multichannel integration provides customers with flexibility in choosing how they interact with a brand.
Voice interactions can enhance user engagement by offering a more natural and conversational interface. This can make interactions with technology more enjoyable and user-friendly.
Automating routine tasks through voicebots can lead to cost savings for businesses by reducing the need for human intervention in certain processes.
Equally important, a voicebot that seamlessly transitions into a chatbot, also known as a conversational AI, combines the power of voice recognition technology with text-based interactions, creating a versatile and user-friendly experience.
Predictive Analytics
Predictive analytics harness machine learning algorithms to offer personalized recommendations, enriching the customer journey.
The solution frequently finds application in the analysis of consumer behavior. In 2020, the predictive analytics software market held a valuation of 5.29 billion U.S. dollars, with projections anticipating a substantial growth to reach 41.52 billion U.S. dollars by 2028.
Hyper-personalization, a cornerstone of modern CX, is made possible through AI. By analyzing vast datasets, AI identifies customer preferences, behaviors, and historical interactions, enabling businesses to deliver tailor-made experiences that resonate with individual needs.
AI and the Future of CX
According to Statista, 60% of marketing professionals stated that the most popular reason for using artificial intelligence to improve customer experience is to predict customer behavior and needs.
AI-powered customer support solutions have become instrumental in streamlining interactions. To illustrate, virtual assistants handle routine queries, automated ticket resolution systems expedite issue resolution, and the overall efficiency of customer support is heightened through AI-driven innovations.
While numerous businesses may not be prioritizing significant investments in VR/multiverse solutions because of high cost, certain customer demographics, particularly the younger generation, anticipate more compelling and immersive experiences from brands. To illustrate, according to the report Global Interest in Metaverse Experiences 2022, by Generation Gen Z and Millennials were generally most interested in metaverse activities.
Here are some examples of VR/multiverse implementation:
- Virtual try-ons: Retailers in the fashion industry can offer virtual try-on experiences where customers can create digital avatars to “try on” clothing and accessories virtually. This enhances the online shopping experience and customer engagement.
- Virtual real estate tours: In the real estate industry, virtual tours within the Metaverse can provide potential buyers with immersive walkthroughs of properties. This enables customers to explore homes and environments in a more detailed and interactive way.
- Virtual showrooms: Automotive companies can create virtual showrooms where customers can explore and customize virtual representations of cars. This allows for an immersive and interactive car-buying experience without physically visiting a dealership.
Use Cases of Successful CX Implementation
Amazon: Customer-Centric Innovation Approach
The approach: Amazon is renowned for its relentless focus on customer satisfaction and continuous innovation. They prioritize personalization, efficient delivery, and an intuitive user interface to create a seamless shopping experience.
Key initiatives:
- Amazon Prime for expedited shipping
- Personalized recommendations based on user behavior
- Amazon Go stores with cashier-less checkout for a frictionless in-store experience
Allegro: Digital Convenience
The approach: Allegro is designed with a user-friendly interface, allowing customers to navigate the platform seamlessly. The intuitive layout and easy search functionalities contribute to a positive and efficient user experience.
Key initiatives:
- Diverse product range: Allegro offers a wide range of products, catering to various consumer needs. This diversity allows customers to find a comprehensive selection of items on a single platform, enhancing convenience.
- Customer reviews and ratings: The platform focuses on collecting customer feedback
- incorporates customer reviews and ratings for products and sellers, which enables shoppers to make informed decisions based on the experiences of other buyers, contributing to trust and confidence.
- Secure transactions: The company provides a safe and secure online payment system. This commitment to secure transactions is crucial in building trust and ensuring a positive shopping experience.
Zappos: Customer Service Excellence Approach
The approach: Zappos, an online shoe and clothing retailer, places a strong emphasis on delivering exceptional customer service. They prioritize customer happiness and go above and beyond in resolving customer issues.
Key initiatives:
- A customer service team trained to exceed customer expectations
- A 365-day return policy, emphasizing customer convenience
HubSpot: Customer-Centric Inbound Marketing Approach
The approach: HubSpot, a marketing and sales platform, excels in providing valuable content and resources to its customers. They prioritize educating and empowering customers to succeed in their marketing efforts.
Key initiatives:
- Extensive educational content through blogs, webinars, and courses
- Inbound marketing methodology that focuses on solving customer challenges
Emirates Airlines: Customer Experience Excellence Approach
The approach: Emirates places a strong emphasis on the training and professionalism of its cabin crew. For this reason, passengers can expect attentive and courteous service, enhancing the overall satisfaction of their journey. The airline’s commitment to addressing passenger queries and concerns efficiently adds to the positive overall experience.
Key initiatives:
- Generous baggage allowance: Emirates has established customer-friendly policies, exemplified by a generous baggage allowance. This attention to travellers’ need contributes to a positive and accommodating travel experience.
- Luxurious amenities: Emirates Airlines is celebrated for its commitment to providing a luxurious in-flight experience. From spacious seating to cutting-edge entertainment systems, passengers enjoy a journey that prioritizes comfort and enjoyment.
- Tech-driven services: Emirates leverages innovative technology to enhance the travel experience. From user-friendly online booking platforms to state-of-the-art in-flight entertainment systems, technological advancements contribute to a seamless and modern journey.
- Extensive destinations: Operating an extensive global network, the company provides passengers with a diverse range of destinations. This global reach enhances travel options and convenience for passengers.
Doing It the Right Way: CX Transformation
To ensure the success of customer experience efforts on a large scale, extending beyond isolated initiatives, companies need to establish an operational ecosystem capable of swiftly responding to customer needs and delivering well-designed experiences.
Accordingly, instead of relying on a disjointed collection of brand interactions, building such an ecosystem necessitates organizations to revamp their internal operations, addressing challenges posed by outdated business practices that may hinder achieving these objectives.
Nielsen Norman Group suggests four focus areas where change must happen:
- Vision and strategy: Devoted leadership committed to a customer centric approach for the long term.
- Employees: organizational structure with a well-established network promoting collaboration across teams, departments, and silos.
- Operations: Updated processes and procedures aimed at encouraging collaboration and working across functional groups to achieve a shared vision of journey-focused experience design as well as customer relationship management.
- Technology: Technical infrastructure supporting cross-functional operations and customer-experience management centered around the customer journey.
Summary
CX is a multifaceted concept encompassing the perceptions customers develop throughout their interactions with a brand, spanning from initial awareness to post-purchase engagement. It involves emotions, insights, and judgments, emphasizing the holistic nature of customer relationships.
High customer experience leads to increased customer loyalty, retention, lifetime value, enhanced brand reputation. Moreover, it provides opportunities for cross-selling and up-selling, as well as positive online reviews and ratings. Yet, poor customer experience can negatively impact brand perception and purchase decisions.
Last but not least, the integration of innovative solutions like AI is crucial for elevating customer experience. It enables personalized interactions, streamlined processes, and data-driven insights, ultimately fostering enhanced satisfaction and loyalty.
Authors:
Tomasz Rabiczko, New Tech Director, OEX VCC
Krzysztof Banaś, Operations and Client Director, OEX VCC