During each interaction with a brand, organization, or institution, the person on the other end of the interaction has a perception of how things went. Over time, the accumulation of these touch points deepen the customer’s perception of the organization. These perceptions influence actions (to engage, to buy, to defect, to complain, to share the experience with others…). These actions and interactions establish the long term relational value between organizations and their customers.
For these reasons, a growing focus amongst companies of all sizes is being placed on enhancing customer experience. The argument is that in a world where the journey towards products and services commoditization is brief, one of the last remaining competitive advantages is the customer experience. It is the one thing that is nearly impossible to duplicate.
Customers have confirmed its importance in multiple surveys.
A recent study by RightNow concluded that 86% of consumers would pay more for a better customer experience, and 89% of consumers began doing business with a competitor following a poor customer experience.
Each year, Forrester Research compiles their Customer Experience Index, where consumers are asked about their preferences and experiences with brands. Companies are then ranked and categorized. Over the past several years, Customer Experience consulting firm, Watermark Consulting has been comparing the financial performance of the Leaders and Laggards from the Customer Experience Index. The results make a strong case that a better customer experience leads to better performance and profitability of organizations.
Customer Experience Leaders outperform by 22.5% while laggards underperform by 46.3%.
However, it’s important to remember that correlation is not always causation. It’s a data point, and a potentially valuable one.
Other research suggests that growing numbers of senior executives and boards are placing customer experience as a top strategic priority. According to surveys done by customer experience firm Beyond Philosophy:
- 95% of senior business leaders say that the Customer Experience is the next competitive battle ground.
- 85% of senior business leaders say that differentiating on traditional dimensions is no longer a sustainable competitive strategy.
Gartner, in its latest CIO survey, found that:
CIOs ranked customer relationship management (CRM) as their No. 8 technology priority for 2012, according to a global survey of CIOs by Gartner, Inc.’s Executive Programs. CRM moved up from the No. 18-ranked technology in 2011.
Additionally, Gartner’s 2012 CEO Survey found that CEOs cited CRM as their most important area of investment to improve their business over the next five years.
Customer Experience vendors are benefiting from the increased mandate to improve the customer experience. In a recent survey by the Temkin group, more than eight out of 10 vendors expect their 2012 revenues to outpace 2011 by at least 25% and one-fifth of the vendors expect an increase of more than 75%.
An Explosion of Channels, Interactions, and Touchpoints
Complicating matters of orchestrating improved customer experiences is the proliferation of channels and digital interactions. Not only do customers now interact with organizations on many more channels than they did a decade ago, they also interact with peers, industry analysts, mainstream media, and citizen journalists on multiple channels as well. Each of these interactions contribute to the perception of the company or brand in the mind of the customer.
Customers are increasingly expecting organizations to respond quickly on their preferred channel in alignment with their increasing expectations. At each stage of their journey, there is a certain set of expectations. Depending on the stage in the customer’s journey, expectations might include more information, a resolved customer service issue, a technical problem solved, a purchase transaction, and then everything that happens while the product or service is put to use.
At the simplest level, a study by Bain & Co., found that customers who engage with companies over social media spend 20% to 40% more money with those companies than other customers.
There’s more to social than just gathering likes and follows.
As the interactions between organizations and their customers become more fragmented and dynamic, Social and Collaborative technologies can play a key role in helping organizations differentiate themselves.
(1) Listen across a wide spectrum of digital channels –> Deeper customer insights – enhanced Voice of the Customer (VOC) feedback
(2) Offer a wide array of preferred channels for customers to choose from, including real time unified communications –> Customer preference wins
(3) Creating and cultivating customer communities to foster interaction, and engagement through depth of resources –> Customer self service, value co-creation, open innovation
(4) Cultivating internal collaboration facilitates more nimble and accurate customer responses. –> Speedy access to people and information who can serve customer needs best
(5) Analytics across digital channels provides clues for customer journeys and expectations at each stage –> Deeper customer understanding paves the way for better product and service design, better marketing messaging and segmentation, and the crafting of a better customer experience.
How are you using or planning to use social and collaborative technology to enhance your customers’ experience? Would love to feature your stories here.