We’ve created this useful guide to give you the information you need to understand, develop, manage, and measure the impact of the customer experience on your business.
What is customer experience (CX)?
Customer experience (CX) is an important part of day-to-day operations and strategy for any customer-centric business or organisation. Customer experience is all the types of experiences that a person has with your organisation, including experiences with your services, products, processes and communication. Unlike customer service, customer experience extends across all areas of your business, so that it often crosses multiple functional areas and teams, making managing it a strategic issue.
While you create the context that customers experience your business through your products and service, communication, sales channel and other points of contact, how customers experience these moments of truth defines their customer journey and their overall experience with your business. For a business, understanding and guiding a customer through these stages is critical in creating a customer experience strategy that retains and attracts new customers.
For government and community organisations, understanding and managing customer experience is critical in ensuring services are delivered in a way that benefits our customers and reduces overall costs.
“Whatever you do, do it well. Do it so well that when people see you do it, they will want to come back and see you do it again, and they will want to bring others and show them how well you do what you do.” – Walt Disney
Comparing customer experience to customer service
Customer experience and customer service are often used interchangeably, they are not the same thing. Customer service is only one part of customer experience management – an important part – and both have the same overall goal of creating satisfied customers. However, customer experience includes more than using a business service. Customer service management is focused on what services you provide and service quality, whether its over the phone, in person, by email, chatbot or online.
Customer experience encompasses customer service and marketing, sales and distribution, website and app design. Customer experience (CX) includes service experience (SX), user experience (UX) and marketing experience (MX). Where staff play a strong role in directly delivering the experience, employee experience (EX) is also part the customer experience. How you engage your customers with research and to gain feedback is also a critical part of managing your customer experience.
In short, managing service experience is only one part of your customer’s experience.
Why customer experience is important to your organisation
Many organisations understand that delivering a good customer experience is good for business. Or if they are a government service provider, that delivering a good customer experience is good for the community. But what does this mean in actual business terms and for long-term strategy? In short, delivering a great customer experience delivers increased profitability for businesses, and reduced costs for the government. More indirectly, great customer experience delivers more engaged customers, and communities and ensures the long-term success of an organisation.
A report by Forrester showed that businesses that are CX leaders in their industry grew their revenue six times faster than businesses that lagged their industry in managing their CX, by retaining more of their customers and attracting more new customers through word-of-mouth. CX leaders had high Net Promoter Scores (NPS).
5 benefits of improving customer experience:
- Higher growth from higher customer retention.
- Higher growth from attracting more new customers.
- Lower customer servicing costs from reduced complaints and errors caused by inefficient complex processes.
- More satisfied staff and lower staff turnover due to staff wanting to stay with an organisation that cares about its customers.
- Improve profitability by reducing customer issues, staffing turnover, increasing retention, and increasing new customers wanting your services.
“Your most unhappy customers are your greatest source of learning.” – Bill Gates
What makes a great customer experience?
The answer is simple, make the customer experience easy. Well, it’s not that simple. If making the customer experience seamless, error-free, delivering exactly what customers wanted every time, and pre-empting their every need, everyone would have done it all already. Delivery of a customer experience that customers find easy, every time takes a lot of work and a lot of listening to customers about the experience they need.
From a strategic perspective, great customer experience goes beyond making the experience easy, it is about defining an experience that is memorable to develop customer loyalty and have them recommend you. To do this means understanding the customer journey and how it crosses different touchpoints with your business. These touch points are called moments of truth. These are the moments that define the customer experience of your business.
To know where these key customer experience moments are, means speaking with customers. Once you know these key moments and design the right experience, you need to measure and track their experience to continually improve and ensure you are delivering a meaningful and memorable customer experience. In addition to tracking your customer’s experience with key metrics like CES, CSAT and NPS, you need to undertake qualitative research to uncover root causes for poor experiences and those that delight your customers.
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffett
How do you manage the customer experience?
Customer experience management is how you strategically manage the experiences your customers have and how they interpret those experiences. Defining, designing and managing the customer experience requires understanding how your customer’s experience is defined by interactions with your employees, service, systems, products, and brand. For each of these areas, you need to understand how they impact your customer’s experience, design ways to improve their impact and measure changes so that you can correctly invest and strategically manage their overall impact over time.
The key elements of your customer experience strategy
Delivering great customer experience drives improved business performance. By understanding customers’ experiences with your business, you can invest in the areas that will have the biggest impact.
Listed below are some of the key elements for developing a great customer experience for your business.
1. Customer journey mapping
Customer experience strategy starts with mapping out the experience journey your customers go through from when they first need the service you provide to when they no longer have the need. Customer journey mapping means understanding your customers’ experiences at each touchpoint. Without this customer-centric view, you are likely to fail to know where the biggest impact is for improving customer experience.
2. Cross-team collaboration
Different operational teams have a different focus and different understanding of customer experience. Embrace this internal knowledge and break down misconceptions about customers by fostering greater collaboration between teams when mapping out how the customer journey relates to internal processes. Through this collaboration, you will uncover a greater number of opportunities and solutions for improving customers’ experience at each stage of the journey. A cross-team approach will also increase awareness across the business of customer needs and foster a more customer-centric culture.
3. Multiple channel engagement
A customer’s experience with your business is likely to cover multiple channels. Almost all businesses engage with customers using multiple channels. These channels can include different ways of buying from the business, and how the business supports its products or communicates with customers. When designing your customer experience strategy, speak with your customers to understand why they use each of the channels and their expectations. In your customer experience strategy use each channel to improve the overall experience rather than add to the complexity in accessing your services.
4. Listening to your customers
Having customer experience at the heart of your business requires understanding their needs and experiences. To understand your customers, you need to continuously listen to what works well for them and where they experience issues. Listening to your customers does not just mean asking them to give you feedback; it also means observing them and actively testing new ideas for improving their customer experience. Actively listening to your customer also requires establishing mechanisms and reporting that make it easy for staff to access insights and how well the business is performing in delivering its customer experience strategy.
When implementing a framework for listening and delivering customer experience insights your framework should look to include the following elements:
- Voice of the Customer. This is a post-experience survey where you ask customers about their recent experiences to identify any problems that you need to address and track how changes in your strategy are affecting customers.
- Relationship tracking. Periodic studies to understand customers’ intentions, awareness and attitudes towards your organisation. The insights from relationship studies will help determine your CX priorities.
- Always-on listening. Customer feedback should include ways for customers to give you feedback rather than wait for you to contact them or for them to post their views on social media. Always-on listening can include social media listening.
- Passive listening. Use and analyse all your existing data in your organisation that provides signals about what customers are doing, what they are choosing, how long they are remaining, and what channels they are using. These customer experience data source can include a diverse range from web analytics to sales and service delivery.
5. Communication
Not only is communicating to others in the organisation about your customer experience strategy essential but so is communicating to customers how listening to them is improving their services and experiences. Your customers want to know that you are not just listening but acting. Telling your customers about the changes you are making also helps drive positive word of mouth, as customers and staff have positive news about your business to tell others.
Measuring customer experience
Having the right metrics is important. If you are not measuring what matters then you will be focusing on the wrong things and if you do make a change, you won’t know if you have improved the customer experience. When you have the right measures, you can . . .
- Identify areas for improvement.
- Track your performance in improving CX
- Prioritising where to invest in improving CX.
- Calculate the return on investing in improved CX; the ROI of CX.
- Matching customer feedback metrics with operation data to understand how changes you are making that impact the experience affect the business and actual customer behaviour.
The five main types of CX metrics
Having the right metrics is important. How you measure customer experience affects your customers: Their willingness to give you feedback, the type of feedback they give and their impressions of your organisation. The type of questions you ask also affects how you will manage customer experience. Below are the five main types of customer experience metrics used to track how an organisation is performing overall. For you to understand what action to take, you need to pair these questions with additional diagnostic questions. Diagnostic questions to you why a score was given; the cause of your results.
The right set of measures will reflect the type of service and products you provide.
- Customer Satisfaction (CSat). Customer satisfaction measures how well your service meets a customer’s needs. Satisfied customers are those whose expectations about the types of customer experience were exceeded, while dissatisfied customers feel your service did not meet their expectations. By measuring CSat at different stages in the customer journey, you can identify where your service is failing and where it drives future goodwill and willingness to reuse your services.
- Customer Effort Score (CES). When customers need to go through more than one step to buy or use your service, they will evaluate you on how easy they found the process. CES focuses on the customer experience process. The Customer Ease Score is a strong predictor of customer satisfaction.
- Net Promoter Score (NPS). NPS asks customers their willingness to recommend a business based on their experience. It is basically a WOM measure (word-of-mouth) that was commonly used when personal recommendation was the main way business grew. Despite its popularity among managers, for customers, it is a question about the business and not their experience. Customers who don’t have a strong relationship with your business often give a lower score even when they are happy with your service.
- Need Resolution. With services where a customer is trying to fix an issue or have something completed, measuring whether their issue was resolved is important. For businesses wanting to reduce costs and customer effort, ‘first time resolution’ is a measure used to show how many customers had their problem solved on their first contact. Need Resolution and CES are highly correlated.
- Problems Encountered. For complex services, asking customers if they had problems is often followed by a question asking what problem occurred. For multi-staged services, knowing where the problems are occurring can help to greatly reduce customer service costs.
“Quality in a service or product is not what you put into it. It is what the customer gets out of it.” – Peter Drucker
How to improve customer experience
Armed with the right strategy, the right metrics and regular engagement with customers, the next step is to improve the customer experience. Here are some of the best practices for how you can improve the customer experience for the core foundations of any good CX strategy:
1. Fixing systematic problems not personal issues
It is tempting to want to get personal with customers; know who had the problem and try to fix their problem specifically. But don’t. Fixing one customer’s problem does not solve the problem. Chasing individual issues wastes resources. Instead, look for the root cause and how often this affects customers. Knowing this will help you prioritise your resources and help improve their overall customer experience so fewer customers are affected.
2. Focus on improvements
It is great having a lot of satisfied customers. However, your focus needs to be on the dissatisfied customers. By looking at where your service has failed, will help you improve, and have more satisfied customers. Fixating on customer problems can appear negative, but the focus is on finding how to improve and prioritising these improvements.
3. Delivering what your customers value
To improve your results – costs and sales – the priority areas are the ones that will make the most impact when improved; providing the best ROI (return on investment). To know which activities are likely to give you the best ROI, it’s crucial to understand your customer journey, expectations and what problems are occurring. Tools like kano analysis, laddering, and critical incident techniques are invaluable in identifying priority areas.
4. Continually Listen
Make listening to customers part of the organisation’s culture. Listening through talking with customers, understanding behavioural and usage data, and collecting customer feedback. To move beyond just hearing what customers say to true listening look for the underlying root causes of both customer experience problems and those things that your customers enjoy about your service. Continually listening can include always-on feedback options, automated surveys and regular feedback surveys designed to dig deeper in understanding the full customer journey experience.
5. Communicate with customers
Part of great customer experience is knowing the organisation is listening and trying to improve. Let customers about improvements and that those improvements came from their feedback. Promote opportunities for feedback as part of the broader customer experience. Too many organisations treat asking for feedback as a hindrance to customers. Don’t make this mistake. While not all customers will have feedback to give, knowing how they can give feedback will improve their relationship with your organisation.
Discover how you can build a great customer experience programme that is cost-efficient and drives improved business performance by contacting us at engage@erisstrategy.com.au.