Creating an effective customer experience is more than just ensuring your customers receive the products and services they desire in a timely and efficient manner. At its core, a customer experience strategy is a framework you can lean on to ensure quality service when the demand for quantity doesn’t seem to be letting up. It’s about creating touchpoints with real people who can organically evangelize and grow your brand through their social media and offline interactions with friends and family. Most business owners know the importance of keeping their customers happy and satisfied, but very few truly understand the byproducts a positive experience can have on their bottom line—the customer experience value.
Let’s take a look at a real example. I once gave a talk about the value of long-term customer retention. In the middle of the talk, one of the participants said, “I don’t think this information applies to me.”
I’ll call this person Bill, which isn’t his actual name. Bill’s comment surprised me and, to be honest, it confused me. His company sells a business-to-consumer product. So why wasn’t he concerned about customer turnover? The answer was because he knew he had long-term customers who didn’t buy often. But that doesn’t really matter.
Why is customer experience important, you ask? A fantastic customer experience promotes the 3 Rs: retention, referral, and relationship. Short-term or long-term, when the experience underwhelms, customers are more likely to leave a company. Customer turnover costs a company money.
But turnover isn’t the only way a customer’s experience influences revenue. Some folks, like Bill, believe that customer experience is solely important for new business. They underrate customer experience strategies that can lead to explosive growth. To avoid Bill’s pitfalls, let’s look at what it means to have a great customer experience, how to develop a customer experience strategy, explain the basic elements of effective customer service, and some examples of customer experience.
What is Meant by Customer Experience?
The textbook customer experience definition can be seen as the totality of cognitive, affective, sensory, and behavioral responses that customers have throughout their relationship with you—from the time they are introduced to your brand, to the time of purchase, to the follow-up they receive from your company after the sale. But customer experience is more than a simple definition.
Customer experience relates to both customer acquisition and customer retention. I can’t emphasize enough that acquisition and retention aren’t either/or options. Companies need both. Every company needs a way to get new customers coming in the door (customer acquisition). At the same time, companies need clear, consistent processes to keep their customers after they buy for the first time (customer retention).
Customer acquisition strategies are just the start of the customer experience, but customer retention has a greater potential to add more to the bottom line. Consider this statistic: you are 60-70% likely to sell to an existing customer, while only 5-20% likely to sell to a new customer. If you have a higher chance to sell to an existing customer, employing a strategy to cater to customer experience rather than solely customer acquisition will show more return on investment.
Why experience matters, regardless of long or short term sales
With this in mind, let’s return to my story. I asked Bill how he figured that customer retention wasn’t relevant to his business.
He said, essentially, that the manufacturer recommended a 5-year life for the product he sold. To Bill, that meant there was more value in focusing on new customer acquisition than customer retention.
Let’s dig into the validity of this line of thinking. Bill’s company sells a product with the following characteristics:
- The product needs to be installed by a qualified professional. It’s not a DIY situation.
- Once installed, it’s unlikely customers will upgrade until they have to replace the item. There aren’t many bells and whistles to get people excited about new models.
- The product likely needs service between the time of purchase and replacement.
From Bill’s perspective, his customers were going to wait until there was a problem, repair the product as long as it made sense, and replace it when absolutely necessary. As a result, he didn’t see much upside in focusing on the customer experience after people made their purchase.
I asked if customers generally replaced their product according to the manufacturer’s recommended timeframe of five years. He chuckled. “No way,” he said, “they wait as long as possible. Sometimes ten years or more.”
This is pretty common. Customers will generally try to push out having to spend money to repair or replace something unless there’s a compelling reason. But the definition of “compelling” may vary—and customer experience strategy puts it within our control.
If you develop a strong customer experience, regardless of short- or long-term sales, you can motivate customers to interact with your business more frequently and compel them to continue buying with your brand.
Using Customer Experience Theory Can Inspire Customers to Replace Faster
A golf enthusiast will happily feel “compelled” to allocate money to replace a perfectly good driver with the hot, new model. But they won’t approach the purchase of a new-model kitchen disposal with the same enthusiasm. Most consumers will probably only feel compelled to replace their disposal when it breaks. And these are just relatable consumer examples; even in the B2B world, businesses will do their best to spend the least amount of money they have to in order to solve their problems.
This is where Bill (and you, dear reader) can benefit from a robust understanding of customer experience theory. Because whether it’s a new golf club or a new cloud-based technology solution, people get excited about buying when they understand clearly how the purchase, or upgrade, will benefit them.
Customer experience training teaches us to think about this in four key phases:
- Engage the audience
- Convert leads to customers
- Fulfill expectations
- Nurture your customers
When you read “engage the audience” you might think this only applies to new customers. But in actuality, existing customers can also start again at the beginning of this funnel, especially when they are on the verge of needing products or services that are offered by your company. Getting the attention of an existing customer to convince them to give you new business means you have converted them again, and get the opportunity to meet their expectations again.
But this cycle only works when you have paid close attention to the fourth step: nurturing your customers. If they have gone three, four, or five years without hearing from you, they might not even remember who you are. Keeping the loyalty of existing customers, even the ones where you have exceeded expectations, is achieved by keeping their attention through storytelling and follow-up.
Yes, that takes effort. But if the effort of nurturing existing customers leads you to hesitate, remember this phase impacts more than just the quarterly profit sheets. It’s in the approach to nurturing customers that a business sends the message that existing business is valued. And that message is heard by both customers and employees.
Customer Experience Goals Examples: Bill and Beyond
There are many cringeworthy and bad customer experience stories. Such as when Amazon ran away from responsibility by refusing to refund an outrageous delivery charge. In the case of the $7,000 delivery charge for toilet paper, Amazon relied on being technically correct (in that a third-party seller had levied the enormous delivery charge) to avoid any responsibility until their hand was forced by bad press.
To avoid scandals like these all together, responsible companies implement customer experience goals to help improve and maintain customer loyalty and a brand with a lasting impact.
Common customer experience goals examples might include:
- Reducing customer return rates or service cancellations
- Reducing the response delay to customer concerns
- Increasing the number of referrals from satisfied customers
- Increasing the frequency with which existing customers purchase new services or products
You’ll notice that all these goals relate to customer retention, not customer acquisition.
If Bill’s company can communicate solid reasons why replacing their product sooner vs. later is compelling for the customer, it’s beneficial for everybody. For example, if there’s a safety reason why replacement should happen sooner, that’s compelling. Educating customers about the benefits of replacement then becomes a matter of customer care. Customers will be more inclined to spend the money to replace the product sooner.
Let’s say Bill’s company can authentically claim it’s safer for children when people replace the product according to manufacturer guidelines. If they tell that story consistently to their existing customers, parents may be compelled to shorten the time between purchases for the sake of their children.
Bill’s company can begin to build their customer relationships from the time of purchase, so people feel cared for. By sharing information about ways to optimize their purchase and keep their family safe, Bill’s company builds credibility. By the time the company starts making the case to replace the product, they’ve built trust, and customers are more likely to listen. By listening to his customers and becoming a trusted advisor, Bill may even discover additional revenue opportunities, such as annual subscriptions to maintain or refurbish the product his company installed.
Additionally, by staying top-of-mind with value-added information, Bill’s company will likely get referrals from existing customers to new customers who need a similar product. Serving those referred customers well lets companies create virtuous cycles of additional revenue.
Once a company shortens the buying cycle for existing customers, it adds revenue. If products are replaced every five years vs. every ten, Bill’s company doubles each existing customer’s value. Even if customers start replacing their products every seven years, it will still represent a significant jump in revenue. And the same goes for service-oriented businesses. Consistent storytelling about the way you are helping customers will inform existing customers of new ways they could partner with your company—or at least keep your value front-of-mind when the time comes to renew a contract.
What are the elements of good customer service?
Vision, empathy, alignment, and consistency are the four elements of customer experience. These elements create a customer experience framework that ensures 360 degree alignment between your leadership, team, and customers. The result is an enterprise-wide customer experience strategy that aligns process, tactics, and department goals.
Here is a deeper look into the four elements of customer experience and how they impact your company and your customers:
- Vision: All excellent customer experiences begin with a well-articulated statement of what that experience should be. We refer to this as the Bullseye. A Bullseye is a simple statement that everyone in the company can use to guide their decisions related to the customer. When this is implemented, decisions at all levels happen more efficiently, customer-facing processes are in alignment, and the team feels empowered, resulting in higher levels of employee engagement. Vision aligns your leadership with the employees who engage directly with customers.
- Empathy: Empathy in customer experience means understanding how your company is experienced from your customer’s perspective. Without a clear vision, it can be challenging to discern which voices to prioritize. Internally, customer success team members might deal with operational teams across several customer segments. Your sales team might deal with buyers who differ from those users. Your executive team may have even more contacts, perhaps in the C-suite. Whose voice matters most? Too often, the customer that complains the loudest is the one who is heard. But listening to the loudest voices can be harmful. Instead, you must listen to the customers that drive the most value for your company. Those customers deliver revenue, referrals, and engagement. We call these customers your Lucrative Loyals. Understanding your Lucrative Loyals means you know how they found you initially and what’s important to them. Empathy means you understand how customers think, feel, do and say. When you listen to your customers’ wants and needs and prioritize delivery to your Lucrative Loyals, you can find others like them more effectively.
- Alignment: Your customer experience strategy must incorporate alignment between the activities of your customer and your company. A customer journey is an important tool for delivering consistency. But without a clear plan for your employees to deliver that journey, you’re likely to end up with an empty strategic idea that looks cool on paper but fails in reality. You have to align the customer’s journey with your team’s action steps. This alignment includes every department that touches the customer. This does not just mean customer-facing functions like customer success. Your customer experience framework also needs to include sales, product communications, customer marketing and leadership at a minimum. With alignment, the company communicates more effectively with customers. That communication continuously reinforces a vision that encourages customers to become increasingly invested in their relationship with you. Adding alignment to your customer experience strategy improves long-term value
- Consistency: When your company articulates a vision, then adds empathy and alignment, you’ll already be on your way to a better customer experience. The last key piece of the model is consistency. Consistency is the foundation for customer trust. Customers expect companies to meet their commitments and address needs throughout the relationship. However, companies often fall short of customer expectations because they don’t give their employees adequate paths to success. As companies go from startup to scale, they need to create tools & processes so that employees know what’s expected of them.
Achieve Better Customer Experience with Alignmint Growth Strategies
Initiatives that engage customers and build relationships lead to both less time between customer purchases and more referrals to new customers. But this only translates to long-term revenue when all the departments of the business are in alignment about how to serve customers, and why. When your company focuses on a unified idea of the customer experience you want to provide, not just to new customers but to all customers, you’ll reveal opportunities on the path to growth that you might currently be overlooking.
Alignmint Growth Strategies specializes in helping companies design customer experience strategies that reduces churn and its impact on revenue and profitability. Companies grow when they have clear, consistent paths to customer retention. Conversely, turnover can mean companies never hit their growth goals. We are here to help your business keep your customers and achieve your goals.