Customer Experience (CX) is the new battleground for marketers. Their cause? To win the hearts and minds of customers. According to Gartner, 89% of marketers expect CX to be their primary differentiator by 2017.
Why is CX so important? Today, customers compare your brand experience against the best they’ve had and use that information to decide whether to stay or go.
CX increases customer retention, loyalty and lifetime value, all while building brand equity. Ultimately, these impact your bottom and top line, sometimes by as much as 5 to 10 percent, according to McKinsey. It is no wonder that marketing leaders are devoting so much time and effort to perfecting their CX.
By 2017, 50% of consumer product investments will be redirected to CX innovations (Gartner)
By 2021, CX market is expected to grow ~3x from $5B last year to $13B (RnR Market Research)
While the majority of CX investments seek to create value, usually there is little to no quantification of this value for your customer and business. Unfortunately, without clear returns, marketers often struggle to secure executive buy-in.
How can marketing leaders make smart CX investments? Here are three critical factors to consider.
Align with your customer & business strategy and outcomes
CX investments fail for several reasons, including lack of executive buy-in, failure to create meaningful experiences for customers and inability to demonstrate business value.
More often than not, these are symptoms rather than the root cause of failure. Frequently the problem lies with the company’s culture and a fundamental lack of customer-centricity.
Most organizations are now branding themselves as customer-centric, customer-first or customer-led. But in reality, few have processes in place to deliver a truly customer-centric experience. From siloed business units to disjointed strategies, the majority lack the organizational structure necessary to ensure that the customer views the business as one cohesive unit.
How can companies overcome this?
The first step is to ensure that all your CX initiatives align with your organization’s customer and business strategies.
Let’s say you are in the financial industry. Your CX team is dealing with disgruntled employees complaining about poor in-branch customer experience, and they decide to make improvements without taking into consideration your organization’s customer strategy. Would the CX initiative have the desired impact if the organization’s customer strategy was to increase market share of millennials who usually transact online?
Identify experiences that are valuable to your customers through journey mapping
Your customers value superior experiences that are meaningful, drive high emotional response and make a difference. While this seems simple enough to understand, most organizations struggle to create and implement such experiences. Why?
Partly because organizations assume they know what customers want and fail to recognize that customer expectations are constantly changing based on each new experience they have, whether positive or negative.
This is exacerbated by organizations’ myopic approach to CX. Instead of designing with the entire customer journey in mind, they often focus on resolving tactical issues at specific touch points, such as the call center.
To develop this expansive view, companies should start by building an end-to-end journey map from their customer’s point of view.
A journey map connects all the interactions customers have with an organization, adding valuable context around their expectations, actions and feelings at each stage of their journey.Customer journey maps, if done right, will identify journeys and moments that matter most to customers. These could be journeys that impact customer satisfaction and loyalty (ex. poor customer service to address customer issues), those that pose high financial risk (ex. website load times causing shopping cart abandonment), or merely those that are most common.
A key first step is to identify these critical customer journeys, recognize pain points within them, assess the impact of these pain points to your organization (using KPIs such as customer satisfaction, NPS etc.), and empower your organization to identify opportunities to address them through future CX investments.
Demonstrate value using meaningful business KPIs
Many organizations jump into CX investments based on decisions made by members of their leadership team, who are often influenced by their most vocal customers or other tactical considerations (ex., imminent competitive threats or business unit concerns). These decisions do not always consider whether CX investments will actually demonstrate mid to long term value.
This can therefore result in failure to deliver tangible, or worse, any returns.
How should you then position CX initiatives for success?
Start by demonstrating the value of CX for your business. Many organizations rely on survey metrics to measure performance – metrics that measure customer loyalty (ex. Net Promotor Score), customer satisfaction, and customer level of effort. If a score improves (ex. increase in NPS), organizations use it to justify success of the program. However, an increase in a score does not necessarily mean increased revenue or profit. You may have happy customers but not profitable ones.
To demonstrate the value of CX, success should be directly tied to business KPIs that measure impact to the bottom line.
Here are some examples of business KPIs: Customer Lifetime Value (CLV), churn rate, cost to serve and ROI.
Keep in mind that you may not see positive business impact within the first six or even twelve months of the investment. For example, if you are considering web chat to improve online experience, it will require time to implement and a few more months to realize value of the investment. You will need to factor this in your decision-making process to have realistic expectations.
Armed with business KPIs, you will be ready to make smart investment decisions. Demonstrating value elevates CX as one of the top strategic priorities, helps secures executive buy-in and positions your initiative for success.
Final take away
Delivering superior customer experience is a strategic priority for all marketing leaders. Prepare yourself to make smart CX investment decisions by aligning your CX initiatives with customer and business strategies and outcomes. Identify experiences that your customers value, and position yourself for success by demonstrating business impact.
How do you prepare to make investment decisions in CX? What’s working? What’s not working? I’d love to hear your thoughts.