Customer Experience in 2011: The Penalties and the Payoffs


Share on LinkedIn

As the end of 2010 approaches, we’ve been thinking about the year ahead and – unsurprisingly – where and how we see customer experience fitting into the strategies and activities of companies as we move into 2011. With seedlings of hope sprouting on the economic front, 2011 has the potential to be a defining year for the rest of this decade.

However, this hoped for expansion won’t be fueled by massive increases in spending on the part of businesses or consumers. It’s going to be a pitched battle for customers and share of spend, driven “the old fashioned way,” through acquisition, retention and penetration. This means getting new customers from your competition; finding new and better ways to sell additional products and services to all; and re-engaging the customers you have, keeping them longer and increasing their value.

The Competitive Battleground: Customer Experience

The good news is, both companies and their customers have clearly defined what’s going to win this war: in a phrase, Customer Experience. It’s one of the most reliable ways to attract and retain more—and more profitable—customers, most of whom say they’ll pay more for better experience, even in a down economy.

The majority of companies understand this as well. In Forrester’s report “The State of Customer Experience, 2010,” 90 percent of executives surveyed said customer experience is either very important or critical to their future plans. At the same time, 80 percent of these respondents further state that they plan to use customer experience to either differentiate from their competition (67 percent), or differentiate from all companies – across any industry (13 percent).

Here’s where it might get ugly. Simple math (and decades of B-School cases) dictates that there will be many more losers than winners. Obviously, only a handful of firms – at most – can effectively differentiate on customer experience in any given market.

The Penalties and the Payoffs

The critical nature of succeeding on experience is increasing. When the experience isn’t up to par, customers are voting with their feet – and they’re doing so faster than ever. In 2009, 86 percent of consumers said they’d stop doing business with an organization after a single bad customer experience, up 27 percent from 4 years prior.

This should alarm all organizations – even companies such as health plans, utilities and TV service providers, which often act like they’re insulated from outside competitors.

Yet as difficult as it may seem, it’s a mountain well worth climbing; the payoffs are significant. When it comes to keeping customers, Aberdeen Group notes that best-in-class customer experience organizations have 75% greater customer retention and 65% better customer satisfaction than the average company. And companies that pay attention to customer experience get more customers, too, with over 300 percent more leads in their sales pipeline that result in closed business.

Senior executives of these best-in-class companies are clear on the pressures driving adoption of Customer Experience Management programs, and the business benefits they expect. These drivers are led by the need to increase customer satisfaction and followed by acquiring more profitable customers, with retaining more profitable customers and building brand loyalty rounding out the top four.

We’re guessing that about 20 percent of those companies that wish to differentiate on customer experience will actually attempt to fulfill their vision, though obviously not all will succeed. After all, embracing—and profiting from—experience as a strategic differentiator starts by accepting that customer experience isn’t defined by your company.

Experience lives in the minds, attitudes and perceptions of your customers, and is based on how your organization is perceived by them when they do business with your company. That’s why if you can already measure customer experience (and improve it) based on these perceptions, you’re already ahead of the competition in the race to differentiate. And if you can’t, you should probably get started today; the penalties for inaction are significant.

Republished with author's permission from original post.


  1. Hi Michael Good solid assessment of the opportunities and pitfalls offered by improved customer experience. I would suggest that customer experience has both an internal and external dimension. I agree that “Experience lives in the minds, attitudes and perceptions of your customers, and is based on how your organization is perceived by them when they do business with your company” An integral part of this however is the role of the employee. I believe we are moving from top-down, inside-out to bottom-up. outside-in. The businesses that get this and adapt will provide the superior customer experience that will profitably differentiate them from their competitors.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here