Gartner defines CEM as as: “the practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty and advocacy.”
Most of the commentary and research around customer experiences is about how to increase customer satisfaction or loyalty. More satisfied/loyal customers are more likely to buy more, return again, and refer others. Or so the theory goes according to the “loyalty effect.”
If all goes well (assuming more loyal customers are actually profitable, and costs of improvements are well spent), the company should see more revenue over the long haul.
So the linkage is: Improve CX > Increase Loyalty > Grow Revenue.
But some companies are able to grow revenue with unhappy customers. Examples include companies that focus on low prices above all else. Customers are loyal in the sense that they are repeat buyers, but not necessarily highly satisfied or brand advocates.
Southwest is one of the rare cases where low prices and high customer satisfaction go together.
But Ryanir has been hugely successful with the more common pairing of low prices with low customer satisfaction. Despite attempts to improve customer service and treat customers better (Always Getting Better), Ryanair is still getting dinged for poor passenger experiences. Yet Ryanair is the fastest growing and most profitable airline in Europe.
The formula appears to be: Low Prices > Repeat Customers > Grow Revenue.
Customers are not necessarily happy, yet the low prices bring them back because that’s what is most important.
Since price is part of the customer experience, is Ryanair a CX success story? Or is higher levels of customer satisfaction required, as the Gartner definition implies?