It has pretty much become conventional wisdom that customer experience, particularly in transactional and service situations, is critical to leveraging downstream behavior. The Peppers & Rogers Customer Experience Maturity Monitor noted that 81% of companies with strong capabilities and competencies for delivering customer experience excellence are outperforming their competition. Further, the Peppers & Rogers study has determined that 90% of North American firms view customer experience as important or critical to their plans, and 80% of the firms would like to use customer experience as a form of strategic differentiation.
So, while considered core to creating desired business outcomes, the translation of experience to actual customer behavior – the Rosetta Store of experience, if you will – is often not fully realized or understood enough to impact action. TARP, for example, has determined that customer churn is caused by customer perceptions of poor treatment 68% of the time. The annual RightNow/Harris Interactive customer experience report produced key findings such as the following:
– 55% became a customer of a company because of their reputation for great customer service
– 40% began purchasing from a competitive brand simply because of their reputation for great customer service
– 86% of consumers have stopped doing business with a company as a result of a negative experience (up from 59% just a few years ago)
– 85% of consumers would be willing to pay more to ensure a superior customer experience
– 55% say that service is the most influential thing a comapny can do to increase customer advocacy
This last point is particularly important. Advocacy, principally the frequency of online/offline positive and negative word-of-mouth and level of brand favorability as a result of personal experience, is the most leveraging element of customer behavior, impacting over 50% of decision-making influence. The RightNow/Harris Interactive report went on to state that 79% of consumers with a negative company experience will tell others (but not the company) about it, and 97% used online and offline word-of-mouth to share their experience. Indeed, word-of-mouth is mightier than the sword or pen: 85% of those who told peers about their bad expeirneces said their motivation was to warn others, and 66% wanted to discourage others from buying from that company.
Though significant in high touch industries such as travel and leisure, financial services, medical care, cable television, telecom, and foodservice, retail experience justifiably gets a lot of study and attention. PricewaterhouseCoopers (PwC) recently released the results of a study focused on retail customer experiences and the downstream behavior these experiences produce. Measuring and evaluating the experiences of about 6,000 U.S. consumers across 11 retail industries, the study found that consumer loyalty behavior is impacted by experiences in ways that create powerful psychological and emotional connections. For instance:
– Almost one-third of retail customers perception of positive experience related to service and support is based on staff members’ product knowledge and recommendations; only 1% ranked loyalty and rewards programs alone as the top influencer of purchase
– Almost half of customers don’t tell retailers about their bad experiences
– Close to three-quarters of retail customers are unwilling to repurchase from retailers who insufficiently, or don’t, resolve their issues
PwC stated that creating a matchless customer experience helps companies attract profitable new customers, keep their best customers, boost their profit margins, and command a price premium. Getting it wrong will enable smarter competitors to overtake those who lag by not delivering optimum value through experience. Both points are irrefutable, and underscore the need for, and benefits associated with, building customer advocacy behaivor through experience.
A 2011 Peppers & Rogers white paper, “Cultivating Customer Advocates: More Than Satisfaction and Loyalty”, concluded: “”The benefits of building advocacy can’t be ignored. Satisfaction and loyalty are important, but they’re old news. It’s a new dawn in customer experience strategy, where the customer controls over 50 percent of the brand message. Forward thinking companies will be the ones that identify and work with their customer advocates to genuinely build trust in the brand, the customer base, and the bottom line.”
We think this statement presented the strategic value case of an advocacy orientation, for building more customer-centricity, more positive experiences and generating more business outcome-focused customer metrics to accompany legacy performance measures, extremely well.