Customers are no longer just looking for a product or service that meets their needs, but they also want an exceptional experience throughout the entire customer journey.
In this article, we’ll highlight a few reasons why we think customer experience is becoming a key differentiator for businesses in today's competitive landscape, as well as why it’s the only way forward for businesses that want to stay ahead of the competition.
1. Increased Competition
As industries become more saturated and new players enter the market, it becomes harder for brands to differentiate themselves based on their products or services alone. In fact, customer experience is poised to be the new battlefield where more than 89% of companies expect to compete primarily on the basis of customer experience.
By investing in customer experience, businesses can create a unique competitive advantage that sets them apart.
2. Changing Consumer Expectations
With the proliferation of technology and the internet, customers have become more accustomed to having everything at their fingertips. They expect brands to provide a seamless and personalized experience across all touchpoints, from browsing to purchasing and beyond, with 73% of them agreeing that customer experience is an important factor in their purchasing decisions.
However, customer experience is a multifaceted process. Customers expect different things when they talk about customer experience, and you might have a different idea in mind when talking about it too. Some customers, for example, might want the technology – such as the app or website – to always work, user-friendly, and elegant, but based on what we know, we know that the majority of customers point to speed, convenience, and knowledgeable help and friendly service as the most important elements of a positive customer experience.
3. Social Media and Online Review
Social media and online reviews have given consumers a powerful voice that can make or break a brand's reputation. Consumers trust reviews from their peers more than they trust traditional advertising, and a negative experience can spread like wildfire on social media. Brands that prioritize customer experience can use social media and online reviews to their advantage by encouraging positive feedback and engaging with customers who have had negative experiences.
4. Increased revenue and profits
Customer experience is the key to revenue growth and profits. Companies that prioritize customer experience tend to have higher customer retention rates, lower customer acquisition costs, and increased revenue and profits over time. This is because loyal customers tend to spend more, be more forgiving of occasional missteps, and refer new customers to the company.
Additionally, a focus on customer experience can help companies identify areas for improvement and make necessary changes to their products, services, and processes to meet customer needs and expectations better. This can lead to increased efficiency, reduced costs, and increased customer satisfaction, all of which contribute to revenue growth and profits.
5. Improved Customer Lifetime Value
Customer lifetime value (CLV) is the total amount of money a customer is expected to spend on a brand over their lifetime. By providing a great customer experience, you can increase a customer's CLV by encouraging repeat purchases, reducing churn, and increasing the likelihood of cross-selling and upselling.
Customers are also willing to pay up to a 16% price premium as long as they feel that the experience is worth it, which further contributes to improving CLV. This price premium is not some spontaneous thing either as it’s carefully calculated by the customers since only 15% of them would be willing to pay for a more engaging design and 12% for a better atmosphere.
6. Improved employee morale
A customer-centric culture often empowers employees to make decisions that benefit the customer, rather than simply following strict procedures. This can give employees a sense of autonomy and responsibility, which can lead to increased job satisfaction and morale.
“Among employees with a great deal of customer empathy, 76% find their jobs meaningful. Among those with low customer empathy, only 49% find their jobs meaningful.”
When customers are happy with the service they receive, employees are more likely to receive positive feedback and recognition for their efforts. These all are powerful motivators that should help employees feel appreciated and valued.
Maybe the better way to realize the importance of a good customer experience is by looking at what a bad customer experience does to businesses. A poor customer experience can have a significant negative impact on a company's reputation and bottom line, owing to customers who have a negative experience switching to a competitor and sharing their negative experiences with others which ultimately leads to lost revenue and damage to the company's brand.
It is essential for companies to prioritize the customer experience by investing in customer service training, adopting customer-centric policies and processes, and leveraging technology to streamline interactions and personalize experiences. By doing so, companies can create a competitive advantage that sets them apart from their peers and positions them for long-term success.