What is customer experience?
Customer experience (CX) is the summation of all the interactions between a customer and an organization. These interactions can take place in a single instance or over an extended period of time. In today’s marketplace, customers are gained or lost based on the total set of experiences they have with a business and what they think and feel about them.
Organizations that successfully deliver superb experiences reap great rewards. Exceptional CX can result in lifelong brand loyalty, higher customer satisfaction, lower churn, and increased revenue. Examples of companies accomplishing this include Apple, Amazon, REI, Southwest Airlines, and USAA.
Great companies — like those mentioned above — understand the importance of delivering a complete customer experience. They see the benefits in their business each day. But how exactly do you quantify the critical nature of improving the customer experience? Here are a few statistics to consider:
- 58% of people never use a company again after a negative experience
- 70% of buying experiences are based on how the customer feels they are being treated
- 55% of consumers would pay more for a better customer experience
- In the U.S., the estimated cost of customers switching due to a weak experience is $1.6 trillion
- Companies that excel at customer experience grow revenues 4-8% above the market
Seven core areas of customer experience
Delivering outstanding experiences requires focus and continual improvement of all aspects of the customer relationship. Specifically, there are seven major areas to rally the organization behind when it comes to designing and improving customer experiences:
- Marketing is how potential customers learn about a product and determine if it might be a fit to help them solve a problem. It is the product promise. Marketing tactics are taking on new forms as people grow increasingly connected. These new forms include social platforms, online reviews, and company-published content.
- Sales include the consideration and evaluation phases of the buying process. Prospects educate themselves about the product with the help of the company and determine if the solution is right for them. This is done through a combination of self-service channels and by interacting with company representatives.
- Technology refers to the core set of features or services that customers pay for and use. For software companies, the technology is the actual software. For other types of companies, think of the technology as the physical good or service sold, like a phone, credit card, or insurance policy.
- Supporting systems make it possible for the company to deliver the product or service. These are internal systems that the customer rarely sees but impact the CX such as billing, provisioning, analytics, and more.
- Third-party integrations enable customers to seamlessly incorporate new products into their existing ecosystem of solutions.
- Support describes all the help-related activity that guides the customer to achieve something meaningful with a product. This could be anything from answering customer questions, training, providing self-help resources, or assisting in integrating the product with existing systems.
- Policies are the rules that companies set to govern how they do business and how people in the company act. For example, a company can have a flexible, no-questions-asked return policy or uphold greater restrictions with no exceptions. These types of procedures impact the CX.
Listed below are some of the ways that customer expectations are evolving.
Why does it matter?
With rising customer expectations, it is not enough to provide a good product at a competitive price. Customers want more. In fact, by 2020, consumers will care more about how they interact with a product and the company that offers it than what it costs. The total experience is what will matter most and the customer experience will overtake price as the key brand differentiator.
"Customer experience is the last source of sustainable differentiation and the new competitive battleground."Tiffani Bova, Global Customer Growth and Innovation Evangelist at Salesforce
Ultimately, if companies do not deliver unique value, help people solve a challenge, and optimize the entire customer journey, the product will not reach its potential.
Challenges with improving customer experience
To provide a holistic customer experience, companies unfortunately often do the exact opposite of what is needed. They focus on each step of the customer’s journey and every function that is involved independently, such as the sales team. This allows each group to attempt to optimize its actions, but it ignores how the groups fit together and how those points of overlap impact customers. Customers do not know or care where organizational boundaries exist.
Research shows that even if companies execute well on individual touchpoints, the overall experience can still disappoint. Customer satisfaction with health insurance is 73 percent more likely when the complete journey works well than when only touchpoints do. Similarly, customers of hotels that get the journey right may be 61 percent more willing to recommend than customers of hotels that only focus on touchpoints.
In today’s digital-first world, customers expect solutions that are personalized to them and they do not want to wait. Increasingly, organizations are looking to product managers to define the requirements and guide the overarching customer experience. This is especially true for software and technology companies. Product managers have the best cross-functional advantage point to help digitally enhance customer experiences, make data-driven decisions, think through complete solutions, and ultimately deliver a Complete Product Experience.
Who is responsible for managing the customer experience?
It is hard work and takes an enterprise-wide willingness to change, a fresh mindset, and lots of effort to bring meaningful CX improvements to any organization. That is why this type of transformation often demands an executive mandate before it gains momentum and before high-performing product managers even begin their work to help make it so.
Product managers already have a deep understanding of customer needs and wants. They sit at the cross-functional intersection of the organization — across business, design, and technology. Because of this, they have a unique perspective and are in a position to lead and influence change everywhere. But product managers cannot do it alone.
Product managers work cross-functionally with sales, support, and other teams that have an impact on the value the customer receives. This cross-functional work is especially important in large organizations where the CX can become disjointed because the company provides multiple products across siloed teams.
There are also many other emerging roles being introduced to account for the demands of offering excellent customer experiences. Data from the Customers 2020: A Progress Report by Walker shows that companies are starting to invest in dedicated CX positions. Teams are also emerging to exclusively focus on the support infrastructure that is needed for customer-focused success.
The following roles are involved in delivering better customer experiences.
Chief Customer Officer
Companies charge key executives with driving the focus on the customer throughout the entire organization. In the Customers 2020 study mentioned above, only 39% of respondents indicated they have C-level executives in charge of customer experience. However, more than 80% expect to by 2020.
Chief Experience Officer
A Chief Experience Officer (CXO) is an executive responsible for the overall experience of an organization's products and services. As user experience (UX) becomes a key differentiator in the modern business landscape, the CXO is charged with leading holistic experience design and making it a central part of the company's strategy and culture.
Customer Strategy Team
This team consists of individuals from crucial customer experience areas, such as sales, account management, quality assurance, support, and product management. Strategists launch initiatives to increase retention, improve customer perceptions, and anticipate customer demands.
Customer Experience Manager
The Customer Experience Manager is responsible for customer loyalty. The focus is entirely placed on examining the needs and desires of the customer and then creating and implementing strategies that directly increase loyalty. The ultimate goal is to turn customers into advocates for the brand.
Customer Experience Product Manager
Specialized product managers identify gaps in the customer experience by monitoring and analyzing the current state of customer journeys against the desired state. This role defines transformation and improvement opportunities by working cross-functionally to develop roadmaps that support the organization’s CX strategy.
Companies need to have people dedicated to creating exceptional experiences — something customers now expect. This has caused a rise in the jobs like the ones listed above. Even though these titles mean different things at different companies, product managers are in the best position to step into these emerging roles due to the unique perspective they hold across strategy, execution, and customers.
How do you improve customer experience?
Improving CX — and delivering a complete experience — requires thinking more broadly about the products and services offered and how to optimize every aspect of the customer journey. Incremental improvements do not go far enough. Organizations need to place the customer at the center of everything and fundamentally transform their business to deliver a Complete Product Experience.
Investments and actions must revolve around customers rather than technology. For company and product builders, this is a fundamentally different approach to innovation than what took place only a few years ago.
Consider the following steps to improve the customer experience.
Understand the customer journey
Great CX starts with understanding what the customer is thinking and feeling. To have empathy for customers, organizations need to understand their lives. Companies need to learn what they care about and what they fear before they can help them. To do this, teams map out the challenges the customer is experiencing and the journey they are on to solve them. When the current journey is fully understood — including all interactions and pain points — planned improvements can be placed on a roadmap.
To create something special, every aspect of the customer experience matters. Increased choice and improved quality are leading customers to see products as interchangeable. Because of this, customer loyalty is at a low. When creating something holistic with the goal of delivering delight, every aspect of the customer experience matters. This means that optimizing all of the touchpoints with a customer must be a priority.
Customer needs and expectations change. So while starting with a deep understanding of the customer journey and setting objectives for the transformation is a great start — ongoing feedback is critical. Customer feedback needs to be tightly integrated into the product development lifecycle. This is why companies need a centralized way to collect internal stakeholder and customer feedback — to ensure the best ideas and CX improvements get added to the roadmap.
More accountability is required to improve CX. Organizations need to track that customer experiences are improving and the product is successful overall. This is another reason the discipline of product management is growing. Product managers are trained to put customers at the center of their strategic and roadmap planning and help teams deliver better products and experiences.
Report on progress
Organizations need to be transparent with their plans and progress so everyone can help improve the customer experience. Teams should consistently be planning, working, and measuring to be their best. And by putting metrics in place, teams can more easily evaluate progress towards goals. Companies can only improve what they can measure. Reviewing metrics keeps teams accountable to the goals and motivated to reach them.
Organizations that want to differentiate themselves and be wildly successful understand that the customer experience matters. And it comes first. Today, breakthrough companies use empathy to map the customer journey.
Focusing on customer experience will also ensure the business is focused on what needs to be built and delivered to the market. Planned efforts should be prioritized and placed on a roadmap that connects the desired customer experiences to what the products, people, and processes need to deliver. Organizations need to choose what to measure so they can showcase a clear picture of progress and their success.
Ultimately, putting the methods described throughout this guide to work can help companies build better customer experiences and create lasting joy for customers.