How does your business treat its customers? As a business leader, are you thinking about customer experience every step of the way and investing in improving your touchpoints with the customer, or do you look at customer experience as an operations cost that must be ruthlessly shrunk? Is there a happy medium somewhere, and what would that look like?
I was once a consultant for a corporation where the leaders behaved as though entertaining any requests from their customers would only serve to reduce their company's profits. Needless to say, that behaviour did not work out very well for them in the long run.
What is Customer Experience?
There is a difference between customer service, customer support and customer experience.
As Blake Morgan highlighted in a Forbes article, customer experience is usually defined as the overall end-to-end experience that your customer has with your brand, starting from how do you approach the customer to their experience using your services or offers. Customer service is usually your customer's experience after they have purchased your products, services or offers — particularly if they should have questions or any difficulties. Customer support or customer care, on the other hand, is sometimes used to focus on how your customer interacts with you while they are choosing the product or service.
Customer experience directly impacts your brand value and is often measured by your net promoter score. Customer experience is not just about customer satisfaction but how your brand itself is perceived. Gartner, Inc. noted that former Mercedes-Benz USA President and CEO Steve Cannon once referred to customer experience as "the new marketing" in terms of communicating your brand.
As competition increases and buyers have more choice and power, customer experience becomes a critical competitive advantage. According to Gartner, more and more companies will compete mostly based on customer experience.
Are you willing to pay for better service? Does it depend on what you are buying?
A PwC study found that 42% of customers would pay for a better customer experience and that 73% believe a good customer experience is important when it comes to their decision on making a purchase. On the other hand, there are some leaders who find from their own practical experience that their customers only care about getting the best price for the product — even though research says otherwise.
This may well correlate to the nature of the product you are selling or even the amount of the premium that you are expecting your customer to pay. However, there is variation here. The customer experience premium for expensive communications infrastructure, diagnostic tools or luxury products may matter more than the customer experience for bulk commodities.
How does your company account for your customer experience spending?
Do you treat customer experience as part of every product's cost so that you amortize the cost of customer experience, including customer service, over the cost of every product and include it as part of your cost of goods sold (COGS)? Is it part of your customer acquisition and maintenance costs, thus your sales and marketing (S&M) costs? Or do you view it as an investment — an expense in improving the overall product experience that yields returns by virtue of directly increasing a customer's willingness to pay or choose your product?
There is continuing debate on this topic, and of course, there is no one-size-fits-all guidance. As Power Integrations board member Anita Ganti wrote, the answer depends on what customer experience does for the business and at what point in your product development or customer engagement process you begin your spending and generate value. A poll conducted by Gainsight offered similar findings.
If we create a culture to treat customer experience as an investment, the next step is to ask the following questions:
• How do I improve my customer experience?
• Can technology help me deliver improved customer outcomes while reducing costs?
• How can I leverage the insights from my customer-facing team?
In part two of this series, we will further explore how we can improve customer experience by using technology and processes that will enable taking the leap.