In today’s rapidly evolving market, customer experience (CX) is a battleground for companies vying to secure a competitive edge. Globally, evidence of the unequivocal correlation between CX and a company’s financial performance is widely understood.
The key question at the forefront of this dynamic landscape: Is customer experience truly driving financial outcomes in terms of customer retention, business growth, and cost savings?
Research suggests that there is a significant impact of CX on the bottom line, and companies that excel at customer experience boast higher rates of customer retention, command premium pricing, and experience enhanced cross-selling opportunities. Conversely, sub-par CX leads to increased churn rates, negative word-of-mouth, and subsequent erosion of the customer base.
Yet, the mere presence of a CX strategy does not guarantee success. To harness CX to its fullest bottom-line boosting potential, companies must pivot from a transactional mindset to a relational approach. This requires a deep dive into the human element of CX by considering the emotional, psychological, and personal aspects of customer interaction that turn satisfied customers into loyal advocates and brand ambassadors. It demands a closer look at the triangulation of interaction between three critical groups of people: employers, employees and customers.
Leverage CX for business performance: The Human Element
As you refocus on the fundamentals of great CX in 2024, the Consumer Psychology Lab defines six key areas to invest your efforts to unlock the full value of customer experience:
- Embrace Technology Wisely to supercharge human capability: Use technology to enhance, not replace, the human element. Automation and self-help options should free employees to focus on higher-level and more complex customer interactions that require empathy, judgement, intuition and personal connection.
- Invest in Employee Training: Frontline employees are the ambassadors of the brand’s CX philosophy. Investing in their ‘hard’ and ‘soft’ skills development is not an operational expense but a strategic investment that pays high dividends in customer satisfaction and loyalty. Train employees how to embody the brand’s promise and skilfully handle challenging situations – this has never been more important given the massive generational diversity between your employees and customers.
- Measure the Right Things: Align CX metrics with financial outcomes. Move beyond surface-level indicators like NPS and CSAT scores to more nuanced measures that link customer sentiment with lifetime value, share of wallet, or profitability; or the link between marketing, sales, customer experience, and churn. Furthermore, including employee-related metrics to business performance indicators could provide valuable insights, for example the link between employee engagement, churn and customer experience. Prioritise Relationships Over Transactions. Organisations often over-emphasise CX KPIs, like NPS and CSAT, at the expense of real value. While NPS is a measure of loyalty, it often relies on transactional data and does not truly reflect relationship strength. Customer-centricity is about fostering connections that convert customers into brand advocates, not just hitting targets. A shift from transactional metrics to relational ones is imperative. Identifying metrics that truly gauge relationships and instilling the importance of customer connection within the organisation should take precedence.
- Integrate Feedback Loops: Loyalty often crystallises during service recovery, and not merely through product features. The hallmark of customer-centricity lies in how service recovery is handled when things go wrong A swift and empathetic response to issues can turn a dissatisfied customer into a loyal advocate. Empowerment involves equipping staff with the skills to engage in meaningful dialogue, demonstrate genuine care, and uphold the brand’s reputation while resolving customer issues. Develop robust mechanisms for gathering and acting on customer feedback. This not only improves service delivery but also demonstrates to customers that their voice (and business) is valued. Prioritise loyal customers’ experience and close the loop to ensure their continued support. While many companies invest in platforms to collect feedback, closing the loop on issue management and learning from feedback is critical. Customer feedback provides invaluable insights for refining customer journeys and enhancing customer experience.
- Instill a culture of learning: Use service failures to improve service delivery and resolve recurring friction areas by identifying innovation gaps. Involve customers in the process through customer focus groups to gain insight about friction and potential solutions to meet their needs. When incentives are used in conjunction with customer experience, care should be taken so that it does not foster underhanded pressure on customers to provide inauthentic feedback, as it does not serve the business reputation or a true assessment of loyalty.
- Foster an Empathetic Culture: Encourage a company-wide ethos of empathy. When employees at all levels understand and care about customer needs, they contribute to a cohesive, customer-centric experience. It is important to note that an empathetic culture can only be developed through the behaviour of the leadership.
The companies that will thrive are those that recognize CX as a holistic endeavour – one that is inextricably linked to the human experiences of both their customers and their employees. It’s time for companies to introspect and realign their CX strategies with a renewed focus on the human element, where every customer interaction is perceived as a valuable asset to the company’s growth story.
ROI in customer experience hinges on training and empowering customer-facing employees to engage with customers to build robust relationships. Empowered customer-facing employees also reduce service costs by resolving issues efficiently. 2024 must be the year of turning employees into brand heroes.
Finally, make CX work for your business beyond just relying on simplistic CX metrics for a false sense of achievement. Address the perception gap between customers’ and CEOs’ experiences of service delivery, highlighted by Bain and Company where 80% of Companies believe they provide a superior proposition compared to only 8% of the customers agreeing with it. Start with the end in mind which is achieved by investing in and empowering employees to create raving fans of your business!
