When customers interact with a company, the implications usually range from being emotional and rational, to sensorial. These responses give rise to an experience, which is ideally termed as customer experience (CX). Companies who invest in enhancing this experience of customers have been found to have a positive impact on their profits and growth.
In the industries where come companies enjoy monopoly or where switching from one provider to another is burdensome for customers, an average customer experience might just be enough. But it should be noted that the reason the customers are sticking with such companies is that they do not have an alternative. The product or service they are being provided is perhaps the best they could get at that price. However, when customers have an option where they could get a better product even at the same price, they would switch over instantaneously. And in today’s competitive economy, there are very few industries where companies can afford to push on with an average customer-experience and yet end up making profits. Investing in CX has not just become important for companies, but in fact has become quite necessary.
For instance, let’s consider you are the customer of two companies Y and Z. With Y, you regularly face issues with their products. When you call up their customer-service, they usually respond rudely. There comes a competitor for Y in the market, offering the same product and at the same price. Would you switch? If you are like all others, you would switch without a second thought.
On the other hand, you love the products from Z. They are all value for money and are backed by an excellent customer service team that is always cheerful. They not only respond to your every query with diligence but also make it a point to get back to you to get your feedback. If you have any concerns, they work on them to find the best solution. Again, there’s a competitor for Z in the market, offering the same product and at the same price. Now, would you switch? Most wouldn’t, and chances are even you won’t.
This shows that with better customer experience, companies can induce a sense of customer loyalty that goes far beyond mere competitive pricing and good product.
A great customer experience increases the Customer Lifetime Value (CLV). As per Wiki, “CLV is the forecast of the net profit accredited to the entire future relationship with a customer.” The ideal way to improve is to maximize the satisfaction levels of a customer at every interaction. When customers are satisfied they even wouldn’t mind paying more to enjoy the service. The Customer Experience Impact Report by Oracle found almost 86% of customers were happy to spend more for better customer experience delivered by the company.
While facts on CLV show that enhanced customer experience increases the overall value of your existing customers, it has been found that it also makes the exercise of acquiring new customers much more cost-effective. A survey from American Express found that one happy customer can influence at least nine people by sharing his/her experiences. This simply means 1 delighted customer = 9 referrals.
Referrals from reliable sources are the single most-cited reason for people to try new products, and the ratio of 1:9 beats any other form of marketing like media ads, by a huge margin. Businesses looking for various means to gain referrals must realize that the only way to get them is to make your customers do it, and customer is most likely to do it only if they themselves have had a great customer experience.
As these stats focus on the incentives of CX, RightNow’s Customer Experience Report shows that on an average 82% customers leave a company due to bad customer experience. This shows that when a company can enjoy the benefits of a great CX, not focusing on it can lead to irreparable damages.
Be it customer service enhancements or operational overhauls, a company must look to improve its overall interaction with every customer. Investing in CX is the ideal way to ensure it achieves the maximum ROI on its overall expenditure.
- Investing in Customer Experience has not just become important for companies, but in fact has become quite necessary.
- A great customer experience increases the Customer lifetime value (CLV).
- Referrals from reliable sources are the single most-cited reason for people to try new products.