In the business world, there is one simple truth: Companies only stay in business if they have customers. For that reason, former NHBC and City University CIO Carl Stokes admonishes companies to focus on customer experience or risk losing customers. He explains, “Today’s customer is more discerning, has more choice, and has better access to others’ opinions of companies and products than ever before. That counts for both consumers in a B2C relationship and to customers in a B2B relationship. In addition, the competitive landscape in most industries is changing fast, with new nimble competitors entering markets with slick and often better value product offerings than incumbent businesses.”[1] Thanks to new technologies, Stokes notes, “Playing fields are often more level, leaving the customer experience as an important differentiator. Gartner now cites customer experience as one of the top three mission-critical priorities for most organizations. Focusing effort on improving the customer experience can lead to other benefits such as operational expenditure — opex — reduction and improved staff morale and engagement.”
Studies have shown younger generations are not as loyal to brands as older generations. And, according to Susan Frech (@SueFrech), co-founder and the CEO of Social Media Link, product price is also not a differentiator. She explains, “CPG companies today have it tough: Consumers are fickle and unpredictable. They no longer make a purchase decision based on price alone; instead, they look at the holistic experience a brand delivers, starting with marketing and ending with the product itself.” Aimee Tariq (@AimeeTariq), Founder and CEO of A Life With Health, frankly states, “It’s no secret that successful companies are the ones with satisfied customers. But while many executives claim to understand the importance of customer experience (CX), it often falls by the wayside as resources are channeled into product development.”[3] The bottom line is this: Customer experience is the best way to foster consumer loyalty. Treat people right, make their path to purchase easy and pleasurable, and they will become return customers.
Shaping a great customer experience begins with data
Deloitte analysts observe, “Experiences are at the heart of the human condition, and, in the business world, they can not only help create customer loyalty but even drive financial results. Sixty-nine percent of consumers surveyed for Deloitte Digital research say ‘reliable, great customer service’ makes a brand their favorite for online shopping; 80% make purchasing decisions based on an emotional connection with the brand, and 76% have been loyal to a favorite brand for more than four years.”[4] Getting to know customers is essential to providing them with good customer experiences. Alon Ghelber (@AlonGhelber), CMO at Revuze, asks, “If you do not understand your target audience and your buyer persona, how can you meet their needs?”[4] It’s an excellent question.
Ghelber insists the only way to find out about your target audience is by analyzing data. He explains, “One of the essential things that big data reveals is consumer behavior. … You’ll want to know how people interact with your brand. Big data can help you figure out the answers to these questions: Do customers demand a product more during specific times of the year? Which items do they usually search for and add to their shopping carts? Did a product meet their expectation after successfully buying it? How do they choose one brand over another? Understanding people’s behaviors is vital, especially that they change over time. Big data gives … business the power to anticipate a consumer’s next move and adapt to it.” To obtain a holistic view of your customers, all sorts of data must be analyzed. Cognitive technology solutions, like the Enterra Shopper Marketing and Consumer Insights Intelligence System™, can leverage all types of consumer data to provide high-dimensional consumer, retailer, and marketing insights.
Deloitte analysts insist, “Numerous advanced technologies can help companies improve the experiences they deliver to their customers, workforce, and partners — including AI, analytics, and the internet of things, among others — and the cloud is frequently a key enabler.” Tariq agrees technology provides essential capabilities necessary to provide consumers with great customer experiences. She notes, “Technology plays a key role in creating a memorable customer experience each time a client interacts with your brand. This can include simple tools such as the use of dedicated landing pages and customized emails, as well as more complex CX technologies such as intelligent live chat and AI-based algorithms that can help companies understand customer preferences.”
Customer experience and cognitive technologies
Nicholas Christ, an account director at Atrium, writes, “As more companies look to the future of artificial intelligence (AI) for help in their sales, they are starting to see how AI can be used to improve customer retention. Companies looking to get a better handle on customer churn and retention should be looking to leverage the power of AI.”[6] He adds, “Before you can begin your journey of using AI to improve retention, there are two foundational items to address.” They are:
1. Determine the quantity and quality. “You have to determine the cost of customer churn to your business, which involves looking at three separate elements: (1) lost revenue; (2) lost opportunities to upsell customers — in other words, lost potential additional revenue; and (3) customer acquisition costs. Adding up these three components gives you a picture of customer churn cost. This is key, as it allows you to then assess the quality of churn. … Determining the cost and quality of churn is part of laying the foundation for AI.”
2. Move away from churn. “Companies will often invest their time and resources in preventing customer churn. This is problematic, as churn is a reactive metric. If you are focused on just churn, often you are going to be too late to address the issue. The indicators of a customer likely to churn begin appearing further back in the customer life cycle. … This is why you must move away from focusing on just churn and examine overall customer success.”
Cognitive technologies can provide companies with insights about customer churn and customer behavior. Frech notes, “To develop that personal relationship — to create an emotional connection and ultimately drive purchase — brands must understand what customers want to hear, and how they want to hear it.” Cognitive solutions can provide those insights.
Concluding thoughts
Does customer experience really matter? Tariq reports, “Research by the Temkin Group found that companies with a turnover of $1 billion annually can expect to earn an additional $700 million within three years when they invest in CX. A further report by SmartInsights revealed that businesses offering better customer experience earned between 4 and 8 percent more than their competitors. And a survey by Deloitte found that 88 percent of companies now prioritize customer experience in their contact centers.” Providing good customer experience can help foster consumer loyalty. On the other hand, poor customer experience can result in lost customers. Losing customers can be very costly. Christ explains, “Depending on the industry, it can be anywhere from five to 25 times more expensive to acquire a new customer compared to retaining an existing one. Not to mention research from Bain & Company found increasing retention by just five percent can increase profits by 25 to 95 percent. Customer churn cannot be ignored.” A lot of things go into providing great customer experiences; however, good data and analysis provide a solid foundation for providing those experiences.
Footnotes
[1] Nicholas Fearn, “Focus on ‘customer experience’ – or lose customers,” Computing, 9 January 2020.
[2] Susan Frech, “Three Ways to Use Customer Data to Deliver the Brand Experience Your Customers Want,” MarketingProfs, 16 January 2020.
[3] Aimee Tariq, “Customer Experience Will Determine the Success of Your Company,” Entrepreneur, 6 August 2020.
[4] Thomas Zipprich, Angel Hollis Vaccaro, Michael Kornstein, and Doug Palmer, “4 Ways Cloud Can Improve CX,” The Wall Street Journal, 10 March 2020.
[5] Alon Ghelber, “What Big Data Can Teach Us About Consumers Experience,” Customer Think, 10 August 2020.
[6] Nicholas Christ, “How Artificial Intelligence Can Improve Your Customer Retention,” CRM, 28 May 2020.
