Intro
Customer experience, CX, is not customer service. Yes, that’s right. Though they seem to imply the same thing, customer service is actually just one part of what customer experience entails.
Customer experience is a holistic perception that a customer develops towards your business based on the interactions they have at every touchpoint of your business. This includes the advertisement they see on their train ride home, the usability of your brand’s website, social media posts, and their interaction with your customer service representative.
It’s kind of like trying to recruit a new member for your school club. From seeing flyers about your club in the hallways, coming to the first meeting, attending events, to meeting other club members…the new member will experience many things for as long as they stay in the club. If they don’t have a pleasant interaction with a board member or feel that the club flyer didn’t accurately portray what the club is actually like…well, you might just lose them.
Good understanding of CX allows you to perfect every customer’s entry point into your business, whether it starts from direct word-of-mouth, an advertisement, or a social media post that popped up on their feed.
In this blog, we will break down what exactly CX is, how it’s changed in the business landscape, and how your business can approach CX in order to attract new customers and retain old ones.
Understanding CX
So…what exactly is CX?
CX is concerned with what the customers experience before, during, and after purchasing from your business. This depends on what the business sells, how, and why they sell it.
For example, a customer at a coffee shop would have a completely different CX compared to an online boutique. For starters, coffee shops probably invest a lot of time into decorating their shop to attract customers. Meanwhile, an online boutique solely focuses on their digital presence as they don’t have a physical store to decorate nor attract customers to.
CX is all about how customers feel and perceive your brand. This can change at any customer touchpoint– and there are so many opportunities to either improve or ruin how customers feel about you.
For example, your brand’s advertisement may have showcased a flawless product, but what if it’s not actually perfect once it arrives in the mail? Maybe one of your clients had a horrible experience with your customer service team? Or, your product is perfect, but the packaging is a hassle and completely deters users away.
Any of these touchpoints can make or break a customer experience.
BTW: a customer touchpoint is any moment a potential customer comes in contact with your business– whether it’s pre-purchase, during purchase, or post-purchase.
The Evolution of CX in the business landscape
CX wasn’t always so…comprehensive. It used to be simpler back then. CX is often confused with customer service because historically, CX primarily focused on delivering a decent product along with good customer service. All that businesses had to do was focus on having an attractive storefront with kind employees.
Presently, businesses are increasingly digital with greater emphasis on online shopping and social media. Although opportunities for businesses to create impressions have greatly increased beyond just billboards and television commercials, businesses must now focus on creating a seamless CX that combines real life with virtual experiences.
Now, CX focuses on building relationships with customers, creating long-term loyalty, advocacy, and making good impressions.
Why did CX change so much?
Brand loyalty is on a decline; with advertisements embedded in every corner of social media and the internet, the market is oversaturated and competitive. CX is more important than ever in order for brands to stand out and meet consumer demands.
You’ve probably noticed the changes too. Social media has recently started incorporating in-app shops and encouraging customers to purchase from various brands. Content creators earn commissions from promoting items that can be purchased in-app, and brands earn customers at cheap costs due to the viral nature of these social media posts . This also means that word-of-mouth advocacy goes a very long way as customer journeys have the potential to occur solely in-app, from discovery to customer satisfaction.
Key Components of CX
CX is all about how businesses deliver positive experiences and value to their customers at every point in the customer journey. It’s important to understand the customer journey to better craft your business’s CX.
A customer journey is the steps that a person takes from the very beginning– from gaining initial awareness about a brand– to the very end, when the person has converted into a customer and has the potential to become a loyal advocate.
Here’s a diagram I thought would be helpful for visualization:
Picture Source: https://business.adobe.com/blog/basics/customer-journey
We can break down the customer journey into three main stages: pre-purchase, during purchase, and post-purchase.
Pre-purchase
- Awareness → Learning about your business
- Consideration → Comparing pros & cons against other competitors
- Main goal: make it easy for customers to engage & learn about your business: why is your product the best solution?
During purchase
- Purchase →Potential customers are converted into actual customers
- The job is pretty much done; customers have already decided to purchase at this point of the customer journey
- Main goal: make the purchasing process easy and painless.
Ex: Apple Pay, Amazon Pay, Paypal, etc. instead of a manual checkout method
Post-purchase
- Customer service
- Product packaging
- Instruction manual
- Post-purchase marketing campaigns: emails, coupons, surveys
- Main goal: customer retention, satisfaction, advocacy
The Importance of CX
Impact of CX on Business Success
Positive CX goes beyond a customer’s first purchase and aims to create loyal customers that are willing to advocate for the brand.
Globally, 32% of consumers stop business with a beloved brand after one negative experience. This means that every step of the customer journey is crucial to your business success, as any touchpoint can influence the customers’ opinion in an instant.
To get a better idea of what a good CX consists of: 70% of consumers believe that speed, convenience, helpful employees, and friendly service matters the most. Having a good product or service is no longer enough. Consider Amazon: an ecommerce company that sells just about everything– how did it become so successful? They implemented their own delivery service to expedite shipping and increase customer satisfaction, surpassing competitors such as AliExpress and even shipping companies such as UPS and FedEx.
84% of companies that have improved their CX saw an increase in revenue. These improvements could be anything, from making your website easier to navigate or adding more payment options during the check-out process.
How CX differentiates companies in competitive markets
81% of organizations believe CX is a competitive differentiator, with 92% of companies reporting increased customer loyalty and 79% reporting cost savings. Positive CX helps businesses establish a strong reputation, increase loyalty, and stand out from other companies despite having similar products. As cliche as it sounds, people never forget how they felt– you remember hearing that while growing up, right? Same is applicable to businesses and how they treat their customers. Not all businesses prioritize how people feel in various parts of the customer journey, and doing so can significantly help you stand out from competitors.
For example, think about ride-sharing apps such as Uber, Lyft, Gett, Via, etc. Or water-bottle companies like Hydroflask, Stanley, Yeti, Owala, etc…These companies provide pretty much the same products and services. I mean, how different can a water bottle get? Or ride-sharing? This is when CX becomes the tie-breaker.
Consider this TikTok about Stanly tumblers that went viral:
A TikTok user posted about how her car had caught on fire, destroying all of her belongings– except for her Stanley tumbler which remained completely intact. Unintentionally, this was a great marketing opportunity for Stanley: the video gained over 94 million views with 64,000 comments discussing the prospect of purchasing Stanley tumblers for themselves. Without even paying or strategizing a marketing plan, Stanley most likely experienced a huge surge in sales and brand loyalty.
In response to the viral video, the president of Stanley, Terrence Riley, posted a video offering to send multiple Stanley tumblers and a new car to the TikTok user. This response garnered over 54 million views with over 68,000 comments praising Stanley’s exceptional support– which most likely overshadowed competitors such as YETI and Hydroflask.
Ever since that first viral video, the user continues to post TikToks showcasing her other Stanley tumblers (yes, I went through all of their TikToks to see their Stanley collection out of curiosity). This is an example of a very loyal customer who continues to advocate for the brand.
How to Think about CX
Approaching CX strategically: holistic view vs. touchpoint-specific view
Journey maps are an effective way to consider your business’s CX.
A journey map is a user experience (UX) visualization document that shows all the steps that a customer takes to interact with your product. The goal is to understand the customer’s perception and feelings as they engage with your business. These steps are not necessarily linear, as there are numerous touchpoints & steps that convert people into customers.
The purpose of journey mapping is to focus on the entire customer experience instead of moving customers through specific steps aimed at making business. You want to understand your customers: what are their problems? What are their needs, wants, and expectations?
Not every customer has the same experience– journey maps should consider interactions with relevant businesses. How do customers research your business, purchase from you, use your products, and seek customer service? Do they share about your product? What are the pain points during each stage of the journey? This could be very different based on your business. For example, a coffee shop might feel very disorganized and chaotic if cashiers handed each customer their drinks at the register. To resolve this pain point, the coffee shop can establish a station designated specifically for handing out drinks to customers.
Journey maps also help you narrow down and optimize specific touchpoints; what kind of interactions do your customers have before, during, and after purchasing from your business?
Consider what your potential customers experience when seeing your advertisements or marketing campaigns. How is your business portrayed on social media? Is your website accessible and easy to browse? Does your customer service have a long wait time?
The goal is to improve each touchpoint to increase customer satisfaction and create consistency across various channels. Are there any areas that could benefit from more personalization? Gather customer feedback for each touchpoint, whether it is through surveys, emails, reviews, etc.
Integrating CX into business culture and operations
It’s not enough for one team or department to focus on delivering a positive customer experience. For the entire business to be in alignment, it’s important to foster a customer-centric culture in which customers are the core of your business. Every touchpoint and aspect of your business should value putting customers first.
At this point, you understand how to map out customer journeys– identify pain points at each step of the journey, and strategize a plan to optimize each touchpoint.
The role of employee engagement in enhancing CX
38% of U.S. consumers expressed that the employees they interact with understand their needs. This is a dangerously low number–how can a business survive if they don’t understand their customers? What problem is the business trying to solve then? This lack of understanding might be rooted in lack of knowledge.
46% of consumers leave a brand if employees are not knowledgeable about the product. Again– this number is disappointing. Although an employee doesn’t necessarily mean that they founded the company– employees are undeniably the face of the company. If the employees don’t know what their product does, how will customers?
This goes to show the importance of employee engagement: the emotional commitment and dedication that employees have towards their job and the organization they work for.
By definition, engaged employees are likely to be more motivated, productive, and dedicated towards their customers. They have a positive attitude towards their customers, which communicates the company’s commitment to customer-centricity. And, they’re more likely to provide helpful information and be empathetic to customer needs. With more engaged employees, there are more engaged customers.
Yes– engaged employees are a real phenomenon. And your business can have excellent employees too.
To improve employee engagement:
- Invest in employee training: provide proper training, resources, and certifications that can boost confidence and knowledge.
- Use recognition & reward systems to acknowledge outstanding work while increasing motivation
CX and Data
How data can help improve CX
In order to improve CX, you need to understand your customers. But, how do you actually understand your customers? Your customers probably have very different kinds of customers with various needs and preferences.
Segment your customers based on shared demographic, behaviors, characteristics, purchases, etc. You don’t have to do this manually– tools like Cotera help segment your customers based on spending habits and activity.
Now that you know what kinds of customers you already have, and prospective customers you want your business to cater to, you can work towards understanding each segment. To do this, build [ideal] customer profiles that contain information about their interests, demographic, buying patterns, specific pain points, etc– anything that will help your business strategize a more positive CX.
You want to create personalized experiences for each segment for them to feel understood. The best way to achieve this is to get feedback from the customers themselves; utilize surveys, reviews, interviews, and email campaigns to get valuable data directly from customers. Many brands provide incentives for customers to write honest reviews and easy means of feedback through multiple-choice questionnaires about their satisfaction.
Read more about Cotera’s segmentation model here.
Numbers don’t lie. Utilize key performance indicators (KPIs) to measure CX such as:
- Churn rate
- Customer lifetime value (CLV)
- Customer satisfaction (CSAT)
- Cart abandonment rate
Why AI in particular is useful
Personalization shows that you understand your customers. You know what they like, dislike, need, and want. You anticipate relevant products and services that your customers would like, and this is a great way to deliver a superior CX.
But, no two customers are identical. It would be really, really hard for a business to do everything and anything at once to ensure that their customers have superior experiences.
This is when you can use AI tools to help you streamline business operations and go through large amounts of data specific to each customer.
Think of the product recommendations that pop up on your Amazon homepage or Starbucks’s app that suggests drinks you might like based on past orders. These great customer experiences are powered by AI, and you can do the same for your business.
How Cotera can help
Inevitably, to go through huge amounts of data and identify patterns, y0u have to automate tasks that might otherwise be impractical to do manually.
Generally, to do this, you need to:
- Set up a data warehouse or data store of some kind: this could be cloud-based data warehouses such as Amazon Redshift or Google BigQuery.
- Buy or build some tool that can send relevant data to the data warehouse from step 1. You want to integrate this tool with the data warehouse and schedule regular data updates. This could be customer messages from your support tool such as Kustomer or Gorgias.
- Choose a machine learning model that can analyze your data. If your data is customer messages, then you might use a LLM to analyze each message.
- Based on what the model outputs, send it to the appropriate communication platform. This could be your support tool or simply a Slack channel that notifies your customer service team to reach out to a customer.
Wow. That’s a lot, no? Cotera can do this entire process for you and help you monitor the overall health of your CX efforts. Learn more about Cotera here.
Conclusion
A good customer experience is undeniably crucial to business success– a good product alone is no longer enough to keep your business thriving, as we saw. This all comes down to truly understanding your customers and how you communicate that your business is the best solution.
CX is constantly evolving as new technologies and trends take place. What had originally started as simply decorating brick-and-mortar shops to attract customers has evolved into creating a holistic, positive experience in all steps of the customer journey.
These are some resources that may be helpful for further reading: