Customer Experience- The New Differentiator
The new reality of the industry is one where customers have access to ever more convenient buying options and infinite information sources. They are, in turn, equally empowered to actively seek out preferred experiences for their home improvement needs and to reject those that don’t provide them. In the changing economic environment, the link between experience excellence and business performance is undeniably strong and inextricably connected. What we know, is that throughout the service chain, regardless of business model, we have lost momentum with the customer and need to do a better job of enabling Associates who serve our customers or clients. As the people on the front lines who are the voice of the company to the customer, they need more care and more adequate, intuitive tools to help them get their job done. If we could change mindset to consider people not as a “cost center” but an “asset base” we could leverage the human capital more effectively and more consistently. Sometimes when we talk about “experience” (because of lack of understanding), people write it off as “soft”. The experience is critical to the customer and to our associates and is anything but soft. It is an integral part of the foundation for optimal performance. Creating an experience is a disciplined, strategic effort rooted in facts and reality. One of the key outputs is a product or design, a solution or a system that is desirable, feasible, viable and scalable. Why is it important:
• A one-point improvement in Customer Experience Index score can yield incremental revenue of $245 Million for a big box retailer. (Forrester Research 2018) That one-point potential is our North Star.
• Over the last decade, cumulative returns have been 49 percent greater for CX industry leaders vs. the S&P 500 (Forrester 2017).
• Best-in-class companies had an 81 percent retention rate with higher customer satisfaction and year-over-year revenue growth of over 14 pecent. (Aberdeen Research 2018)
• Over 80 percent of customers say they will pay more for a superior experience. 70 percent say they will abandon a bad experience. This cost the US retail industry over $1.6 trillion in 2017. (Qualtrics 2017).
• A fully engaged customer represents a premium of 23 percent, a differentiated 360 experience will increase spend 18-36 percent and omni-channel shoppers have a 30 percent higher lifetime value. (Gallup 2017)
• Elite brands provide 22 emotionally positive experiences for each negative experience. The bottom 5 percent were at 2:1.(Forrester 2018)
• People will pay 16 percent more for what your selling if the experience is good for them. Conversely, one out of three will walk away from a product or experience they love, with one bad experience. (PwC 2018)
Customer Experience is not an initiative; it is a change in mindset. The concept of “a new frontier” is intentionally a little tongue-in-cheek
We cannot be in the people business if we are unwilling to consider human factors. With people, influence is far more powerful than control. The difference in output based on “want to do” versus “required to do” is considerable. Engaged employees create engaged customers. Which is not to say customer experience is the same as customer engagement: engagement is an outcome of a good experience.
Customer Experience Design is about intentionally shaping the customer’s interactions with the business or the Brand to deliver experiences that increase emotional engagement, elevate consideration and ultimately, deliver long-term sustainable value. Companies cite experience as a differentiator but for the customer it is more personal, it is the difference. A seamless, integrated experience is a requirement. So, as business people we must purposefully synchronize the online thinking into physical planning. As leaders, we should find ways to bridge the chasm that exists between analog hearts and digital minds. Frequently, people gloss over those details, but if we consider, that 80 percent of CEO’s consider they are doing well with the customer Experience and only 8 percent of customers agree, it validates we have a gap and an opportunity! With that, if we also contemplate an average 70 percent of employees in the U.S. are not fully engaged, it says we have work to do—beyond tactical maneuvers for short term optics—to more long term strategies.
Together, we must purposefully and collaboratively create relevant, seamless experiences with less friction, aligning the physical and digital experiences as one end-to-end customer journey. Bain and Co. report 70 percent of purchases are influenced by online shopping but over 70 percent still occur in stores. 95 percent of customers use at least three channels. To optimize potential, the experience must be convenient, consistent, cohesive, seamless and frictionless for the customer.42 percent say they will pay more for a friendlier, welcoming experience, 65 percent find a positive experience to be more influential than great advertising with 73 percent pointing to experience as important in purchase decisions. 82 percent of customers want more human interaction and 54 percent say it needs improvement. The customer drives revenue, our associates help drive the experience. We need to co-create a more effective navigation system so they can drive the results.
We have adequate data to define the opportunity and highlight the importance of the customer Experience. Most companies are resisting the data. We have to admit we don’t know what we don’t know and approach it as a continuous learning to advance the business objectives. What we do know is that over 50 percent of companies in the Fortune 500 in 2000 no longer exist. The projection is that over 40 percent of companies in the current Fortune 500 will not exist in 2025. With the pace of change in the industry and in technology, we cannot continue to do business and develop process as we have always done it. The industry is a catalyst for continuous change. Sustained transformation requires significant capability building. Continuation is as important as activation. The potential for sustained growth is optimized by collaboratively building from the roots up. By harnessing the collective power of cross-functional teams, working with the business from within the business, we can cause change. It’s not about validating opinions or finding answers, but tirelessly asking the right questions. We should encourage our troops to move from “my business” to “our customer.” We must have courage seeking the optimal outcome, working beyond the organizational chart to maximize organizational benefit.
Customer Experience is not an initiative; it is a change in mindset. The concept of “a new frontier” is intentionally a little tongue-in-cheek. The facts and the sciences have supported the reality that experience drives behavior and results, for decades. Companies resist because it is hard. However, it is a new frontier if we decide it’s finally time to bridge the chasm between digital minds and analog hearts and we are ready to tackle the long-term journey collaboratively.