While a customer-experience focused strategy is mostly associated with driving top line revenue, it is equally important for the bottom line in terms of cost savings and efficiency improvements.
Here’s a shockingly simple truth that many business still fail to embrace: providing a delightful customer experience keeps customers around. And when they stick around, they tend to spend more and say good things about you to others.
Smaller shops often know this better than large corporation that claim to be customer focused. A few years ago Reddit went crazy after a pleased customer posted a handwritten note from the auto repair shop Jimyz in the US state of Ohio. In addition to racking up more than 1,500 comments, the understated act earned the repair shop top honors in scores of articles about great customer service and drove truckloads of business to the owners.
This respect-the-customer approach is often absent among larger firms looking to keep costs in check. But not entirely. Until JetBlue changed the landscape, low-cost airlines often provided uncomfortable and colorless experiences. Crew members were often grumpy. What amenities were available, had to be paid for. And seats were cramped. By contrast, JetBlue looked like a mid-range or even high-end carrier. Since entering the market in 1998, it has consistently outscored not just competitors but full-service airlines by offering unlimited snacks, inflight television, and sometimes free WiFi. Seats have plenty of legroom and staff tend to be friendly and welcoming. While the carrier has had its ups and downs with the industry, its commitment to service has also set it apart, with revenue nearly tripling from 2006 to 2015.
Customer experience drives topline revenues
Acquisition of new customers, increasing the firm’s share of wallet, and reducing customer churn, are all fundamental to driving topline growth. In the new paradigm of the Experience Economy, the delivery of branded, memorable customer experiences – delighting customers at key touchpoints on their journeys – is the key competitive advantage fueling these fundamental drivers of topline growth.
Experience can (and does) inspire loyalty and an increased share of wallet. For instance, even with higher prices for products of similar quality, coffee sellers such as Starbucks and grocers such as Trader Joe’s have dedicated clientele willing to pay the higher prices, largely because of the experiences the firms provide.
Delivering experiences that foster customer loyalty and increase share of wallet implies that the firm is not only able to keep customers satisfied in terms of basic rational and functional needs, but that the firm has also addressed customers’ emotional needs through memorable experiences, which in turn garner loyalty. Such memorable experiences also drive brand trust and advocacy. Customers are more likely to recommend a store or service provider to friends, family, and coworkers, leading to greater customer acquisitions. And of course memorable experiences increase the willingness of customers to repurchase, which leads to greater share of wallet from any single client.
Customer experience also drives the bottom line
While a customer-experience focused strategy is mostly associated with driving top line revenue, it is equally important for the bottom line in terms of cost savings and efficiency improvements.
Consider a firm that blindly tries to benchmark its customer satisfaction across its touchpoints against its competitors. In an effort to beat the competitor to the bottom, the firm incrementally improves every touchpoint based on how it ranks in satisfaction versus its competitors, even if such improvements do not have any meaningful impact on customer retention, advocacy, and trust. On the other hand, a firm that has a methodical customer experience approach prioritizes the touchpoints and journeys that are most aligned with key target segments’ emotional and functional needs and with its own core brand promise and values. It likewise deprioritizes improvements for non-essential touchpoints. This focuses the firm’s limited resources on areas with the largest impact on customer loyalty, thereby improving both the ROI of investments as well as operational expenses.
Customer Experience: Hard but worth it
Times are changing. Traditional methods of doing business and working with customers are being transformed by digitization of both back-office and customer-facing systems. Retailers, telcos, banks, broadcasters, publishers, travel agencies, airlines, accommodation providers, transportation, and even energy firms are all being transformed as the provision of experience becomes central to attracting and retaining customers. Forward-looking apparel sellers, lifestyle brands, and even a number of B2B firms are starting to embrace customer experience as well.
Of course it is hard to do. It often requires examination and transformation of processes, culture, financial structures, IT systems, management, and how success is measured. But firms that do embrace the change can expect a loyal customer base that will help them prosper. This applies to both the Jimyzs and JetBlues of the world.
See if our Customer Experience Management Consulting Practice can help you.
For more on customer experience and how to implement it at your organization, download Synergy Consulting Group’s White Paper: From Satisfaction to Emotionally Connected.
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