What is customer experience (CX)?
Customer experience is an increasingly popular term in business, especially when it comes to long-term strategy and planning. Customer experience (CX) refers to how a customer perceives your brand based on their exposure to it. Customer experience is the sum total of someone’s perception of your organization. Unlike customer service or customer relationship management, customer experience does not map neatly to a single area of your business.
Discover the fundamentals of customer experience as explained by the XM Institute
You set the overall context of a customer’s experience: your product or service, messaging, and interactions at the sale and post-sale stage. But the perception of how these touchpoints are experienced is the customer’s. It is not something you control (although you can certainly influence it). Instead, it is defined by your customers and their journey.
With the rise in social media sharing, it’s become mission-critical for brands to invest in new technology and ways of working to control their own narrative.
Customer experience versus customer service
It’s worth taking a moment to differentiate customer experience from the better-known idea of customer service, since it’s not unusual to see the two terms used interchangeably. This is understandable, since customer service and customer experience management have an important shared goal – making customers happy.
However, rather than simply being a new label for an old idea, customer experience is a much wider concept that includes customer service and much more besides.
Customer service is the quality of attention and care you provide for your customers, whether over email in a contact center, face to face on a shop floor or across a reception desk. It can be provided through customer interactions with staff, or via service-based tools such as website support pages and customer service chatbots.
As a department or job title, customer service is a customer-facing role that has the remit of answering queries and dealing with routine aftercare and any complaints that arise. It is a component part of customer experience, albeit a crucial one.
Customer experience encompasses customer service and also marketing, advertising, merchandising, product design, hiring decisions, logistics, brand purpose, in-store aesthetics, supply chain choices and just about every other part of your business operation that affects customer outcomes. It also extends beyond your sphere of control, drawing from third-party reviews and opinion, press and media coverage and even popular culture if your brand has a high enough profile.
Long story short – CX is vast in scope, and customer service is a relatively small part of it.
The importance of customer experience
Most organizations recognize the core case of good CX: delivering consistently on your brand promise, and providing customers an optimized experience, brings financial rewards. But that represents a shift from previous years, where brands chased after higher Net Promoter Score (NPS), without connecting it to financial performance.
We see our customers as invited guests to a party. And we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.
– Jeff Bezos, Amazon
As organizations evolve their CX mindset, they’ve recognized that CX is a means to an end. High CX metrics mean little without an associated uplift in financial performance.
5 benefits of improving CX:
- Drive revenue and customer lifetime value
- Increase brand value
- Boost customer loyalty and advocacy
- Keep close to customers and changing behaviors
- Reduce costs and invest in the right things
How CX leaders outperform CX laggards:
- #1 – By 2020, customer experience will overtake price and product as the key brand differentiator – Walker
- 86% – of those who received a great customer experience were likely to repurchase from the same company; compared to just 13% of those who received a poor CX – XM Institute
- 6x – Between 2010-2015, CX leaders grew 6x faster than CX laggards – Forrester
What is a good customer experience?
We’ve touched on the fact that a customer’s experience isn’t totally within a brand’s control. There are a couple of reasons for this.
- Customer experience is made up of a wide range of factors, some of which are outside of the company’s direct influence (for example user-generated social media content, third party reviews).
- Customers create their own journeys, rather than following a prescribed process. They stop and start, move from one platform or channel to another, and sometimes retrace their steps. Customer experience derives from the journey as a whole, not the quality of each touchpoint.
So with this in mind, what does a good customer experience look like, and how can you as a company know when you’ve met your goals when it comes to delivering it?
As is often the case, the answer to understanding your customers’ experience is to ask them. In the upcoming sections we provide a range of CX metrics and a starter-list of foundational elements to a good customer experience management program.
In addition to tracking quantitative metrics like CES, CSAT and NPS, make sure you are set up to gather and act on qualitative experience data from customers, as this can be a valuable source of insights and can offer you a deeper understanding of what customers want and expect from you. Doing this and more ensures the personalized experience customers expect.
How do you manage the customer experience?
If CX is your customers’ perception of your organization, customer experience management (CXM) is your strategy for controlling those perceptions. It’s gone out of fashion as a term as practitioners have shifted to thinking about CX as something you don’t just “control” but track on a constant basis and make a central part of everything you do. It remains in use mainly because of Forrester’s use of the term in their Wave ranking of SaaS CX providers.
To understand how to manage CX, you need to first understand experience management (XM) – the discipline of measuring and improving the four core experiences of a business: customer, employee, product, and brand.
As CX is part of XM, companies should adopt the XM Operating Framework, which is built on a combination of technology, culture, and six competencies. While each of these elements are important, focus most of your attention on the six competencies and their 20 associated skills.
XM Operating Framework Competencies
Using the six XM competencies to manage customer experience
- Lead – Architecting, aligning, and sustaining successful CX efforts across different people and projects over multiple years
- Realize – Identifying and tracing the right metrics to ensure CX efforts achieve well-defined business objectives
- Activate – Making sure your organization has the appropriate skills, support, and motivation to achieve the desired CX results
- Enlighten – Capturing, analyzing, and distributing actionable insights
- Respond – Building organizational mechanisms to continuously take action based on insights
- Disrupt – Identifying and creating experiences that differentiate your organization from competitors
The XM Institute offers a CX Maturity Assessment that you can use to identify your organization’s strengths and weaknesses across the six XM competencies.
Key elements of your customer experience strategy
Delivering great customer experience drives improved business performance. And understanding customers’ expectations of your brand – and what is crucial to their satisfaction – will help you set priorities and de-risk your investments. Before you start getting into the weeds of a customer experience strategy, consider taking a step back to consider the vision you have for the program. Get some help with this step by reading our guide to building a customer experience vision.
Here are some of the core foundations of any good CX strategy:
1. Customer journey mapping
The first step in understanding the current experience is often customer journey mapping: understanding the experiences your customers are having at each touchpoint. Often businesses deliver well on components of that journey, but without a customer-centric view they may fail at distinct points. Viewing the journey – not just the touchpoints – helps to frame the experience from the customer’s perspective.
- What is Customer Journey Mapping?
- How to Understand Customer Journey Touchpoints
- How to Run a Journey Mapping Workshop
- 10 Must-Haves for a Customer Journey Mapping Tool
- 10 Ways to Use Customer Journey Maps
2. Cross-functional collaboration
Consistent delivery across the journey can be a challenge, often increased by a business’ siloed operations. Until the entire business understand their impact on customers’ experience, progress will be limited. For example, billing and credit operations might see themselves as removed from frontline delivery – but to a customer, difficult billing experiences can override positive store or digital experiences.
Cross-functional experience governance helps the business to break down those silos and improve the customer journey experience in meaningful ways. Committing to a customer centric view helps to realign existing processes and allows the business to deliver improved experiences. An effective and productive customer experience strategy is built on that multi-disciplined engagement; making certain employees understand that each person in some way touch that experience.
To design a CX strategy that is fully customer-centric, businesses need to understand where they currently are in delivery on the customer journey and to identify effective means of improvement. CX programs can deliver that real-time insight into what customers are experiencing and how those experiences impact their engagement with the brand.
To deliver consistently on the elements of the brand experience that customers most value, it is extremely productive to listen continuously. Soliciting – and reporting – real-time customer feedback across the range of touchpoints and experiences helps you identify and prioritize things to improve. Because customers will tell their stories, both positive and negative – whether you are listening or not.
Every CX listening program should incorporate the following elements:
- Relationship tracking – Periodic studies to understand customers’ attitudes toward an organization. The insights from relationship studies often drive the CX program’s overall priorities.
- Journey feedback – This type of listening identifies customer perceptions immediately following an interaction in the customer journey, such as receiving customer support or purchasing a product.
- Interaction feedback – Used to monitor and improve specific customer touchpoints, interaction feedback helps companies understand how customers perceive experiences through the lenses of success, effort, and emotion.
- Always-on listening – Customer feedback doesn’t always have to be actively solicited. Offering digital collection mechanisms on websites and mobile apps gives customers a chance to provide feedback whenever and however they’d like.
- Passive listening – This type of listening is based on collecting and analyzing existing customer signals in the marketplace, for example social media posts and customer care interactions.
Communication of actions taken to improve the experience is essential: customers want to know that you are not just listening, but acting. And the positive word of mouth that results from direct customer engagement and problem resolution is a huge contributor to how the business is seen by both current and potential customers.
Customer loyalty is earned by consistently delivering on your brand promise, as experienced by your customers. Doing well on what your customers most value is the key to CX success. And acknowledging and resolving experience failures builds trust in the brand.
Your most unhappy customers are your greatest source of learning.
– Bill Gates
Measuring customer experience
- Track progress on actions taken
- Identify improvement areas
- Calculate the ROI of CX
- Prioritize your actions and invest in the right things
It’s crucial to combine any X-Data metrics like NPS with O-Data metrics like average spend and customer retention. Because your NPS could be sky-rocketing, but that may be because unsatisfied customers have deserted you.
Types of CX metrics
- Net Promoter Score (NPS) – There is a heated debate on the value of NPS, but at a basic level NPS gives you a snapshot of overall customer advocacy. However, within your organization you need to set expectations around its use and limitations. It doesn’t work as well at a transactional level, and there are issues with cultural differences and a lack of alignment between scores and interpretation (e.g. if someone gives you a ‘6’ rating, are they really a detractor?).
- Customer Effort Score (CES) – The Customer Effort Score can help you understand the basic functionality of your digital offering and its relevance to your customers’ needs. This metric focuses on the ease with which a customer can complete any given task.
- Customer Satisfaction (CSAT) – CSAT helps you understand how satisfied your customers are with your company’s products and/or services. When you collect this data at various touch points, you can start to identify key drivers of positive or negative experiences at different points in the customer journey.
How to improve customer experience
1. Focus on delivering what your customers value most
It’s crucial to understand your customers’ view of your brand and the moments that matter most to them. A consistent, day-to-day delivery on your brand promise is crucial to retaining customers, cementing brand loyalty, and growing your base.
Understanding what elements are crucial to your customers helps you prioritize action and investment. In any list of experience elements, there will be ones that fall to the bottom. The key is to be sure that the lowest-performing elements are also the least important ones to your customers. That alignment – typically derived from key drivers – helps keep the business focused and KPIs relevant.
By identifying the loyalty behaviors you’re trying to improve, you can build models that will help you demonstrate to leadership how those behaviors drive changes in key CX metrics. This will help you secure buy-in for ongoing CX spend and ensure continued improvement.
2. Listen carefully to what your customers tell you – and then act on that feedback
One very productive approach is to use closed-loop processes to respond directly to customer concerns. In B2B CX, it’s even possible to follow up with customers who give low satisfaction scores or are NPS detractors. Given you’ll usually get fewer responses than in B2C, and have a closer relationship with each customer, this kind of approach can be highly productive.
In B2C, you’ll often have a much higher response rate to any surveys you send out. So while you should absolutely fix anything customers raise as an issue, following up with low-scoring individuals is often unproductive. Especially if your managers haven’t been trained and coached for those discussions.
Also listen to what your employees are saying. Often employees can identify problems and opportunities faster and with more depth than what you will uncover through your customer feedback programs. In fact, companies that have mastered the employee experience by listening and acting on the voice of employees have the best CX.
3. Show you’ve taken action
Customer experience programs are ongoing discussions between a brand and its customers. As such, it’s crucial to demonstrate you are taking action on the feedback, even for those respondents who have not specifically asked for contact. Including a simple message alongside customer-led initiatives – e.g., “You spoke. We listened.” – demonstrates that providing feedback is not just a tick-box exercise within the business. Customers are far more willing to provide experience feedback if they believe the business takes it seriously and acts on it.
4. Focus on improvements, not measurements
Customer experience isn’t a metric; it’s an ongoing program that delivers substantial business benefits. And that means you shouldn’t chase numbers. Use measurements to drive improvements in your CX program that will result in tangible outcomes. Whenever presenting or reviewing CX metrics, pair them with key learnings and resulting action items.
To gain momentum for your CX program, make and share quick wins.
5. Build upon your success
XM Institute offers research and tools to help you design, deliver, and mature your CX program. If you’re just getting started, the Fundamentals of Customer Experience Launchpad provides helpful tips and resources. For those who are further down the path of CX maturity, the XM Institute Blog offers insight into key trends and best practices on all four elements of XM – customer, employee, product, and brand.
Do what you do so well that customers will want to see it again and bring their friends.
– Walt Disney
Considerations for the digital customer experience
Businesses can improve their integration of the digital channel and optimize the brand experience by understanding key digital components. Here’s a few ways to approach digital CX optimization.
It’s the less sexy side of digital CX, but understanding page loads and purchase process barriers are crucial to digital conversion. The approach is diagnostic in focus and often will use metrics like customer effort scores (CES). That is, how difficult is it for your customers to use your digital channel effectively and whether they were able to complete their task.
Understanding the role your digital channel plays in the overall customer experience (from consideration to purchase) is more difficult – but absolutely crucial. Businesses often look at basket abandonment as a failed conversion. But understanding that a customer is not wholly abandoning, but may actually be mid-purchase can be strategically essential. Particularly in consumer products, customers may go online to review potential purchases but then go into a store to test or experience the specific product. That customer might purchase in store – but their digital experience would have had a significant impact on their purchase behavior.
Understanding the role each channel plays is crucial to maximizing the overall brand experience. Your customer doesn’t typically think in channels; they want to solve problems and find options. Multiple channel contact may be essential in conversion. Appreciating the different role each channel plays reorients your business to be more customer-centric.