Have you ever lost a customer to a competitor and didn’t know why they left? A customer experience strategy can help you retain more customers and stop them from defecting to competitors.
Research by HBR found that companies who skillfully manage and execute customer experience strategies reap enormous rewards. They achieve higher customer satisfaction, reduced churn, increased revenue, and greater employee satisfaction.
Furthermore, with rising competitive pressures, creating a highly differentiated customer experience can help turn dissatisfaction or indifference into delight. People like being WOW’d and having their expectations exceeded.
Creating a unique customer experience is one of the best ways to achieve sustainable growth, particularly in industries that are stagnating. If a telco, a utility, or an insurance company can create a highly differentiated customer experience that turns dissatisfaction or indifference into delight, it will recruit an army of vocal advocates online and offline, gain market share, and generate revenue growth.
– ATKearny, How to Create an Entirely Different(iated) Customer Experience
In this post I will take you through five customer experience strategies. I’ll also analyze two real examples of amazing customer experiences delivered by Zipcar and Zappos.
Why customer experience is important
- Higher customer referral rates and customer satisfaction were reported by a study of 860 corporate executives who increased their investment in customer experience (Strativity Group, 2009)
- It eases customer acquisition, drives customer loyalty and improves customer retention (Beyond Philosophy, 2013).
- Increases customer satisfaction. When a customer is WOW’d by the experience and has their expectations exceeded, it increases customer satisfaction.
- Reduces customer churn. People want to buy from places that make them feel good. Creating an experience that is memorable and enjoyable for the customer will help to keep them coming back for more and not churning away.
- Create a competitive advantage and differentiation. No longer can you compete on price, customers want more, and they want emotional connections with the companies they deal with. Create that experience that keeps them coming back for more. This will create a point of differentiation that you can use as a competitive advantage.
- A report by Econsultancy found that just 20% of companies have a well-developed customer experience strategy. Big opportunity for companies who are willing to invest in the customer experience.
Now let’s take a look at five customer experiences strategies you can use to increase satisfaction, reduce churn and increase revenue.
1. The three ‘Ds’ of customer experience
A Bain & Company survey (2005) found that only 8% of companies truly deliver a superior customer experience. On the flipside, when the survey asked companies to rate themselves, 80% thought they delivered a “superior experience” to their customers.
James Allen, Frederick F. Reichheld, and Barney Hamiliton wrote a piece for the Harvard Business School and looked at what sets the 8% companies apart from the rest.
How were they able to deliver a ‘superior customer experience’in the eyes of their customers?
They found the leaders in customer experience to pursue three imperatives simultaneously.
a) Designing the right experience-focused value propositions
The companies delivering a truly outstanding customer experience divide customers into segments and design experience-focused value propositions for each one. They tailor and design customer experiences for different customers.
Vodafone offers a great example. Unlike traditional mobile phone companies who might segment users based on country alone, Vodafone segments their customers into high-priority global segments: “young, active, fun” users, occasional users, and a handful of others.
In designing the value propositions for each segment, the entire customer experience was at the forefront. The ‘young, active, fun’ users were offered Vodafone live!, a state-of-the-art service that provided everything from games and pop-song ringtones to new, sport and information (this was back in 2005). Occasional users were offers Vodafone Simple, which provided an ‘uncomplicated and straightforward mobile experience’.
b) Delivering value to the customer
The best companies deliver these value propositions by focusing the entire company on delivering them. An emphasis is put on cross-functional collaboration. For instance, the marketing team and supply chain team are in line across the whole customer experience; they know and deliver a consistent value proposition.
CRM tools can help with this. They offer a way to keep all customer data in one place, and give multiple department’s access to that information. Sales people can add information which can trigger specific actions. Customer support or supply chain can jump in, know what segment the customer is in, and then deliver a customer experience that has been defined for them.
Tracking the metrics behind delivering the customer experience can get tricky. I recommend measuring it using a Net Promoter Score or a customer satisfaction tool like Client Heartbeat.
You can sync Client Heartbeat up to most CRM’s, and measure exactly how happy (or unhappy) your customers are. Use this data to analyze how effective your customer experience strategies are, and make better business decisions using actionable customer feedback.
c) Developing the capabilities to do it again and again
The 8% of companies who offer superior customer experience have developed their capabilities to please customers again and again. They have systems in place to deliver a consistent customer experience over and over again.
The leaders also know how to keep innovating and improving the experience. They have tools to help with customer-focused planning and executing; they know what customer-based metrics need tracking; and offer customer-focused management incentives to keep their employees goals in line with the company’s goals.
2. Define the customer experience and keep it consistent across all touch points
According to Bernd Schmitt, customer experience management represents the discipline, methodology and/or process used to comprehensively manage a customer’s cross-channel exposure, interaction and transaction with a company, product, brand or service.
The best companies recognize that customers interact with different parts of the organization and across multiple touch points. They know customers engage with different employees when they make a purchase, when they’re getting service and support, and when they’re talking to billing or accounts.
A company must take all of these experiences into account if they want to create loyal customers.
Scott Nelson, vice president and distinguished analyst at industry research firm Gartner, shared this on the topic of customer experience.
In the past, companies could rely on loyalty out of sheer convenience. If you wanted a bank account, for example, you went to the branch closest to your home or office. Not anymore, Nelson says: “I can bank with somebody in Ohio if I’d rather, [instead of] with the bank across the street.” – Scott Nelson, Gartner
Customer loyalty is now driven by a company’s interaction with its customers and how well it delivers on their wants and needs. The customer doesn’t see the marketing department and customer support center as two different things, they simple see one brand. They demand an experience that reflects that.
So when a customer gets transferred from support to sales, you better make sure your sales guy is clued up with what existing products and support requests the customer has had in the past. No way is the customer going to want to explain it all again.
To keep a customer experience consistent, Adam Feigenbaum from iCIMS suggests these tips;
- Hire right: regardless of the role, make sure your employees believe in your brand and what it stands for.
- Own the issues: make yourself a part of the solution and ensure you satisfy and upset customer.
- Empower your people: Let your team actively own the issues and give them the power to solve customer problems without having to ‘pass you onto the manager’.
- Don’t let it fester: The more time a customer sits in limbo, the worse the experience becomes. Fix problems quickly and find solutions fast.
3. Base the experience on individual customer needs
Customer experience strategy must start with knowing what your customer needs and wants, which will equate to their expectations.
Once you know that, you can work backwards to create an experience that exceeds those customer expectations.
To achieve this, the best companies speak to their customers. One example of a company that is particularly good at listening to customers and delivering a superior experience is Superquinn, the Irish grocery chain.
Here’s an excerpt from “The Three Ds of Customer Experience”, which details how Superquin approaches their strategy:
Founder and President Feargal Quinn walks each of his stores’ aisles every month, talking to consumers. Twice monthly, he invites twelve customers to join him for a two-hour roundtable discussion. He asks them about service levels, pricing, cleanliness, product quality, new product lines, recent displays and advertising promotions, and so on; he also asks what items they still buy from his competitors and why. Quinn uses what he learns to evaluate store managers and continually improve the company’s strategy and its execution of that strategy. – The Three “Ds” of Customer Experience
Taking a hands-on approach to understanding individual customers’ needs will help create an experience that WOW’s your customers. Exceeding customer expectations is the easiest way to create a memorable experience. Memorable experiences also develop customer advocates, who sing praise about your company to friends and colleagues.
4. Create experiences with ‘real people’ not ‘brands’ or ‘companies’
People want to deal with other people, not brands or companies. There’s nothing less personal than getting an email from a ‘brand’ with no personalization. It just doesn’t pack a punch. We seek human to human engagement.
I recommend you try to make sure that every engagement with a customer is a personalized experience. It’s an opportunity to build a strong relationship with a customer. A relationship that extends beyond expectations and one that will lead to a memorable experience.
Think about the now famous Zappos customer service reps. Zappos CEO, Tony Hsieh, doesn’t care how long his customer service reps stay on the phone. He doesn’t enforce any KPI’s around phone time. He sees it as a marketing opportunity to build a customer experience that then gets told to friends and colleagues. Tony Hsieh writes it off as marketing expensive!
Too many companies think of their call centers as an expense to minimize. We believe that it’s a huge untapped opportunity for most companies, not only because it can result in word-of-mouth marketing, but because of its potential to increase the lifetime value of the customer. – Tony Hsieh, Zappos CEO
Here are my tips to start using people, not brand to build an experience:
- Send emails from a personal email account.
- Use names and personalization – treat them like a person not a number.
- Send follow up emails and calls based on a specific action (don’t just blast them).
- Get your employees engaged, and excited about your product. This comes off when emailing and on the phone! A Gallup survey found 70 percent of U.S. workers were not fully engaged, which results in unhappy workers and poor brand experiences.
I love this quote by Martin Zilling, it really exemplifies what customer experience should be about.
Customers Remember Experiences, Not Your Brand Logo – Martin Zilling
5. Leverage technology to enhance the customer experience, not create it
A common problem companies fall into is trying to use technology and software to create a customer experience. This is not recommended as it can lead to the focus being on what the technology can do, as opposed what you can do to enlighten an amazing experience
I recommend you define a customer experience, and then identify what tools and software you need to assist to make it happen. Do not mold your customer experience strategy around technology. Find technology that you can use around your strategy.
Here are some tools you should look into:
- CRM tools for relationship management: keep all data and communications between your company and employee in one spot so everyone can see it quickly.
- Marketing tools to engage with customers: send trigger emails based on specific actions.
- Online survey tools and customer satisfaction tools: survey customers, get feedback and measure satisfaction.
- Web analytics and tracking tools: Measure engagement, number of site visits and page visits. Build out a customer profiles full of data to help manage the experiences.
Customer experience examples with analysis from Zipcar and Zappos
Example #1: Zipcar delivers holistic experience to customers
Zipcar is a car sharing company which bills itself as the ‘alternative to car rental’. They offer an amazing customer experience across all touch points, from sign up right through to collecting the car and dropping it back off.
Zipcar does this so well because they know their audience. As Pamela Walshe describes on the answerlab blog, Zipcar knows their audience are busy, mobile people with places to be. Pamela goes on to say that every aspect of the customer experience has clearly been designed with the customer’s experience in mind.
One great example is how Zipcar communicates their rules across multiple channels. They are clear, concise and available everywhere. Unlike traditional rental car companies that bury the rules to try make an extra buck, Zipcar wants you to know the rules so that you fully understand your obligation and the costs if you don’t follow them.
Zipcar Rules (photo credit)
Example #2: Zappos has no limits on customer service rep calls and marks it off as marketing expense
Zappos brand has instilled a WOW factor in their customer service since the company was founded in 1999. This WOW factor is part of their customer experience and is embedded in their corporate culture.
One great example is all successful recruits take a five-week training course which includes two weeks on the phones in the call center. Customer service is a big emphasis and they are drilled on what the company culture expects from them.
When the customer service reps hit the phones, they are instructed to do whatever is required to make the customer happy. They don’t have KPI’s around call times; the focus is on creating an amazing customer experiences.
This has paid dividends for Tony Hsieh and Zappos. Customer service forms a big competitive advantage for the company. Through lots of amazing customer experiences and so many positive stories, Zappos has some remarkable customer loyalty. Impressively, 75% of purchases made at Zappos come from returning customers, and repeat customers order more than 2.5 times every 12 months. Repeat customers also have higher average order sizes.
Retain more customers by creating a better experience
A customer experience strategy will help achieve higher customer satisfaction, reduce churn and increase revenue. A well designed strategy starts with defining what customer experiences you want to deliver, then making sure those experiences are consistent across all channels.
Use the strategies provided in this post to start formalizing your new, amazing customer experience. I hope it becomes something that keeps customers coming back for more and creates plenty of positive worth of mouth.
Additional resources I recommend: