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Home » Customer

Is your customer experience giving you the edge?

Submitted by on Tuesday, 23 June 2009One Comment

A recent study by the Marketing Forum in the UK sums up what for a long time many of us have intuitively known: the customer experience is just not cutting it with customers. The result? Disengaged customers who are ready to defect at the first sign of a competitor’s price cut or special promotion.

customer experience

The graph above tells a simple story. No matter what industry they are in, companies are presenting customers with the same or similar experiences.

Experiences which in a nutshell are bland, uninspiring and boring.

In the study, 44% of consumers said their customer experiences at best were bland an uneventful, while another 15% found them ‘frustrating’ and ‘extremely annoying’. Few companies were able to achieve significant differentiation in their service experience.

Yet instead of seeing this as a problem, we prefer to focus on the opportunity. But first…

What you need to know about the ‘customer experience’

Research conducted by both Frederick Reichheld and Colin Shaw with the London Business School have demonstrated that customer satisfaction is often misleading.

Satisfied customers are as likely to be disloyal and switch service providers as dissatisfied ones, they say.

Many companies are unaware of this link and continue to blithely measure customer satisfaction, oblivious to the concept that there may be no link at all between a high score and increased amounts of customer loyalty or spend.

Customer Experience Training ThailandInstead, what is important is what we call customer engagement – a customer’s willingness to interact emotionally with the brand in a way that deliberately encourages him or her stay, say or spend at each touchpoint. This is vastly different to simply doling out customer service training in the hope the employees can work things out. Because the chances are, they won’t.

Customer engagement is achieved through a staged customer experience which evokes the emotions leading to the actions the customer, if you have understood him or her, in any case wants to take. Fine-sounding as it may sound, the experience may be expressed in even very small but important interactions. Also, this experience needs to start with the expectations created by your company’s advertising. Most experiences offered by service providers do not. The result? a negative first touchpoint as the customer feels the service provider is not living up to the promises it has made.

A winning strategy for the recession

Asked what the priority for a service provider must be for the year ahead between:

a) attracting new customers

b) keeping existing customers

c) turning existing customers into advocates

and d) getting rid of the least profitable customers…

…it was interesting to note that at a recent seminar of CEOs and Marketing Directors the most popular order of priorities was placed exactly the same as above, in other words a,b,c,d. Yet the research from Reichheld in multiple markets has shown that the optimal strategy is almost always b, c, a, with no ‘d’ at all (a pet favourite among CRM practitioners) because as people’s spending power changes (which happens often during the recession), last year’s ‘dog’ can easily turn into next year’s ‘cash cow’ – meaning it isn’t smart to cut out customers who may only be marginally profitable.

The big gains though are to be had by companies who cement their positions in customers’ lives through creating a branded experience which resonates with them. By doing this, Zara (as an example) was able to:

• Increase average customer visits from 2.3 to over 5

• Increase customer spend by over 45%

• Increase the number of repeat customers in a year from 38% to 61%

The advantages of creating a customer experience during a downturn far outweigh the more traditional approach (of spending more on advertising, which is costly) or engaging in price-cutting (reduced margins and risk of brand damage) or promotions (short term).

Instead, look to creating an experience for your customers in ways that will drive their stay and spend – plus, if you really get it right, increase their say (advocacy) which is incredibly powerful in a recession. If customers themselves are cutting back, they are always looking for something new or different to talk about. Why not make them your sales team then!

But the central benefit is this: few others are differentiating from the crowd in their service experience. If you do, you stand a big chance of winning customer’s hearts.

What you can do now

If you would like to find out more about creating a compelling customer experience then feel free to contact us at our office on +662 6393550 or using our more details form here.

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