If your business is at a stage in its lifecycle where you are considering improving customer experience, then you already know how vital it is to get this right. A study by Dimension Data determined that 84% of companies that focused on improving CX reported an increase in annual revenue.
In this deep dive, we consider the impacts & risks to a business of ignoring the importance of customer experience.
When brands fail to deliver a customer-centric experience, it is more than just the direct customers that will be impacted. Here are just some of the benefits of improving a poor customer experience on your business:
- Improved Customer Retention
- Decreased Cost of Servicing Customers
- Improved Employee Experience
- Improved Brand Loyalty
- Increased Customer Spend
Improved Customer Retention
At its core, a customer-centric culture in a company will lead to a higher customer lifetime value (LTV). Customers will also be more likely to advocate for your brand & its services in the form of reviews & word of mouth referrals. According to Nick Glimsdahl from the Customer Experience Professionals Association (CXPA), almost 2.5x the number of companies focus more on customer acquisition than on customer retention (see study here).
Depending on your industry & the average customer LTV, customers will need to be nurtured & engaged with, through multiple touchpoints. Feedback from existing customers is invaluable, not only in retaining these clients, but in fixing pain points in their experience with your brand, ultimately improving your product for a wider group of existing & future customers. Ensuring that your customer service team takes a customer-first approach to their roles is a must, particularly in a landscape where businesses compete on customer service & experience, as much as product.
Taking on board customer feedback is important; without implementing customer listening programs, brands are effectively flying blind. Dissatisfied customers aren’t guaranteed (or even likely, in most instances) to leave feedback as to why they no longer want to work with a business or consume a product, they will quietly opt-out unless prompted.
Decreased Cost Of Servicing Customers
On the most basic level, poor customer experiences lead to dissatisfied customers.
As any employee in a customer-facing role, or business owner can attest, dissatisfied customers are harder to service, require more time, attention & resourcing and, for this reason, often cost more to service. More time spent servicing customers, particularly if the missing link is better communication, and improving your customer experience will increase the profitability of formerly dissatisfied customers.
Improved Employee Experience
Happy employees perform better & deliver better experiences to customers. In a perfect world, your employees should be your number one promoters, recommending your business proudly to potential customers & sharing their positive experience of their workplace with peers. Spreading positive brand awareness by word of mouth is the most powerful form of advertising.
A workplace environment that is not conducive to happy employees will lower morale. Outside of this, customer-facing teams dealing with dissatisfied customers day in & day out will see higher employee fatigue & harder, less satisfying work for employees overall.
It is important that employee feedback is heard & taken on board. Creating a positive culture for employees will lead to happier employees, who are more likely to produce better work, happier customers & advocates for your brand..
Improved Brand Loyalty
All it takes is one poor experience for a customer to start weighing up their options – is this product or service right for me? Think about the last time you ate at a restaurant you like, where the food was worse than you remembered. Conversely, positive experiences for customers are much more likely to lead to repeat business, positive reviews & customer advocacy. The knock-on effect of keeping customers happy is tenfold; happier customers are more likely to leave reviews, and reviews lead to more customers.
95% of customers read reviews before making a purchase (goodreviews). Customers in the consideration phase of choosing a product are likely to rely on reviews & social proof where they don’t have word of mouth recommendations as to which product or service to choose - these reviews also help your business appear more widely across the web & with a better reputation to boot!
86% of consumers will hesitate to purchase from a business that has negative reviews (reputation x). If poor customer experience is leading to negative reviews, imagine the number of potential clients lost due to these reviews? Ensuring that customer experiences are positive will mitigate the risk of negative reviews.
Increased Customer Spending
Research by the Harvard Business Review shows a direct link between customer experience and annual revenue. They found that customers who had the best experience were shown to spend 140% more than those who had a bad, or less-than-great experience.
If the service or product delivered to your customers, particularly new customers who have yet to form opinions about your brand, is sub-par, they are at the very least less trusting of your business & less likely to spend more money. Trust in business is imperative. To even think about cross-selling, up-selling or referrals without having earned the trust of your customers is wishful thinking.
To summarize, optimizing your customers’ experience across the different stages of their journey with your business is crucial. The risks of a poor customer experience to prospective and existing customers, employees & your reputation in-market are matched only by the benefits of getting it right.
To see how Potentiate can help you with your customer experience challenges, please get in touch with us here.