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Tuesday, 9 June 2015

Customer Experience: How it is Related to Business Value?

 Aequor Technologies     03:37     Customer experience, Customer experience Management     No comments   

Customer experience is a major driver of future revenue. This “thing” or this “term” is so important these days that in the 2005 book, Return on Customer, Don Peppers and Martha Rogers presented the customer experience as the single most important factor for business success. For this and some other vital reasons, it is critical that customer experience is improved to improve the business value of an enterprise.


So let us first take a glance at the determining factors shaping the customer experience in today’s digital age.

There are many factors and of course some of them are in the control of businesses, including- face-to-face contacts, the brand advertising and packaging. While still there are numerous factors that escape the “control” of a business, for instance, word-of-mouth. And then your customers are individual entities who differ in various ways, creating the famous customer experience gap. So to build a great customer experience, following gaps need to be filled:

•   In what we believe customers want and what they really want.
•   B/w brand promises and brand experiences.
•   Our perception of the quality of the customer experiences we facilitate and how customers perceive it.
•   B/w the ways we seek business value and the ways we offer and benefit from customer value.
•   B/w divisions, the front-end of our businesses and the back-office.
Furthermore, for a superior customer experience and showing its impact, it also needs to be quantified.

Customer Experience Management
Now if a business has to deliver a good customer experience, practicing Customer Experience Management or CEM is important.

It is aimed at meeting customer expectations and ideally exceeding them, whereby the design of customer interactions at all the touch points are taken into account. Using end-to-end customer experience, the mutual value of customer interactions is optimized in an incessant loop of interaction, reaction, pro-action and optimizing satisfaction to go beyond the expectations.

How to quantify the Customer Experience?
Yes, now it is even possible to quantify the customer experience.
For transaction-based revenue model, findings indicate that after controlling other factors that drive repeat purchases, it is customers past experience that makes the biggest difference. A customer who had a great past experience tend to spend 140% more compared to the one who had the poorest experience.

These findings do not often change with revenue models. So while a transaction-based business is interested in how often customers return, a subscription-based business is interested in how long he remains committed. So even if it is a subscription-based business, results remain equally impressive.

For subscription-based business, future membership length could easily be based on the quality of customer experience. The findings indicate that a member with a poor past experience has close to 43% chance of being a member a year later while a member who had a good past experience would want to continue the membership for at least another year and chances of him doing that is as good as 74%.

Other Benefits
Reduce Customer Care Costs
If a customer is unhappy, he either returns the product or is more likely to require support. To find and resolve the source of dissatisfaction, a business spends time and employ resources. It proves that delivering great experiences actually reduces the cost to serve customers from what it was previously.

Some companies, for example, Sprint has announced publically that as part of their focus on improving the customer experience, they’ve managed to reduce their customer care costs by as much as 33%.

Increase Revenues from Multiple Sources
There is evidence that when a company’s Customer Experience Index (CxPi) score goes a notch higher, it drives revenues from multiple sources, including but not limited to the following:

1.    New sales – these are driven by word of mouth.
2.    Incremental purchases – these are made from existing customers
3.    Revenue saved by lower churn.

Conclusion

It is certainly the right business decision to invest in the experience of your customers. However, doing it the right way is equally important.

It requires that you take the right steps towards doing the customer journey mapping. It starts with understanding the customers and gathering the right data. Next comes taking inputs & feedback into account to validate the data. Also, key customer questions across various stages or “moments” in the life cycle should be taken into account. As these are dynamic representations, focusing on customer experience optimization is also essential.

Only then a good customer journey map comes into being. It is a framework that enables you to precisely view the customer life cycle, observing the various stages and touch points of customer’s characteristics, goals, emotional triggers etc.

Most importantly, it will help you to demonstrate to everyone in your organization just how big is the impact of delivering a great experience.
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