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Customer Experience: the Most Important Competitive Differentiator?

Whether it’s on a website, on LinkedIn, (or in the title of a blog post like this one), customer experience (CX) is a phrase that seems to be banded around everywhere at the moment… and for good reason. A study has shown that by 2020, customer experience will have taken over both product and price as the key brand differentiator. It seems that almost every forward-thinking company adopts this as their new favourite buzzword, but what does it actually mean and how important is it as a competitive differentiator?

Let’s go from the top. What is customer experience?

On a number of occasions, I’ve heard 'customer experience' be used almost interchangeably with 'customer service'. It’s easy to understand why that is; they both deal with the relationship between customer and company and are equally as important as each other. The problem with using these terms interchangeably is that although related, they aren’t the same. A bit like your eyebrows- they are definitely sisters and not twins.

The way I see it, customer service is reactive and often isolated. If you go to a shop to buy a product and your attendant is friendly and helpful, that’s good customer service. Similarly, if you call up a company to discuss a query you have about their services, by them assisting you with that query and solving your problem efficiently, they are also providing good customer service. In each of those examples, the customer has initiated the contact and the exchanges were isolated.

Conversely, customer experience is proactive and ongoing. Great customer experience comes from companies listening to their customers and anticipating their wants or needs, not only through customer service, but at every point of interaction the customer has with the company. For example, I listen to music via Spotify… mostly RnB and musicals (I know right- what a mix!). Every time I open the app on my phone, Spotify gives me a list of suggestions for other playlists and albums which I might be interested in listening to, based on my preferences. For example, if I’ve been listening to the Hamilton soundtrack, Spotify might suggest I listen to The Greatest Showman album. I’ve discovered lots of great new music which has prompted me to return back to Spotify again and again. I use their service almost on a daily basis and have recommended it to many friends. Hence: a fantastic customer experience for me and increased revenue for Spotify.

Here's what I mean:
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In differentiating CX from customer service, customer experience doesn’t relate to isolated events or depend on customer initiated contact though- it’s always at play and exists throughout your entire relationship with a company, an element of which includes customer service. CX is about making your brand one that customers want to use because of the overall experience they have when they use your services or buy your products. Put simply, it’s the whole package.

Sunglass wearing woman relaxing near swimming pool with earphone plugged in iPhone at Sao Paulo
Photo by Bruno Gomiero / Unsplash

Technology has had a big impact on CX

Looking back over recent years, it’s clear to see the correlation between technological advances and better customer experience. In the case of my previous example, the CX team at Spotify used algorithms to understand my musical preferences, which then allowed the app to offer me suggestions which were well received. That wouldn’t have been possible at all if I wasn’t using digital means to listen to music; i.e. if I went to a store and bought the CDs with cash, algorithms would be no use to anyone.

It stands to reason then that this method of improving CX is relatively new, with its evolution intrinsically linked to technological advancement. There are thousands of other examples I could’ve given instead of Spotify; almost every major digital service nowadays deploys similar tactics to its customers- so much so that they are becoming not only expected, but completely normalised. Studies have found that customers’ expectations are getting more demanding as technology becomes more entwined with everyday life, but people are also willing to pay more for a better experience. It’s simply not enough to sit back and expect customer loyalty anymore: especially as 67% of customers cite bad customer experience as their reason for churn.

This leads to a very interesting point. In the past, customer service and/or customer experience was largely a support function of a company. In days gone by, you would purchase a product or service from a company and the only further dealings you would have with that company would be if you needed additional info or help. You might give them a call or send them an email, and that would be that. Fast forward to today- people are actively seeking out good CX when comparing products across the market, so it really is one of the most important differentiators. This means that CX and service isn’t just a support function anymore- it has become a product feature in its own right. Therefore, companies who want to have the competitive edge and retain customers simply must place higher focus on customer service and experience than ever before.

So why is it that some companies are leading the pack when it comes to CX and others can’t cut the mustard?

One of the main reasons why customer experience is so important to a company’s success is because it builds a lot of value, in the short and long term, for the customer. Whichever way you look at it, whether it’s offering helpful suggestions for products, assisting with a customer query or anything else. The underlying reason why companies go out of their way to provide great CX is to get the customer into a position where value is as high as possible… and they need to do that quickly so that the customer doesn’t go looking elsewhere. The best companies at doing this make the journey so seamless that the customer ends up leading themselves to the value.

Keeping it personal

personalised-branding
Photo by Thirteen .J / Unsplash

So how do you make a customer journey so seamless they lead themselves to the value? One way of doing this is by prioritising personalisation. 80% of customers said that they prefer businessed who offer personalised experiences over those who don’t, and those customers who find personalised experienced very appealing are 10 times more likely to be that company’s most valuable customers. Before you ask- sending the odd email with their name in the header isn’t what I mean by personalised service. Much like my Spotify profile, online retailers are now using algorithms to offer their customers personalised content and personalised homepages. (I highly recommend reading this article published on Medium which goes into more detail about this). Intuitive and helpful personalisation helps the customer feel valued which improves their experience- it’s always nice to think that someone is thinking about your needs. It also serves a practical use too- with online retailers stocking vast amounts of products, it saves the customer time rifling through pages and pages to find what they’re looking for. Ultimately, personalisation lets the customer find what’s valuable to them quickly, increasing the chances of a purchase.

Wait a second, so is CX just to do with digital? What about the humans behind the tech?

woman-with-bubbles
Photo by Alejandro Alvarez / Unsplash

So far a lot of this post has been focussed on the tech side of things- but a huge part of CX is about increasing human contact between the brand and its customer. At a time when so much emphasis is put on brands to keep up to date with the latest tech trends, companies are focusing so heavily on improving their digital channels that human to human contact is suffering. In fact, according to a report by PwC this year, a staggering 59% of all consumers feel that companies have lost touch with the human element of customer experience.

Yikes. That’s a lot.

It’s easy to see how companies can get carried away with using tech to improve their CX, but studies have shown that as technology improves, the requirement for human to human contact is actually increasing. 75% of all consumers agreed technology should be used primarily as a method of facilitating human communication and in a survey about improving business processes, the improvement customers requested the most was better human service. This is particularly important when a customer has a complaint or query that needs to be dealt with. Being overly reliant on automated services as a method of replacing human contact has actually shown to have a negative impact on customer experience, so companies who do this are putting themselves at a competitive disadvantage. To illustrate this, let’s use the example of Artificial Intelligence in customer service.

Automated customer service bots, like chat bots and automated voice systems for phone calls, can backfire on your CX if used poorly. I’ll break it down into two sections: the idea and the reality.

THE IDEA:

People can’t live without technology nowadays. Everywhere we go, we take our smartphones with us to stay permanently connected. Technology in everyday life means we can constantly keep in contact with each other, digest news on the go, use Google Maps to get to where we’re going and post pictures onto social media once we get there. The bottom line is that we are totally engrossed in technology.

via GIPHY

As a natural progression, customers are more frequently using technology as a means to communicate with companies (through social media as well as other channels). Therefore the next logical step for companies is to place higher emphasis on digital communication channels for their customers to respond to the increasing demand and improve CX.

With me so far? Good, let’s see what might happen next:

People are generally more comfortable dealing with technology than they are with humans. People don’t even call up to order pizza anymore- it’s all done via an app (ever heard the phrase “there’s an app for that”? It’s because there is. For everything.) Let’s do away with the middle man (literally) and replace human contact centre agents with automated bots. It will make the process more streamlined and efficient for the customer. Happy customers, happy businesses.

Right?

Hang on. The logic is great, but let’s see how this scenario actually plays out…

THE REALITY:

People find it increasingly difficult to live without technology nowadays. Most of the time, we take our smartphones out with us to stay connected. On the whole, people agree that having digital channels to communicate with brands is a positive thing for customer experience. There’s one caveat:

Humans like to talk to humans. Not bots.

No matter what the channel, people want to ensure that when engaging via digital means, there is a real person on the other end who can assist them properly. According to the PwC report mentioned above, people want more human contact in the future, not less. Hazarding a guess, a reason for this could be that ultimately, AI doesn’t allow for compassionate communication. Overall, automated bots aren’t able to provide a service anywhere near as positive as what a human can offer. As it turns out, even with all the tech in the world, people just want to have a conversation with a person.

Companies who understand this are seeing marked improvements in CX and ROI. Amex is a great example. They changed their customer service philosophy to give agents much more freedom.They have done away with scripts and allow agents to deal with a customer query as they see appropriate. Oh, and they got rid of automated customer facing bots. Instead, they focussed on real communication and used tech as a means of understanding their customers better. They used internal tracking software to understand how their customers used their website and used the analytics to see where customers were dropping off, so that they could use the findings to improve overall customer experience.

Since doing this, their customer retention has increased by 400%.

You can still use tech to make customer communication more efficient and improve customer experience, you just need to be careful that in doing so, you don’t throw the baby out with the bathwater and get rid of all human contact.

As Felix Winstone, Director at Talkative, says: “it’s about enriching and enabling humans, not replacing them”.

A great way of doing this is to use integrated software like web chat or web calling. Having a web chat button on your website (which clearly tells the customer that they will be connected with a real person) satisfies the need to have a fast and pain-free method of contact. One minute they are looking through the website, and a click later they are speaking with a service agent who can help them with any queries they might have. At the same time, they can rest assured they are getting credible information from a human within the organisation. If their query is more complex, the conversation can be easily escalated to a voice or video call. From a CX perspective, it seems that this would tick all the boxes.

Companies need to be available... and when I say say available, I mean it

Further to this point, having multiple contact channels is also a bonus for customer experience. A multi-channel offering which allows customer to communicate with companies via social media, online chat, video calling and/or messaging apps like WhatsApp is more in line with modern customer needs than sticking with traditional contact channels like phone and email. The proof is in the pudding: businesses today are operating an average of nine customer contact channels to deliver a multichannel experience This isn’t about to change either- the expectation is for that to rise to 11 by the end of 2018. It’s not just about having fancy algorithms and being able to personalise content consumers see, it’s also super important that companies remember to reassure their customers that they are easily contactable should they need anything else.

The development of technology has enabled increased human connectedness, through the channels mentioned above and more. It stands to reason that for a positive CX, companies must offer their customers maximum accessibility to their company to follow this trend. Companies who fall behind on this simply aren’t living up to modern customer expectations, so you might be right to assume that these are the companies who might slip behind.

In summary, it’s clear to see that customer experience is a key differentiator amongst companies, and one which you shouldn’t take for granted. Good CX is, in some cases, a relatively untapped gold mine of value, which companies can use to attract new customers and retain existing customers. With 66% of consumers ready to jump ship and switch brands because of bad customer experience alone, it’s apparent how important CX is to the long-term success of a business.

Patsy Nearkhou

Patsy Nearkhou

Patsy Nearkhou is Marketing Manager at Talkative. She loves to create content around customer experience, customer service and emerging tech within these fields.

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