Why customer experience matters more every day
Customer experience continues to be the buzzword of 2018. Visit any business or industry conference, and you'll no doubt find keynote speeches and breakout presentations highlighting how your business can align itself to provide a better, more holistic customer experience. Looking at Google trends, we can confirm that interest in Customer Experience as a topic is at an all time high and has been increasing consistently over the past 5 years.
How valuable is the customer relationship?
The sustained interest in customer experience is well founded. In their article for the Harvard Business Review entitled "Why Strong Customer Relationships Trump Powerful Brands." Christof Binder and Dominique M. Hanssens highlight their research of M&A data "covering over 6,000 mergers and acquisitions worldwide between 2003 and 2013." Their findings were consistent - Customer Experience (as measured in the worth of existing repeat customers who are known in person), makes up a growing percentage of organizational value and is increasing at approximately the same rate that Brand Value is declining. In short, it can be said that the today's brand value lies in customer relationships.
According to the research, the average company now finds 20%+ of its valuation is dependent on the perceived quality of their customer relationships. Customer experience experts point out several reasons why customer experience continues to grow in importance, while brand building is declining in importance over time. The analyst community agrees in the importance of customer experience. According to Gartner's latest Customer Experience in Marketing Survey 2017: Greater Expectations, Greater Challenges, in two years 82% of B2B CMOs expect to mostly or completely compete on the basis of CX, compared with 76% for B2C marketers.
The Top Reasons Customer Experience is Growing in Value
- "The reason why our clients are now turning to us more and more on this topic of customer experience is that indeed these companies, like Apple, Google, Amazon, Uber, are just raising the bar in terms of customer expectation." - Nicolas Maechler, McKinsey
- The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is 5-20%. - mycustomer.com
- "Where the consumer was once informed, he is now truly empowered. He can dictate change at the highest levels of business. And the consequences for businesses who fail to grasp this fundamental shifting of the tectonic plates of the marketplace may face extinction sooner than they think." - InTheKnow
- Word of mouth is one of the most powerful tools a company can wish for today. The truth is, 84% of consumers do not trust adverts anymore. People are now seeking third-party validation when making an online purchase. And that’s why customer advocacy is so important. - Trustpilot
- "52% of B2C customers say they’d switch brands if they didn’t feel they were receiving a personalized experience." - Salesforce.com, 2018 State of Marketing Report
Digital Becomes a Big Challenge
But the rise of customer experience is not the only trend impacting businesses today. From 2004 to 2018, we have seen an exponential increase in the number of Smartphones, Tablets and Connected Devices in use. The result has been a rapid digitization of customer interactions.
Companies are stuck between a rock and a hard place - having to both maintain high levels of customer experience in order to compete, and deliver those experiences on a rapidly growing array of digital channels. Oxford Economics found that the most successful companies are taking a holistic approach to digital transformation in order to support a better overall customer experience. Unfortunately, the average organization is not as well prepared to manage the growing number of channels and maintain an end-to-end customer experience.
As a result, when facing a choice between maintaining a long term their current customer experience and rapidly expanding to new channels, the data points out that many organizations and CX leaders are making the choice to quickly pursue digital experience opportunities projects with currently existing channels of communication. The challenge remains, however, that hybrid models are proving to offer the best results.
“Hybrid CX now has, on average, a two-point lead over purely digital and purely physical CX. Even a single point in CX improvement can yield hundreds of millions of dollars in revenue growth. Between 2016 and 2017, the quality of hybrid CX rose in nine of the 21 industries we studied. As a result, hybrid now leads in 12 industries and ties for the lead in nine more. Hybrid also leads in virtually every sex, age, and income group. - Customers Prefer Hybrid Digital/Physical Experiences, Forrester, 2018
Why are hybrid experiences important?
Globally, customers are still transitioning from traditional channels to digital communications and it is important that companies continue to support traditional channels in conjunction with introducing new mobile and online offering. The numbers speak for themselves:
- Over1/3 of banking customers opting to continue to receive paper statements
- Fifty-four percent of American adults say they get a credit card or checking account paper statement by mail
- For those who prefer paper, loyalty is fierce. Nearly half (46 percent) say they would not switch even if they were charged extra for mailed statements
- At a recent Appway roundtable of banking executives in Singapore, Fifty percent of the roundtable participants disclosed that their onboarding is still paper-based.
While consumers are making progress in their move away from paper-based communications, and companies are making big strides on eliminating paper from processes like onboarding and claims management - many production systems and government regulations require paper to be an option for customers. Taking hybrid requirements that bridge the entire enterprise into consideration when building the overall customer experience is key to delivering a manageable, scalable and exceptional customer experience.