Profitable long-term customer relationships are the lifeblood of a successful company! This truism supports that effective customer interactions, in the current economy, are carried out in a professional, and problem-free manner. Today’s smart consumers expect more value from their providers with a dedicated focus on relevance, product availability, ease of purchase, cost-effectiveness, 100% quality, and expedient and painless delivery.
Being customer-centric is no longer just viewed as a company tag line; it is a mission-critical strategy directly aligned with the realization of projected financials.
Rule One, in successful companies dictates that Customers are King as they “are the company”!
The Customer Experience (CX)
The Customer Experience (CX) are sets of positive pre-sale subjective expectations and post-sale use perceptions that customers have of a company, brand, business model, and products and services. An alternative description refers to CX as the sum of all physical, emotional, subconscious, and psychological encounters a customer experiences with a business over the lifespan of their relationship. In summary, CX provides a continual value-add experience to customer relationships across every touchpoint that fulfills their expectations and perceptions.
According to Forrester, exceptional CX consists of interactions and events that customers believe and values as:
- Useful: they deliver value plus.
- Usable: the value is easy to recognize and engage.
- Enjoyable: they’re emotionally engaging.
The key to a positive Customer Experience is the differentiation that businesses consciously build into their business model and products and services to provide a competitive market advantage. Market research reveals that organizations with a formal, lucid, and highly competitive Unique Sales Proposition (USP) are better equipped to influence positive customer expectations and perceptions.
“The purpose of a business is to create a customer.”
The array of customer pre and post-purchase communications and events represent the crucial dynamics of the Customer Experience. Customer impressions are personal and embrace various sensory, emotional, rational, and physical facets in creating and sustaining a positive or negative customer experience.
A fundamental change of mind-set focusing on the customer, along with operational and IT improvements, can generate:
20 to 30% uplift in customer satisfaction.
10 to 20% improvement in employee satisfaction.
Economic gains ranging from 20 to 50% of the cost base addressed in the various journeys.
A successful Customer Experience is generally determined by how the purchased products or services support the individual customer’s positive expectations and resultant use perceptions. When a company meets customer expectations and opinions, they establish a loyal customer connection. On the other hand, the failure to meet customer expectations and perceptions will typically result in outcomes that include customer loss, decreased revenue and profitability, and brand damage.
The management of the overall Customer Experience, at best-in-class organizations, is classically the responsibility of an executive, with senior-level sales, marketing and customer service skills, practical work experiences, and a deep-rooted passion for customer service excellence.
A 2014 Harvard Business Review Study revealed that:
In Transaction-based Businesses, customers who had the best experiences spent 140% more than customers who had the worst experiences.
In Subscription-based Businesses, customers who had the best experiences had a 74% chance of being a subscriber one year later, yet customers who had the worst experiences reported a 43% chance of remaining a subscriber after one year.
Customer Perceptions & Expectations: The Differences
There are recognized confusion and misinterpretation of the meanings of customer expectations and perceptions as used within the Customer Experience approach. Outlined below are explanations of these terms and a description of the supporting Customer Gap Analysis.
- Customer Expectations: pre-sales set of positive beliefs and assumptions in deciding to purchase a product or service. Customer expectations are classified as either explicit or implicit and influenced by demographics, cultural background, family lifestyle, personality, beliefs, reviews, and experience with similar products and services.
- Customer Perceptions: post-sale subjective evaluations of use and support after purchase of a product or service. Customer perception is dynamic versus static; therefore, customer perceptions are about the current customer belief and attitude.
When a customer’s post-sale use of a product or service conflicts with their subjective expectations, a gap occurs with the selling company’s value proposition. The gap among expectations and perceptions recognizes the difference in the customer’s fulfillment level (satisfied – unsatisfied) with the business’s product or service. The best outcome, for the seller, is situations where customers perceptions align and surpass their expectations.
Customer product and service gap types include:
- Administration, Contract and Legal Gap
- Communication Gap
- Customer Service Gap
- Delivery Gap
- Performance Gap
- Product Quality Gap
In the post-sale environment, customer perceptions can easily and quickly change from positive to negative or vise-versa. For this reason, well-managed businesses regularly bridge the gap between customer expectation and understanding to maintain customer loyalty and be in a position to quickly recognize customer problems and exploit opportunities for upselling and cross-selling.
Managing customer perceptions is a difficult but necessary activity for companies to effectively ensure that their business aligns with customer needs, viewpoints, and their financial goals.
Customer Experience Market Intelligence
Salesforce Research recently surveyed over 6,700 consumers and business buyers globally on the pluses and minuses of the customer experience. Key report highlights follow:
- 76% of customers report that it’s easier than ever to take their business elsewhere by switching from brand to brand to find an experience that matches their expectations.
- 70% of customers indicated that connected processes such as seamless handoffs or contextualized engagement based on previous interactions are critical to winning their business.
- 56% of customers actively seek to buy from the most innovative companies (that is, those that consistently introduce new products and services based on customer needs and new technology).
- 63% of customers expect companies to provide unique products/services more frequently than ever before.
- 66% of customers say it takes more for a company to impress them with new products and services than ever before.
- 57% of customers have stopped buying from a company because a competitor provided a better experience.
- 62% of customers say they share bad experiences with others. With the proliferation of peer review sites and social media, this practice can inflict widespread reputational damage.
- 72% percent of customers share good experiences with others — a full 10% more than those who share the negative.
Differentiation Analysis Workshop (DAW)
The key to successful selling is to identify what makes a business unique in a world of homogeneous competitors. The Unique Sales Proposition (USP) is a beneficial approach to identify and promote the exceptional value demonstrated by a company that differentiates it from competitors.
A Differentiation Analysis Workshop (DAW) is used to identify the supporting information required to populate the USP baseline for decision-making. DAW participants are typically brutally honest and without preconceived ideas and biases concerning the company’s brand and image, business model, and products or services while actively engaged in this strategic collaborative event.
The vital questions answered, discussed, and challenged until all participants reach a group consensus for DAW inclusion are as follows.
- What are the critical components of the company culture?
- What is the company’s forward vision?
- What are the company’s mission and business model?
- What are the products and services?
- What are the targeted customer market segments and geographic locations?
- Is the company on the plan for revenue and profitability realization?
- What is the current and trend percentage of the new name to current long-term customers?
- What percentage of customers are lost or fail to repurchase annually?
- What are the marketing and sales plans to attract and obtain new customers?
- How effective is the company’s cross-selling and up-selling processes?
- What is the value of the company’s Unique Sales Proposition (USP) versus competitors?
- What are the current and future company weaknesses versus competitors?
- Have any previously identified and quantified opportunities failed to be leveraged or exploited?
- What is the company’s perceived current market image?
Qualifying Characteristics of Desirable Customers
To avoid future unnecessary marketing and sales undertakings and unwarranted financial outlays, it is essential to determine the attractiveness and potential of prospect conversion to profitable long-term customers. The overall success of the Customer Experience is directly influenced by targeting prospects who are amenable to the company’s value points as contained in the Unique Sales Proposition (USP).
Identifying and weighting key customer purchase-centric characteristics is focused on:
- Problem to be solved or an opportunity to be exploited or leveraged.
- Buying habits with a focus on when they buy and how they buy.
- Available budget/purchase power.
- Personal chemistry.
- The problem or opportunity needs to match with specific products and services.
“If all you’re trying to do is essentially the same thing as your rivals, then it’s unlikely that you’ll be very successful.”
The Way Forward
Knowledge Compass consultants successfully help clients improve the customer experience and assimilate with corporate culture and strategy, thereby improving customer loyalty and cross-selling and up-selling opportunities.
Knowledge Compass provides consulting services with the use of an array of Frameworks, Analyses Tools, and Interactions from their Best Practices Consultant Toolbox.