CUSTOMER EXPERIENCE MANAGEMENT (CEM) ALLOWS COMPANIES IN BOTH THE B2B AND B2C SECTOR TO ACHIEVE GREATER REVENUES AND LOWER OPERATING COSTS. WITH PRODUCTS AND SERVICES BECOMING MORE SIMILAR (THE COMMODITISATION EFFECT ), HAVING THE RIGHT CUSTOMER EXPERIENCE STRATEGY HELPS INDIVIDUAL COMPANIES DISTINGUISH THEMSELVES AND THEREBY BUILD A LASTING COMPETITIVE ADVANTAGE.
Definition of Customer Experience (CX) The set of intertwined systems, processes and people that make up an enterprise generates specific events that a customer experiences. CX is the sum of all those experiences as well as the emotions they generate for a customer in their interactions with that enterprise. It comprises:
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- Customer experience related to the sales process, which the customer experiences themselves or hears about from others. This covers not only their experience of the buying process, but the emotions it arouses and how they remember it.
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- Customer experiences related to marketing activities, arising from the customer’s contact (direct or indirect) with an marketing information, whatever its style, quality and content.
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- Previous customer experience of a particular company or brand – in other words brand reputation, based on a customer’s first-hand experience or on word of mouth.
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- Customer experience associated with a service or product, which consists of many aspects of a customer’s current experience. These may include reliability, ease of use, availability, price, etc.
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- Customer experience related to customer service, covering every customer interaction with an employee of the company or people or institutions acting on its behalf. The more customer-focused the company’s employees are – from senior management to front-line staff – the better will be the customer’s experience of the company.
- All other experiences that the customer acquires on the Customer Journey (the customer’s path through all points of contact with a company or brand).
CUSTOMER EXPERIENCE MANAGEMENT
Despite being a relatively young discipline in business management, Customer Experience Management is an activity which affects almost all of an enterprise’s management divisions – even though to date it has been mostly associated with a company’s marketing or customer service departments. CEM involves:
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- Building a Customer Experience strategy and activities in line with the business strategy. This involves establishing Customer Experience principles consistent with company strategy, thereby underpinning the way in which the company provides services or products . Introducing the right CEM strategy can help a company build a competitive advantage over other firms in the same sector. By providing customers with positive experiences that are different from those of the competition, companies have the chance to build customer loyalty, leading to repeated purchases or positive recommendations to friends. Properly selected CX activities can affect both the systems and processes that operate in a company.
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- Building understanding of Customer Experience and the support of senior management for its development. The commitment of senior managers to CX builds sensitivity to it amongst all employees, ultimately allowing those managers to translate CEM into revenue growth and lower costs. This happens because the conscious management of customer experience leads to greater customer loyalty. Research confirms[1] that loyal customers are six times more likely to forgive a business for a mistake, five times more likely to make repeat purchases, and twice as likely to recommend a company to friends. These three aspects directly affect a company’s revenue. Meanwhile, optimising processes within a company and adapting them to customer expectations often leads to lower costs: for example, better-targeted and executed communication with customers reduces the number of queries and the amount of time needed to deal with them.
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- Building staff commitment and a customer-focused attitude. Profit and revenue growth is firstly stimulated by customer loyalty. Customer loyalty is a direct result of their satisfaction. Customer satisfaction is built on the value and quality provided to them by the company. And these are created by satisfied, loyal and effective employees.[2] (The Service-Profit Chain; Harvard Business Review 1994.) Because customers come into contact with them every day, it is a company’s staff who have the greatest impact on the customer experience. Training employees and building their commitment to CX is an indispensable step, as properly trained teams and efficient, friendly customer service procedures determine the experience a customer will have.
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- Building a credible brand reputation.A brand’s reputation is created from the sum of all customer experiences at all the points of contact mentioned above. Therefore, all departments should participate in a CEM project, because regardless of the role of individual employees, each of them in some way affects the customer’s experience.
- Building a measure of the effectiveness of Customer Experience activities and how they impact revenues. This area is extremely important for the both the credibility of a CEM project and its continuous optimisation. By using the right success metrics, a company can monitor its CX achievements and change its activities in response to the changing market and varying customer needs. CEM success metrics include those related to the acquisition of new customers (the average value of new orders, average revenue per customer), customer retention (customer retention rate, Net Promoter Score) and organisational effectiveness (sales costs, marketing costs, customer retention costs).
TO BE EFFECTIVE, CUSTOMER EXPERIENCE MANAGEMENT MUST BECOME PART OF A COMPANY’S PHILOSOPHY.
It must permeate all departments and levels within a company. This allows the consistency of a company’s image in the eyes of customers to be maintained. Remaining in closed, non-communicating silos does not foster a customer-focused attitude, and thus does not build positive a customer experience.
[1] Temkin Group Consumer Benchmark Survey
[2] The Service-Profit Chain; Harvard Business Review 1994.