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“Customer experience” is one of the biggest buzzwords in the business world today, as well as a key competitive differentiator across multiple markets. In fact, according to a Gartner survey, over two-thirds of marketers claim that their companies compete primarily on the basis of customer experience.
In a post-COVID environment, the idea of what constitutes the customer experience has been radically re-envisioned for many businesses. Is a fully online and digital focus the way forward? Or is a return to a reimagined in-person experience a better bet? Perhaps a hybrid approach?
Many companies struggle to deliver an exceptional customer experience, and adjusting to the “new normal” going forward isn’t going to make it any easier. Fortunately, we’ve put together this blog post on all things related to the customer experience — key performance indicators, best practices, and more — to help businesses get moving in the right direction.
What is Customer Experience?
Gartner defines customer experience as “the customer’s perceptions and related feelings caused by the one-off and cumulative effect of interaction with a supplier’s employees, systems, channels or products.”
These various opportunities for interaction that are known as touchpoints, and each touchpoint has the potential to either move the consumer further along the customer journey or cause them to disengage entirely. To that end, each and every touchpoint must be optimized so that, when taken collectively, they create an exceptional end-to-end customer experience. Should you succeed in achieving this, your business will be rewarded with higher rates of customer satisfaction, loyalty, and advocacy, better word-of-mouth marketing, increased revenue, and so much more.
Customer experience is one of the major points of differentiation a business can make from its competitors and is just as important as considerations like cost and product quality. Nurturing a positive customer experience is more likely to result in happier customers who are likely to remain loyal to the business and be advocates for it. Customers are also willing to pay for a better experience, as 84% of companies that have improved customer experience have reported an increase in revenue.
Customer Experience vs. Customer Service
It’s important to specify that customer experience is distinct from customer service. Though important, customer service is only a single opportunity for interaction, specifically the point of interaction where an employee provides a service to a customer.
- Occurs during direct interaction between a customer and a representative of a business.
- Involves the act of supporting or advocating for customers as they inquire, purchase, or troubleshoot a product or service.
- Is usually owned / managed only by a single branch of a business.
The Customer Experience
- Encompasses a holistic experience that touches all parts of the company.
- Ranges from the top of the sales funnel to the bottom, from advertisement to personalized follow-up communications.
- Every employee and business representative has an opportunity to improve the customer experience.
Customer Experience by the Numbers
10 Ways to Measure the Customer Experience
There are a wide range of different key performance indicators (KPIs) organizations can use to gauge the health of their customer experience. These KPIs typically vary from one role to the next — for example, a customer service VP is more likely to be concerned about customer satisfaction and customer churn, whereas an IT leader is likely more focused on the total cost of ownership and customers’ service level agreements.
That said, these are some of the most popular KPIs and metrics that businesses use to evaluate their overall customer experience:
Customer Satisfaction (CSAT) Score
This KPI indicates overall customer satisfaction with everything from your company’s products and services to its customer support. You can determine your company’s CSAT by conducting a survey in which you ask customers to rank their experience on a seven-point scale ranging from “Very Unsatisfactory” to “Very Satisfactory.” Ideally, your CSAT score should fall somewhere between 75% and 85%, though this may vary by industry.
Customer Effort Score (CES)
CES — often used in conjunction with CSAT — refers to the amount of energy customers must expend in order to get an issue resolved, a question answered, or a request fulfilled. Similar to CSAT, you can measure CES by asking customers to rank their experience on a seven-point scale — this time, one that ranges from “Very Difficult” to “Very Easy.”
Average Handle Time (AHT)
AHT refers to the average time it takes for a call center agent to complete a customer interaction. To calculate AHT, divide the sum of your total talk, hold, and follow-up time by the total number of calls answered.
First Call Resolution (FCR)
FCR is an indication of a call center’s ability to resolve a customer issue or complaint the first time they call in — no follow up necessary. You can calculate FCR by dividing the total number of calls resolved on the first attempt by the total number of first calls.
Time to Resolution (TTR)
TTR, also known as mean time to resolution (MTTR) and resolution time, refers to the average amount of time it takes a customer service team to resolve a case once it’s been opened. In order to calculate TTR, divide the sum of all times to resolution by the total number of cases resolved.
Net Promoter Score (NPS)
Created by loyalty marketing expert Fred Reichheld and first published in the Harvard Business Review, NPS evaluates the overall customer experience, customer loyalty, and the potential for business growth. The NPS survey asks customers to rank brands on a 0–10 scale based on how likely they would be to recommend that brand to a friend or colleague, with a 0 being “Not at all likely” and a 10 being “Extremely likely.” Those who offer a score of 9 or 10 are considered “Promoters,” that is, loyal enthusiasts likely to fuel growth. Those who score a 7 or 8 are considered “Passives” (satisfied, but unenthusiastic and more likely to leave), and those who score between 0 and 6 are considered “Detractors” (unhappy customers likely to impede growth).
Customer Churn Rate
Customer churn rate refers to the percentage of customers who discontinue services over a given period of time. A high churn rate is a clear indication of low customer satisfaction and should prompt a serious reevaluation of your organization’s customer experience. To calculate your churn rate, subtract the total number of users at the end of the period from the total number of users at the beginning of the period. Then, divide that sum by the total number of users at the beginning of the period and multiply by 100.
Customer Retention Rate
Customer retention rate refers to the percentage of customers that a business retains over a given period of time. Customer retention rate is closely related to customer churn rate. For example, if your custom churn rate is 25%, that means you retained 75% of customers — therefore, you have a 75% customer retention rate. To determine your customer retention rate independently, subtract the total number of new customers acquired during a given period of time from the total number of customers at the end of that period. Then, divide that sum by the total number of customers at the start of that period and multiply by 100.
Customer Lifetime Value (CLTV)
CLTV is a prediction of the net profit an individual customer will bring to your company over the course of your relationship (or, alternatively, over a defined period of time). In order to calculate CLTV, you must first calculate lifetime value (LTV); in order to do so, multiply the average value of a sale by the number of transactions and the retention time period. Once you have the LTV, multiply it by the profit margin to determine CLTV.
Customer equity is a measurement of the total combined lifetime value of all of your company’s customers. Download our CX Measurements one-sheet to keep these KPI strategies conveniently close at hand.
10 Best Practices for Creating a CX
Much like Rome, an exceptional customer experience isn’t built in a day — it requires a sustained effort and the flexibility to adapt to the latest trends and changing consumer expectations. Here are some best practices every business should keep in mind when crafting its customer experience strategy:
- Define your vision and mission. It’s far easier for a company to create a cohesive and consistent omnichannel customer experience when it has a clear idea of what that experience should look and feel like. This typically involves:
- Understand the wants and needs of your customers. Determining your customers’ wants and needs will help you understand the degree of changes that have to be made and, more importantly, where they have to be made. Sometimes the actual customer preferences may not be so obvious. In an airport CX diagnostic, the security check was a pretty obvious pain point, however an in-depth case study revealed that passengers were more negatively affected by the attitudes of the TSA employees than by the length of time they had to wait in line.Gathering and segmenting analytical data is a vital first step in creating a positive customer experience, but you’ll need to take a deeper dive in order to understand exactly what motivates them, what excites them, and what frustrates them.
- Map your customers’ journey. One of the first steps in understanding your customers is to identify all the points of the customer journey. The journey is the steps a customer will take to achieve a goal – whether it’s to educate themselves, purchase something, or return a product. What complicates matters is that customer journeys aren’t linear; with so many different channels for customers to use, it can be impossible to predict exactly how they’ll engage with your business.Instead of creating an “A to B” map of where customers might go, map out the entire possible journey and identify the important touchpoints. From there, ask a few questions for each point:
- What is the experience we want to deliver for each point?
- Where are the pain points for our customers?
- Which pain points are a result of bad design / organization?
- How can we reverse-engineer from there to improve those points?
- Determine how to best capture customer feedback. Try to secure feedback through as many avenues as possible. Live chat tools, follow-up emails, post-interaction surveys, and outbound calls are all important channels to piece together a larger picture of your customers. If your customer service personnel can solicit feedback as soon as possible you’ll receive the purest emotion response. That can be challenging for your agents, especially when the customer is upset, but it helps to provide a clearer picture of what are the most urgent pain points.You should also consider implementing a Voice of Customer (VoC) program. VoC refers to the process by which businesses capture customer perceptions in order to gain firsthand perspective into what the customer experience is like. VoC enables organizations to better understand how their target audience perceives their brand, provides insight into what customers want, and promotes customer engagement. For additional information on how to implement a VoC program, we recommend reading our blog post on the subject.
- Target your customers’ emotional motivators. Emotional connection is well on its way to overtaking customer satisfaction as the key determinant of customer value. According to a study from HBR, fully connected customers are 52% more valuable, on average, than those who are just highly satisfied. Emotional connections increase customer loyalty and make them less likely to shop competitors and less sensitive to price.
In order to establish a meaningful emotional connection, HBR recommends that organizations measure and target consumers’ “emotional motivators” — that is, the feelings that drive customers’ behavior. HBR outlines the following 10 high-impact emotional motivators, which businesses can leverage to strengthen customer relationships and enhance the customer experience:
- Craft your customer personas. Once you’ve understood your customer’s journey and emotional motivators and collected their feedback, it’s time to create representative customer personas – i.e., what would a 40-year-old single mom value vs. a 25-year-old young professional? In order to build your customer personas:
- Review customer data to determine chief demographics and trends
- Collect customer feedback to determine consistent pain and pleasure points
- Identify patterns and commonalities within the customer journey
- Interview customers to pull representative quotes
- Determine your top customer personas
- Create actionable personas. Consider something similar to the Compass Model employed by Disney or empathy mapping
- Your customer personas are living documents; you’ll need to constantly refine your personas as both your business and customer base changes over time.
- Personalize your customer interactions. Personalization is proven to enhance the customer experience, with 91% of consumers saying that they’re more likely to shop with brands that provide personalized offers and recommendations. Therefore, marketing campaigns and sales tactics should never be one-size-fits-all — organizations need to tailor promotional materials to the individual. After you’ve created your customer personas and understood the different areas you want to target, the most efficient way connect with your customers is through a combination of customer segmentation and AI.Using its CRM system, a company can segment customers into discrete groups based on shared characteristics; for an even more granular view of the individual, it can build out profiles based on a customer’s purchase history and preferences. These capabilities provide organizations with a better understanding of who their customers are and what they want out of the customer experience. Armed with this information, the company can target customers with campaigns tailored to their specific interests or use AI to generate automated, customized recommendations.
- Define a framework for the development of your team. A company’s employees are, perhaps, the most integral component of delivering an exceptional customer experience, so it’s vital that they be given the opportunity to succeed. In much the same way that an organization has to design the customer experience from the ground up, your organization should be designed to provide employees the best opportunity to succeed.To start, there needs to be an understanding of the shared aspirations for the employees throughout the company. Just as the customer journey should be viewed holistically, the employee experience should be informed by mixed teams – management, marketing, customer service, designers, etc. This opens up communication between different parts of the company to provide a more comprehensive perspective on concerns and common aspirations. Ensure that these team discussions are informed by the defined company vision and mission.
- Optimize the employee experience. Once there’s a sense of direction, employees need support in order for their employee experience be exceptional. To that end, organizations must make every effort to engage their employees so that they feel connected with their work, colleagues, customers, and purpose; this means empowering their employees with the right tools and technology so that they can get the job done and focus on what’s important. Ensure that employees have a closed environment where they feel safe and confident in leaving continuous feedback.
- Deliver a consistent experience. From brick-and-mortar to desktop computer to mobile device, customers use more channels to shop and interact with brands than ever before. Each of these channels represents a touchpoint within the larger customer journey, so it’s imperative that the user experience be consistent, seamless, and frictionless across them — that is, the customer should receive the same level of care, attention, personalization, and service regardless whether they shop in-store, online, or over the phone.
Put everything into practice. A customer experience worth talking about has to be consistent across both theory and practice. In order to motivate everyone to do their very best, business leaders must model a customer-first mindset to their employees. Leadership must also be mindful to incorporate customer-centricity into their company’s guiding principles and to make those principles a key component of new hire training and retraining efforts. In doing so, organizations can create a customer-centric culture that is reflected in the customer experience.
To better practice an exemplary customer experience, consider these steps:
- Adopt CX-centric technology to better collect and analyze customer data.
- Make use of predictive analytics to forecast customer trends.
- Measure your CX levels through a customer metric like the Net Promoter Score.
- Review your ROI after delivering an updated customer experience to determine which areas should be prioritized.
Want to keep these best practices handy for you and your team? Download our 10 Best Practices for CX Strategy checklist.
CX Technologies and Tools to Invest In
Every successful customer experience strategy starts with a solid technological foundation. Here are the five tools and technologies an organization needs in order to craft an exceptional customer experience:
1. Customer Relationship Management (CRM) System
A CRM system is the bread and butter of any customer experience strategy and the most vital tool within any organization’s customer experience arsenal. At the risk of stating the obvious, a CRM system is a centralized repository for customer data that enables businesses to gain a better understanding of who their customers are, how they think, and what they want. By implementing a CRM system, an organization can consolidate data that would be otherwise spread out across many disparate systems, thereby providing them with a 360-degree view of the customer and enabling them to reimagine and redefine the customer experience.
Today’s CRM systems offer robust feature sets and a variety of system integrations for additional extensibility. A cloud-based system like Microsoft Dynamics 365 allows for seamless connectivity between departments, including sales, marketing, and customer service.
One of the more important applications that allows for instant access to this customer data is Dynamics 365’s Omnichannel for Customer Service solutions. Omnichannel solutions provide a holistic view of all your customer-related data gathered from across different channels presented within a unified interface. This ensures that any user will have access to contextual customer information through the most appropriate communication channel. For a closer look at why today’s CX strategy needs to be omnichannel, download our free eBook on Omnichannel Customer Service.
2. Website [with Self-Service Portals]
It goes without saying that every business should have a website that consumers can use to learn more about what it does, what products it offers, and who they can contact for more information. The key distinction here is a website with self-service portals.
Self-service has become a leading trend in the customer service and support sector in recent years. According to research from the HBR, across all industries, 81% of customers attempt to handle matters on their own before contacting a live customer service representative. According to another survey from Microsoft, 77% of consumers report to having used a self-service portal — in fact, 73% of consumers actively want to use self-service technology. It’s easy to understand why: Self-service options and fast, easy to use, and convenient, making them ideal for resolving low-level issues.
And customers aren’t the only ones who benefit: By offering self-service options, such as an easily accessible knowledge base and chatbot capabilities, organizations can alleviate the burden placed on call centers, thereby reducing response times, as well as overall spending. Developing self-service solutions may sound daunting, but Microsoft Power Platform applications like Power Apps and Power Virtual Agents allow for the creation of custom tasks and interfaces without requiring a lot of technical know-how.
3. Master Data Management (MDM)
Most organizations generate massive quantities of data on a daily, let alone monthly or yearly, basis. Staying on top of all of that data and determining which of it is relevant to enhancing the customer experience requires the assistance of an MDM tool. Master data management refers to the discipline by which businesses ensure accuracy, uniformity, and consistency across all data assets; to that end, an MDM solution is any technology designed to support that effort. MDM solutions are generally used to implement and enforce data entry protocols, remove duplicate data, enrich master data records with information from external data sources, and so on. As far as customer experience is concerned, an MDM solution can bolster a company’s CRM system by ensuring that any data that lives in the CRM is clean and up to date.
4. Data Analytics
Speaking of data, once an organization’s customer data is clean and consolidated, the next step is to run advanced analytics and reporting on each data set. Data analytics software enables businesses to generate meaningful insights from data about everything from customer preferences to buying habits, making it possible for them to anticipate customers’ needs and contextualize the customer journey. Self-service analytics programs like Power BI allow for the creation of interactive, immersive reports.
5. Artificial Intelligence (AI)
A more recent entry into the canon of customer experience technologies, AI is well on its way to become a CX staple. There are a wide variety of applications for AI in the realm of customer experience, including intelligent chatbots, personalized product recommendations and marketing campaigns, smart email content curation, automated segmentation, and so on. Once an emerging technology, AI is now mainstream and expected to dominate the customer experience landscape for years to come — in fact, according to one prediction, AI will power 95% of all customer interactions by the year 2025.
The latest AI advances make use of machine learning, which is where analytical programs are able to learn from data and patterns to improve themselves. Systems like Microsoft Azure Databricks bring the power of machine learning AI with a simple interface to manage, secure, and process data.
High-Performance Customer Experience
Here at Hitachi Solutions, we’re committed to helping clients across all industries develop and execute upon winning customer experience strategies. We’ve identified eight key focus areas designed to give our clients a competitive advantage:
There is a lot to consider when implementing a CX strategy, but that process can be made easier through workshops on topics like Marketing Maturity, Customer Voice Enablement, Customer Insights, and Customer Service. Contact Hitachi Solutions today to learn more about these focus areas and to start developing a customer experience strategy that will earn customer loyalty and boost your bottom line.
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