Consumers are increasingly comparing businesses not just to competitors, but to every customer experience they've ever had. Building customer loyalty means providing a positive customer experience in an increasingly competitive environment. GetApp's 2019 customer experience survey found that 48% of U.S. workers believe their company provides an excellent customer experience (CX)—suggesting over half of American companies know their CX has room for improvement.
But don't fix something just because it's broken: Gartner research (full report available to clients) suggests customer experience drives over two-thirds of customer loyalty, and impacts consumers more than brand and price combined. Below we explain what CX is, as well as how to develop, measure, and implement an effective customer experience strategy.
Customer experience is how customers perceive and feel about a business after one-off encounters or cumulative interactions over time. By improving customer experience, businesses hope to increase customer satisfaction and loyalty that will in turn increase revenue and profitability. Any time someone has an interaction with your business, be it making a return or resolving a complaint, it contributes to customer experience.
Before developing a CX strategy, we need to explore the main components that make up customer experience for any business. Using factor analysis, Gartner researchers identified (full research available to clients) four primary categories that have the greatest impact on CX:
Product experience: What a product or service does and how it feels to customers
Interaction experience: How customers feel when they interact with a company
Brand perception: How customers view a company's industry position and values
Price perception: Whether customers view a product or service as a good value
This research suggests product experience (what a product or service does and how it feels to customers) has the single greatest ability to improve customer loyalty. Accounting for 36% of the change in Gartner's attitudinal loyalty index, product experience is trailed by interaction experience at 30.4% and outperforms brand perception (20.4%) and price (13%) combined.
Developing an effective customer experience strategy requires identifying, nurturing, and building salient experiences that leave a lasting impression on customers as well as creating touchpoints that reaffirm customer choices.
Gartner's guide to creating a high-impact customer experience strategy states that most customer sentiment is informed by a fraction of experiences. Effective CX initiatives must identify the customer experiences that leave pronounced and enduring emotional impressions, and avoid focusing exclusively on areas that are frustrating vocal customers. Investments in customer experience are best spent making strong impressions or forming attachments that increase customer loyalty.
For example, after someone purchases something online they may face momentary uncertainty as they wait for their order to arrive. Dominos Tracker is a popular illustration of how to turn this potentially negative customer experience into a positive one. From order to prep, bake, quality check, and delivery, customers can monitor their pizza—making them less likely to worry about their purchase.
Ultimately, creating lasting impressions is about boosting customers' confidence in a product or service they've purchased. Although tracking a pizza may seem trivial, understanding human psychology and addressing areas where customers may be negatively impacted is a core component of building an effective CX strategy. Identify and prioritize the experiences that are most salient to customers, then redesign or improve touchpoints that customers remember. Businesses can increase efficiency and impact by discounting a large portion of negligible customer issues.
Though making interactions with your business easier and more effective will improve customer loyalty, there are limited returns on investment when it comes to improving interaction experience. Simply fixing customer pain points isn't enough to remain competitive, largely because consumers are using positive interaction experiences with other businesses as points of reference.
Additionally, many businesses seek to improve interaction experience and differentiate themselves through customized interactions (e.g., marketing personalization). However, Gartner's research suggests that unique and personalized interactions do little to improve customer loyalty. Showing customers that you know them may leave a positive impression, but it doesn't appear to leave a lasting one.
Businesses can reduce the tendency people have to consider alternative options by encouraging them to trust the wisdom of their original choice. This idea parallels a marketing technique that reinforces choice-supportive bias, or the human tendency to remember our decisions as better than they actually are. This involves hyper-focusing on the positive attributes of things that we choose, and the negative attributes of things we do not choose. Some examples of this include:
Post-purchase messages like “Great choice!" that reinforce positive sentiment about recent transactions and prevent customers from doubting a selection.
Abandoned shopping cart emails that nudge consumers toward purchasing products they themselves selected, reinforcing bias toward their own choices.
Mechanisms that give customers transparency after a purchase is made, such as package tracking, that reduces momentary post-purchase uncertainty.
Since product experience is the driving force behind customer loyalty, this is a smart place to invest customer experience resources. Four criteria define product experience:
Life enrichment: Does the product make customers' lives better?
Product Utility: Does the product work for customers?
Product Usability: Is the product easy for customers to use?
Customer needs alignment: Does the company's product address changing customer needs?
Solicit customer feedback to isolate areas where your company's product experience needs to improve. Keep this process simple by asking questions such as:
Does our product make your life better?
Has our product's functionality met your expectations?
Is our product easy for you to use?
Does our product adequately address your needs?
What, if anything, would you change about our product to make it better?
To safeguard customer loyalty in the long term, regularly survey customers to understand where product experience might be falling short of expectations. Consider using a common method of measuring customer satisfaction such as net promoter score (NPS) and pairing it with additional CX metrics that make sense for your business.
NPS is a single question survey used to gauge overall customer satisfaction that simply asks customers how likely they are to recommend a product or service to others. Declines in NPS score over time may indicate your organization needs to make customer experience adjustments. When and how frequently NPS surveys should be sent to customers varies from business to business. Generally speaking, it is best to measure customer sentiment shortly after a purchase is made (7-15 days) and then in regular intervals after that (every 30-90 days).
Unfortunately, NPS alone doesn't tell the whole story, and relying on it exclusively can be misleading. According to a Wall Street Journal analysis of 2018 earnings call transcripts from 50 S&P 500 companies, net promoter score was cited more than 150 times. Not only does this mark a fourfold increase of mentions compared to five years ago, but out of all the mentions tracked not a single executive mentioned NPS declines. Some downsides to net promoter include:
It is intrinsically positive because it asks people how likely they are to recommend a product or service.
While it can be an accurate measure of intent, it does not capture actual customer behavior—which can differ from intent.
Without a followup question asking why respondents chose the score the did, NPS provides little actionable guidance for how companies can improve CX.
To avoid overreliance on NPS, consider using additional metrics to monitor customer experience.
Measuring how customers perceive your business can feel abstract. However, there are hard metrics that provide insight into customer experience. Understanding how customers experience your product or service prevents customer perceptions from coming as a surprise. It is important to identify a few key signals that will serve as a pulse for monitoring your organization's CX health before launching a customer experience strategy.
Doing this will help with determining whether or not CX investments are having a measurable positive impact on your business's customer experience. Below are some of the most common performance indicators used to asses CX according to Gartner research. Be sure to choose metrics that measure both intent and behavior, then monitor them as your organization launches CX initiatives:
Engagement volume: The total sum of engagements across your entire organization, this includes communication with customers across multiple channels (e.g., email, phone, chat or website)
Retention/churn rate: The proportion of contractual customers your organization tracks over time, often used to measure customer lifetime (e.g. a churn rate of 10% implies an average customer lifetime of 10 years).
Employee engagement or satisfaction: Use employee engagement surveys to better understand employee experience if your CX initiatives aim to satisfy staff as well as customers.
Net Promoter Score (NPS): NPS typically consists of a two-part questionnaire. The first part (example shown above) asks respondents to rate your business, and the second is an open-ended follow-up to why respondents chose the score the did.
Loyalty program participation: Loyalty programs exist to improve customer loyalty and drive repeat business. Participation can be measured in a few different ways, including loyalty program participation, rewards redemption and percentage of earning members.
Keep in mind that customer experience initiatives take time to bear fruit, with estimates of three to five years before benefits are seen (this time frame may be shorter for smaller organizations). This is because CX projects are typically indirect in how they deliver benefits to your organization.
Customer experience software uses customer feedback to inform strategic decisions that will improve perceptions and feelings about your brand, product, or service. This is accomplished with technology by collecting direct, indirect and inferred customer feedback from all customer interaction channels, then processing that information to facilitate real-time decision making and inform overall strategy.