What is customer experience and why should organisations care?

What is customer experience (CX)?

Bruce Temkin, co-founder of the Customer Experience Professionals Association (CXPA), defines Customer Experience as “the perception that customers have of all their interactions with an organization”. The Cambridge Dictionary highlights that feelings are important, stating CX is ”the way someone feels at all stages of doing business with a company or organization”.

Let’s break down Bruce Temkin’s definition further:

Customer


A person who could potentially or already has purchased or used products/services from an organisation.
PerceptionIt’s how the customer (not the organisation delivering the experience) sees, thinks and feels about how they were treated and valued during the interactions. The perception is subjective and involves emotions.
InteractionThis is any and all encounters (also referred to as a ‘point of contact’ or ‘touchpoint’) a customer has with an organisation. It may include visiting an organisation’s website and store/office, reading a review about them, making a purchase/transaction, the delivery, using their product/service, speaking to staff (via phone, social media, in person… anything) and cancellation or return process.
OrganisationAn organisation can be a business, company, charity or brand. It includes the employees and product/service.

Temkin’s model of CX suggests focusing on 3 components of the Customer Experience from the perspective of the customer: Success, Effort and Emotion.

Let’s look at these aspects further.

SuccessThis is about whether a customer was able to achieve their goal by interacting with an organisation. Did the organisation deliver the expected value to a customer? Is the organisation more focused on their own organisation goals rather than helping a customer? Customer experience without achieving the customer’s success is a failure, regardless of how great and amazing the experience was.
Effort This concerns how easy or difficult it was was for the customer to achieve their goals. How straightforward was it for the customer to find, engage and get value from the organisation? Is the organisation helping a customer achieve their goals in the way they want or need to? Does the organisation have overly complicated processes with (avoidable) long delays?
EmotionThis is about how a customer feels during each separate interaction with an organisation and all the interactions put together as a whole. Was dealing with the organisation enjoyable and a pleasure for the customer? Was the experience memorable or personable? How does the customer view the time they spent  with the organisation?

Generally, organisations were primarily focussed on ensuring customers were successful, however there is now greater emphasis on improving the whole customer experience, which isn’t just about how quickly an organisation can respond to a customer request or can deliver a product, but it’s about how your customer feels about the experience when they got a response and received the delivery.

Customer experience management (CEM)

Customer Experience is about the customer’s perception. Customer Experience Management (CEM) is where an organisation tries to manage and improve that perception, by identifying the customer’s desired experience, comparing it to the actual experience and then closing that gap by having a strategy to focus on organisation operation and processes around the customer’s needs. Gartner defines CEM as “the practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty and advocacy.

As well as aligning with what a customer wants, an organisation must align their brand with the customer experience they provide. Yuri Kruman tells us in a Forbes article that: “To reach and engage a customer, brands must deliver one or some of the following: novelty, delight, a form of greater health or wealth, improvement in a business process through cost savings or time, increase in quality, organization or convenience, and/or a vision or mission that compels the customer to take action, whether in the form of a purchase or by gainful influence with others.” Organisations should be clear on what attributes their brand stands for and ensure they include it in all their customer experiences.

How important is customer experience? Why care about CX?

Today, with increasing competition, business models shifting to subscription models and pay-as-you-go cloud offerings and there being less vendor lock-in, there is more emphasis on organisations to continuously prove their value to customers. Even if an organisation helps a customer to achieve their goals, they can no longer expect automatic renewals and repeat business. Customers have an increasing number of choices of who to do business with, the barriers to switch have significantly decreased and customer expectations have risen. Due to this, organisations are pursuing ways to differentiate themselves and one way to do this is by the customer experience it offers. The customer experience must be vastly different to competitors in order to stand out and be memorable to customers.

But what about marketplaces that don’t have many competitors, high barriers to competitive entry, high costs to switch, similar offerings with little differentiation, infrequent repurchase or customers who prioritise a specific aspect (such as price, quality or time)? Customers may simply purchase due to necessity, so satisfaction and loyalty aren’t a top priority. Some examples are paying mandatory bills to a local council/government, airlines that fly uncommon routes where all customers use the same airports, life insurance companies, telecom providers, people giving money to a charity to help a specific cause and customers using price comparison tools to purchase based solely on the cheapest price (where customers are unloyal and unwilling to pay significantly more for better customer experience). Can these type of organisations still benefit from focusing on enhancing their customer experience and is it worth the investment? The answer is yes, but the customer experience would be different. Different organisations operating in different marketplaces have different reasons to improve customer experience and the focus of enhancement should be on different things.

What are the benefits of an organisation enhancing the customer experience they offer?

Generally, it’s morally good to help other people by treating customers better, helping them to be more successful and happier. Looking from a business perspective, the benefits need to be more strategic and profitable, focused on the long term customer behaviour in relation to the organisation.

Below are just some of the benefits that an organisation can obtain by improving CX:

The Cost of CX

The challenge organisations have is how to define and deliver customer experience in a cost-effective way, where they don’t over promise and under deliver.

When an organisation has an idea for improving the customer experience, they need to confirm:

  • it is actually something the customer wants and values
  • the cost of implementing it and the value the organisation will get
  • how much the customer is willing to pay for it

This starts with knowing your customer – what they value the most and what customer experience they actually want you to deliver. Ask your potential and existing customers and employees for feedback. Listen to them. Also see what your competitors are offering and what future trends or predictions are expected to occur in the market. Once you’ve gathered feedback from all sources, review what you’ve captured to identify what customer experience improvements are most desirable for the organisation to implement.

Next evaluate the cost and the ROI from delivering customer experience. Consider if the organisation is able to deliver it (eg has the right resources in place) and the metrics to be used to determine the impact it’s having (you should be able to measure if what you do has a positive or negative effect).  

Then decide how the customer experience improvement will be paid. Will all costs be passed on to the customer or will the company absorb it? Again, it’s important to know your customer. Never enhance your customer experience beyond what your customers actually want and are willing to pay. If customers would like a better experience but aren’t willing to pay for it, then either the organisation must pay for it or just don’t offer it.

This is why airlines don’t replace at scale all their economy seats with first class. Yes it would be a better customer experience but economy customers don’t want to pay the additional cost and it doesn’t make economic sense for the airline to absorb the cost.

It’s also important not to assume that customers always value price over customer experience. Echo Managed Services found that while price was the main factor when customers picked a new service provider, 33% would switch suppliers due to poor customer service.

Customer experience is a neutral term and does not imply a luxury service. Budget supermarket Aldi was voted as providing better customer satisfaction than upmarket Waitrose. A Michelin star restaurant and Starbucks may both give a great customer experience providing coffee to the customer, yet their business models, prices and delivery are very different.

This is why many companies (eg broadband providers, airlines and steak houses) have different offerings/tiers for similar products and services. Often the more a customer is willing to pay, the better quality or additional features/services the customer gets. So if a customer wants more, be honest and make it clear that it is going to cost the customer more. The customer may not want to pay more and decide on a cheaper option, but they will understand the reasons for the difference and you will have set their expectations for what they will receive.

Prioritising customer experience improvements based on where the investment will make the biggest difference is very important, so that you don’t waste time, effort and money focusing on the wrong things.

Conclusion

The main reason why customers decide not to go with an organisation is doubt that reality will match or exceed their expectations. An organisation needs to give confidence that customers are with the right organisation to achieve their desired goals.  Knowing and adapting to the customer, communicating the brand and setting expectations are key to a great customer experience. Customer Experience is a long-term journey, not an overnight project. Organisations need to commit to investing in a long term strategy, making continuous improvements, to improve the customer experience.

2 thoughts on “What is customer experience and why should organisations care?

  1. Simply want to say your article is as surprising. The clearness in your publish is simply cool and that i could assume you are an expert on this subject. Fine along with your permission allow me to grasp your feed to keep updated with imminent post. Thank you 1,000,000 and please keep up the enjoyable work.

Leave a Reply

Your email address will not be published. Required fields are marked *