The importance of customer experience in a winner takes all world
Trends such as digitalization, the rise of the experience economy and globalization are impacting every market. Network effects and the internet mean that businesses can now operate at greater scale, serving more consumers in more countries than ever before.
This is leading to a ‘winner takes all’ world where gaps are growing, not just between best and worst companies, but even between top organizations. The difference in sales, revenue and loyalty between the number one player and the number two in many markets is therefore accelerating.
That was the message from Ed Thompson of Gartner at the analyst’s Customer Experience & Technologies Summit 2018, which Eptica attended. To succeed and become number one in your market you must therefore focus on customer experience, and customer experience management if you are to achieve long-term differentiation and consumer loyalty.
Research from both sides of the Atlantic provides clear evidence of the link between superior CX and company success:
- A $100 investment in 2000 into a portfolio of the top brands in the American Customer Satisfaction Index provided a return of over $760 by the end of 2016. Investing the same amount in the S&P 500 would have delivered just $157.67 – 5x less.
- Companies in the UK with above average scores in the Institute of Customer Service’s UK Customer Satisfaction Index (UKCSI) saw average revenue growth of 9.1% - laggards just 0.4%.
- In the UKCSI brands with CSAT scores of 9/10 or 10/10 saw loyalty rates of 96% and 92% likelihood to recommend. For those with just slightly lower scores (8-8.9/10) loyalty was only 66%, with under half (47%) being likely to recommend.
The growing CEO focus on CX
As Thompson explained, senior management clearly understands the importance of CX – 67% of companies say they now compete mostly or completely on their customer experience. This will rise to 81% in just two years. More and more companies are employing senior heads of customer experience, such as Chief Customer Officers – and 50% of these report directly to the CEO.
So, how can brands deliver the customer experience that consumers require? According to Gartner it is about focusing on increasing CX maturity, primarily through three activities:
Baseline where you currently are – most organizations are still in the initial phase of CX maturity, typified by a chaotic, fragmented approach. Bring together different departments and initiatives, and build a small, full-time team to co-ordinate and drive all the work that is being done. This eliminates silo-based working and helps give focus to CX across the business.
Audit all your current CX projects and see where there is any duplication and opportunities for consolidation. Look at where market leaders are investing – for example, 57% of brands list collecting and analyzing customer feedback as a key priority for 2018. Put in place metrics so that you can measure the results of your efforts, and ensure they align with business KPIs.
Focus your program in the right direction through techniques such as customer journey mapping, prioritizing areas you can work on now, and which need to be approached later in the process. Analyze all of your current and planned technology projects – how can they be reprioritized to support your CX aims and to deliver ROI?
Through all of this process, the key is to be practical and to focus on the needs of the consumer. For example, while many CX experts talk about the importance of delighting the customer, this is less important than offering an effortless experience to everyone – value their time and make it easy for them to interact with you. Don’t be afraid to imitate others, whether within your sector or in other areas, and look at everything from the customer perspective. How can you help them do what they need to do as quickly and seamlessly as possible?
Following these steps isn’t easy and is a long term, continuous process, but as the financial metrics show, CX is at the heart of success in an increasingly winner takes all world.