Top 10 Reasons Why Businesses Can’t Ignore the Customer Experience
14 Aug 2022 • 4 min Read
Customer experience is made up of every interaction that a customer has with your organization, and how he or she perceives those interactions. Whether an individual is reading an email from your company, visiting your website, engaging with your brand on social media, speaking to an employee personally, or using your product or service, every touchpoint is a part of your brand’s customer experience.
Why bother keeping an eye on your current customers if there's a whole world of potential new customers ripe for the picking, right?
Unfortunately for everyone, that seems to be the mentality of quite a few businesses, and it couldn’t be more wrong. While there may be a short term gain in acquiring new customers, a model that primarily focuses on converting new vs. keeping old customers will lose in the long run.
Understanding the importance of customer retention is the first step in building customer brand loyalty, which is to say, establishing a group of people who regularly choose your brand over competitors regardless of price and convenience. Having this loyal base not only stands to improve your bottom line, but allows you to fearlessly experiment with new offerings, get valuable feedback and benefit from a number of other advantages.
For better or for worse, customers can now share their brand interactions far and wide. And they have high expectations for those interactions to be positive ones.
Here are the top 10 reasons why businesses can’t afford to ignore the customer experience and should strive to create the best experience possible for their customers:
1. Retention efforts today will impact your revenue tomorrow. Online retailers spend about 80% of their digital marketing budgets acquiring shoppers. But for each 1% of shoppers who return for a subsequent visit, overall revenue will increase by approximately 10% – meaning if online retailers retained 10% of their existing customers, they would double their revenue!
Consider the flipside: “Actively disengaged” customers, defined as “people who oppose the brand and may be actively spreading that opinion”, can impact the brand perception and ultimately the bottom line. Simply put, customer retention is a more valuable pursuit than acquisition, it’s making the most of what you have and making what you have work for you.
2. It boosts customer loyalty. When customers feel cared for and catered to in their interactions with a company, they are more likely to feel satisfied with their experiences with that business. This satisfaction in turn reduces customer churn while increasing a customer’s willingness to repurchase and recommend that company to others.
3. It attracts new customers. Word of mouth is a powerful marketing tool. When you wow your customers, they are likely to share those experiences with others, both online with people they may not even know and in more personal conversations, which drives more awareness of your brand and more new customers.
4. It increases revenue. By reducing customer churn, increasing the number of brand advocates and engaging new customers, a seamless customer experience can help increase your revenue. Customer experience can also help drive revenue by encouraging larger or upgraded purchases, such as a first-class flight instead of coach, for example, or a customer bundling their home broadband and mobile plan in one offering.
5. It creates a competitive advantage. While it still plays an important role in purchasing decisions, price is no longer the differentiator that it once was. People think customer experience is more important than price in their choice of brand. People like doing business with businesses that they like, and that affinity can be cultivated through a carefully considered customer experience.
6. Loyal customers are more profitable. Engaged consumers make more frequent transactions and are more likely to indicate they would be exclusively loyal to a brand in the future.
Customers who are not engaged with a brand tend to make purchase decisions based on price and convenience. This means that when costs rise with one brand, a sometimes necessary business decision, disengaged customers will churn and seek a better deal elsewhere. Already loyal customers, on the other hand, are much more likely to remain loyal. As you implement price and policy shifts, your most engaged customers are the ones who will stick around and ride out the changes.
7. Loyal customers are curious. A lot of the fun in running a brand comes from innovating your product and service line-up. But it’s definitely not fun to introduce updates that no one engages with.
Because repeat customers enjoy doing business with you and have bought into your brand philosophy as well as your products, loyal customers will look for ways to grow and deepen your relationship. These are the people who are more likely to peruse your brand’s other offerings and expand their purchases into other products or services. What’s more, they’re the ones who are actually excited for new products and will share their excitement with others, which brings us back to the whole word-of-mouth point.
8. It engages employees. Employees today want to be proud of where they work, and a big part of that comes from knowing that their employers will do right by their customers. Customer Experience and employee experience are inextricably linked. Highly engaged employees positively influence the customer experience. They proactively look to find new ways and realise them to deliver exceptional customer experience.
Organisations that are committed to the customer experience also have more engaged employees and empowered them to ensure their goals and the organisation’s goals of customer satisfaction are aligned.
9. It transforms organisations. To be effective, customer experiences must touch every aspect of an organisation. This can be truly transformative to a company, making them think more purposefully about the way they conduct business and shaping organisations from the inside out.
10. Increases the value of your organisation. Effective customer experience will not only improve the customer's perception of your organisation but also the perception of potential investors, who will view happy customers as a sign of positive customer experience as a positive sign of a healthy bottom line. This will also facilitate identifying investors and partners with similar values, which will help scale up the business to meet what the market demands.
Do not underestimate the importance of customer retention. Focusing on retention is the first step in building a community of people who care about your brand and your products.
Instead of throwing all your resources behind building a larger pool of customers, create an environment where people feel good about the purchases they make – they’ll then make larger, more frequent purchases, share their brand enthusiasm with their personal connections and remain loyal through changes. New customers simply won’t do the same.
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