Why Customer Experience? Why Now?

For decades, companies have been promising to delight customers, while simultaneously disappointing them in nearly every channel. That tactic won’t cut it anymore. Why not? We’ve entered a new era that Forrester calls the age of the customer — a time when focus on the customer matters more than any other strategic imperative. In the age of the customer, companies find that:

  • Commoditization has stripped away existing sources of differentiation. Competitive barriers of the past like manufacturing strength, distribution power, and information mastery can’t save you today — one by one, each of these corporate investments has been commoditized.
  • Traditional industry boundaries have dissolved. Companies in every industry find themselves competing with new types of competitors — automakers with services like Zipcar, newspapers with Google News, travel agents with Expedia, and the entire retail industry with eBay.
  • Customers have more power than ever. With online reviews, social networks, and mobile web access, it’s easy for your customers to know more about your products, services, competitors, and pricing than you — and to share their opinions of your company with their friends.

Those are the global business trends. But what specific business benefits can companies expect to gain from customer experience investments? Every firm in every industry can leverage great customer experiences to:

  • Bolster brand equity. Referencing customer service conversations, Tony Hsieh, Zappos.com’s chief executive officer, wrote in Delivering Happiness, “Our belief is that the telephone is one of the best branding devices out there.” Even with conservative estimates, it’s easy to make the case that the call center has influence on par with, if not greater than, that of mass advertising campaigns. And the call center is just one of many customer touchpoints where the experience influences the customer’s impression of a brand.
  • Garner customer loyalty. Years of Forrester data confirm the strong relationship between the quality of a firm’s customer experience and loyalty measures like willingness to consider the company for another purchase, likelihood to switch providers, and likelihood to recommend. We’ve also found a solid connection between customer experience ratings and Net Promoter Score in multiple industries.
  • Boost revenue. Even small shifts in customer loyalty can translate into billions of dollars of incremental revenue each year for firms in some industries. One example: B2B company CDW drove $230 million in incremental revenue in just one year by following up on sales leads identified through customer loyalty surveys.
  • Drive down costs. Through its voice of the customer program, Fidelity Investments recently identified a problem with account authentication in its interactive voice response system. It recruited a few associates to discuss the issue, identified its root cause, and quickly launched a solution. Its estimated annual cost savings from this one fix: $4 million. Other companies count their savings in terms of higher employee retention.

The big takeaway? Companies need to start treating customer experience as a business discipline not a bumper sticker.

If you need to make the case for customer experience at your company, you should:

  1. Download a free (yup, free!) copy of our report, “Why Customer Experience? Why Now?”
  2. Attend our webinar this Thursday, October 13th, at 1:00 p.m. Eastern time (18:00 UK time). Bring any colleagues who are wondering why customer experience matters — and what they need to do about it. (Please note that there’s a fee for this event if you’re not a Forrester client.)
  3. Join our online discussion about how to convince your execs to commit to customer experience initiatives.

Comments

Link to org performance is key

Kerry,
Concise and spot on. I especially appreciate that you note both revenue and profit opportunities in strengthening customer experience. I still meet too many leaders who think investments in customer experience are a trade-off to profits.

In reality, clarity about an ideal or target experience liberates an organization to stop investing in things that customers don't value (and won't pay for).

Thanks,
LCI

CX strategy

hi Linda,
Spot on comment about the ideal or target experience. The longer "Why CX? Why Now?" report points out the need for a customer experience strategy that guides CEM activities and related resource allocation. I love how you've phrased this -- it liberates a company from bad investments.

This is an excellent article

This is an excellent article extolling the virtues of the customer experience. I worked in the telecommunications industry for six years, and the customer service reputation of the particular company I worked for was horrible – our Net Promoter Score was actually in negative territory.

Like many other organizations, this company did not fully consider the customer experience when constructing a technology platform. The thought process went something like this: “We have this great technology, and we need to get it to market as quickly as possible. How do we get it into people's homes? Once we get it there, how do we bill for it?”

During my tenure at this organization, I spent a tremendous amount of time and exerted loads of professional energy, unfortunately to no avail, to get the right people together in order to re-engineer the customer service experience. Start with the experience you want your customers to have, then design and build the systems and procedures and insert the right people to create and deliver that experience. This is often easier said than done, however, when legacy systems are in place and a lot of capital has already been invested in those systems.

Although most organizations tend to view customer service as a cost center, in reality it may be one of the largest profit centers for a company.

Jack Dempsey
Principal, Pretium Solutions

Great thoughts Jack. Indeed

Great thoughts Jack.

Indeed customer service should be viewed as a profit center. After all, great service creates loyal consumers who will not only purchase again and again from a company, but also recommend the company to their friends.

Thanks for the super comments.

There are some really

There are some really powerful reasons here why simply paying lip service to customer service simply isn’t good enough. From our experience helping 350+ companies we’ve outlined another four on our latest blog post at http://eptica.wordpress.com/2011/10/12/entering-the-age-of-the-customer/

"Not a Bumper Sticker"

It is amazing to me how many businesses only consider the customer experience as an afterthought, figuring they can slap on some positive customer interaction when things get tough and that it'll turn business around. In reality, loyalty is not something a business can develop in one night. It involves company-wide cultural and procedural changes that can take years to fully mature. Many of the businesses that were founded on principles of customer service and creating positive customer experiences are the companies with household brand names.

http://www.drivingretention.com/earning-true-customer-loyalty-requires-a...

Mobile Economic Time is one good reason

Hear, hear! In the face of challenging external stimuli the office of Chief Customer Officer (CCO) has emerged in a few astute organisations as the focal point for everything relating to customer happiness. As markets rapidly change executive level customer awareness and sponsorship is a vital development to retain customers; grow wallet share; attract new custom; defend market position; and increase profits. In a world shaped by digital interaction business success and future-proofing depend on astute, timely (often inspired) reaction to evolving market needs. Anticipating and decisively adjusting to survive service quality threats and rapidly take advantage of emerging customer acquisition opportunities are very high indeed on the CCOs charter. For example taking action to improve and safeguard the online mobile customer experience - because as a recent CA Technologies study http://bit.ly/qqXgBk (Twitter hashtag: #CA_MET) revealed that savvy consumers re-claim 38 extra days a year with 'Mobile Economic Time' http://www.youtube.com/user/catechnologieseurope

Why Customer Experience?

Great article. Why Customer Experience? I would add...Because one bad experience has a big mulitplication factor today. A factor of tens or hundreds of customers. No surprise that customer experience analytics is growing in adoption. It provides the opportunity to address the many upsides that you discuss in the article. Know your customer. www.enkata.com.