With apologies for the inflammatory headline, marketing is fooling itself about customer experience.

In research over the last two years, we’ve seen a consistent over-estimation of how good things are and the results to come. 

Some of the most compelling evidence comes from our recent study in partnership with IBM, The Consumer Conversation, a look at consumer-facing organizations, most with over $1B in revenue. The report points out some of the ways in which views of brands and their customers don’t match up.

At Econsultancy we strongly believe in customer experience (CX) and its potential to be the key difference for brands reforming themselves in the digital age. That’s not a stretch, since CX is the sum total of all interactions between a person and a company.

It’s a bit like saying that moving forward, we predict that water will be a key differentiator for fish.

As is often the case, the issues start with having a variety of definitions. At many organizations, CX is thought of as nearly synonymous with 'usability.'

Companies think that when they’re done optimizing their shopping carts and speeding up their site, they’re done. These things are important, but they’re just a small subset of what we need to include when we grapple with customer experience.

We’ll get to some of that breadth in this post, but think of it this way; customer experience is everything from when a person first discovers a company until the last moment they think of it. It’s the advertising, marketing, product, customer service and emotional brand, as well as every interaction with them.

Another problem is self-perception, which was a main thrust of The Consumer Conversation. When marketers are asked to compare their organization’s CX with their sector, everyone is good looking and above average.

You can see in the chart below how most companies agree with the statement that they provide 'superior' customer experiences in their stores and sites, and to a lesser but still indefensible degree, their mobile channels.

There’s no question that customer experience overall is much better than it was, and that trend will continue. But that’s a wider phenomenon resulting from digital-only companies pushing the technology and their competitors to raise their game.

A superior customer experience is rare in the wild. For the companies that manage it, that’s good news. If everyone differentiated with CX, there wouldn’t be much differentiation left. But that won’t happen. Here are some of the reasons why that will continue to be the case.

#1 The online/offline gap is a canyon

Most companies do live by the internet alone. Retail is 90% offline for example, at least in raw revenue terms. Even digital pureplays like eBay, Warby Parker, Piperlime and Bonobos are getting into the offline action.

But the real story isn’t as simple as making sure you’re in both places, because consumers don’t predictably research and purchase from one site, store, channel or device.

They go online to discover and research their products before buying them in a store…or they do the reverse by showrooming…or some other combination.

 

Those same companies say they provide a 'superior' CX tend to be more realistic when the questions get more specific. Only about a third claim to do a good job of linking online and offline customer experience.

What to do? There are a number of ways to approach the divide, but most companies are thinking about phones.

First, call centers should be a rich source of information, not just data, about what’s really happening in the customer experience on an aggregate and individual level.  But as we’ll see in point #2, what companies should do and what they’re doing are still far apart.

Second is the move to mobile. It’s making everything more complicated for marketers, but ultimately our handheld or subcutaneous devices will be the bridge. Examples are everywhere, but most are still pale visions of what’s to come.

#2 We’re only as good as our lowest point

In another case of having a top notch slimming mirror, brands are much happier with their ability to resolve conflicts than their customers. A whopping 89% of marketers said they are satisfied with their capability in this area, with nearly half of those being 'very satisfied.'

 When consumers in our study described specific issues they’d encountered in the last year, only 28% said that they were dealt with “very effectively,” only 4 points higher than those who said “very ineffectively.”

Success and failure live in the difference between the two. Seventy-one of those that had a good experience are still customers of the brand and nearly half shop at the same levels.

Among those that weren’t happy, only 46% are still customers and a scant 13% report that they shop at the same level.

The stakes are enormous and the rewards can be. A reputation as a company that picks up after failure can be enormously powerful, especially in service relationships where customers assume problems will arise.

Avoiding the dark side of customer service issues isn’t just about technology. Customer service tools are already remarkably sophisticated, and getting more so rapidly.

Certainly, companies have to allocate resources, but that’s happening at different speeds in different sectors. The real problem for many is priority. What do companies do with the information they already have? In most cases, not much.

Roughly half of the respondents in our study do a good job of collecting data across their customer service channels. They may combine call center data with that from emails, comments fields, post-issue surveys and chat, among other sources.

Most of that data is used in aggregate analysis and benchmarking for future planning. But it could have an immediate impact in very real ways.

45% of those collecting data across channels (roughly 25% of the total) take the step of turning this group of customers with service issues into a unique segment, with somewhat smaller numbers customizing online (43%) or offline content (39%) to them.

Every business person has heard the numbers that prove why retention is so important. The moments when customers are won and lost should be treated with at least equal priority. Yet most companies don’t take advantage of the capabilities they may already have to treat those with service issues as special…to give them something - an apology, discount, gift or experience of value - and create a memory that will make the relationship stronger.

#3 The will is there but the body is lacking

Technology has made it possible to start thinking in terms of true customer experience management. Our ability to turn data into information and action in something approaching real time is in its early days, but it’s fair to say that the gap in performance is now more human than technological.

 

The main issue on the tech side of customer experience is that most companies are slow to put the necessary pieces together. Even among the large companies in our sample, only 37% report having the tools to provide an exceptional customer experience.

It’s not a small investment, especially because it goes beyond the budget figures. To truly commit to customer experience means aligning strategy, structure, product and budgets to the same goals. That can be a profound, difficult and expensive change.

#4 There’s not enough proof and it’s the wrong kind

There may never be a better time to invest in customer experience. Attention is high and capital is cheap. That’s good for organizations, technology providers and ultimately for customers. But times change. Inevitably some variable in the equation will change and the investment in CX will come under the white hot light of financial review.

When that happens, some companies will be able to calmly show how their investments in the people, processes and tools of customer experience lead to more, higher-spending customers who are exceptionally loyal. Most won’t.

37% of large consumer brands say they’re able to tie revenues or cost savings with their customer experience activities. Of course, a much higher percentage use Net Promoter Score or similar satisfaction measures, because they’re easy to implement. Those soft metrics are valuable and should be a piece of the measurement approach. They shouldn’t be the end state.

It’s not easy to measure CX in terms that resonate with financial managers, but it’s necessary. 

With consistent, agreed-upon measurement, control-group testing and benchmarking, analysts can show how CX is a driver of better margins and higher revenue, and how it drives lower costs in not only retention, but customer acquisition through improved reputation.

#5 All this capability and we’re stuck on “10% off”

Have you ever been at an event and received a push message to your mobile device? Perhaps you were at Bonaroo or Glastonbury and looked to see who texted, but instead found a 10% off coupon for a frozen yogurt stand not too far off.

All those patents given life in systems that dwarf NASA’s computing power…all to save a few coins on Pinkberry.

There is nothing wrong with discounts, and there’s certainly nothing wrong with frozen yogurt. But there is something pale in how marketers are using their emerging capabilities.

Personalization is how digital experiences can regain the quality of the small store customer experience. The data available today makes it possible to know something substantial about the customer and what they want. It also means that businesses can know instantly whether they have the inventory or capability to meet those needs.

Until very recently, that kind of customer service wasn’t possible outside of shops where the proprietor knows the clientele and their inventory backwards and forwards. 

Any discussion of customer experience touches on the idea that when brands give their customers great value, the rewards are loyalty and a willingness to share information as well as to forgive the occasional failure. Offering discounts is only a part of that exchange. There's far more we can do.

When Nordstrom app users can reserve clothes they like and find them hanging in a fitting room, that’s value. When American Airlines customers get replies to each and every tweet about their issues, that’s value. When Starbucks lets you order ahead and skip the line from your phone, that’s value.

These are the kinds of features and experiences people remember, and every marketer should be thinking about how to provide them (and 10% off).

For Econsultancy subscribers, the Consumer Conversation is available in full.

Stefan Tornquist

Published 28 May, 2015 by Stefan Tornquist @ Econsultancy

Stefan is Vice President of Research (US) for Econsultancy. You can follow him @SKTornquist
and connect via LinkedIn.

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Comments (4)

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Diana Combs, Content Writer at Varied

I really enjoyed this article, and plan to share on Linked In. Thanks!

over 2 years ago

Stefan Tornquist

Stefan Tornquist, Vice President, Research (US) at EconsultancyStaff

Thanks Diana

over 2 years ago

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Calen Williams, Member Experience Consultant at Club Works/MXMetrics

Great article. Right on!

over 2 years ago

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Jacob Dsd, E-commerce at Rand

Perhaps one of the most effective and cheapest customer experience management tool are buyers' reviews, especially when collected separately for each branch.

Clients highly value personalised experience and even negative reviews can help companies showcase their initiative, thus boosting loyalty and satisfaction. While customer satisfaction surveys can be a great way to see where you're standing with your service or product, they can be quite time-consuming and yield a low number of answers. A great alternative way of gathering feedback are review collecting companies. Ekomi and Bazaarvoice both offer great solutions to help you monitor customer satisfaction in real time and to keep your finger on the pulse when problems arise.

In my opinion this is the best way of monitoring your clients' satisfaction as it offers a long-term insight into your product's performance and most importantly - brings you more responses. It's also more transparent and authentic for customers who want to evaluate your company's performance.

over 2 years ago

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