How CX Impacts the Bottom Line
Words by Jeanne Ogilvie
There is growing recognition of the importance and relevance of emotional intelligence, creativity and staff engagement in businesses. Neuroscientists have found that 90 to 95 percent of decisions are shaped at an emotional unconscious level rather than a conscious or logical one. Yet, rationalising something based on feelings and emotions is a common hurdle for agencies to justify. Instead, they face questions such as: What is the return on investment? How do you quantify it? How will it impact my bottom line?
When it comes to CX, the answer is actually quite simple: a good CX strategy will save you money, as well as increase your profit. And we can prove it: we have the data and bottom-line figures. A 2014 McKinsey report shows that brands that can improve their customer journeys, see revenues increase as much as 10 to 15 percent, while lowering the cost to serve 15 to 20 percent.
How is this possible? Well, there isn’t any magic to it. Imagine one of your customers has a bad experience when interacting with your brand, a number of scenarios can occur: best case, they’re a loyal, long-time customer with a strong emotional connection to your brand, so they might give you another chance. Most likely however, they will instantly decide to try a competitor. 96 percent of unhappy customers won’t complain, and 91 percent will simply leave and never come back.
“When it comes to CX, the answer is actually quite simple: a good CX strategy will save you money, as well as increase your profit.”
— Jeanne Ogilvie
These customers will be telling other people about their bad experience (humans have a strong tendency to bond over negative experiences!), and research shows that an unhappy customer will tell between 9 and 15 people about their bad experience. You have not only lost a customer, but also a potential 9 to 15 new customers. And what if they put their complaining energy into calling, emailing, commenting on social, or even coming into your store, head office or local branch? Dealing with customer complaints isn’t a piece of cake, especially when the customer, in a panic, has reached out on every channel available. As companies are often guilty of not communicating between departments, it means that teams are trying to fix the problem in parallel with no intercommunication – inefficiencies that are extremely costly.
The good news is these inefficiencies can be rectified with a robust CX strategy. And a great experience has the opposite effect: loyal customers are known to buy more and more often, they are less price sensitive, and you also see an increase in cross-selling and up selling with these customers. In fact, customers who have an excellent experience with a company are seven times more likely to try a new product or service.
Loyal customers are your best asset. By creating meaningful and memorable experiences, you’re creating an emotional connection with your customers, which is extremely valuable. Customers will talk about you, as well as influence their friends to try your brand, service or product. They will help drive perceptions of your brand in a positive and genuine way because people will most likely believe a friend, colleague or even complete stranger over anything you, as a brand, will say or promise to deliver. So, why not empower your customers to do the work for you?
To do this, you can’t just be good and simply meet expectations. You need to be absolutely brilliant. Thoughtful, clever, personable and remarkable. People aren’t comparing the experience they’ve had with you and the one they’ve had with a competitor anymore. They are comparing the experience you’re giving them with their most recent and best experience – regardless of industry or sector.
If we know all this, what’s getting in the way? Where to start?
Firstly, get to know your customer and their experience journey across all touchpoints and gather a deep understanding of what’s working and what isn’t. In parallel, as a company wide initiative, define what you want that experience to be, then map that against the current experience and identify the gaps. This in itself can be a challenge, because businesses tend to be so focused on their financial targets and business metrics, that they don’t take the time to put themselves in their customer’s shoes. Some businesses believe they are already delivering a great CX. A well known statistic and piece of research in the CX world is that 80 percent of CEOs believe that they offer a superior customer experience and only 8 percent of their customers agree. That’s called the experience gap and it hurts!
Although the concept of a good or excellent Customer Experience is relatively intuitive and easy to understand, we’ve found that getting it off the ground and implementing it is often where clients get stuck. We often hear, “we’ve done all this research but what do we do now?” This is where the CX Strategy needs to be defined. A CX strategy gives your organisation a clear direction on the experience you want your customers to have across all touchpoints, then helps you think about what you need to do to deliver it, and who is going to do what in that process. Lastly establishing KPIs as measures of success will help you not only track your progress over time, but confidently speak to the board of directors (and/or investors) about the hard figures and ROI, securing budget in the future.
Our CX team at Frost*collective helps businesses align internally on key objectives, breaking down organisational silos, and defining key experience objectives. We help leadership teams walk in their customers shoes and get to the bottom of what it’s really like to interact with the brand. Lastly, we develop a CX strategy to help all teams deliver and exceed on customer expectations and business objectives.