What is Poor Customer Experience Management Costing Your Company?
You’re probably well aware of the research showing that 82 percent of consumers buy more from companies who make it easier to do business with them. The initial purchase is just the beginning of the customer experience. When it comes to getting help with the products and services they buy, 55 percent of consumers say they would pay extra to guarantee better service
That means that service before and after the sale directly influences the profitability of the sale itself. And of course the quality of service influences the probability of future sales to those customers.
A mere 2 percent increase in customer retention has the same bottom-line impact as decreasing costs by 10 percent!
Why then are so many otherwise smart brands focusing so much attention on attracting new customers, but so little on the customer experience?
Organizations create customer experiences every day, intentionally or not. When they do it well they bolster the lifetime value of hard-won customers. When they manage it poorly, they harm profitability, retention, and future sales. Either way, the quality of the customer experience goes straight to the bottom line in the form of profits – or lack thereof.
Here’s an example: If company A has a reputation for delivering consistently better customer service than company B, then company A can command a higher price on that basis alone. Of company A’s customers, 82 percent will make more or bigger purchases – at higher prices. Company A is attracting and retaining the lion’s share of the market, while company B is struggling to maintain profitability. Company B slashes spending, but company A reinvests its profits in creating an even better customer experience. And so the cycle goes.
Therefore it makes sense to look at Customer Experience Management not in the traditional sense of a cost center, but as a driver of financial success. Applying best practices leads to better results, as with any financial driver in the enterprise.
In an earlier blog post I outlined the eight best practices for Customer Experience Management, using well-known companies as examples. The best practices boil down to three areas: customers, employees and metrics.
It’s important to understand and listen to customers – but you knew that already. In that blog post I illustrated the benefits of integrating the various channels of service, including social media. I talked about empowering and engaging employees from the top of the organization on down. Above all, Customer Experience Management means using metrics that go beyond business efficiency to give you insight into the drivers of satisfaction, retention and advocacy. Those metrics need to translate into actionable data to decision-makers.
Avaya is hosting a webinar series that will help you tie investments in Customer Experience Management to real measures of success that your CEO cares about. Register now for “Is your Customer Experience generating or squandering your money? Investing in best practice pays off.”
By the way, if you’re curious about the statistics in my first paragraph, they come from research by Avaya, BT and Defaqto. The factoid about a 2% increase in customer retention having the same effect as decreasing costs by 10% comes from Leading on the Edge of Chaos by Emmett Murphy & Mark Murphy.