What is customer experience (CX)?

Customer experience (CX) refers to how a business engages with its customers at every point of their buying journey—from marketing to sales to customer service and everywhere in between. In large part, it’s the sum total of all interactions a customer has with your brand.

Customer experience is not just a set of actions. It also focuses on feelings. How do your customers or prospective customers feel about your brand? At every customer touchpoint, you can improve—or destroy—how your customers feel about you. So there are important decisions to make at each touchpoint, and those decisions influence how successful your business will be as a result.

Why customer experience (CX) matters?

So why is the customer experience so important? As products become more commoditized, customers differentiate based on experiences with your company more than specific product features and functions.

Customers want to feel connected to their favorite brands, and they want the companies they buy from to know and respect them. CX has become the leading competitive differentiator, so businesses must ensure that their CX strategies can deliver personalized, pleasing interactions at every customer touchpoint.

These interactions have a cumulative effect on your customers’ overall perception and impression of your brand. That makes CX critical to success. Here are some factors that can make a big difference in your customers’ opinions of your company, and therefore, positively impact CX:

  • Do your marketing campaigns speak to their wants and needs?
  • Is your ecommerce site easy to navigate and does it guide and assist visitors along the way?
  • How strong is your strategy for serving both B2B or B2C customers during the sales and service processes?
  • Is all your customer information readily accessible to the people and systems that need it? Do customers have to update every person on who they are, what they need, or explain every conversation they’ve had?

The degree to which customers feel you understand them has a strong influence over their level of satisfaction—and their decision to do business with you. If you get CX right, you’ll be the company to beat.

89% of companies surveyed by Gartner consider customer experience to be the new competitive battlefield.

What is a CX strategy?

A customer experience strategy lays out the actionable plans needed to deliver a positive, valuable, differentiated customer experience (CX)—no matter the customer touchpoint.

A customer experience strategy should consider any/all competitive insight, consumer and marketplace research/data, and any internal strategic goals, initiatives, and value statements.

A customer experience strategy must include all departments, not just those historically viewed as customer-facing. Today, every employee works in a customer service role. Incorporating groups from across the business will make it easier to align everyone around customer-centricity goals and improve customer experience (CX).

What is customer experience management?

Gartner defines customer experience management (CEM) as "The practice of designing and reacting to customer interactions to meet or exceed their expectations, leading to greater customer satisfaction, loyalty and advocacy."

What is good customer experience?

There is a difference between good and bad CX. When the customer experience is positive, customers walk away from every interaction feeling happy and satisfied. Positive customer experiences include well-targeted marketing campaigns (PDF), easy-to-purchase-from ecommerce sites, simplified buying processes, self-service customer service options, and the ability to connect with company representatives anytime, anywhere, through any device.

Customers expect multiple channels for engagement. They want brands to anticipate their needs, and they want their loyalty rewarded through useful and relevant loyalty programs.

Connected data plays a crucial role in a company’s ability to provide outstanding customer experiences. To do so, you need to connect your data and any intelligence garnered across all of your systems, from front- to back-office. Only then can you deliver a seamless, connected, and personalized customer experience across all marketing, sales, and customer service touchpoints.

Define bad customer experience (CX)

A negative customer experience leaves the customer feeling unhappy, disappointed, or even frustrated. Negative customer experiences often stem from the customers’ perceptions that you don’t know them, don’t understand them—or don't care to—or that you’re difficult to do business with. These perceptions can develop in response to:

  • Difficult-to-navigate websites
  • Products that don’t meet expectations
  • Sluggish customer service request resolution
  • Irrelevant marketing outreach

In an increasingly personalized world, standardized, one-size-fits-all customer interactions are off-putting for customers, especially since customers provide a wealth of information about themselves—either intentionally or inadvertently. In a connected, data-driven world, there’s no excuse for a disconnect between brands and customers.

These disconnects occur when a customer service representative is unaware of a customer’s previous interactions, when the CRM system doesn’t have a customer’s correct information, or when personalization is missing or simply consists of a first name as the email salutation.

Great customer experience examples

Businesses have long known that customer experience can be more important than the products themselves, and they have capitalized on that. Apple, Zappos, and Starbucks are good examples of companies putting customer experience (CX) first. They realized that others could match or exceed their product offerings, so they chose to differentiate based on providing experiences that customers find appealing. They continue to lead their markets.

But there are other, less well-known companies out there doing the exact same thing. B2B companies, such as Varsity Scoreboards (formerly Sportable Scoreboards), Construction Specialties, and Panasonic Business, are implementing and integrating various customer experience software suites to make it easier for customers to do business with them.

How does customer experience software work?

Customer experience software is a platform for the entire company. Most customer-focused companies use marketing cloud, service cloud, sales cloud, and commerce cloud software to optimize customer interactions throughout the customer lifecycle.

Optimizing CX requires having enough data to show you a complete picture of your customer. Since the customer provides that data every time they interact with your company, you just need the right CX software to use that data effectively. This means a complete integrated suite of cloud applications, including marketing automation, ecommerce, customer service, digital experience, CRM, CPQ, and sales force automation (SFA) solutions as well as a customer data platform (CDP) to help unify that data into complete profiles and actionable intelligence.

How to improve CX

Are you looking for ideas on how to improve CX? Customer experience improvement is not a one-and-done exercise. It requires:

  • Clearly defined CX goals
  • Executive and C-suite buy-in
  • Integration across all front- and back-office systems
  • Customer/employee feedback and data
  • Digital tools and the ability to track a customer’s digital journey
  • The mindset that all employees are customer-facing employees
  • Analytics and metrics
  • A data-driven mindset

What’s the difference between customer experience and customer service?

Customer service and customer experience are two terms that are often used interchangeably. They’re not synonyms, but they’re related.

Customer service is the act of providing assistance or support to customers, either through digital channels or through human interaction. It’s one part of customer experience, but not the sum of it.

How does customer experience (CX) impact sales?

CX extends across the entire sales process—from website searches to browsing ecommerce sites to various digital customer service channels to in-store experiences (to name a few).

It’s easier than ever to take your business elsewhere. Therefore, providing a great experience during every customer interaction is mandatory to get a customer to purchase, repurchase, and stay loyal.

Remember, customer experience is based on customer perceptions, and perceptions equate to money spent—with you or with your competitors. Through engaging, thoughtful, customer-focused marketing campaigns. In other words, companies need to focus on what their customers care about, and they need to access the data that tells them what their customers care about. From research to purchase, customer journeys need to be efficient and effective. Customer service must be comprehensive, flexible, and faultless.

Remember, customer experience is based on customer perception, and perceptions equate to money spent—with you or with your competitors. Positive perceptions lead specifically to increased customer loyalty, retention, and, ultimately, customer advocacy. These all, in turn, have a quantifiable financial outcome. All parts of the customer experience matter.

How does customers experience (CX) drive business growth?

CX has a direct effect on your bottom line. It’s a well-known fact that it's exponentially more costly to acquire a new customer than to keep an existing one. Therefore, providing each customer with a positive experience is vital to your business growth. Great customer experiences can also lead to incremental growth through cross-sell and up-sell opportunities. Great CX also drives customer advocacy, which brings new customers—inexpensively—to your business.

Negative CX is a leading cause of declining growth. Customers with negative perceptions leave, pushing customer churn through the roof. In the digital world, this can happen very quickly. Social media and online review sites make it very easy for customers to widely share their experiences. More are likely to share the bad ones. Customers are much more likely to jump online with a complaint than a compliment, and that complaint can spread to millions of people—instantly. Customers and their experiences are in the driver’s seat.

Is there an ROI on CX?

Providing great customer experiences does offer a significant return on investment (ROI).

While it may be easy, or relatively easy, to measure the cost of investing in a CX mindset and customer experience software, measuring benefits may be a little trickier. We tend to expect big things from customer experience, but does it boost market share? Will it increase revenue? Or is it just the cost of doing business today? Well, a little bit of all three. KPMG (PDF) has reported that failing to meet customer expectations has double the impact as providing a great experience at every interaction point. However, you can draw correlations between CX and monetary improvements by measuring key performance indicators around customer satisfaction. After all, a CX mindset is designed to boost customer satisfaction, reduce customer churn, and increase customer loyalty.

Customer Experience KPIs

There is not a succinct list of the top key performance indicators (KPIs) to determine customer experience success. The KPIs you use depend on your business, customers, and industry. For example, if you don’t have a field service organization, there is no need to track the reduction in on-site service calls. But as mentioned above, customer experience is designed to increase customer satisfaction, so there are some general KPIs that might be inclusive enough to list here. This includes:

  • Revenue growth
  • Customer retention/customer churn
  • Cross-sell and upsell amounts
  • Customer service costs
  • Net promoter score (NPS) change
  • A variety of digital metrics—including pages visited, time spent on-site, conversion rate—that help show the satisfaction level of those who visited your online properties

Who's responsible for customer experience (CX)?

Every employee is responsible for customer experience. Everyone has a critical role to play. All systems must share accurate data—in real time—to support those roles. It’s true that customer-facing functions—marketing, sales, and customer service—do get most of the attention, but the following back-office systems are also important:

  • Inventory management to ensure that a customer gets a product that they ordered and is not told that stock has run out, after the order is placed.
  • Ecommerce sites that provide the same experience to online customers as that received by in-store customers.
  • Accounts receivable (AR) and billing to assist and alleviate any issues around billing and payment.
  • Human resources (HR) to make sure that the right employee, with the right skillsets, are hired for the right job.
  • Logistics to guarantee that the product arrives when promised.
  • Finance to ensure that your company can support the subscription-based pricing models that customers want.
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