June 24, 2021
Customer Experience as a Competitive Advantage
In a crowded, hyper-competitive business landscape, companies differentiate themselves by offering “greatness” at every touchpoint.
Consumers are no longer willing to settle for bad or even mediocre experiences. In turn, this means, every misstep, no matter how minor, creates an opening for companies to gain market share by outshining their competitors.
Delivering an exceptional customer experience (CX) is quite possibly the most important competitive advantage for any business, regardless of size or sector.
In this article, we’ll look at customer experience as a competitive advantage. Then we’ll get into the key elements that make it possible for brands to capture that advantage and win the market long-term.
What is Customer Experience (CX)?
Before we dig in, let’s quickly define customer experience.
Customer experience represents the overall emotional journey throughout the buying cycle— from the moment a customer discovers a brand to the point of purchase and beyond. Customer experience includes every piece of content they read, every conversation with the service team, every interaction they have with a product.
It’s also a good time to clear up a common misconception: customer experience and customer service are not interchangeable terms.
Customer service represents just one slice of the total experience and refers to the direct interactions that a customer has with front-line employees—customer success teams, sales reps, tech support, etc.
CX, on the other hand, measures overall customer perception based on the sum of every touchpoint they interact with—directly or indirectly. This includes preconceived notions someone might have about a brand as well as direct interactions with a human rep, marketing communications, press mentions, and more.
CX as a Competitive Advantage
Customer experience (CX) has become a major differentiator across all industries.
Conversocial’s State of Customer Experience Trends 2021 report found that 22% of customers said they consider a great experience to be more important than price.
According to ZenDesk, brands that prioritized CX pre-pandemic are already at an advantage. Companies with mature CX strategies are more than six times as likely to exceed customer retention targets than those that haven’t made CX a priority.
Slow movers risk falling even further behind as customer expectations continue to rise and brands invest more into the technology and training that enables them to compete on experience.
Great Experience = Increased Loyalty
The real advantage of CX is keeping customers happy so that they keep being customers.
You’ve probably come across these oft-cited stats:
- Most of your business comes from your existing customers
- It’s cheaper to market to your current customers than chasing after new ones.
If an organization cares about its reputation and wants satisfied and loyal customers, they’ll invest in CX.
Good CX not only helps organizations retain customers, but it enables them to leverage their reputation to attract new ones.
But—customers are more impatient than ever. While customers are happy to stick with solutions that work for them, they won’t think twice about jumping ship when they run into trouble. In other words, you need to continuously earn their business. Once they’re gone, it proves difficult to regain their trust and have them return to your product or service. Winning back customers is an expensive effort. If companies don’t stay ahead of the curve, products and businesses will fail.
CX Enables Organizations to Control the Entire Customer Journey
As a strategy, CX allows organizations to orchestrate the “emotional journey” to guide consumers to the desired outcome.
Focusing on CX means an organization is intentionally designing and defining the emotional journey around their product or service. Having control of the emotional journey allows organizations to make better-informed business decisions.
But you can’t secure a strategic advantage through customer service alone. Instead, your CX game plan needs to start much earlier than you might think. The customer experience begins the moment that a prospect first encounters your brand, whether they visit your website, discover you in their Instagram feed, or receive a cold email from a sales rep. The relationship lasts throughout the entire customer lifecycle—from acquisition to purchase, support, loyalty, and retention.
Put the customer at the center of the entire business strategy—including the messaging the sales team uses, what features developers build into an app, the services your company offers, your marketing strategy, and beyond. Each strategy must come together to create a cohesive experience across every interaction and touchpoint.
The challenge is, customers now interact with brands on multiple channels—engaging with virtual assistants, shopping on social media, visiting a physical store, and more.
In a previous blog post, we mentioned that an omnichannel strategy is critical to a company’s growth. It allows brands to cater to different preferences. For example, some people might prefer to get support from a human rep, while others prefer using Facebook Messenger.
Omnichannel customers also spend more than single-channel customers. Ensure this group receives a consistently positive experience—on all channels—so that they keep coming back.
CX is Directly Linked to Positive Business Outcomes
It’s easy to get caught up in products and profits, but many organizations lose sight of this basic fact: customers generate revenue.
CX impacts all business outcomes. Customers are the main part of a business. No matter how good a product is, it doesn’t matter if there are no customers to consume it.
The challenge is, it can be hard to quantify the returns on your CX investments. KPMG points out that economic value is maximized when customer expectations align with experiences. The 2016 report argues that the negative impact of underdelivering can be up to twice as great as exceeding expectations. However, they also point out that investing too heavily in over-delivery can result in unnecessary spending.
The key is figuring out exactly what customers want and investing in the solutions with the greatest impact.
One of the reasons that CX is so important is that understanding what drives value for your customers allows you to create a cohesive business strategy that maximizes profits and boosts retention rates.
In other words, putting the customer first allows organizations to invest in value-added products and services that customers love.
Customer Experience as a Competitive Advantage Starts with Strong Foundation
The benefits of putting customers at the center of every decision and strategy are well-known. But securing a competitive edge isn’t as straightforward as you might think.
Three things must be in place in order to build an effective CX strategy:
CX is Powered by Data
Like most modern business strategies, good CX is built on a foundation of good data. Brands now have access to unprecedented amounts of customer data—behavioral insights, communication records, usage data, etc.
Companies wishing to be successful must learn how to use that information to deliver personalized experiences, great service, and product offerings that solve problems or pain points. To achieve this, organizations must truly understand their customer.
Understanding your customers requires you to look at them from multiple angles. For instance, you might review customer feedback against usage analytics to determine whether what your customers say aligns with their actions. Alternatively, analyze app usage patterns to understand how customers use a product. You might also look for themes in feedback across multiple channels to understand how customers feel about your brand.
In the end, it boils down to interpreting data. Disconnected, dirty data is the source of many problems in your CX strategy. If you’re working with incomplete, inaccurate, or outdated information, you risk making decisions that don’t align with your customers. Without the right data, it becomes impossible to create the products/services/solutions your customers expect, want, or need. As a result, your business loses money—or worse, fails.
CX Involves the Whole Team
While much of the customer experience is informed by front-line interactions, success is an organization-wide effort. According to Forrester, customer experience as a competitive advantage can only be realized through collaboration between specialties.
Developing an understanding of your audience starts with collecting and analyzing data, but you’ll have a hard time putting those insights to work if you don’t have a unified CX strategy in place.
Even if you’re just looking at using customer service as a competitive tool, a lot needs to happen behind the scenes to ensure that your sales and service teams get the desired outcome.
CX involves any and all interactions a customer has with a brand and products, employees, services associated with that brand. As such, CX must include the executive team and should feed the strategic initiatives at the company level. And, CX KPIs are valuable for the teams designing the portfolio of services/products roadmap.
It’s hard to point to one part of the organization that shouldn’t be involved. Certainly, all touchpoints need to help drive journeys forward, but technology needs to not only build but bring innovation into play, finance needs to understand the investment required, HR needs to build the right culture and training, and leadership needs to drive and support the whole process.
CX is Enabled by Technology
According to PWC, technology isn’t a final solution—it’s an enabler.
The firm emphasizes that technology must support a specific outcome—whether that’s achieving specific goals for customers, helping employees deliver more human experiences, or enabling teams to create innovative solutions.
If you’re trying to gain a strategic advantage through customer service, you might focus on implementing technologies that empower front-line employees to deliver exceptional experiences.
For example, automation can free up time, eliminating time-consuming tasks so that service representatives can provide personalized support. Predictive analytics can be used to respond to customer expectations as they evolve.
This shift requires new ways of working, a focus on employee experience, and a sophisticated view of human-and-machine relationships.
CX is much more than excellent service and competitive prices. It’s the foundation for building and sustaining a successful brand. But leveraging CX as a competitive advantage depends on great data, a customer-centric culture, and technology that empowers the entire team to deliver a quality experience.
Whether you’re looking to build an omnichannel retail experience or get a better handle on your data, we’re here to help. 3Pillar Global develops software that increases customer acquisition, retention, and long-term growth. To learn more about our services, contact an expert today.
Special thanks to these members of FORCE, 3Pillar’s expert network, for their contributions to this article.
FORCE is 3Pillar Global’s Thought Leadership Team comprised of technologists and industry experts offering their knowledge on important trends and topics in digital product development.