July 21, 2021

How Customer Experience Has Evolved

CX has always played a crucial role in a company’s success—from the Mad-Men era of wining-and-dining clients to today’s era of personalization, chatbots, and omnichannel journeys.

In the last decade, customer experience has changed dramatically. Yet, one thing remains constant: customers want to be treated with special care.

Below, we’ll discuss the evolution of the customer experience to help you get a better understanding of where CX has been so that you can prepare for where it’s headed next.

CX Evolution: Customer Experience Throughout the Ages

So, when, exactly, did CX become a “thing?” Arguably, “customer experience” has always been a “thing,” even in the days when merchants were trading livestock for exotic spices.

CX, as we know it today, can be traced back to the 1920s, when American psychologist Daniel Starch popularized the concept of market research in advertising—followed by the introduction of Gallup polls in the 1930s and focus groups in the 1940s. Then, in the 1980s, Total Quality Management (TQM)—a strategy that focused on improving customer satisfaction via continuous improvement cycles—began to gain traction.

Pre-internet, relationship selling, and customer-friendly contracts were the norm, but there was little emphasis on long-term customer care, as customers couldn’t easily switch to a new provider if they weren’t happy.

All that changed in the 1990s when the internet allowed just about anyone to sell goods and services online. Customers now had the freedom to shop around, read reviews, and choose the best option for their needs.

A 1998 Harvard Business Review paper, Welcome to the Experience Economy, identified memorable experiences as a distinct offering—separate from goods and services—that people sought out.

Later, the idea of brands using experience as a differentiator became part of doing business. Brands like Amazon, Airbnb, Uber, and CarMax emerged as leaders in creating these seamless experiences that soon raised the bar for all businesses. Small e-commerce brands, analog mom-and-pops, and legacy businesses across every sector were now held to the same standard as Silicon Valley innovators.

Today, we’re still refining that strategy. Seamless journeys span multiple channels and feature adaptive, personalized messaging and offers—tailored to individual consumers.

The Digital Transformation Factor

Digital transformation describes the process of integrating digital technology into every area of an organization—transforming how it operates, as well as how it creates value for consumers.

The acceleration of the digital transformation is a consequence of A: COVID-19 and B: cloud technologies are becoming more accessible and affordable to more people. Customers are embracing cloud-based solutions at a faster rate because there are bigger, louder online communities talking about the importance of these technologies in the digital sphere.

They add, “because there are so many products to choose from, brands are learning that they’re the ones that need to adapt to changing behavior—not the other way around.”

It’s also worth mentioning that human-to-human relationships used to be the norm, but for a long time, technology made things less personal.

One of the biggest disadvantages of digital customer experiences is that it’s incredibly hard to form authentic 1:1 relationships with customers. At our current stage in the CX evolution, there’s a renewed emphasis on relationships, but only because we now have access to the technology that makes this possible.

At the same time, brands often forget that many of the same norms that apply “IRL” still apply online.

In the analog world, norms are reinforced because we can instantly read and respond to visual cues—allowing us to determine whether our actions get the desired response. For example, if someone walks into a store, a salesperson can greet them with a smile, ask if they need help, and depending on their body language and verbal response, the salesperson can easily figure out what to do next. They might leave them alone if the customer curtly says, “just browsing.” Or, they might help them find a gift for their mom if it comes up in conversation.

Now, if someone new visits your online store—it doesn’t make sense to greet them with a “sign up for our newsletter” or “fill out this survey.” Yet, many brands jump the gun—and somehow, wonder why their bounce rates are so high.

Ultimately, we need to think about these things the same way we think about analog interactions. You greet a new person who visits your website, ask them if they need help, and apply the appropriate action based on their response.

COVID-19 Changed the Game for CX

Digital transformation was already redefining CX way before the coronavirus pandemic came along. However, COVID was an accelerant—companies were forced to adapt to new needs both internally and externally. We saw companies scramble to go remote and cater to customers facing the same challenges of moving their lives and work into the digital realm.

Ultimately, the pandemic created lasting shifts in customer preferences and customer support strategies. Brands are beginning to see agility as a critical part of their risk management, supply chain, inventory planning, etc. strategies.

COVID also pushed customers to rethink their values and priorities. It’s no longer enough to “like” a product or service. Consumers are thinking about their own experience—i.e., did the company solve their problem within a reasonable time? Did the person they spoke with demonstrate warmth and empathy?

Zendesk Customer Experience Trends Report 2021 found that half of the respondents say CX matters more to them now than it did just a year ago.

They’re also thinking about the big picture—like, is this brand on the right side of the issues they care about (whether that’s climate change, social justice, or how a company treats its employees).

According to KPMG’s 2020 report, Customer Experience in a New Reality, consumers have become more thoughtful and selective about the products they buy and from whom. Customers want to know that the organizations they buy from care about them—and care about humanity in general and taking care of the communities they live in.

Customers Now Define the Entire Business Strategy

In the past, customer experience was largely driven by front-line employees—service teams, sales, marketing—with minimal oversight/input from top leadership.

Modern business leaders know that the entire CX strategy is determined by customer emotions, goals, and problems. They must enable employees to deliver value.

Laggards, on the other hand, are still competing on price, often leaving CX up to individual silos (customer service, sales, marketing, C-suite, IT, and so on). Those silos might work hard and develop some effective tactics, but they do so on their own. As a result, customers get a fragmented, inconsistent experience across interactions and channels.

Customer-centricity also defines the product strategy.

A product comes from a need shared by many potential customers. Today’s customers want products that are affordable, eco-friendly, and solve a specific problem.

Product companies started creating these really granular customer journey maps to get a better sense of how customers interact with products, what they think about that experience, and how they gather information.

Product companies have shifted their approach during the last 10 years. Instead of building a so-called good product and then looking for the right customers, they now start with a problem/need in the market and build an MVP that directly addresses that problem. Then, they test it with real users from their target market, capture and analyze feedback. From there, use that feedback to create a solution tailored to the customer.

Final Thoughts

Customer experience has changed so much in a short time, making it impossible to predict what lies ahead. But at the same time, CX has always been about building relationships, responding to customer needs, and trying to make things a little easier. In other words, it’s about human connection.

We can expect this “ancient trend” to continue for the foreseeable future—only with more granular, accurate data, faster prescriptive insights (from AI), and, unfortunately, even more pressure to elevate the customer experience across every channel and touchpoint.

To learn more about how 3Pillar helps its clients prepare for the next phase in the CX evolution, contact an expert today.

Special thanks to these members of FORCE, 3Pillar’s expert network, for their contributions to this article.

LinkedIn Angel Almada

LinkedIn Kathryn Rosaaen

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.