7 Ways Customer Experience Improves Your Bottom Line

In a world where you come across new brands every other day, your brand needs to stand out. How to make it possible? Well, there are different dimensions to it:

The quality of your product
The kind of services that you provide
The look of your brand
The reputation your brand holds in the minds of the customers

While the first three points are quite comprehensive and precise, the most important one is the fourth point. Customer Experience or CX is a vast arena of your business that determines your brand's performance. It might sound basic, but the concept is deeper than what you perceive. To give a simple idea of how deep it is, read the quote of Rick Mans, head of Customer Experience EMEA-LATAM, Roche, from Clootrack's Customer Experience Challenges Report:

“To understand customer experience better, you need to understand customers better. To understand your customer better, you must go into a beginner's mind. Leave all preconceived perceptions about your product or company behind and let the customer insights change your mind and help you to redefine your priorities.”

But why is CX so important? How does experience determine the course of your business?

According to Deloitte, customers spend 140% more when they have positive experiences with a brand.

Well, it does majorly. CX is directly related to your company's revenues, profitability, and future probability of the brand's performance. Moreover, it is equally important to measure the CX regularly for the brand to understand the areas where it could perform better.

As CX is an unavoidable phenomenon in business, take a look to understand 7 ways in which it impacts the business of a brand:

1. CX Determines Profitability

When a customer experiences uninterrupted and hospitable service from a brand, it gathers a positive impression. A positive experience goes a long way, suggesting more revenue and lower costs for CPA (cost per acquisition) and CRC (customer retention).

On the other hand, emotional investment in good CX saves you great money in performing the marketing and advertisement of your brand. As a domino effect, customers tend to unintentionally create awareness about your brand among the people around them. A good CX experience leads to word-of-mouth referrals that, in turn, boost more sales.

It is not difficult to understand that when people advertise your brand of their own will, chances are that your brand is likely to make more customers who can later have the potential to become your regular consumers.

Nevertheless, a good CX experience leads people to make a double or impromptu purchase the next time when they decide to buy something from your brand.

2. CX Impacts Value Proposition

Value proposition indicates the position of your brand in the market. Also, a large part of brands' value proposition is their ROI and KPIs. Concentrating on KPI means monitoring the performance of your brands and determining the areas that can be improved. Subsequently, a well-planned KPI measure leads to profitable ROI. Return On Investment denotes your brand's actual profit from its business.

Customer Experience has a huge role in determining the ROI of a brand. Know that CX gains the attention of customers to a huge extent. More people are likely to connect with a brand if it has a higher performance quality. For example, Facebook Ads have a high ROI of 152%, which can be converted to 85% of social media orders. Why is it so? If you notice, social media platforms engage highly in gaining people's attention through frequent surveys and providing great connectivity to their users.

3. CX Determines Customer Satisfaction

Customer Experience means customer satisfaction which is a primary aspect of improving a brand's performance. Measuring customer satisfaction is a great part of determining a brand's success. Businesses are supposed to conduct a healthy mix of qualitative (reviews, direct interactions, interviews, mentions) and quantitative (NPS and CSAT scores) data.

These are certain tools that have a direct impact on customer experience. However, they only indicate the mood of your consumers towards your product and do not justify the reason behind their attitude. Therefore, to comprehend that as well, brands should also dedicate effort to studying the customer behavior and pattern of buying.

Moreover, Julie Ryan, Director and Global Customer Experience, Johnson & Johnson quoted in the Customer Experience Challenges Report says, "Brands should implement robust 'customer listening' tools across all critical customer touchpoints-use a combination of surveys/interviews/focus groups + data mining techniques to tap into transactional systems (e.g., ERPs, CRMs, Customer Service technologies, etc.) to build a 360-degree view of your customer's journey with your organization." All types of surveys and measuring tools heavily depend on Customer Experience, which is greatly determined by customer satisfaction.

Read more about data-driven culture at organizations here.

4. CX Generates CLV

Customer Lifetime Value, or CLV, is a measure that indicates how much revenue a customer generates throughout the duration of their relationship with a brand. With CX, one can determine the complete spending of new customers, measure the impact of the brand's retention efforts, and separate different spenders, like big and habitual shoppers, from the rest of their customers. The customer lifetime value, denoted through CX makes, also helps the brand brainstorm attractive deals for its regular and new customers.

For example, many food delivery brands like Zomato or Swiggy provide free delivery to their new customers on their first order. On the other hand, clothing brand H&M lures its customers to join its brand membership to enjoy discounts and offers. All of these are different techniques to gain the attention of the buyers and make them use their services. Moreover, they specifically target to tieing the customer with their brand by providing them with a quality experience. Therefore, using this they get to understand their brand's CLV which ultimately results in an improved solution to ascend the image of the brand.

5. CX Accelerates Order Frequency

Order Frequency is a measure that determines how often the customer is buying a certain product from your brand in repeat. Of course, if the customers are repeatedly buying something from your brand, they have had a good customer experience. Good order frequency denotes that your product has established trust among its customers, and they do not require further convincing to buy and use your brand. Also, according to statistics and customer behavior, it is said that a buyer is likely to spend 3x times more when they become a frequent buyer.

Moreover, as CX is directly related to Orders Frequency, it also determines the success of a brand in retaining the interest of its loyal customers towards a certain product in their brand.

6. CX Influences Price Sensitivity

Price sensitivity refers to the changing demand dynamics of a product or service if and when its prices undergo a change. As a conventional example, customers tend not to spend more for anything that has an alternative available at lower prices. So how does this affect customer experience? With established brands, typically luxury labels, their customer segment is the least concerned with prices. This is because excellent customer experiences in the past outweigh the pricing factor.

However, here’s a reality check: Not every customer will be pleased by the prices of your products. Naturally, a brand's price range heavily directs the customer's behavior. Moreover, the experience of customers with price sensitivity majorly determines a brand's target and potential buyers. After a brand identifies its potential buyers, they dedicate efforts to alluring those customers with buying potential and establishing a good customer base. For example, customers will be willing to spend more money for the same products/services owing to good experiences.

7. CX For Crisis Management

This might not be related to the bottom line, but it saves a great deal of customer base. When customers gather a good experience from a particular brand, they tend to trust it fully. So in situations where customers get disappointed with a certain service from your brand, they will have the trust to convey it to the company very frankly. This, in turn, helps the brand to work in the critical area without losing its reputation among its regular customers.

For example, if a customer becomes unhappy with your service or product, their good experiences in the past will make them not give up on your brand, no matter what. This provides an extra cushion for you and your team to fix the product/service issues instead of spending time and resources on retaining that customer.

Final Thoughts

In the Customer Experience Challenges Report, Sean Crichton-Browne, Head of Global Partnerships & Customer Engagement, MarketCulture Strategies Inc, talked about how most companies treat customer experience:

“One of the biggest challenges in companies is to understand what the customer truly needs. Not what they think they need. Many companies build their brand around what they believe is best for the customer. When they find out what the customer really wants, it may then be quite different from what the customer really wants.”

Customer Experience is a game changer for both small and big brands. It helps companies to work on areas that might enable them to boost their sales and revenues. Sadly, many brands do not focus much on customer experience and assume their customer base. But the reality is that customers are likely to change their choices due to several factors frequently.

Hence it is important to constantly monitor CX to run your business on the right track.

7 Ways Customer Experience Improves Your Bottom Line

Do you know what your customers really want?

Clootrack