My daughter, Claudia, and I have a tradition when we eat ice cream at home: it’s always topped with chocolate sauce, whipped cream, and sprinkles. One day not long ago, Claudia asked me if I’d make her a bowl of ice cream. I was in the middle of something but said yes anyway—and made it in a rush. When I handed Claudia the ice cream, her enthusiastic thank-you and broad smile quickly dissolved into disappointment.
“What happened to the whipped cream and sprinkles?” she asked.
What happened was that I delivered a subpar experience because I ignored my top customer’s known preferences and instead focused on what was easiest for me at the time.
It’s exactly the same in business.
Companies that ignore what they know about their customers are bound to disappoint them. Instead, brands should develop what Don Peppers and Martha Rogers call learning relationships: building on and using the customer data they gather over time to deliver increasingly relevant customer experiences (CX) and interactions.
The fact is, CX is all about business, about a win-win between company and customer. That’s why it’s become a business imperative—and a competitive advantage.
It’s likely that you’re here because you’re sold on the value of CX, but your colleagues might not be. Even with all the buzz around it, there’s a good chance they think that CX links to only “soft” metrics disconnected from the bottom line.
I beg to differ. There are myriad business reasons to care about CX. Let’s take a look at three: profitable growth, customer expectations, and omnichannel realities.
What does every CEO want most? Profitable revenue.
Where does CX come in? Customers who consistently enjoy positive brand experiences tend to buy more and buy more often, spend more when they buy, cost less to serve, recommend and advocate, and forgive mistakes. Sounds like a profitable relationship to me.
Consider this: Temkin Group found that even a moderate increase in CX generates an average increase in revenue of $823 million over three years for a company with $1 billion in annual revenues.
Conversely, a company’s bottom line can take a hit due to poor customer experiences. According to SDL, for every failed CX, brands lose a potential 65% of revenue per customer the following year. This is a tough reality because customers today have sky-high expectations.
Nearly 80% of U.S. consumers say they expect brands to show they “understand and care about me” before those consumers will consider making a purchase, according to the “Wantedness” study by Wunderman. The study also found that 56% of U.S. consumers feel more loyal to a brand that shows a deep understanding of their priorities and preferences.
Serving up what customers want—in a way that makes business sense for you—is worth the time and effort. It’s worth giving them the whipped cream and sprinkles on their ice cream.
Let me reiterate: Customers who consistently enjoy positive brand experiences tend to buy more and buy more often, spend more when they buy, cost less to serve, recommend and advocate, and forgive mistakes. That means more revenue at a lower cost.
Proof point: “Fully engaged” customers—those with a strong attachment to a brand, who you might consider to be brand ambassadors—deliver a 23% premium over the average customer in share of wallet, profitability, and revenue.
One of customers’ toughest expectations: They expect to do business with you when and where they want—on their terms. Technology is giving them the platform to accomplish this. You need to keep up. They don’t care about your preferred processes or channels. They also don’t care about your silos or technology challenges. They only care about getting what they want when they want it, quickly and easily. This applies in B2B and B2C.
According to Aberdeen, a strong omnichannel customer engagement strategy will retain 89% of customers, and see a revenue growth of 9.5% year-over-year. Further, research from McKinsey Global Institute shows that 50% of customer interactions happen during a multi-channel, multi-event journey. The reward is there for companies that can provide engaging omnichannel experiences: Omnichannel customers shoppers have a 30% higher lifetime value than single-channel customers.
Remember, as Sam Walton, founder of Walmart, said, “Customers can fire everyone from the CEO on down simply by spending their money somewhere else.” Customers want, and expect, their whipped cream and sprinkles—and when businesses serve it up they, too, get a sweet reward.