A chain of events has occurred over the last few years that has changed the world of business. Advancements in technology increased the pace of globalization. This, in turn, allowed businesses to gain consumer bases in far away places and allowed startups to have increased access to funding. More businesses began to pop up, and with this growth came a growth in consumer expectations. Customers expect more of the organizations they purchase from. When companies fail to deliver, customers leave.
One of these customer expectations is a better relationship with brands. They want to be able to have access to the companies they buy from whenever they want, wherever they are. They want businesses to be more engaging and to provide more value to them. Due to this, the practice of improving the customer experience has become key.
Without profits, businesses fail. There’s no way around it. And one solid truth that has emerged over the last few years is that when customer experience is focused on, revenue goes up. This has become widely accepted, with 41% of senior marketers saying that in terms of its impact on revenue, customer experience is second only to the product.
Nearly three-quarters of consumers spend more when they experience good customer service. And even more consumers, 86% to be exact, openly express that they are willing to spend more for a better experience. But it’s not just about increasing revenue, it’s also about maintaining it. Without providing a positive customer experience, businesses are seeing severe drops in sales. 78% of consumers have opted out of making a purchase purely because they experienced poor service.
The brands that lead in customer experience, see their revenue grow up to 8% above the rest of their competitors. One of the reasons for this above average growth is due to how companies, that put effort into the customer experience, respond when a customer isn’t pleased. When companies respond effectively and efficiently to bad customer experiences, they see customer spending increase by 30%. When they respond poorly, customer spending can decrease by up to 63%.
Another reason for the additional revenue growth is because companies that see the value of investing in improving customer experience are concentrating efforts online–and they’re succeeding. 97% of consumers’ purchases are influenced by their online experience and 65% of consumers’ opinions about a brand have been changed by their online experience.
It’s expensive to bring in new customers. A company first needs to develop a marketing campaign. Then they need to identify leads, pursue them, and bring them through the customer journey. This takes time and money. In fact, when compared to keeping an existing customer, attracting a new one can cost seven times more. But it’s not just about holding onto customers, it’s also about keeping them happy. Strongly loyal customers have between six and 14 times more lifetime value than others. These figures should immediately shock organizations into maintaining current customers. And the best way to do that is by ensuring that their experience is unparalleled.
A good customer experience is so essential that 94% of consumers will continue to purchase from a company if they have a positive experience. Besides just continuing to buy the same products, 65% customers who have a positive experience will try new products or services from the company and 71% will forgive the company after a mistake. On the other end of the spectrum, when consumers have a bad experience 82% of them will leave.
And brands that are working towards developing this improved customer experience are seeing the difference. When a company sets up an integrated experience for their customers online, their brand loyalty is increased by 88%.
While retaining customers is the simplest way to keep sales profits up and marketing expenses down, another method is through referrals. When a potential customer is referred, sales are much easier, require less time and need less financial investment. And when a brand is known for providing a high quality customer experience, this reputation is enough for 40% of consumers to base their purchases on it.
If they’re happy with their experience, the chain of referrals will continue. In fact, 87% of customers who have a positive experience will go on to recommend the company. One surprising aspect of customer experience is that when it comes to referring, experience has more of an impact than the price or the product. Even the little positive experiences count, which can be seen through the fact that 71% of consumers who get a fast response on social media will go on to refer others.
But referring is a two-way street. When customers have a negative experience, 79% will attempt to detract others from doing business with the company. 54% of those who have an unpleasant experience will share it with at least 5 peoples.
Many organizations are beginning to understand how the customer experience that they provide can either have a positive or negative effect on their profit margin–in a really big way. Already, nearly 90% of companies are winning and losing customers to competitors based on the customer experience that they provide. Customer experience is gaining such importance that by 2020 it will overtake both product and price and biggest brand differentiator.
In order to prepare for this major shift in how business is done, companies need to become internally equipped. They need to engage customers, understand consumers and provide value to all. The most efficient way of achieving this is through a customer relationship management system. These platforms enable organizations to get a bird’s-eye view of their customer base so they can identify where the needs, concerns and problems are located in order to fix them effectively and efficiently. This, in turn, allows organizations to provide the optimal customer experience.