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Improving Customer Experience Can Help Beat Your Competition, Drive Loyalty and Boost Profits

The world is getting flatter every day. Consumers are more educated and less patient than ever, expecting what they want when they want it—and getting it. Armed with search engines and a well-earned sense of entitlement, today’s empowered customers will quickly abandon your company for competitors only a mouse click away. In this fast-changing environment, no company can afford to let their guard down.

Unfortunately, many organizations—both large and small—are ceding control of their customer experience at a time when their customers are less loyal than ever. In 2009, 86%  of consumers said they’d stop doing business with an organization after a bad customer experience, up 27% from four years earlier. This should alarm all organizations—even companies such as health plans, utilities, and TV service providers, which often act like they’re insulated from outside competitors.

Now more than ever, companies must understand, measure, and improve customer experience. Why? It’s one of the most reliable ways to attract and retain more—and more profitable—customers, most of whom will pay more for better experience, even in a down economy.

When it comes to keeping customers, Aberdeen Group notes that Best-in-Class customer experience organizations have 75% greater customer retention and 65% better customer satisfaction than the average company. Moreover, companies that pay attention to customer experience get more customers, too, with over 300% more leads in their sales pipeline that result in closed business.

Embracing—and profiting from—this new reality starts by accepting that customer experience isn’t defined by you. It’s based on how your organization is perceived by your customers when they do business with your company.

Measuring Customer Experience

While many organizations recognize the importance of improving customer experience not many have the tools or data to track it, much less improve it. So how can companies measure and improve customer experience? Where do you start? With a word—and that word is “touchpoint.”

Every point of contact—online and off, in-person or not—between or about your organization and any member of your audience universe is a touchpoint. Salespeople, packaging, advertisements, manuals, customer service centers, invoices, catalogs, thank you letters and even your products. The list goes on.

However, it’s not just corporate touchpoint like these. Today, many touchpoints that profoundly influence your customers are outside your direct control. For example, word-of-mouth, bloggers and the media, distributors, retailers and resellers or marketing “partners” who sell under your good name all “touch” your customers.

Whether human (such as sales staff or a call center) interactive (Websites, e-mail) or static (including radio ads or sales collateral), each touchpoint is an opportunity to deliver a great customer experience, and bring customers closer. At the same time, a single poor touchpoint can mean a bad experience, driving prospects and customers away. This is why measuring customer experience is so important.

Measuring and improving experience involves getting at this critical information from the “outside in.” Understanding what your customers think—and why—can help you answer questions like these:

1. Once we win a customer, how does the experience we deliver match up to what our customers expect from us? Where do gaps exist, and how big are they?
2. Are we underinvesting in areas that are important to our customers? Or overly investing in areas that don’t matter? How can we reallocate our resources to be more effective?
3. Where can we focus customer experience efforts to boost loyalty with our most profitable customers? Which “dials” can we turn to boost loyalty with our best customers?

These insights help companies better understand customer wants and needs. They can also provide actionable data that can be leveraged to increase acquisition, boost satisfaction and loyalty, improve overall marketing, sales and service effectiveness and strengthen brand.

Analyze Customer Experience Data for Actionable Strategies

To actually improve customer experience, you must understand your current customer experience. The first step? Identify and analyze all your touchpoints—every single interaction between you, your prospects and your customers—to create a map of exactly where you are today.

Through an understanding of which touchpoints exist—including which work, which don’t (and why) and any that are missing—you can identify and close “gaps” between actual and perceived performance, charting a path to where you need to go tomorrow. Among other key measures, your research should highlight:

• The “moments of truth” where you interact with customers
• All touchpoints at each interaction, including categorization by type (human, interactive or static)
• How touchpoints work individually, or in sequence (“touchpoint paths”) to move customers through the relationship lifecycle and closer to your company
• The most important touchpoints with regards to:
—Acquisition, satisfaction and retention
—Value to your business and value to customers
—Ability to generate revenue (and cost to create and maintain)
—Efficacy at meeting both business and customer needs
• Gaps where touchpoints should exist but don’t
• Redundancies where touchpoints exist but shouldn’t

With this data in hand, you’ll be able to quantify the effectiveness of each touchpoint and whether it positively (or negatively) influences customer experience. You’ll also have a starting point for developing a customer experience strategy that helps set priorities, map out costs and benefits, and provide specific metrics for measuring business impact.

Create More Loyal (and More Profitable) Customers

Though most executives know customer experience is important, most aren’t sure how it impacts their bottom line; that link is customer loyalty. The long-term value of a loyal customer is huge.

Unlike merely satisfied customers, loyal customers stick with you over the long term, even if they’re not getting the best price. They transact and more and devote an increasingly larger “share of wallet” to your company. They tell their family, friends and associates about their experiences, which can dramatically lower customer acquisition costs, and are more likely to forgive the occasional mistake, decreasing churn. In short, customer experience makes customers more valuable, and more profitable.

By analyzing customer experience gaps and opportunities through the lenses of customer segments, business processes, touchpoints and your customer relationship lifecycle, your company can quantify the returns on customer experience investments in very real and tangible ways.

Beginning with a clear understanding of which customers are most valuable and why—and where you may be in danger of losing them—companies can prioritize investments to increase loyalty, speed progression through the lifecycle, both reducing the cost of serving customers and increasing their value.

Through this understanding, you’ll be in a position to build real value, improving retention and cross-sell, while building relationships that will reward you for years to come. After all, in a world where nearly 90% of customers will walk after a single poor experience, the cost of ignoring customer experience may well be your survival.


—Harris Interactive: 2009 Customer Experience Impact (CEI) Report (October 2009)
—Aberdeen Group: Customer Experience Management: Is Your Entire Company Really Focused on the Customer?  (August 2008)
—Aberdeen Group: The 2011 Marketer’s Agenda: Accessing and Understanding Customer Experience Data is Life or Death (July 2010).

About the Author(s)

Michael Hinshaw is managing director of MCorp Consulting, a brand and customer experience consultancy that maps and improves the touchpoints between organizations and their customers. An innovative executive, consultant and educator, Hinshaw pioneered Touchpoint Mapping®, a process that helps companies improve business performance by measuring and transforming the ways they interact with their customers. For more information, visit www.mcorpconsulting.com/