A strange phenomenon has been occurring in direct to consumer brands, with more businesses recognising the importance of customer experience, but as the market experiences a slow down, they are also investing less in them. Instead, money is being spent in areas such as marketing in an attempt to attract new customers and this is where brands need educating as to the flaw in their old school logic.
A recent Gartner survey found “that many organisations have faced crisis situations in their CX program within the last three years. Economic or financial pressure has impacted the highest proportion of respondents (53 per cent)”. Even more concerning, is that this financial pressure has in turn seen the withdrawal of executive support in more than 60 per cent of cases with just under 60 per cent acknowledging this was because they were unable to demonstrate value or ROI. As a result, all future attempts to improve customer experience are questioned by the CFO and ultimately, these businesses reported a “decline in the quality of the customer experience, weakened financial performance of the organisation and erosion of its competitive position”.
Essentially, by not investing in their customer experience, these brands are worsening their position, but when questioned are unable to qualify or quantify how or why this is. So what makes CX so difficult to understand when it comes to value? Well firstly, it is so intertwined between business units that have been traditionally siloed with their own KPIs and responsibilities that often the measures just aren’t in place. Secondly, it’s somewhat of a new concept and one that many businesses just don’t really understand. Afterall, marketing has always been the answer to increase sales, and the customers have always been a way of solving business problems. If sales are low, more marketing will find more customers who will buy more things right?
What if we told you that customer experience is the answer to your business problems and that your business should be the answer to your customers’ problems?
Customers now, more than ever, have a vast array of products and services at their fingertips. Without even leaving their homes, most people can find, buy and take delivery of almost any product they want. So what can differentiate a brand to stand out among all others? Yes, marketing will play its part. Without awareness or an ability to be in front of your customer, you cannot be in their consideration set. But upon interacting with your brand, whether virtually or in the flesh, what is it that makes that customer want to purchase, and continue to engage and purchase with your brand? The answer is the experience and it covers many different aspects.
Take for example a typical online purchase of a pair of pants. Your marketing team has managed to create awareness and draw the customer to your website.
How easily can they find pants?
How quickly can they filter for the exact pants they are looking for, be it size, colour, or fit (and do you have a helpful and easy to understand size guide)?
How do you merchandise them?
Do you show them in context of other items of clothing and accessories?
Do you make it easy for them to buy the outfit if they wish?
Do you offer recommendations for what may suit them based on what others have bought?
Do you store their preferences for the next time they shop?
What delivery options do you offer?
Can they buy online and collect them in store to try on?
How quickly can they do that?
Or could they instead get fast delivery?
What are the return options if they’re not quite right?
How can they be kept up to date on the delivery of their purchase?
What will the receipt look like?
How can they provide feedback on their purchase experience and the product?
Where will their purchase history and receipt be saved to for fast future reference?
What follow up will they receive from your brand for their purchase?
How can they stay engaged and what will the incentive be to keep purchasing with your brand?
Will you save their preferences, shipping and payment details to make future purchasing easier?
Will they be able to save other items for future purchasing while they’re on your site to come back to?
How can they access those items when they’re ready to buy?
Will you let them know when stock is running low and they might miss out?
What about if you’re currently out of stock? Will you let them know when it comes back in?
Overwhelming isn’t it? But all those steps add up to what can be an amazing customer experience that keeps your customer wanting to come back and shop with you more often and recommend it to their friends and family. Or, it can make for a terrible experience that sees that customer never shop again and that’s why every step needs to be considered and invested in to make sure you have the best chance possible of retaining that customer you’ve spent so much money on acquiring. And when it comes to showing ROI, higher transactional revenue and higher frequency of purchase are easily quantified against acquisition costs.
The problem with decreasing your investment in customer experience to increase the investment in marketing is a bit like the old adage of “Robbing Peter to pay Paul.” You’ll find new customers, sure. But if the experience with your brand as a customer falls short in any of these aspects that they find important, you will continually be left needing to fund marketing at higher and higher acquisition costs to find new customers instead of retaining customers who continue to shop with your brand, therefore lowering your acquisition costs and increasing your return on investment from your marketing budget.
In addition, the information you can capture from these customers engaging with your brand benefits your business across a number of departments. First and foremost, your marketing department! When you provide an exceptional customer experience, your customers are happier to provide an exchange of their information for value. That is, if you offer a compelling reason to do so, they will offer this information for you freely and willingly in order to receive a better experience. And when you have more information about your customers - particularly your best customers - the more refined and targeted your marketing can become to find more people just like them, resulting in higher value customers that are more likely to be retained and repurchase, resulting in a higher ROI and lower acquisition costs.
Take for example customer profiles.
Often a guest checkout is a faster option for customers - particularly new customers. However, if you want to capture customer information for remarketing, persona development, product development and so on, find a reason that makes it worth their while to create a profile with your brand. Often, it can be that they will be able to check out faster in future and therefore it’s worthwhile saving their name, address, phone number and payment details. But what about all the other useful information they can provide prior to this point?
Providing a compelling reason to identify themselves at the point of hitting your website or entering your store is hugely valuable to both your customers and your brand. Known customers mean known value. You can qualify how they were acquired and you can quantify their value through recency, frequency, monetary value, NPS and CSAT scores and engagement. You can view who they are, their demographics, their size, colour, product and other product preferences, as well as shipping and payment preferences. You have their contact details to communicate with them in meaningful ways and you can make offers that are relevant and more likely to result in a sale.
Essentially, you are receiving a full and complete view of your customer that allows your retail team to service them better, your marketing team to sell to them more efficiently, your CX team to develop more relevant, sought after and convenient services and experiences and your product team to buy and develop more items they are wanting, and reduce excess, poor selling stock.
Providing that compelling reason is easy. Offering value to your customers for providing that information can be as simple as delivering more personalised recommendations, or saving their preferences for fast access in future or even just having a say in what they could purchase from you in future. The opportunities are endless and should be learned through continual interactions and communication with your known customers.
The hard part is not implementing effective and exceptional customer experiences.
The hard part is educating your executive team about why it’s so important and valuable to invest in your customers.
For assistance in educating your team around the value of CX, setting goals and measures, or proving ROI, contact Arkade who can provide services across all these areas to assist you in developing and executing a strong customer experience focus for your business. Get in touch via email@example.com or 03 9999 8270.