Emphasizing the customer experience is an unorthodox approach to brand differentiation, but as eCommerce changes the business landscape from local to international, price and product matter less, and personalized experiences are starting to matter more.
In today’s digital-first world, consumers have near limitless options to choose from. If one retailer or platform doesn’t have the right product at the right price, consumers can find another option in seconds.
While this lack of commitment suggests that today’s consumers aren’t loyal, the opposite is true. Consumers are loyal, but not towards product price and quality, but the customer experience.
But why is this the case? Changes in consumer shopping patterns, the adoption of new digital shopping channels, and technological advances might just be the chief offenders.
Why is Customer Experience More Important Now Than Ever ?.
Before the advent of eCommerce, consumers didn’t have access to the near-limitless amount of options they do now.
Consumers did not have much reprieve from a poor customer experience when confined to shopping malls, urban centers, and large brick-and-mortar department stores.
After all, what could they do?
Faced with few alternatives, shoppers had no choice but to make their purchases from whatever place was available.
However, as large eCommerce platforms such as Amazon entered into the fray, consumers had more recourse to shop at outlets that had lower prices, more variety and offered more positive experiences.
As the eCommerce space grew, competition also became saturated. With the plurality of digital sales channels such as social media, mobile apps and eCommerce websites, consumers can find the lowest prices for the best products in seconds.
But it’s not product price and quality that keeps them coming back; it’s the customer experience.
According to data from SuperOffice, 86% of buyers in 2020 will pay more for a better experience, with CX overtaking price and product as the key brand differentiator in 2021. Here are three reasons why this is the case.
Companies spend a fortune on marketing, to the tune of a combined $141.8 billion USD between paid search, desktop and mobile ad placements. Marketing is what gets customers in the door, but it’s not what keeps customers around.
According to a report from Harvard Business Review, the costs of acquiring a new customer can be anywhere from five to 25 times more expensive than retaining an existing one. From the statistic above, this definitely seems to be the case.
Keeping your customers around pays off in the long run. Research shows that increasing customer retention rates by just 5% increases profits by 25% to 95%. Refining and personalizing the customer experience instead of investing exorbitant amounts into ad and marketing efforts pay far more dividends.
Following the same logic for customer loyalty, it only makes sense that a loyal customer is a happy customer. Why else would they make repeat purchases at the same business? While an increase in customer retention rates is the most discreet advantage of improving the customer experience, a less visible improvement is increased customer acquisition through WOMM or word-of-mouth marketing.
Social proof has long been the most impactful and trustworthy form of marketing – it’s the one that consumers trust above all else and the form of marketing that’s most likely to drive sales. One report even states that an overwhelming 92% of consumers from around the world trust testimonials, anecdotes and other forms of earned media more than traditional advertising.
Tony Hsieh, CEO and founder of Zappos, who changed their business model in the early 2010s to focus primarily on the customer experience, says that his company’s philosophy “became ‘let’s take most of the money we could’ve spent on paid advertising and paid marketing and instead of spending on that, invest it in the customer experience/customer service and then let our customers do the marketing for us through word of mouth.’”
Zappos doesn’t just talk the talk; they walk the walk.
On June 11, 2016, one customer service employee had a call that lasted 10 hours, 43 minutes. Customers have a lot of choices when it comes to buying shoes, but they’re likely to stay loyal and recommend friends and family to an organization that goes the distance to ensure that they’re happy.
Reduce Customer Churn.
Social proof is one of the best ways to retain existing customers and attract new ones, but it’s also the most discernible way to lose customers too.
In a presentation from Esteban Kolsky, Chief Evangelist of SAP, while 72% of satisfied customers share a positive experience with six or more people, 13% of unsatisfied customers will share their negative experiences with 15 or more people.
Most times, they won’t even complain before leaving.
According to Kolsky, only 1 in 26 unsatisfied customers complain.
The rest simply leave.
Even if you’re a beloved brand, one bad experience can cost you more than you think. A report from PwC on the future of CX has found even when people have a positive attitude towards a brand, 32% of all customers will walk away from just one bad experience, with 59% walking away after several in America.
Considering the inordinate costs of attracting new customers and the impact that negative customer experiences can have on a brand, it’s in an organization’s best interests to put CX at the forefront of its business strategy.
Transform Your Customer Experience to Transform Your Business.
Today’s digital consumers have demands, and they aren’t anything like what they’ve expected in the past. As advances in technology increase expectations for convenience, personalization and knowledge, customer experience has become more important than ever before.
Among all customers, 73% state that CX is a deciding factor in making their purchase decisions, behind product price and product quality.
In fact, it’s so important that 86% of buyers are willing to pay more for it.
As the eCommerce space continues to grow and evolve, companies must be prepared to change and adapt, too.
Ensuring consistency across all your sales channels, investing in comprehensive customer profiles and personalizing the customer experience at every touchpoint isn’t just important; it’s essential.