Date Published: December 21, 2020 - Last Updated 3 Years, 72 Days, 5 Hours, 32 Minutes ago
Best ICMI Articles of 2020 - #7
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” - Warren Buffett, 2005
Customer experience (CX) has become an increasingly integral part of business strategy, but many companies have struggled to successfully implement a successful plan of action to ensure good and consistent success in this important part of customer service.
Thought leaders in the customer service industry have found that market forces and technological changes have made CX easier, and more necessary, than in the past to maintain customer loyalty, and they have boosted their CX and brand loyalty. Other companies must be proactive and follow in their footsteps, or risk falling behind.
Here are five reasons why the time is now to advocate for efforts to enhance CX:
1. One Negative Customer Experience Can Lose a Customer.
Lifelong brand loyalty is a thing of the past. Consider these sobering statistics:
- According to PwC, 32% of customers will stop interacting with a brand after a single bad experience, and 45% will switch after three bad experiences.
- A recent study by Gladly was even more alarming; it showed that 84% of customers will switch to a competitor after three poor customer experiences.
This trend will only accelerate, as companies are making initial brand adoption easier and less risky than in the past. Also, research has shown that generations X, Y, and Z, which make up the largest customer segments, are fickle and mobile customers who will change brands faster than other generations. A survey of millenials found that more than half will switch brands after the first poor customer experience.
2. Executives Now Recognize the Business Value of CX and Are Making It a Company Priority.
“If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.”-Jeff Bezos, Founder & CEO, Amazon
Management now recognizes the ROI of CX, and are increasingly open to investing in it. This is especially becoming true as data technology enables the ability to track the results of efforts to improve CX.
3. Customer Retention has Graduated to an Actionable, Monetizable Goal.
The data is unequivocal – it’s much cheaper to retain a customer than find one. According to Harvard Business Review, “...acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one.” And yet while every company has a budget for user acquisition, only a minority have an actual budget line for user retention
Internal metrics of customer behavior are becoming more available and sophisticated. The top brands are ranking their customers by value, using metrics such as customer engagement, customer effort, and customer loyalty. Such quantifying of customers simply requires a good data algorithm, one with multiple contributing factors, to produce an easy-to-use number that can dictate options for the service agent.
Based on the relative ROI of retention, that should change. Consider research by Fred Reichheld of Bain & Company that shows that a 5% increase in customer retention rates increases profits by 25% to 95%.
4. As Chatbots Proliferate, the Risk of Poorer CX Increases.
Forrester identifies 2020 as the “year of the bot”, with 35% of firms planning to invest in agent-facing bots to improve customer service. Full-service virtual assistants may be the wave of the future, but the use of low-cost, lower-function chatbots is growing exponentially and has caused a disparity in quality. The Opus grid of sector contributors, long used as a leading sector guide, now looks like a 1000-piece puzzle. Sector signs and the Gartner Hype Cycle, a well-known model for market trends, all confirm that the chatbot market has peaked. In 2019, the first articles from Forrester analysts appeared that discussed customer dissatisfaction with bots. It is important to invest in quality automation, time, and people needed to maintain CX.
5. The Shift to AI Needs an Outcome Goal, and CX Can Be That Goal
“While AI adoption is increasing, some organizations are still questioning the business impact and benefits…Success depends on considering both tangible and intangible benefits, and determining how to meaningfully quantify them.” –Brian Manusama, Gartner
Artificial Intelligence (AI) adoption is no longer confined to emerging technologies; its adoption has become mainstream across many vertical markets. Despite this, market reports and data show that companies are adopting AI without true, trackable outcome goals. An Ovum 2019 study of 341 CX managers showed that only 12% report a “well-established AI strategy with applications and implementations in place.”
The true market leaders will use their plan of “AI for CX’ for more automation and faster outcomes for customers, and further competitive differentiation from market laggards. Customer experience trends are transforming CX from concept to actionable, measurable outcomes that generate revenue through increased sales and reduced customer churn.
The time to meaningfully invest in CX is now, when your company can be among the thought leaders, and not later, when it becomes a necessity of survival.