What is customer experience & why it’s important: 2022 guide
Learn what customer experience is and why it’s so important for your business. We also provide tips and examples for how to improve your CX strategy.
Published April 17, 2020
Last updated June 22, 2022
Customers have come to expect more out of companies, but who can blame them? We've all had customer experiences that range from outstanding to infuriating. It's put more pressure on companies to find a balance between the experience they want to offer and limited internal resources and other priorities—especially when the well-known customer-centric companies are the ones reaping the rewards.
In this article, we’ll explore:
- Customer experience definition
- Why customer experience is important
- What is a good customer experience?
- Customer experience management
- How to improve your CX strategy
- Measure CX
- How to analyze customer experience
What is customer experience?
Customer experience (CX) is everything related to a business that affects a customer’s perception and feelings about it.
Customer experience (CX) focuses on the relationship between a business and its customers. It includes every interaction, no matter how brief and even if it doesn’t result in a purchase.
Whether it’s a call to a contact center, exposure to an ad, or even something as mundane as the payment of a bill, every exchange between customers and businesses builds (or damages) the relationship.
Most importantly, it’s how customers view those experiences in aggregate that matters.
“Customer experience is how a customer feels about the sum of their interactions with a business,” said Dave Dyson, Sr. Customer Service Evangelist, Zendesk. “It involves every way a customer interacts with a company, at all stages of the customer journey—including the marketing materials they see before they become a customer, the sales experience, the quality of the product or service itself, and the customer service they receive post-purchase.”
What is the difference between customer experience and customer service?
The difference between customer service and customer experience is that customer service is one factor in the customer journey, while customer experience is the sum of all a customer’s interactions with the brand.
In other words, customer service is one piece of the customer experience puzzle. "Customer service is what happens when the experience breaks down," said Annette Franz, founder and CEO of CX Journey. So if we get everything right, if we have executed the experience flawlessly, or if we've done a great job with designing and executing on the experience, then we don't need customer service. Because there's not an issue with the product. The billing is accurate, it's thorough."
Good customer service is vital to your company's overall customer experience. Agents are often the first (and only) human voice customers hear, especially when they reach out with an issue.
What is the importance of customer experience?
Customer experience is important. And it's only becoming more important to both customers and businesses, according to our Trends Report. In fact, more than half of businesses surveyed (56 percent) are making better customer experiences the top business priority in the coming year.
Here are some of the benefits of delivering a great CX.
- It can increase customer retention
- It can boost customer lifetime value
- It builds brand loyalty
- It impacts brand reputability
- It can give companies a competitive advantage
How customers feel about your brand is tied to customer retention, lifetime value, and brand loyalty—and 52 percent of customers report going out of their way to buy from brands they’re loyal to.
Attracting and retaining customers in an ultra-competitive business environment is no small feat, and companies that ignore the importance of providing a seamless, effective customer experience can end up losing out to rivals who understand that it’s the customer who defines good service.
This means even one experience that doesn’t live up to customer expectations could have drastic results on brand reputability and that reduced room for error is exaggerated by the ease of switching in the web 2.0 era. If you don’t like a product, or the way a company interacts with you, finding an alternative is as easy as a Google search.
It’s a high-stakes game—61 percent of customers would now defect to a competitor after just one bad experience. That’s a 22-percent jump from the previous year. Make it two negative experiences, and 76 percent of customers are out the door.
“A good customer experience drives competitive advantage. Customers can always choose to go elsewhere,” said Dyson. “If you’re having trouble and can’t reach customer support, you’re going to get frustrated, perceive that as a bad experience, and you might leave. Businesses that provide good experiences set expectations for what a customer experience should be at similar businesses.”
Due to this developing market saturation, many companies are realizing customer experience is their best chance to stand out from competitors. In other words, if a good product and competitive pricing are no longer enough to produce loyalty, then a personalized experience will have to be your differentiator.
What is a good customer experience?
A good customer experience makes it easy for a customer to do business with you, according to Dyson.
“A great customer experience makes it effortless for customers to accomplish their goals for what they want to use your product or service for,” he said. “Customer loyalty is less about big 'wow' moments and more about being dependable and making things easy for customers.”
- Marketing setting realistic expectations about the product or service
- Intuitive product design
- Easy-to-access self-help resources
- Proactive messaging around known issues
- Sales being transparent about pricing
- Always-available live customer support with short waits
What’s important is that all these teams are working together to create a seamless, consistent experience for the customer.
Since a separate department usually handles every customer interaction, it may seem like having satisfactory metrics within each department would be enough to create a great customer experience. However, the tricky part is that the consumer does not experience their relationship with your company as a series of smaller interactions, but rather will remember it as one ongoing interaction.
This can create problems for organizations in which various departments are siloed and do not communicate in between each other. Silos can result in customers having to repeat information, fill out forms multiple times, or just a customer journey that drags on longer than needed.
For instance, agents should be able to easily access context like what items are in a customer’s shopping cart or what outbound email promotions they’ve opened, even if the marketing team is directly responsible for that information. Likewise, a marketing team should have insight into past support interactions so they can send customers more targeted emails.
Being aware of customer experience from an end-to-end viewpoint and making sure customers’ needs are at the center of attention every step of the way is key for creating a good customer experience.
What can cause a bad customer experience?
While 60 percent of companies surveyed in our Trends Report gave themselves high marks for service, 68 percent of customers say there’s room for improvement. In fact, 54 percent of customers report that customer service feels like an afterthought for most of the businesses they buy from.
A bad customer experience happens when a customer feels a business failed to meet their expectations. Some of the top indicators of a poor customer experience include:
- Long wait times
- An automated system that makes it hard to connect with a human agent
- Having to repeat information multiple times
- Unhelpful agents
- Customer service is hard to reach
- The business ignores customer feedback
Customer experience management
Customer experience management (CXM) is the process of measuring, analyzing, and improving the experience you provide customers. CXM looks at the entire customer journey to determine customer pain points and how to resolve them.
How to improve your CX strategy
The good news is that the customer experience can be improved. And it starts by putting the customer at the center of your strategy. Here are 7 tips:
1. Create feedback loops
Customer feedback provides insight into customers’ expectations, and how they might change over time with changes in your industry. It can also tell you where customers are getting stuck and confirm what’s working well.
The key is to acknowledge the feedback and do your best to act on it. “It’s important to create a feedback loop with customers and act on what they tell you,” said Dyson. “This builds trust and ensures it’s not just lip service.”
Dyson also recommends creating an internal employee feedback loop. Agents can help aggregate customer feedback and provide insight into what's making it challenging for them to deliver great service, such as policies or processes that don't suit customer needs or friction between siloed teams that's leading to slow resolution of customer issues.
2. Build an omnichannel experience
When you develop an omnichannel CX strategy, you aren’t just meeting customers where they are—that’s table stakes.
Omnichannel means going a step further and providing a consistent communications journey for your customer, one where the conversation history and context travels with them from channel to channel.
Context—about who your customer is, what outbound emails they’ve opened, what’s sitting in their shopping cart, or what they’ve talked to you about in the past—is crucial for delivering a good experience across channels.
3. Create a content management strategy
Customers would often rather solve issues on their own than reach out to a live agent. You can help them help themselves with data-driven content.
Usually, it’s in the form of help articles or chatbots that quickly point customers in the right direction. Ensuring that your content is accurate and up-to-date is crucial; an unhelpful article translates into a bad experience.
4. Deliver personalization
According to our Trends Report, 76 percent of customers expect personalization using data.
This might include engagement over their preferred contact method, account type or status, product recommendations based on purchase or search history, or some kind of personalized online experience.
Tailoring support efforts towards customer personas can go a long way. Gathering context about who they are (their preferences, personalities, habits, etc.) can help agents better target their support that leads to faster resolutions. It may be helpful to conduct UX research on your business's support initiatives to figure out ways to make interactions more personalized.
5. Empower customers through AI
Gartner estimates that by 2022, 72 percent of customer interactions will involve an emerging technology such as machine-learning applications, chatbots, or mobile messaging.
AI-powered chatbots and virtual customer assistants are handy for quick, repetitive tasks. But when they reach their limits on providing capable customer support, humans need to be there to help their customers.
6. Deliver proactive experiences
Simply reacting to customers’ needs is no longer enough to stand out. When businesses are proactive—anticipating customers’ needs and getting ahead of a problem before it escalates or even happens—they can create a unique experience that feels personal.
"Proactive support for me is about getting ahead of technical issues, breakdowns, issues that you have identified — and then reaching out to customers to let them know: Hey, here's what's going on and here's what we're doing about it, said Annette Franz, founder and CEO of CX Journey.
An e-commerce company might deploy a chatbot on its checkout page to answer customers' questions before they abandon their cart. Or, an internet company might send a text to let customers know about an upcoming outage.
7. Use data and analytics
The stories found in the data about your customers and your support agents will clue you into many things: the efficiency of the support organization, general satisfaction with the interactions, behavioral trends amongst your customers, and lots more.
Refining processes with your customers in mind starts with understanding what the data is saying.
How to measure customer experience
“There’s no single, magic number to measure customer experience,” said Dyson. “You have to look at all the little pieces of the elephant. It's hard to measure as a whole, so the more data you have, the better.”
Here a few places to start:
1. Send customers satisfaction surveys
These give you insight into things like customer satisfaction score (CSAT) and Net Promoter Score (NPS).
2. Measure customer effort score (CES)
This tells you how easy a customer thought it was to get a resolution to a recent contact.
3. Analyze churn rates, expansion rates, and customer lifetime value
"You can take a look at churn and expansion amongst different cohorts and compare them, such as those who interacted with your support team and those who didn’t,” said Dyson. “If those who contacted support are staying longer, you know your support team is creating a good experience.”
4. A/B test new CX efforts
For example, when integrating your customer support tool with your marketing automation system, you can A/B test emails to targeted customer segments.
5. Use your community forum as a virtual focus group
Community forum discussions around pain points, feature requests, or how customers are using your product or service can provide insight into how customers feel about their experience with your business.
6. Look at customer service data like ticket reopen rate and time-to-resolution
“Look at how long customers have to wait before they get an answer. No one likes to wait when they need help," said Dyson.
7. Talk to customer-facing staff
“Beyond the numbers, it can be equally as helpful to ask customer-facing staff about what customers are telling them,” said Dyson. For instance, customer support might have insight about pain points they can share with the product team. “It’s also key to ask agents if they’re having any difficulties. If they are, chances are customers are too. When you make your agents’ jobs easier, they can provide a better experience for customers.”
How to analyze customer experience
Companies that are unable to successfully analyze the customer experience are often taking a fragmented approach; that is, they’re looking at the different factors and figuring out how each one can be improved. While they’re doing so, they aren’t giving due consideration to how each factor influences the others.
That approach upholds the chaos that causes unsuccessful customer experience management.
By taking a more organizational and holistic approach to a customer experience strategy, it leads to more customer satisfaction and loyalty. Here are some areas to keep in mind when analyzing customer experience:
- Customer service
Marketing’s role might be the most dynamic; it needs to constantly adjust to match customers' shifting needs.
Marketers are often responsible for making the first impression on a prospect through ads, outbound campaigns, and word-of-mouth. Their influence continues through public communications, social media marketing, and creating a brand presence. The data gathered through all of these customer touchpoints can help you create more personalized customer interactions, which in turn creates more loyal customers.
Sales organizations are responsible for solidifying the expectations of becoming and being a customer. Outside of quick retail experiences, the sales process is often very attentive to the customer journey and meeting the needs of their prospects.
This provides valuable insights concerning what customers are looking for (be it specific features, follow-ups, support requirements, etc.) which in turn can influence the efforts in other parts of the business. When your business is in-sync, sales can be more enabled to close repeat purchases and reduce customer churn rates.
The goods and services provided by a company and the customer experience are closely linked; many customers will pay more for an experience than the product they’re receiving (think of the differences between high-class dining and fast-casual fare).
Beyond the immediate experience, details like reliability, affordability, user experience (UX), general ease of use, and a product’s life cycle all tie into the overall experience a company creates for its customers. The experience provided by the product is the primary contributor to a business’s reputation, which in turn impacts every other part of the customer experience.
After a sale, customer service is often the primary department that interacts with the customer.
Support agents can collect real-time feedback: they can see how customers interact with the product, how (and if) expectations are being met, and how the customer base is changing. Feedback is critical; businesses can’t effectively evolve without it.
A CRM platform like Zendesk can help connect customer data from all these teams and areas of the business together to streamline management.
Great customer experience starts with good customer service
Investing in good CX through an CX software is important for any company, no matter how big or small. After all, your success depends on your ability to keep and attract loyal customers. And failing to put your customers first can send them straight to your competitor.