What we know about customer experience

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Explores how the way brands think about customer experience (CX) is changing as they compete hard for customers’ attention in an omni-channel world with more consumer touchpoints.

Brands are competing hard for customers’ attention in an omni-channel world with more consumer touchpoints than ever before. To that end, how brands think about customer experience (CX) is changing; it has to be a strategic priority for businesses, considered an investment and not a cost and championed by marketers with true customer-centricity. Delivering positive customer experience is a way for brands to build and stand out in an age of stagnant sales growth and product commoditisation.

Definition

Customer experience (CX) is the complete set of connections and interactions that a customer has with a brand both online and offline via a multitude of touchpoints. Online touchpoints include video views, mobile and desktop content consumption, social media, e-commerce transactions, chatbots and connected IoT (Internet of Things) devices. Offline touchpoints include in-store, in-branch, outdoor and experiential advertising, and sampling. All of these interactions influence the way in which the customer perceives the brand.

Key insights

1. The idea of brand experience is a response to the focus on customer experience

With marketers putting greater focus on customer experience (CX) in recent years, the notion of brand experience has come to the fore. Brand experience encompasses the totality of all the experiences and interactions with or involving the brand. Brand experience design takes responsibility for every brand encounter – whether owned, earned or paid – and seeks to create memorable experiences that are engaging, high quality, useful and ideally pleasurable. The focus needs to be on creating positive “hero” experiences, driving Share of Experience and avoiding negative or neutral experiences, which can be equally harmful.

New measurement tools such as Real-time Experience Tracking (RET), Experience Stock (ExStock) and Brand Experience Index (BXi) can help brands understand the impact of the brand experience they deliver to consumers on measures such as brand consideration or preference. However, it’s important to avoid focussing on just short-term, real-time measures and to balance short-term measures of CX with slower, harder-to-measure brand metrics which are ultimately the gateway to high-performing brand experience.

2. Brands focused on customer experience win – during and after a recession

Business analytics firm, Marketscience, conducted a comprehensive economic analysis of the last five major recessions, looking across factors including sales shares, brand equity, customer satisfaction, marketing spends, and operations expenses data. Fifteen years ago, the authors would have argued that brands should preserve sales and marketing budgets to maintain demand by pushing more people into the sales funnel. But the analysis found that, during a recession, maintaining strong experiences for current customers trumps efforts to bring in new customers when it comes to driving overall demand. So today, brands should be focusing on the customer as that what’s truly vital to long-term brand health – and that can include all mid and lower-funnel marketing activities from in-store customer service to intuitive online consumer journeys. And ad budgets should focus on reinforcing the brand’s ability to deliver distinctive, quality customer experiences rather than price promotion.

3. Enhancing customer experience helps create brand growth momentum

Kantar analysed 3,907 brands measured in its BrandZ database over a three-year time frame and how they performed at different stages in the buyer life cycle – exposure, activation and experience. It found that a small group of brands which overperformed at all three stages grew by an average of 46%. Increasing the number of people pre-disposed to choose a brand in future at the exposure stage was the biggest contributor to growth at 27%, with 12% from activating immediate sales and 7% from brand experience driving repeat sales. By over-delivering against customer expectations at the experience stage, a brand is influencing not just future sales but encouraging positive word of mouth, helping to attract new users. Social listening and looking at customer satisfaction – over time and relative to competition – can guide brands on how well they are doing that. Customer experience also needs to be considered in the marketing of the brand. Over-promising and overly incentivising new users compered to existing ones should be avoided. On the other hand, marketing that highlights the positive aspects of experience, or reflects well on users, can boost retention, not just acquire new users.

4. Great customer experience blends brand thinking and human-centred design

Today’s most valuable brands – Amazon, Apple, Microsoft - are ecosystems which have a brand purpose and brand story, but they bake it into their customer experience design as much as they share it via communication – ‘doing’ rather than just ‘telling’. Brand strategists are now responsible for both telling the brand story and building the brand system. Focusing on design alone misses the difference that distinguishes brands and forgets to attract the new user who will drive growth. Bringing a brand and cultural lens to design will ensure that the customer experience is authentic to the brand and meaningful to potential customers.

5. Creating consumer ‘energy’ across four dimensions improves customer experience

Research firm Forrester has developed the Consumer Energy Index, a framework for thinking about and improving customer experience. Based on two decades of trended, multi-modal data about global consumer behaviour and attitudes, the Consumer Energy Index indicates where consumers stand in their attitudes to brands on four dimensions:

Isolation vs. identity: consumers moving towards “identity” are eager to affiliate with their tribe; those moving towards “isolation” want to withdraw into their own world.
Distrust vs. trust: consumers swinging towards “trust” are willing to believe a brand’s good intentions; those gravitating towards “distrust” doubt companies will keep their promises.
Comfort vs. novelty: consumers approaching “novelty” have a growing appetite for risk taking; those nearing “comfort” seek reassurance and safety.
Vulnerability vs. efficacy: consumers feeling high levels of “efficacy” are empowered to get what they want; those feeling “vulnerable” perceive a loss of control.

A swing towards identity, trust, novelty and efficacy indicates a heightening of energy; a swing towards isolation, distrust, comfort and vulnerability is the opposite. Measuring the impact of brand marketing and customer experience on the four dimensions can help identify further opportunities to improve customer experience.

6. Customer experience a key focus for brands but still work in progress

Enhancing customer experience is a key priority for marketing innovation according to a 2019 survey with more than half of CMOs viewing it as a top three priority, on a par with revenue growth. In a separate 2019 study, four fifths of senior marketers globally believed that creativity will be critical to transforming customer experience and business overall but found that less than half would focus investment in creativity in the year ahead. More than half of those surveyed said that increased customer expectations are a barrier to customer experience excellence. However, there was widespread agreement that customer experience has to be seamless and consistent across all channels.

Despite this there is acknowledgement that cross-channel consistency and capability is lacking. CX is too often seen as an online, tech-driven discipline, centred around CRM systems and personalisation. However, there is an increasing shift to ensuring offline experience lives up to and is consistent with online developments. In addressing the gap brands should start with the desired offline experience – which can vary by different locations and environments – drive consistency of experience, invest in empowering employees to deliver superior experience and go beyond just fixing pain points.

7. Customers reward experience but brands are underdelivering

A 2018 survey in the US, UK and China asking consumers to rate promised and actual brand experience found that more than half of consumers said brands fail to live up to the promises they make. However, delivering on promised experiences has a real benefit for brands with those rated highly in the survey having a more than 200% higher Net Promoter Score and 25% more loyalty. Amazon, Netflix and Royal Caribbean cruises ranked highest in the US, UK and China respectively. Sony, Apple, IBM and IKEA were also well rated. On the other hand, a 2019 report from research firm Ipsos found that experiences which don’t deliver on what the brand promised create negative feelings, undermine satisfaction and emotional connection, and ultimately impact the bottom line.

8. Customer experience metrics are evolving to provide more actionable insight

The traditional metrics for customer experience of Net Promoter Score (NPS) and Customer Satisfaction (CSAT) measure intent and sentiment. Some companies are using AI and machine learning to get more customer experience insight out of the open-ended questions which are part of the NPS method. Others are exploring alternative measures such as “kinectivity” – an index of relationship distance correlated to financial measures. EXQ has also been proposed as a more reliable metric as it looks at actual and not inferred change resulting from changes in CX. Unlike NPS and CSAT it is not a continuous feedback measurement and thus is a useful strategic tool for medium to long-term planning. EXQ is based on 25 drivers of consumer behaviour which are measured and then combined with a share of category calculation thereby identifying the overall importance of that driver for the brand. If used alongside NPS and CSAT it can show which experiences drive those metrics.

9. Good customer experience is multichannel, responsive and social

Research suggests there are three factors brands need to address to keep customers happy.

Multichannel offering – Consumers say they are more loyal to and increase business with companies that offer a choice of ways to get in touch and respond quickly and effectively to them.
Respond to consumer habits – With the growth in online, after-hours shopping brands need to get better at live query handling with a real person not just automated support.
Use social media positively – Manage reputation by encouraging sharing of positive experiences and brand content, and active interaction with people when appropriate.

10. Good experience starts with human appreciation of people’s real lives

As consumers rarely think about brands, to create a consistently good experience for consumers, marketers should be thinking about people’s lives, humanity, culture and the brand’s role outside of the purchase cycle. High-performing brands exhibit some of eight good qualities – brands should aim to do at least one or two well:

Have a meaning beyond the category, beyond just sales and profit
Inspire and empower employees to behave at all times in a way that delivers what the brand stands for
Show consistent brand behaviour, language and attitude in all creative
Learn and understand to exceed expectations
Have responsive, excellent customer service when things go wrong
Release themselves from the product category they sit in
Innovate continuously
A totally humanised experience where brand and customer are partners

11. Customer experience requires ongoing commitment

The best CX strategies need to create long-term business success through driving brand reputation and commercial performance. The 2018 Institute of Customer Satisfaction report showed that businesses maintaining a higher customer satisfaction than their sector average achieved stronger turnover growth and profit than those whose customer satisfaction was below the sector average. Brands with successful CX strategies:

Recognise that customers’ own lives, not brands, are the most important thing for them
Focus on both functional and emotional needs
See customer and commercial performance as one
Design proactively and respond reactively

This WARC Best Practice Paper outlines seven steps to design, deliver and sustain an on-going customer experience.

12. The functional aspect of customer experience should not outweigh the human element

Technology such as AI, chatbots and VR can force brands to focus on the transactional aspect of CX at the expense of the emotional. It’s important to remember that consumers are people and the human-to-human experience is key to building brand loyalty. As customer experience becomes more ‘faceless’, brands can build relationships through offering a shared sense of purpose, values or community benefit.

To ensure effective branded experiences brands should implement human centred design where consumer behaviour, psychology, process improvement, innovation and creativity are brought together in ways that recognise the unique needs of the individual and enhance the brand in the minds of customers. This approach creates memorable experiences that address human needs in ways that build long term relationships.

13. Understanding the core elements of CX and behavioural economics can take it to the next level

In order to understand the emotions of consumers, businesses can carry out in-moment research, asking not what brands should do but why consumers would want a particular experience, and then measure its effectiveness. To elevate the customer experience brands require an understanding of five core elements of CX:

The rational. Accounts for 50% of customer’s brand experience and tends to be what is focused on i.e. product delivery times, speed to answer calls.
The emotional. Accounts for remaining 50% and is about how a customer feels about the experience.
The conscious. Elements that customers are aware of such as product, price, location.
The subconscious. Things that influence customer behaviour that they are not aware of.
The psychological. Cognitive processes that make decisions and drive consumer behaviour and are responsible for driving retention and loyalty.

Behavioural economics helps brands understand the psychological elements and design a customer experience that fosters the desired customer behaviour.

14. Understanding the customer journey can help improve the customer experience

In order to understand what was driving its NPS and customer loyalty, Delivery Hero, a global online food delivery company, wanted to develop an holistic approach to customer experience which would encompass the ‘front end’ experience with customers as well as the ‘back-end’ of the restaurants supplying the meals and the drivers delivering them. It also needed to work across different countries to allow comparison and the transfer of best practice. The approach adopted had three stages:

Discovery: should the brand focus on the customer or the restaurant? If the country offers lots of competition, then a restaurant focus would be most appropriate.
Identify: understand the different customer groups, develop the customer journey map and identify a ‘driver tree’ showing how each driver could impact the CX.
Outline: run a workshop with employees to develop and prioritise ways to counter pain points. Checking these against the driver tree highlights which to implement to affect NPS.