What’s the best way to succeed in business? It’s not your products or services, although it goes without saying that they need to be great. It’s your customer experience. And customers agree. According to a McKinsey study, 70 percent of buying experiences are based on how the customer feels they’re being treated.
Customers are longing for amazing customer experiences, but they’re often left disappointed. Your customer experience encompasses every interaction your customers have with your brand. This can include browsing your website, visiting your store and interacting with your staff. Customer experience is the difference between listening to jazz music while sipping a coffee in an upmarket cafe and grabbing a coffee at the local gas station. An Accenture survey found that only 23 percent of companies were able to deliver great customer experiences. The other 77 percent simply failed to deliver.
Customer experience is something many brands pay lip service to, but ultimately fail to provide. However, the brands who put their customer experience above everything else can go on to become amongst the biggest in the world. Just look at Amazon, Zappos and Apple. These guys put their customer experience at the heart of everything they do.
Why is customer experience so important? The way you treat your customer defines who you are. It’s an important part of the promise you make to your customers. It defines how they see you and how likely they are to buy from you. Your customer experience is the key to your success. Here’s why.
1. It will help you stand out from your competition
It’s hard to thrive in a competitive market. But look at it this way: if your industry is crowded, it means that demand exists and your market is viable. In fact, if you’ve only got a few competitors that could well be a bad omen. Now having lots of competitors brings its own problems. Inevitably, your competition will be offering products and services very similar to your own.
So how can you stand out? You could compete on price, but that only leads to a race to the bottom. Instead, you could compete on customer experience. This is the new competitive arena for brands, with Gartner reporting that 89 percent of companies now expect to compete on the basis of customer experience. Compare that to only 36 percent just four years ago. So even if you can’t stand out with your products and services, you can create a customer experience that will make you shine. It can be unique, something that only you can offer, something your competitors can’t easily replicate.
It’s not so much about what you’re selling, it’s more about how you’re selling it. This covers everything from how easy it is to navigate your website, how well your messaging speaks to your customers, how attentive your staff is and the quality of your after-sales support.
2. Customers are willing to pay more
Focusing on customer experience isn’t just following the latest trend. It’s also smart business. Making every customer interaction amazing doesn’t just make your customers love you, they’ll be willing to pay more for the experience. Surveys have shown that as many as 86 percent of customers are willing to pay more for a better customer experience.
You might be wondering, “How much more?” Well, American Express conducted a survey of consumers which found that the customers who valued good service were willing to pay up to 12 percent more for a product if accompanied by excellent customer service. This figure showed an impressive 50 percent increase from the extra amount people would pay the previous year.
If you’re worried about alienating your more price-conscious customers, you could offer different tiers of service, with your higher tiers offering more premium experiences such as personal care and support, and exclusive access to certain features.
3. It’s cheaper to retain customers than acquire new ones
If you’re like most businesses, you spend a significant chunk of your budget working to attract the attention of prospective customers, nurturing them until they become leads, and finally closing them to win the sale. It’s a long and expensive process. Studies have shown that it’s 6-7 times more costly to attract a new customer than it is to retain an existing customer.
So it’s strange that most companies spend little to no money on customer retention. Companies tend to take it for granted that those that buy from them will naturally buy from them in future. But that’s not necessarily so. The U.S. Small Business Administration reports that 68 percent of customers don’t come back because they’re not happy with the treatment they’ve received. More worrying is a Bain & Company study that finds that 60-80 percent of customers who describe themselves as satisfied with a company still do not become repeat customers.
Why is that? Well, it’s typically because they didn’t offer great customer experiences that allowed their customers to build a personal connection with their company. Little things can make a huge difference, like addressing customers by their name, showing a genuine interest in their circumstances and making them feel valued. This personal connection is needed for customers to return again and again.
4. It reduces customer acquisition costs
What’s the best kind of advertising that money can’t buy? Word-of-mouth advertising. Creating customer experiences that delight your customers will create an army of devoted fans who can’t wait to tell people about you. This makes getting new customers so much easier. And cheaper. In fact, American Express found that on average, happy customers tell nine people about their experiences with a company. That’s great news, especially as recommendations from a friend or family member is cited as the top reason for customers to try a new product or service, with 42 percent of respondents agreeing. By way of comparison, only 3 percent of respondents said an interesting advertisement was their top reason.
Word-of-mouth works for a couple of reasons. First, we trust our friends more than we trust ads. Good or bad, we can rely on our friends to tell it to us straight. Second, word-of-mouth is very targeted. Your friends are only going to tell you about something they know you’re interested in. Focusing your resources on making your existing customers happy is much less expensive than spending money going out trying to find new ones.
And don’t be shy to ask your customers to give you a helping hand. Online reviews from customers are a quick and easy way for them to help you spread the word about your business. All it takes is a follow-up email request whenever your customer has made a purchase.
5. It increases customer lifetime value
A study by InfoQuest found that a ‘Totally Satisfied Customer’ contributes 2.6 times as much revenue to a company as a ‘Somewhat Satisfied Customer.’ It’s all about increasing your customer lifetime value (CLV). For example, say you have a cost per acquisition of $100 per customer and a CLV of $150. That gives you a 50 percent return on investment (ROI) on your marketing. Now imagine you can double your CLV to $300. Now you have a 200 percent ROI!
Offering amazing customer experiences will help you build long-term relationships with your customers. These relationships are not about making a quick sale, but are about always having your customers’ best interests at heart. With each positive experience, your customer will start to see you not as a vendor, but a partner and an ally. Consistently great customer experiences help create brand loyalty. It means having customers who are happy to make repeat purchases from you, customers who eagerly await your new product releases.
Customer experiences that invoke shared values are particularly powerful, with 64 percent of participants in a study saying that shared values were their primary reason for their loyalty to chosen brand. By offering experiences that appeal to your customers’ core beliefs, you can build this loyalty over time.
So you want to deliver outstanding customer experiences? It goes without saying that you must be accessible and responsive when dealing with customers. But that’s to be expected. You need more than that to deliver outstanding customer experiences. Outstanding customer experiences occur when you go above and beyond your customer’s expectations. It could be sending them free samples of a product they’re interested in. It could be offering them help without them needing to request it. It could be as simple as asking them how their vacation went.
You need to offer your customers outstanding experiences for every interaction they have with you. These interactions might be face-to-face, or they might be digital, for example through live chat. Remember, authentic human-to-human interaction is the key. You want your customers to feel about you the same way as they feel about their friends.
What your customers ultimately feel about you depends on the cumulative effect of all their customer experiences with you.
Copyright © 2017 Entrepreneur Media, Inc. All rights reserved.
This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors.