Customer Experience: Why It Matters & Why It Pays

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When you deliver an outstanding customer service experience, you transform passive customers into loyal superfans. In this day and age, your customers are more plugged in than ever before. They’re leaving reviews, sharing their thoughts, and taking their time to determine which brands they want to support.

In other words, your customers are in control. While salespeople used to be in the driver’s seat, customers have all the power today. Users are more educated about what they want, their needs, and what they’re willing to pay for. With more competition than ever, it’s never been more important that your customer experience stands out. 

What exactly is customer experience (CX)? This marketing term refers to the relationship between a business and its customers. However, it isn’t a one-time interaction. It’s every stage of the customer journey, from first learning about a brand to long after a purchase is made. The customer experience is the sum of all of these interactions, as well as how your customer feels about them. 

With that in mind, why is the customer experience so important? A reported 70% of buying experiences are based on how customers feel they’re being treated. Purchase behaviors aren’t based on anything metrics-based, though many companies act as though they are. In this guide, we’ll explore why customer experience matters—plus why it pays. 

What is customer experience?

To start, what is customer experience? Because it’s such a large part of modern business, it’s often difficult to create a clear-cut definition. In essence, it’s the sum of all interactions a brand has with a customer over the lifetime of their relationship. It’s how the customer feels about these interactions, whether it’s a positive or negative experience. 

You can break down the customer experience into a few different elements:

  • Availability: How accessible is your brand and customer support? Nobody likes to wait for service, and customers today expect problems solved quickly. 
  • Simplicity: Your customers also want things to run simply and smoothly every step of the way. The more tension in your customer journey, the less likely they’ll have a good customer experience. 
  • Accountability: Customers don’t like when brands play the blame game. They expect brands to own up to problems and create real solutions. 
  • Quality: A great customer experience also delivers a high-quality, reliable product or service. 
  • Design: Additionally, customer experience includes a brand’s design and marketing. How does the branding make the customer feel, and what story does it tell?
  • Service: Of course, customer service is also one of the most important parts of customer experience. 

All of the above work together to create the entire picture of customer experience. When every interaction with a brand is positive and helpful, customers are more likely to stay loyal. Better yet, they’re more likely to share this experience with their friends and family. 

What is the difference between customer experience and customer service?

Next, it’s important to recognize the difference between customer experience and customer service. Though the terms are similar, they refer to distinctly different things. To clarify, the customer experience is the entire customer journey—including customer service. 

On the other hand, customer service is limited only to the interactions a customer has when asking for help or assistance. While ensuring you have strong, effective customer service is a great way to improve your customer experience, it’s only one piece of the puzzle. Keep in mind all of the elements above. They’re all needed to create the big picture of customer experience. 

Both customer experience and customer service are important. It’s no longer good enough to have good customer service on its own. You also need a strong customer experience strategy to add outstanding service to every aspect of the customer journey. Remember, customer experience isn’t limited to a specific part of the sales funnel. It’s the entire journey and beyond.

What does an exceptional customer experience look like?

Now that you understand the most important definitions related to customer experience, let’s paint an even clearer picture. What does exceptional customer experience look like in practice? How can you identify when a brand has a strong customer experience strategy?

While this might look a bit different depending on the industry, a brand exceeds when:

  • It identifies and understands its target customer (and who they are).
  • The brand’s core values are a part of each aspect of the customer journey.
  • Emotional, human connections are made with customers. 
  • The brand makes an effort to capture and use customer feedback. 
  • Customer problems and needs are anticipated, and the brand stays proactive.

When a brand has an outstanding customer experience, there are endless benefits. Aside from reducing churn and improving customer loyalty, the brand will actually profit more long-term. In fact, when businesses focus on customer experience, research shows there is an 80% increase in revenue

It’s helpful to look at a real-world example of a brand that excels with its own customer experience. The luxury hotel chain the Ritz-Carlton strives to always create a 5-star experience for guests, both new and returning. From the start, the Ritz-Carlton set “Gold Standard” for service. It’s all in their motto: “We are ladies and gentlemen serving ladies and gentlemen.” 

Their dedication to going above and beyond to satisfy customers comes to life in every real-world example. Their employees, for example, are entitled to spend up to $2,000 per guest to resolve a problem. This isn’t just limited to sales and support staff. Housekeepers, services, and even valet attendants are tasked with maintaining the guest’s experience no matter what. Though this is an extreme example, the Ritz-Carlton proves that attention to the customer experience always pays off. 

Why is customer experience important?

Now that you know what customer experience looks like, why is it so important? In the past, brands could get away with being good or even average. 

Today, good isn’t good enough. With so much competition, it’s never been more important to stand out from the crowd. In addition, your customers are more vocal about their experience than ever before. With that in mind, here’s why a positive customer experience is essential. 

People will pay more for a great customer experience.

First, customer experience pays. Research shows that customers are willing to pay 16% more for products or services from brands that provide high-level customer experiences. People want to feel appreciated from the start. They’re willing to pay for this care. 

There are so many examples of this you can find in the real world, but one of the most well-known is the Walt Disney World Resort. The average Disney World vacation for a family of 4 costs up to $6,000. To compare, the average family in the US spends around $4,000 for a vacation.

As you can see, families are willing to spend significantly more on a trip to the most magical place on earth. What keeps families spending that extra cash? It comes down to the customer experience. Disney World is famous for its world-class service, theming, and commitment to customer satisfaction. This reliability pays off when it comes to how much families will spend. 

People stick around for a great customer experience.

Next, when your customers feel heard and appreciated, they keep coming back. Unfortunately, 1 in 3 customers will leave a brand after a single bad experience. Moreover, 92% will abandon a product or service after 2-3 negative interactions. Though this is intimidating, the opposite is also true. When you deliver great service and experiences, you create superfans. 

Using the Disney World example above, how many of those first-time visitors return again? The visitor return rate is the highest in the world for any theme park at 70%. Because each visit is a magical, memorable experience, they’ve earned their customers’ trust. This is why so many families continue to visit this magical place yearly (or more frequently). 

Though travelers could certainly go elsewhere on vacation, they trust Disney’s quality and commitment to service. Disney World competes against all types of vacations, including other top theme parks. Still, they’ve carved out an undeniable space for themselves through their outstanding experience alone. As we said, experience pays!

It saves you money in the long run.

Did you know focusing on your customer experience also saves you money? It’s true. Though it might cost more upfront to anticipate problems and spend additional funds training staff and investing in tools, it’s worth it. 

When you anticipate problems, you reduce the need for more support down the line. You limit your customer contact cost, and reduce your demand for support staff. In addition, by collecting customer data and feedback, you create new solutions that serve your business into the future. Most importantly, you limit the need for refunds, compensation, or expensive recovery efforts. 

It’s easy to see this math in action. The print provider Moo uses its extensive resource library and help guides to cut down on customer service costs. Their easy-to-navigate guides help with anything, from editing your designs to fixing a printing-related problem. Because customers are guided through the process easily, this saves Moo time and money. It’s a win-win for everyone, and it’s cost-effective into the future. 

It helps you stand out from your competitors.

In today’s world, you’re up against big competitors. No brand exists in a vacuum. As the world becomes more digital, you’re facing steeper competition than ever before. It’s not as easy to stand out on the quality of your product and service alone. However, your experience is something that only you can offer. 

One example of this is Chewy, the online pet goods retailer. Though they competed with well-known retailers in this already crowded space, their commitment to the customer experience helped them come out on top. For example, when a grieving customer reached out to Chewy after getting an unwanted subscription of food after the death of their pet, Chewy was quick to take action. 

Instead of simply accepting the food as a return, they fully refunded the customer’s order. They asked the customer to donate the food to a local animal shelter, and they even sent a bouquet of flowers in condolences. This thoughtfulness is what led to Chewy’s $3.5 billion acquisition and continued success.  

It’s key to creating superfans of your brand.

Last but not least, customer experience matters because it’s the key to creating superfans. When a brand has a strong experience strategy, customers become advocates. They share their passion and loyalty, and this speaks for itself. In fact, a reported 72% of customers share a positive experience with 6+ people. Most importantly, superfans are more likely to make repeat purchases long-term. 

An example of a brand that’s worked hard to create superfans is the hair care line Madison Reed. Started in 2013, Madison Reed has grown into the leading provider of at-home color. They disrupted the hair care industry in one simple way: by listening to customers. 

By looking closely at trends and feedback, they recognized that young adults are more ingredient-conscious than ever before. By making an affordable yet high-quality alternative to salon hair color, they help customers reach their hair goals. Today, Madison Reed continues to impress customers (and hair professionals) with each new product offering. 

Make Every Interaction Matter

Ultimately, when you invest in customer experience, you invest in your entire business. In today’s world, it’s not just about outbound sales. It’s about investing time, energy, and money into customers (both new and returning). When you put customers first, you transform passive users into inspired superfans. 

There’s no secret formula when it comes to customer experience. It’s simply a way to focus on customers and their needs at every step of the customer journey. By meeting customers where they are, you become a brand worth trusting. This is the ‘magic’ behind superfans, and it’s also what makes a brand future-proof.

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