Bad customer experience doesn’t just leave customers feeling underwhelmed and unappreciated. It also has a real impact on your overall business longevity and revenue. In fact, $75 billion is lost annually due to poor customer service alone. Many businesses are still continuing business-as-usual despite rising customer expectations. What’s the real cost of bad customer experience management?
Bad customer experiences don’t just impact one person. They’re largely becoming public, meaning they have a ripple effect on your industry. Today’s customers are more likely to remember the bad than the good, and they’re also more likely to share their feelings with their own circles. While it’s hard to sum up the true cost of poor experiences, we do know it’s hard to recover from.
We’re in a new era of competitiveness. No matter your industry, your customers can find another option out there. If you aren’t willing to take customer experience management seriously, odds are someone else will. However, this is also an opportunity to do better, stand out, and create more superfans. In this guide, we’ll explore the true costs of bad customer experience management.
- What Is Customer Experience Management?
- Benefits of Good Customer Experience Management
- Losses From Bad Customer Experience Management
- How to Put Your Customer Experience First
What Is Customer Experience Management?
To begin, let’s define customer experience management. This phrase can be quite the mouthful, but it’s not always clear what it means. There’s an abundance of so-called marketing gurus on social media and beyond spreading the good word of customer experience, but they don’t usually have the actionable steps to back it up.
In short, customer experience management (CXM) is a system of strategies focused on boosting customer satisfaction and engagement. Beyond marketing tools and customer support, this prioritizes things like:
- Personalization: Creating personalized experiences for your customers, making each feel special and appreciated.
- Loyalty: Existing customers are more profitable than new customers. Rewarding existing customers for their loyalty is a part of CXM.
- Customer-first: Instead of thinking about what customers can do for you, a strong CXM strategy focuses on putting customers first.
- Transparency: In order to have a strong customer experience, brands have to be transparent about operations, processes, and mistakes.
- Support: Of course, no customer experience would be complete without excellent service that meets customers where they are.
While it’s easy to confuse customer experience management with a CRM system, there are key differences. Most importantly, CRM systems help identify quantitative insights like data to see customers as statistics and trends. While CRM is an effective way to promote business growth, you also need a strong grip on CXM.
Benefits of Good Customer Experience Management
First, what are the benefits of good customer experience management? If you put your customers first, you reap the positive benefits. While this includes things like increased revenue and customer retention, we can also share these benefits.
Higher customer lifetime value.
Your customer lifetime value is the amount a specific customer spends throughout their lifetime supporting a business. It’s a way to highlight brand loyalty, and it’s a good sign you’re focusing on quality and service. When you invest in your existing customers, they’re likely to spend more money on your brand throughout their lifetime.
Another way to describe this is as a reduced customer churn. Strong customer experience management programs have less customer turnover. It’s always more expensive to attract new customers than to keep the ones you already have. If someone’s supported you in the past, keep this momentum going.
Reduced marketing costs.
Similarly, you can reduce your marketing costs by focusing on positive customer experience management. When your existing customers are excited about your business, they share these experiences with others. From 5-star reviews to referral programs, let your outstanding experience speak for itself.
With 54% of customers reading at least 4 reviews before purchasing something, word-of-mouth marketing translates to social proof. While you can always throw more money at your marketing and sales process, a great customer experience markets itself. This gives you a bigger budget to focus on other parts of your business.
Customers are engaged in your success.
Finally, a successful customer experience program also improves customer engagement. An omnichannel approach to marketing keeps your audience interacting with your brand across mediums, tuning into new products and offers. When customers are invested in your success, they become superfans. These partners in your brand root for your highs and fight against your lows, making them the most worthwhile customers.
You don’t want passive customers. When your brand doesn’t stand out to your audience, you’re not likely to go noticed for long. Instead, a strong customer experience management strategy keeps your customers engaged in your success every step of the way. Where will your best customers take you next?
Losses From Bad Customer Experience Management
That being said, the pros above also have their counterpart. You can expect a lot of losses if you don’t have the right strategy for customer experience management. A negative experience is more impactful than a positive one, and it can have a ripple effect in these ways within your brand outlook.
Customers leave poor public reviews.
Of course, it should come as no surprise that customers are likely to leave a poor review after a bad experience. With 94% of consumers saying a bad review convinced them to avoid a business, reviews have a big potential impact. While bad reviews happen, they’re a sign you need to take action quickly.
You can always take this as an opportunity to turn around the situation and win a loyal customer, but it’s much easier to avoid these reviews in the first place. If you rack up several negative reviews, customers will start to avoid you altogether. Customers are online more than ever before. They trust the judgment of their fellow shoppers, and this can truly impact the long-term reputation of your brand.
Customers switch to the competition.
Speaking of poor reviews, the more negative your reputation, the more likely customers will run to the competition. No matter your industry, your customers have more options than ever before. Thanks to the internet, they’re no longer tied to local providers. You never want to lose customer loyalty. While it’s true you can’t keep everyone happy, that doesn’t mean you should write off customers you’ve lost due to poor customer experience management.
Today, customers will pay more for a better overall experience. This is a way to stand out from the competition. If you’re not willing to take your customer experience management seriously, someone else in your industry will. Not only is it harder to attract new customers, but it’s impossible to retain the ones you have if you’re not putting customers first.
Lose your top employees.
Finally, one unexpected cost of bad customer experience management is how you lose your top employees as well as your top customers. When workers are happy and excited about their work, they’re invested in your success. They’re superfans and partners in their own right. However, providing a poor customer experience creates a revolving door of more negativity.
Nobody wants to deal with unsatisfied customers. Your support team shouldn’t be a siloed part of your company structure. Experience is everyone’s responsibility, from the top down. When employees are unhappy, they’re more than 2.5 times more likely to say they don’t provide great service. The employee experience is undoubtedly bound to your customer experience. You can’t have one without the other.
How to Put Your Customer Experience First
With that in mind, how can you put your customer experience first? It doesn’t have to be complicated. In fact, it just comes down to a few basic things to make a huge difference in your overall customer experience. Better yet, these also have a positive impact on your employee morale as well.
- Unite departments: First, break down any barriers between customer service and other departments. The experience is the responsibility of everyone within a company, and everyone should feel empowered to serve customers.
- Ask for feedback: Start conversations with customers through surveys, social media, interactions, and touchpoints to get them involved. These engagements are a great opportunity to learn what customers want and how to improve.
- Use technology: Technology makes it possible to create a seamless, omnichannel experience. Your customers should be in charge of deciding how they want to access support.
- Make a customer journey map: Don’t assume you know your customers best. Truly take the time to understand their journey through each stage of your funnel. When you know where they’re going, it’s easier to build a strong relationship.
When you put your experience first, everything else falls into place naturally. This isn’t something that happens overnight. It takes proactive planning to find the right customer experience management strategy for you. As long as you’re putting your customers first, you’re on the right track.
As a customer experience expert, I’ve worked with countless companies on ways to actionably improve engagement and loyalty. I’ve also seen firsthand the true cost of bad customer experience management. Above all, I caution all businesses against falling into these traps above. Your customers want to support you. Make it as easy for them as possible.