What is customer experience and why is it important? (2023)

Customer experience is the heart of the relationship between a company and its customers. When people talk about customer experience (CX), they typically mean traditional sales and marketing touch points along the customer journey – for example, attentive store clerks in attractive stores or simple and beautiful apps and websites. In the past, when done well, CX investments have yielded good results: better customer retention and acquisition, increased sales, and stronger loyalty.

But the world has changed. It's more than just the COVID-19 pandemic: A continuous barrage of external life forces—economic, social, political, and beyond—affects people's daily decisions in unavoidable ways. Actually,according to Accenture's research, 72% of consumers say that external factors, such as inflation, social movements and climate change, affect their lives more than in the past. Amidst so much upheaval, people are reassessing what's important to them: 61% of consumers say their priorities keep changing as a result of everything going on in the world. As a result, the way they interact with brands is evolving, as is the idea of ​​customer experience.

Here we will explain what customer experience is, how it is changing and how a new customer experience strategy can benefit your business.

Customer experience is many things, but it can be broadly described as the perception a customer or a company has of a brand. It is embedded in every interaction, and every interaction is an opportunity to build a stronger bond between the company and the customer – or has the potential to weaken that bond.

Good customer experience involves building a relationship by understanding what people want, need and value. It goes beyond the act of using the product or service itself: the full experience includes pre-purchase connections with the brand (via marketing or awareness), the process of researching and making the purchase (either in-store or online) and post-purchase interactions (regarding service , repairs, additions and more). The goal is to create flexible and effective connections between the brand and the customer.

It is important for brands to remember that every interaction that people and other companies have with them evokes some kind of emotion. Whether good, bad, happy or sad, the emotions these interactions evoke are so connected to the brand. This can result in your customer asking some important questions:To buy or not to buy? To love or not to love? To return or not to return?

It is also crucial to recognize that people's needs, desires and feelings change from moment to moment based on external forces. A simplistic understanding of people's emotional responses is not enough - brands must see their customers beyond puzzle wallets and respond to the complexities of their lives.

Positive customer experience is one way to stand out from the competition. As more brands compete for the public's attention and more opportunities are readily available, CX provides a way to put your product and brand at the forefront.

Imagine that you are a company that wants to place beverage vending machines in your offices. Your overall customer experience isn't just how much you enjoy using the machine, it's the full start-to-never-finish process of engaging with the brand, making the purchase, and continuing interactions for service and support or future upgrades. When you make the purchase, the beverage retailer can offer you a one-size-fits-all experience, such as showing you images of different products. But a better approach would be to useaugmented reality (AR) eller virtual reality (VR)to create a tailored, personalized and customized experience so you can see exactly how each type of machine would look in your office space. Because of this great customer experience, you and your business colleagues are happy, and your business will use the same dealer the next time you want a vending machine.

Brands looking to increase customer acquisition, customer loyalty, customer engagement and drive growth must think about delivering more exceptional experiences and connecting with customers in more dynamic ways.

Twenty years ago, the answer to "what is good customer experience?" would have been a straightforward explanation of optimizing touchpoints, mapping customer journeys, and designing and producing coveted products that customers want.

But today, the way we interact with brands and what we need from them has changed exponentially. At a time when people navigate constantly changing external economic, social, environmental and political forces, their behavior is increasingly inconsistent. The consumers aremore comfortable with paradoxical choicesas their decisions become trade-offs between what they want, what they need, and what options are available.

Adapting the customer experience to these changes is not easy. Oversimplification of segmentation and underestimation of the impact of external life forces havecreated an interrupt:

A life-centered approach to customer experience creates connections that endure amid constant change and disruption.

Although companies have evolved past the product-centric approach that focuses on performance to accept the importance of customer experience, it can be a regret to see CX as something static. Instead, businesses need onelife-centered approach.

Life-centered businesses accept that people are multifaceted, complex, and do their best to adapt to life's unpredictable circumstances—and use this insight to meet the changing needs of customers. By taking a life-centric approach to the customer experience, companies can better reach them at a number of critical junctures and create connections that endure amid constant change and disruption.

Historically, CX was limited to the purview of the Chief Marketing Officer (CMO) or Chief Operating Officer (COO), with different functions of the business operating in silos focused on their own priorities.

Let's take a quick look at how traditional CX thinking has informed how leaders and functions within an organization think about their customer experience strategies:

• CEO: prioritize maximizing profitability
• Marketing and brand: focus on making people want things
• Sales: focus on the product the company wants to sell
• Product development: Create products based on market research that are easy to use
• Talent: use traditional metrics based on employee performance within a function (onboarding, annual reviews, etc.)
• Technology and IT: focus on enabling business processes on a larger scale
• Operations: focused on delivering efficiencies to the business that often limit growth
• Supply chain: focus on moving products and goods to consumers

As you can see above, each department and function has its own priorities, goals and metrics. Blindfolded to the rest of the business, each department executes a specific customer experience strategy template without seeing the bigger picture. Instead of operating in isolation, companies must organize all of their internal operations in new ways to evaluate and meet changing consumer needs.

To stay relevant and compete in today's ever-changing world, customer experience strategies must be top of mind for all stakeholders in your business. From management to marketing to sales to service, everyone across front- and back-office functions must be invested in delivering a life-centric customer experience.

By taking the company's existing assets (such as talent, data and technology) and rewiring them for more coordinated action, internal operations are simplified in pursuit of a common goal. Internal alignment allows companies to pursue an external strategy that maximizes the customer experience.

This is a defining moment for the C-suite. Leaders who push beyond traditional CX strategies and redefine their organizations not just by what products or services they sell and offer, but with a life-centered approach to understanding and meeting customer needs, will emerge stronger and ignite growth in their organizations.

Internal alignment allows companies to pursue an external strategy that maximizes the customer experience.

From bank onboarding journeys for new customers to how clothing should be presented online, many of the fundamentals of customer experience have become mainstream. As a result, it is increasingly difficult for brands to differentiate themselves via CX alone.

Companies have traditionally focused on optimizing customer contact points around products and services. In the past, this has been a successful approach to increasing sales and loyalty. Now it is no longer enough. The way forward is to take a holistic, dynamic view of who customers are and what motivates their behavior – and to treat them as more than just buyers.

Today, brands must improve customers' lives through new technology-led experiences that go beyond short-term transactions. Consider the impact of omni-channel services that connect physical shopping with customers' digital data for greater personalization. Companies must also have the enterprise-wide imagination, vision and empathy for the customer that will drive them to find creative ways to engage and serve people who crave simplification and empowerment.

By evaluating what brings value to customers and rethinking how a brand promise fits with customer needs, companies can refocus their efforts to drive growth and relevance.

To develop a life-centric CX strategy, brands must think of customers as more than just buyers.

Brands are looking for ways to capitalize on the changes the world is experiencing to emerge stronger and more prepared for the road ahead. To do so, they must hone in on the complex life forces and paradoxical behaviors that drive consumers today. Through data, technology and a holistic, human-centred approach, they can respond to people's diverse, often paradoxical and ever-changing needs.

To achieve this, an evolution is needed: it's time for companies to becomelife-centered.

Explore more aboutwhat it means to be life-centeredand learn how to create a life-centered strategy that works for your business.

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