Customer experience seems to hold the key to shoring up long-term relationships and creating sustained value for businesses – a belief that is becoming increasingly strong among C-level executives across industries and sectors. According to the KPMG in India -EQUiTOR Value Advisory report titled -Customer experience –key to sustained value creation 75 per cent of organizations today rate seamless customer experience as a matter of high priority, alongside digital transformation. Add to this, technology today has handed customers unprecedented control over the experience of purchasing goods and services. One must also remember that all of this plays out in fluid, hypercompetitive, and always-on markets with many channels and touchpoints, or individual interactions.
Similarly, the above report also clearly establishes how customer experience has a big influence on financial metrics and how it creates intrinsic sustainable value for a company. The findings established a clear quantitative and qualitative relationship between a company’s customer experience and the value it creates. Customer experience, if designed and implemented well, can help businesses enhance valuations to the tune of 125-400 percent.
Focusing strongly on customer experience could enable brands in several key industries to unlock up to USD200 billion of value that they might otherwise miss out on. In e-commerce, increasing investments in customer experience by 100 percent can lead to a 2X growth in business. Meanwhile, in the two-wheeler and four-wheeler automobile industry, a 100 percent investment in customer experience can lead to 1.7 times faster growth in business.
Customer experience has a bearing on almost every important aspect of business
Customer experience broadly has four spheres of influence, each with a distinct set of attributes, that impact a company and its brands in different ways.
The first is stability, which is concerned with the brand’s perception and its expansion into new geographies, product categories and customer segments. Singularity is an important attribute in this context, to ensure that the brand is perceived in a similar way by all customers. Next is the brand’s franchise, which is associated with the share of mind, loyalty, advocacy, and preference it commands among consumers. The third is governance, which roots the brand in a specific set of values; affirms that a business lives up to its internal truth whilst enabling a consistent experience across multiple channels and touchpoints; and protecting processes through patents and identifiers. And, finally, there is leadership, which determines important aspects such as innovation, differentiation, , and the brand’s perception as an industry leader.
A direct impact on revenue, profitability, and market sentiment
There is a strong correlation between customer experience and financial metrics such as revenue and profitability as well as the sentiment of investors and customers towards the company.
Higher customer loyalty through impeccable experiences can lead to revenue growth. As we know, acquiring new customers is costlier than retaining the existing ones. Consistently good experiences can help increase brand loyalty and advocacy, which, in turn, assists in the reduction of customer acquisition costs. Also, higher customer retention and gives a company more pricing power, thereby increasing its ability to generate profits. Poor customer experience, on the other hand, could make customers unwilling to continue with a brand and adversely impact its profitability. Moreover, seamless customer experiences can improve a company’s ability to expand into other sectors and geographies, thereby boosting its top line.
Market sentiment, meanwhile, is largely determined by the company’s commitment to delivering on its promises. Naturally, brands that live by a specific set of values and strengthen their connection with customers through experiences that are consistent with these values, enjoy better market sentiment than others.
Universal relevance within organizations and across industries
With customer behaviours and priorities changing rapidly, there is a need to rethink the ways in which customer experience is delivered. Customers today expect connected journeys, seamless transitions across channels, and experiences that are personalized to their preferences and circumstances. Businesses are thus faced with the challenge of finding ways to connect better with customers, understanding their needs and behaviours, and creating relevant value propositions.
To do this successfully, they must reflect on how the entire organization can be orchestrated to work cohesively towards delivering better customer experiences. It will call for the front, middle and back offices to be connected and aligned to the principles of customer-centricity. Companies that build their critical processes, functions and relationships around customer experience are likely to emerge winners. Customer experience, after all, is everyone’s business.