How value is being redefined in 2022

KPMG’s 13th annual Customer Experience Excellence report was released earlier this month. In this, we share the insights from research with 10,353 consumers who have evaluated their experiences with 333 organisations.

It shows that how customers think about value and make decisions about purchases is changing rapidly. This is seldom just about price, however with customer spending squeezed, winning with customers is more dependent than ever on understanding and responding to these changes.

In this year’s report we explore which organisations are leading in customer excellence and how they are making this headway. And we identify how businesses need to use purpose to create, preserve and prevent the erosion of value, through deep insights about their customer and what they perceive to be valuable.

We also examine how value and price are balanced. In order to grow, brands must provide customers with more value than ever before. However, there is a risk they get this equation wrong. Cost cutting and margin adjustment won’t deliver this alone: it requires a deeper commitment to a higher purpose.

Analysis of the market leaders this year has highlighted how they serve a common good through low cost, purpose-driven experiences that fuse values and value. One such company is Pharmacy2U, a remarkable story of how one company scaled dramatically to meet the demands of the changed consumer, and in doing so, achieved a UK leading customer experience. first direct has also secured a leading position this year too, by successfully managing the impacts of the pandemic and maintaining its role as the original challenger bank. Their utilisation of AI based predictive technology has enabled personalised offerings and reduction in ‘cognitive load’ for customers. Another exemplar who continues to feature among the leading brands is Lush, one of the pioneers of ethical retailing, with products that eschew unnatural ingredients, excessive packaging, and animal testing. It is a prime example of the three major trends sweeping retail: digital prowess, the health of the individual and the health of the planet.

We have been measuring The Six Pillars of customer experience for 13 years. Derived from millions of customer evaluations of thousands of brands, we have empirically found that they describe customer experience excellence. The leading firms demonstrate mastery of these pillars and are deliberate and purposeful in the experiences they create.

• Integrity: A strong sense of societal and environmental purpose has become the defining characteristic of leading companies. What the company stands for and how its existence makes a difference to the world have become very important areas for communication to customers.
  
• Resolution: Detecting, resolving, and removing customer pain is a prerequisite for excellent customer experiences and is fuelled by outside in thinking. Deeper understanding of customers’ lives is required to locate pain points and drive more holistic experiences aimed at prevention rather than reaction.
  
• Expectations: User-generated content, influencer marketing and best in class experiences are constantly setting and resetting expectations. The rapid advance in technology is stretching the boundaries of possibility and therefore making expectations more fluid than ever.
  
• Time & Effort: Companies have focused on creating frictionless processes, but attention now is expanding to look at “cognitive load”. AI and new technologies are making it simpler to remove cognitive load for customers by doing the thinking for them.
  
• Personalisation: Customers expect highly personalised experiences every time they engage with a business, and they already know that businesses have tools to achieve this. The leading companies have become adept at leveraging real-time customer data (such as website behaviour, search results, purchase history, most active times, and past interactions), allowing them to personalise their offerings and gain a deeper understanding of the customer’s wants and needs.
  
• Empathy: Humanising customer experiences is one thing but being able to maintain a brand’s unique personality throughout the customer journey, particularly when much of it is mediated through technology, is considerably more difficult. Brands must ensure they deliver on both to leave a lasting impression
  

The consumer perception of value is increasingly being shaped as price plus customer experience plus purpose. Consumers assess value through their own personal values set, where the purpose of the business and its environmental and societal considerations are balanced against the price they are willing to pay.

The problem many companies face is that they have a limited understanding of how customers derive value and which value drivers matter most. That means companies focus on obvious and rational value drivers at the expense of equally important experiential and psychological drivers.

Price will nearly always be part of the purchase consideration. With the difficult economic conditions, it is likely to become important for a wider group of consumers. The top five companies that do well in response to our question “provide good prices and rates” are also rated positively for their customer experience: Pharmacy2U, Smarty, iD Mobile, Primark, Lookfantastic.

However, it is not all about price and there is a risk that organisations get the focus wrong. Cost cutting and margin adjustment won’t deliver this alone: it requires a deeper commitment to a higher purpose.

Consequently, organisations must reconcile the cost of living crisis and a potential recession with this need. In many instances in the UK, organisations are linking their purpose to their social, environmental and ethical commitments. It is how these organisations show sustainability across products, operations and supply chain that help define if it is successful in having a higher purpose.

Those who lead are successfully balancing the value of purposeful experience with the value of price.

There is no question that when it comes to customer experience the game is changing. Customers still want more for less, but this is tempered by the degree to which the organisation demonstrates a strong sense of purpose and a commitment to its environmental and societal responsibilities. The bottom line is that a strong customer experience, focused on value, can insulate organisations against short term economic headwinds and equip them to ride out an uncertain future.

To find out more about how purpose is being redefined in order to create, preserve and prevent the erosion of value and how to lead the way in customer experience, click here to read the full report. This includes a sector lens, spanning Consumer and Retail, Technology, Media and Telecoms, Energy and Natural Resources, Banks and building societies, Insurance, Local Government and Healthcare.

Click here to watch the 2022 UK CEE launch webinar recording.