CX in the Phygital Era: What Fortune 500 Companies Are Doing About It
We are at an inflection point. The world of phygital (a combination of physical and digital) is here — all hardware needs software and all software needs hardware. As I talk to global businesses, the one thing that comes up in almost every conversation is how their customer expectations have taken a dramatic upturn.
Today, it is no longer good enough for a business to have a great standalone software application or a competent service support team or a formidable brand image. Customers need every single touch-point to be seamless, integrated, and delightful.
Which brings me to my main point — a great UX (user experience) alone will simply not help businesses succeed in today’s digital era. For a business to stand out, they need to transition from UX to CX (customer experience) — taking a deep look at every single customer touch-point and making it a unified part of the whole.
Understanding CX
So, what is CX? I very often hear executives use the terms UX and CX interchangeably. While both are concerned with the experience of using a product, CX is much wider and all-encompassing than UX.
With CX, businesses are concerned about every interaction that a customer has with its brand. This starts all the way at the initial awareness and research stage, and entails every little step and interaction involved in prospect conversion, customer retention, and upgradation.
Let us take the example of an awesome e-commerce application with a delightful UX and a great back-end technology. However, its telephonic service support interactions are mediocre at best, and the marketing campaigns are sub-par. What do you think the customers would write or discuss most about? Not the technology and the in-app experience for sure!
You see, a single weak link in the entire chain of customer experiences could bring down the entire house.
I want to make it perfectly clear here — having a unified CX strategy is no child’s play. It involves studying the entire ecosystem around your customer and various factors that influence their experience with your product. Some of these factors could be under your control and the other may not. This is where it gets tricky.
What do you do if your product is being used by customers in areas with weak phone signal strength or poor lighting conditions? What if many of your customers have disabilities or seem to be in a stressed/distracted condition when using the product? How will you design for such unexpected errors and circumstances?
CX is therefore about factoring in a multitude of possibilities and taking informed decisions that are pragmatic, feasible, and ultimately viable (technically and financially).
Why should companies care about CX now more than ever before?
Globally, companies are realizing the impact of a unified CX journey — both on their image and in the bottom-line. During my interactions with clients across six continents, here is what we gathered on this rapidly strengthening trend.
1. Happy customers mean happy balance sheets
A happy and satisfied customer accounts for 2.6 times in revenue as their moderately satisfied counterpart, and about 14 times in revenue as compared to an utterly dissatisfied one. Womply’s research adds that bad reviews have a significant effect on revenues, with a 1–1.5 star rated business reporting 33% less revenue than an average firm in the domain. The scenario is further underscored by the assertion from Forbes that 94% of consumers surveyed tend to avoid a company with bad reviews.
The verdict is therefore near unanimous — happy customers mean more moolah. Again, we should remember here that CX also has a major influence over on-the-spot purchasing decisions, as 49% of the buyers surveyed accepted having made an impulse purchases after receiving a more personalized experience.
2. Building a Loyalty Club will significantly reduce your cost of acquisition
Winning a new customer can be costly — 7x as much as retaining an existing customer . Investments in existing customers is therefore a profitable choice and it is but a short time until one sees positive results. Building customer loyalty through an enhanced CX framework could not only drive revenues through enhanced sales, but also help rationalize costs by driving down costs for acquisition.
The importance of CX here is highlighted by a Walker study, which found that by the end of 2020, CX will have overtaken both price and product as the key brand differentiator.
Did you know that 95% of people who had a bad experience are willing to give the brand another go if they know their issue has been dealt with correctly?
3. Customers are your biggest marketers
Word of mouth happens to be perhaps the most important marketing channel that a business can pursue today. With 84% of the consumers surveyed not choosing to trust advertisements anymore, it is evident that buyers are now increasingly relying on third-party validations for purchase decisions, especially online ones. A happy customer who is willing to make a recommendation is therefore the best ambassador for any business.
It is interesting to note here that according to Esteban Kolsky, 72% of the customers surveyed were willing to share a positive experience with 6 or more people. On the other hand, if a customer was not happy, there was a distinct possibility of their adverse views reaching 15 or even more compatriots.
4. Reviews Trump Sales Pitches — Every Single Time
Customer feedback is an unmatched tool for driving brand recall and sales. If customers are unable to openly access the experience of other product users, they would tend to look elsewhere to build confidence for their purchase decisions. 88% of the consumers surveyed claimed to have read peer reviews to determine the quality of the firm’s overall CX framework. Negative reviews are a significant reason in driving away customers from your business to the competitors.
Recent research indicates that one negative review can turn away 22% of the prospects, around 30 customers. The percentage of lost customers, therefore, tends to increase in tandem with a rise in negative reviews. Three negative reviews can result in a 59.2% decline, while over four negative reviews pushes the figure to around 70%.
Review ratings also tend to affect the way that a business ranks on search engines. It is now clear that persistent negative ratings can result in business losses as search engines rank the best enterprises for users basis the ratings received.
What Fortune 500 Companies Say
I spoke to over 50 Fortune 500 Companies this year across diverse industries ranging from industrial products to transportation, healthcare, telecom, hi-tech and manufacturing. These are some of the insights I received.
An overwhelming majority of the respondents felt that a unified CX journey is absolutely essential to retain customers and build a ‘WOW’ brand, while the next largest group identified with the positive bottom-line impact of such measures.
Feedback surveys and direct interactions continued to be the most important channels for understanding customer experiences with the brand, with merely an 8 percent of the respondents reposing their faith in old-style field research. The focus clearly is shifting towards an environment where the customer is at the center of all interactions and is never left unattended. The key, going forward, will be in synthesizing the insights from these various channels such that every successive interaction feels like a seamless transition from the one preceding it.
Brands are increasingly focusing on the creation of intuitive products to drive the CX story. Omnichannel consistency and proactive support are a key part of this narrative, with customization (hyper-personalization) and DIY support coming close behind.
Legacy siloed structures and the lack of a streamlined change management process are seen as the biggest roadblocks for a smooth CX transition. Surprisingly, the absence of management or budgetary support ranks rather low here, underscoring the growing need felt amongst the top executives to strengthen their brand’s CX journey.
Fortune 500 Companies feel that better change management paradigms are crucial for streamlining CX implementations. They further identified the need for deeper knowledge, new digital technologies, and a ‘digitally native’ workforce as harbingers for an effective CX framework.
While employee satisfaction, CSAT (Customer Satisfaction) and NPS (Net Promoter Score) emerged as the unanimous choice for the preferred CX metrics to track, quite a few respondents also spoke out in favor of tracking CES (Customer Effort Score) and Customer Loyalty & Retention. While the cost of customer acquisition and customer lifetime value did not receive much support, I do believe that given the direct revenue impact of these key metrics, their importance will only continue to grow over the coming years.
The Way Ahead: From UX to CX
As the importance of CX continues to grow at an exponential phase and more businesses begin to realize the direct impact of it, it is crucial to identify a viable roadmap to transition from the current focus on merely delivering UX.
I have shared some more dope on CX in my other articles — From UX TO CX: 8 Things That Need To Change and Building Your CX Strategy: An 8 Point Compass to Success. Do check them out and let me know what you think!
