The Future of Experience: The CX Imperative of Today
With customer loyalty up for grabs, learn why and how today’s leaders invest in customer experience.
By Josh Buchholtz, Tina Wink, and Geoff Berkheimer
Every company faces the challenge of how to build a competitive advantage and grow — and today, staying on top is harder than ever. As of 2020, the average tenure of companies on the S&P 500 Index was just over 21 years, compared with 32 years in 1965; a clear long-term trend of declining corporate longevity is expected to continue even more throughout the 2020s. Moreover, a softening economy and inflationary pressures add to this challenge, forcing many CEOs to prioritize profitable growth over the “drive revenue and scale” strategy that has dominated for the last 10 years.
If the approach that has brought success recently may not continue to do so, then how do leaders face this challenge to thrive and win in the next 10 years? The key is investing in your organization’s customer experience (CX) capabilities.
What is CX, and how does it create profitable growth for leaders?
CX is the value created from the sum of all interactions between a company and its customers. A customer experience may appear as a moment in time or a perfectly curated product. But achieving this experience requires a holistic, cross-functional, executive-led discipline that reaches across product, service, marketing, sales, and technology strategy. Together, these capabilities work to deliver a winning CX formula. CX is the orchestrator that drives customer-centric growth and enables companies to win.
A strategic focus on CX enables profitable growth. Leaders realize top- and bottom-line value in three primary ways:
- Expanding share of wallet
Value is created by developing differentiated and compelling products, services, and experiences that uniquely fit customer expectations through need-based customer acquisition, cross-sell, and upsell. This value increases new customer acquisition and win rates. - Maximizing moments across the journey
Value is earned through advocacy, loyalty, and customer love over time by knowing when, where, and how to engage every unique customer along their distinct journey. This expertise increases the share of wallet and probability of repeat business while reducing customer churn and acquisition costs. - Gaining internal efficiency
Value is unlocked by predicting personalized experiences and offers based on unique needs and relevant desirability. These data points are used to integrate key functions under a shared set of goals and business objectives to ensure the sum of interactions is consistent and meaningful to customers. This lever increases internal efficiencies and win rates, reducing duplicative work and cost to serve.
Over time, companies that invest in customer experience thrive. In fact, companies with top CX ratings outpaced their peers’ stock performance from 2019 to 2022 and doubled their lead over companies with poor CX experiences. CX innovators lead CX laggards in growth by 5.1 times, and data shows customers are willing to pay 4.5 times more for excellent experiences.
Why CX now?
Customer experience unlocks profitable growth, and companies that invest in customer experiences will win.
However, with economic concerns continuing, customers are becoming more sensitive about where they spend money — making CX imperative for companies today. As customers spend less, competition to keep those customers will increase.
So how do companies win in an environment where their customers are spending less and competition is increasing? Simply put, they invest in CX. Customers spend more with companies where they have better experiences. Customer experience excellence influences purchasing decisions with 74% of consumers influenced by experiences alone and drives price inelasticity. Consistently positive experiences unlock deep emotional value and loyalty with consumers.
With increased competition, new market dynamics have led to digital disruption in previously stable industries and even in sectors perceived as less susceptible to CX-related pressures. But due to high customer expectations, it is no longer realistic for any industry to consider itself immune to the influence of CX. In many cases, tech- and customer-focused start-ups have challenged long-standing, successful companies to reconsider their product, service, and customer acquisition strategies.
The takeaway is clear: Businesses are at an important crossroads as external factors and new consumers reshape the ecosystem of customer expectations. Companies that know their customers best and build products, services, and experiences that consistently meet their needs will have an advantage over unfocused competition.
How can CX leaders tackle complexity to realize business value?
Building a successful CX program is complicated, and there are common blockers that organizations across all industries face. To overcome these challenges, CX leaders can reap top- and bottom-line rewards with world-class experiences by following a four-pillar blueprint:
Executive alignment to a shared set of goals and objectives is a challenge for many organizations, and the same remains true for companies that seek to win through customer experience. Leaders should align at the highest level of the organization under CX goals and objectives with the company CEO setting mandates and direction for teams to follow. A shared alignment reduces common challenges, including siloed “ownership” of the customer, where different departments “own” different parts of the customer journey.
Organizations can lack a consistent definition of customer experience and the value it creates for the brand, customer, and employee. Organizations often agree that “yes, of course, CX is important” but fail to measure its importance. This inability to define and measure its value becomes a blocker to scaling customer experience across an organization. Leaders should clearly communicate the direct business and intrinsic value of customer experience. By clearly articulating the business case of customer experience from the customer and employee perspective, silos dissolve and teams can unite under a shared purpose and value.
Companies can struggle to manage a complex ecosystem of technologies, systems, databases, and teams. This web often grows more tangled through acquisition and expansion. Even though “Customer 360” has been an accepted industry term now for years, many companies’ marketing, sales, service, and foundational technology systems are disparate and disconnected. Data continues to be held offline (e.g., in spreadsheets) across industries. Even where data management and sharing are more mature, the collective view of these data is often missing. Disparate data leads to limited feedback loops and a lack of visibility into the voice of the customer. To remedy this challenge, leaders can invest in advanced data architecture systems and connected platforms to provide a competitive edge while training their teams to utilize these systems to deliver consistent, hyper-personal experiences. Companies that know their customers best — and can provide data-driven value at key moments in their experience — have a greater probability of winning that customer for life.
Status quo syndrome can create barriers to fundamental change. The old saying “If it ain’t broke, don’t fix it” will lead companies to stagnate and lose customers over time. Instead, leaders should look to disrupt themselves, invite change, and take measured risks by defining the value of CX and following a test-and-learn approach to scale. With incentives to reduce fears and resistance to change, leaders move the needle forward by removing barriers between teams, business-to-business, and business-to-IT. This mindset and operational shift communicate a greater purpose that empowers employees and welcomes change.
Looking ahead
The opportunity to win through customer experience is more significant than ever before. Customer loyalty is up for grabs, and those who consistently deliver great experiences have a higher probability of winning those customers for the long term.
Leaders need to understand the value CX creates and elevate the customer experience to the top of the c-suite strategy by aligning under a shared set of goals and objectives; defining the business and intrinsic value that CX creates; and connecting data, technology, and teams through a focus and commitment to change — to improve.
Read additional articles in the series to explore this topic further:
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