Omer Minkara - Vice President and Principal Analyst, Aberdeen
6 minute read
By Omer Minkara - Vice President and Principal Analyst, Aberdeen
Posted in Customer Engagement
Customer experiences (CX) define the identity and success of the modern enterprise. While factors such as price and time in market are still relevant, buyers in both B2B and B2C industries prefer working with brands that address their unique expectations. Traditionally, firms across all industries and of all sizes have aimed at accomplishing this by tailoring their activities in the front-office (sales, marketing, service, and commerce). However, this approach is short sighted.
Traditional CX programs are often siloed across different business departments leading to fragmented customer experiences which in turn lead to frustrated clientele. Moreover, other business departments that also have a significant impact on CX (e.g., back office, IT, operations) are often neglected in traditional CX programs. As a result, even though firms may synchronize front-office activities, they risk falling behind in delivering on customer expectations due to poor integration with non-customer-facing departments when managing CX activities. This is where practical CX programs come in.
Practical CX refers to brands managing customer needs in a truly holistic manner across all business departments, ensuring that all departments function cohesively in delivering unified experiences to current and potential buyers across all channels.
This isn’t an easy endeavor. It requires firms to craft and implement unique capabilities designed to facilitate communication and collaboration across the enterprise, leverage data to hyper-personalize interactions and most important, empower employees throughout the business to adapt to changing buyer needs. Best-in-Class firms understand the benefits of practical CX programs and are leading the way in using them to fuel their success. Figure 1 illustrates the benefits the Best-in-Class enjoy by utilizing practical CX when managing relationships with their clientele.
Figure 1: Leaders in CX Enjoy Customer Loyalty & Superior Financial Results
As depicted in the above figure, top performing firms enjoy 14.6x greater year-over-year (YoY) increase in customer satisfaction rates (23.0% vs. 1.6%), which in turn leads to 14.2x greater YoY increase in customer retention rates (35.5% vs. 2.5%). Together, these findings validate that leading firms with practical CX capabilities build stronger bonds with their buyers. As a result, this leads to those buyers rewarding them with 3.8x greater YoY increase in their spend (16.4% vs. 4.3%).
Aberdeen’s research also shows that incorporating practical CX within business activities helps firms improve (decrease) service costs by 5.7x more YoY (33.1% vs. 5.8%). Such gains in cost reduction are facilitated by having a better understanding of changing customer needs, and proactively adjusting service activities to minimize inefficiencies (lengthy wait and handle times, repeat contact) in addressing buyer needs. Coupled with growth in revenue, decrease in cost enables Best-in-Class firms that lead the way in practical CX to grow their profit margins per customer by a remarkable 31.0% YoY versus 0.7% erosion observed by firms without practical CX that unifies all business departments to deliver cohesive buyer experiences.
The experiences customers have when interacting with businesses are influenced by the collective perceived impact of conversations with all business departments, even those that customers don’t directly interact with as issues such as billing errors in finance or shipping issues with operations all have an impact on the perceived experiences of buyers.
As such, it’s vital for firms to facilitate communication and collaboration across all business departments by first establishing a company-wide definition of CX goals and metrics, and then enabling all employees within and across various departments to work with one another to address buyer expectations. Figure 2 shows that three out of four of the Best-in-Class firms leading the way with practical CX have already established such enterprise-wide communication & collaboration. More firms (including those with Best-in-Class results that lack this capability) should make this capability a priority to eliminate fragmented buyer experiences.
Figure 2: Top Performers Enrich Their CX Programs with Necessary Building Blocks for Success
Another key attribute of Best-in-Class firms leading the way in practical CX is hyper-personalization – referring to tailoring each conversation to address the unique needs of each buyer while also ensuring that conversations with all business departments and across all channels remain consistent. Best-in-Class firms are 17% more likely to have this capability (74% vs. 63%).
To hyper-personalize, firms must have a holistic and timely view of customer data available across all enterprise systems (e.g., CRM, ERP, e-commerce, marketing automation, and contact center). That’s important as it allows employees across all business departments to see the same customer journey insights while being able to drill down and focus on relevant parts of the journey aligned with individual roles. Best-in-Class firms again lead the way in having a connected view of customer insights with their 20% greater adoption of this key capability (73% vs. 61%).
Although existing data may help business leaders tailor operational needs to address current customer demand, that doesn’t guarantee that those activities will continue meeting and exceeding buyer expectations in the future. Customer needs are dynamic. Powered by demographic changes, advances in technology and other macro and micro-economic factors such as the economy, COVID-19, supply chain disruptions, inflation, etc., buyer behavior changes at lightning speed. As such, business leaders in both the front office and the back office must closely monitor those changes and proactively adjust their activities to keep up.
Root-cause analysis allows analyzing historical and real-time data to uncover how certain factors influence business conditions such as customer demand, call volume in the contact center, etc. Best-in-Class firms have 16% greater adoption of this capability (67% vs. 58%). Adding predictive analytics to the mix allows firms to forecast the likelihood of future events (e.g., customer demand, client churn) to adapt future activities with forecasted changes in business.
The good news for employees is that they don’t need to adapt their activities themselves to keep up with those changes. Savvy business leaders support employees across all departments with prescriptive guidance providing employees with real-time decision assist such as sales and service playbooks, or automated, system-generated alerts and pop-ups with contextual guidance. Such real-time guidance:
As a result, this improves employee engagement levels as it ensures employees across the business receive timely support to help them achieve their objectives – which ultimately helps the company achieve its overall business goals. Best-in-Class firms with practical CX programs are 35% more likely to empower their employees with such real-time guidance (58% vs. 43%).
CX programs have become key differentiators that define brand-identity in the eyes of customers in addition to determining the financial success of enterprises. Contrary to the traditional approach where business leaders consider CX programs to be exclusively confined to the front office (with many even siloed within the front office across sales, marketing, and service), savvy firms recognize that modern CX programs must be enterprise-wide and enterprise-scale.
In other words, they must include all stakeholders within the company and must scale to address changing customer needs by adjusting the activities of all relevant departments in a proactive fashion. Best-in-Class firms that build and manage such a practical CX program reap its benefits, including happier customers, decrease in costs and growth in revenue.
Findings from Aberdeen’s research suggests that transforming from traditional to practical CX isn’t about organizational revenue, company size, etc. Rather, it requires firms to establish the five building blocks noted earlier in this article, including:
Aberdeen highly suggests business leaders across all departments evaluate which capabilities are currently a part of their activities and form a CX transformation committee. This type of program collectively weaves capabilities across all departments in such a way that enables employees across the whole business to deliver truly unified experiences, regardless of the department or channel that customers use to interact with the business.
VP & Principal Analyst
Contact Center & Customer Experience Management, Aberdeen
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