Customer experience management: how customers become happy and how they stay that way

The greater the choice, the harder it is. These days, do we choose the one product from a selection that impresses us with its quality and pricing? No, not any more. Because standards and pricing are too similar in many product categories nowadays, we primarily choose products that make us feel good.

The experience we as customers have of various touchpoints with a company is decisive for our purchasing behaviour. The feelings that products trigger in customers become the most important differentiating elements within the competition. For this reason, customer experience is currently way ahead on the agenda for many companies.

The definition of customer experience management: what delights the customer?

The customer experience is everything a customer encounters and associates with the product, the brand or a company. Companies work with customer experience management to ensure that these impressions are effective at all a brand’s touchpoints along the customer journey. Overall, the aim is to achieve the utmost customer satisfaction for all encounters. Or to put it another way: delighting customers.

The Harvard Business Review reports that companies have introduced a new position for this task in management: the Chief Experience Officer (CXO). With this person, companies ensure that all employees understand and live the idea of focusing on an inspiring customer experience.

According to this definition, customer experience assumes the marketing function. Today, the customer experience is just as crucial in determining how a brand is perceived and how successful it is commercially as classical marketing with promotions and advertising campaigns once was. Experts speak about “customer experience marketing”. The digital transformation opens up many new opportunities for innovative customer experiences online and in the analogue world.

Customer experience – a task for everyone

The story of online marketplace Amazon is one of the best-known success stories for a clear customer focus. “The customer takes centre stage here for all our activities,” this is how Amazon founder and CEO Jeff Bezos has described the company’s mission for many years.

According to a 2018 survey in Scandinavian companies, customer experience management often falls down due to silos within the company. Those taking the task seriously have to anchor customer focus in all departments and across all levels. Even with the CEO and top management – not just in digital marketing, sales and service.

What distinguishes CXM from CRM?

The two terms sound so similar that you could be forgiven for thinking the difference between experience and relationship can be ignored. Not so.

In customer relationship management (CRM), the company looks at the customer and adjusts the relationship with them from this viewpoint. Usually digitally across several channels. Newsletters, apps, branding and marketing automation.

Customer experience management views things from the customer’s perspective, so looking at the company from the outside. This leads to completely different findings. To trigger delight, the expectations and needs of each customer have to be more than fulfilled. Ideally, customers are pleasantly surprised by their experience with the company. Digitally and in real life.

By contrast, CRM documents the customer relationship. This is important and will remain so. By focusing on customer experience, companies invest in the quality of their relationship to their clientele. And this is a huge difference

KPIs for customer experience management

Even if CXM works on the quality of the customer relationship, success can be measured. Various KPIs show how good the customer experience is. These include:

1. Net promoter score
2. Customer satisfaction
3. Churn rate
4. Retention rate
5. Customer lifetime value (CLV)
6. Customer effort score (CES)

Most companies only use the first three KPIs. Here, the evaluation is only complete if we also consider customer retention, the average customer value and the effort (CES) that a customer has to put in to solve a problem or to get an answer.

Advanced customer experience marketing

Companies that invest in the customer experience (CX) quickly realise that their employees are also in need of a good experience. The term “employee experience” (EX) was therefore established. If both are managed together, this results in the most powerful competitive advantages.

And what comes next? The best proof of our delight is a personal recommendation to friends and colleagues. We can also work towards this in a targeted way – this is known as advanced customer experience management: those who are satisfied remain loyal. And those who are loyal can become ambassadors for the product or brand.

Something that is less easy to measure with KPIs, but that can be felt as job satisfaction, is the gratitude of happy customers. The greatest motivation for good work is positive feedback. Employees enjoy this whenever and wherever customer experience management is excellent. They pay this back as commitment to the company’s customers.