We all know we need to strive for positive customer experiences and do everything we can to avoid negative customer experiences.

What many CX leaders fail to consider, however, is the relationship between your customer experience and your bottom line.

What is a “Bad” Customer Experience?

Depending on your team and the products you support, your challenges may be different. But, generally, a “bad” customer experience means the customer’s expectations were not met in one way or another. For example, maybe it’s tough for customers to reach you. Maybe they have to wait on hold longer than they’d like. Maybe they are transferred multiple times and have to explain their situation more than once. In each case, it’s easy to see how a customer might feel they have to try too hard to do business with you. High customer effort often means bad customer experience.

Bad customer experiences obviously damage existing customer relationships, but they can also endanger potential opportunities and erode your bottom line. Research by Microsoft found that 58% of consumers simply switch companies when they have a poor customer service experience. Furthermore, according to Qualtrics XM Institute, businesses globally stand to lose $4.7 trillion in consumer spending due to poor customer experiences.

Drivers of Costly “Bad” Customer Experiences

What are some of the drivers behind those poor customer experiences, then? Customer complaints tend to fall into a handful of categories:

• Failing to offer timely support. With 90 percent of customers rating “immediate response” as very important to them, customers expect real-time, 24/7 customer support.

• Failing to resolve in the first touchpoint. Customers have come to expect their issues to be resolved quickly–making first contact more important than ever.

• Failing to provide an efficient customer support experience. This could manifest from the overuse of scripts, a lack of customer service etiquette, or even with customer service agents offering wrong or inaccurate information.

• Failing to listen to customers. Customers will absolutely tell us what they want and expect—if we bother to ask them.

• Failing to use the right tools. Email may have been the cutting-edge solution once, but email support threads can take days and details get lost when emails are transferred between support agents. Newer technology like AR-powered video chat and live text chat can augment these experiences.

What is a “Good” Customer Experience?

By contrast, a good customer experience feels effortless for the customer. It should be easy, natural, and fast, and it should use technology that makes sense under the circumstances. According to Mark Fortlage, vice president of Operation Support at Alorica, “Brands have shown their ability to deliver the level of customer service that consumers want with digital avenues such as chatbots and social media, which offers more convenience to consumers.”

In fact, he says that the American Customer Satisfaction Index ranking top online retailers high on their list demonstrates that, “the evolution to digital in all aspects, including customer service, is a success for companies.” New technology is having major implications on customer service, so brands will need to adjust their tactics to keep customer satisfaction—and earnings—up.

The Cost of Bad Customer Service

CS executives looking at how to improve customer experience need to understand exactly how customer service affects profitability. A CustomerThink article identified top ways customer experience affects the bottom line:

Satisfied customers spend more. According to a Harvard Business Review study, customers who said their experience met or exceeded their expectations spent about 140 percent more than customers who reported a negative experience.

Resolving issues for unhappy customers is expensive. Each customer contact, product return, or request for refund costs money to address. Gartner estimates that support guided by an agent costs an average of $11 per contact, where self-service is closer to $0.10.

Happy customers are loyal. The same Harvard study found that consumers with high levels of satisfaction have a 74 percent chance of still being a customer one year later. Those who rate their customer experience as poor only have a 43 percent chance of sticking around another year.

Unhappy customers share their experiences widely. With the proliferation of social media, one dissatisfied customer has the power to share their disappointment, not just with family and friends but with everyone on the platform. A hit to your brand’s reputation certainly has the potential to impact your bottom line.

Furthermore, the probability of selling to an existing, satisfied customer is 60 to 70 percent (while the probability of converting a new customer is only 5 to 20 percent). This clearly demonstrates the value of keeping your existing customers as satisfied as they can possibly be.

How To Fix Your Poor Customer Experience Practices

Luckily, while the costs of bad customer service are high, good customer service provides numerous benefits beyond keeping your customers—including referrals, reputation, and growth.

To fix your current customer experience practices you must first transform your customer experience goals to reflect what actually matters to customers. When customers get fast, intuitive, delightful experiences, companies gain measurable business benefits—including the chance to win more of their customers’ spending dollars.

Meet customers where they are.

Consider Traeger Woodfired Grills. By implementing AR video for warranty support and customer service they were able to see what their customers were seeing—in real-time and without barriers. Using that technology improved customer experience and resulted in a 51 percent reduction in warranty spend, a 30 percent improvement in customer KPIs, a 60 percent increase in first-call resolution, and a CSAT score regularly about 90.

See customer relationships as assets to protect.

American Express* also saw benefits from changing their approach to customer service. Rather than continuing their outdated model of treating customers as cost centers, they began looking for opportunities to build customer relationships. This allowed Amex to better understand the needs of their customers. To support this effort, Amex shifted their tech stack to align with their new strategic approach of putting customer relationships at the core of their business model. The result? A 400 percent increase in customer retention.

Connect the pieces to create a holistic experience.

Another great example is Best Buy. Predicted to be forced out of business by Amazon, they turned things around by investing in customer experience and transforming from a traditional retail store to a customer-focused technology partner. Best Buy no longer just sells products, they focus on building relationships by providing expert advice and leveraging digital solutions to improve the customer experience.

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Companies that underestimate the customer experience do so at their own peril. Some 77% of U.S. adults say that valuing their time is the most important thing a company can do to provide them with good service, according to Forrester Research.

Customers need to be able to get the value they are looking for in as easy a way as possible. Making things easy is oftentimes about solving a bunch of tiny little pain points that individually might not seem like a big deal, but over a whole customer experience become a massive improvement.

Research shows that customers who exerted minimal effort to get problems resolved are 94% more likely to repurchase items from an organization and 88% more likely to increase the amount they spend.

Customers form their perceptions of their experience with an organization in three ways:

• First, whether the experience helps them achieve their goals, and fulfills their needs;
• Second, how easy the experience is for them;
• Third, how it makes them feel.

The Temkin Group, a customer experience research organization, asked U.S. customers in 2018 to rate their experiences with nearly 400 companies across 20 industries, and a positive emotional response was the strongest driver of loyalty.

“When you look at behavioral economics, emotion is a fundamental way of how we make decisions; it is a fundamental part of how our memories are shaped,” said Aimee Lucas, Vice President at Temkin Group.

“It’s really about how we remember those experiences and the stories we tell others that impact the decisions we make in the future about doing business with that company again.”

To add true value, digital technologies have to minimize customers’ efforts and improve their emotional experiences.

For example, Delta Air Lines launched a mobile tracking app to provide flyers with real-time updates about their baggage. It informed customers that a bag was successfully loaded on a plane, and where in baggage claim to retrieve it. The app also notified travelers if a bag was lost and connected them to customer service from the plane via in-flight Wi-Fi to resolve the problem.

The airline identified common travel frustrations and used digital technology in small ways to reassure fliers that their bags were being carefully monitored, and made it easier to resolve problems when something went wrong.

The key to improving customer engagement and experiences with digital technologies is not to put technology first. You have to go into it by identifying where you can improve the ease, the emotion and the effectiveness of the customer experience.

The most innovative companies are designing and redesigning their products and services from a customer-centric perspective. Customers don’t just want a digital experience; they want a better overall experience. For example, Amazon Go stores enable customers to skip the hassle of checkout lines, as do Sam’s Club stores. Luxury products such as royal oak offshore watches are supported by multi-lingual customer service.

Companies can also look across industries to find inspiration for how to resolve common pain points. That’s because customers are no longer comparing experiences within a single product category. For instance, customers don’t compare their banking experience only to other bank experiences, but they compare it to their best experiences with a favorite airline, a favorite restaurant, or a favorite retailer.

Digital technologies are great tools, but they aren’t helpful unless they have purpose. The best companies put customers first by creating a simple and easy customer experience leveraging technology to create a deeper connection.

About the Author

Andrea Belk Olson has a 20-year, field-tested background that provides unique, applicable approaches to creating more customer-centric organizations. A 4-time ADDY® award-winner, she began her career at a tech start-up and led the strategic marketing efforts at two global industrial manufacturers. In addition to writing, consulting and coaching, Andrea speaks to leaders and industry organizations around the world on how to craft effective customer-facing operational strategies to discover new sources of revenues and savings.

How setting up a Customer Effort Index can radically increase Top-Line Revenue.

Companies seem adept at chasing new customers while watching the churn. Why else would they spend around $500B on advertising and acquiring new customers, $50B on CRM spend, and just $9B on the call center (Ovum).

It seems that retailers are content to pour funds into loyalty schemes, money into advertising lower cost products, and then sitting back and watching the customer churn. They set out to attract new customers with price incentives while often leaving existing customers on the receiving end of poor customer service and the churn continues.

Most retailers, from big players to medium sized chains, have the technology to put in place loyalty schemes and many do. These schemes certainly enable them to gather information about customers’ buying habits in order to market new offers to them and run operations more efficiently and profitably. But consumers’ wallets are overflowing with an excess of loyalty cards for different retailers, none of whom actually has their loyalty.

It seems that customer loyalty can’t be bought, it has to be earned. The most recent research from PricewaterhouseCoopers found that consumers ranked loyalty programmes last when asked to rank factors influencing purchase decisions. Furthermore, the research found that 72% of consumers are unwilling to re-purchase from retailers which fail to resolve their issues. To stop the churn and nurture loyal customers who return time and again, it’s great customer service that is key.

An organization’s contact center is often seen simply as a tick in the ‘customer service’ box, and not as a means to actively improve the customer’s experience and reduce customer effort. But the retail industry is a prime example of where truly great customer service can drive loyalty and generate revenue.

Building loyalty is easier than you thought. So how can your contact center help you keep customers coming back for more? Well, loyalty has more to do with delivering on basic promises than it does with consolation gifts. It is all about making it easier for customers to resolve their issues or queries at the time; in other words, reducing the customers efforts when they have a sales query or when something goes wrong.

Increasing customer effort not only decreases customer satisfaction, but more importantly, decreases both customer loyalty and future spend. Dissatisfied customers look elsewhere for the same product.

Buyers are benefiting from the explosion of mobile and e-commerce technology that means comparisons of stock, comparison of prices, and delivery times for products, are a mere tap of the iPad screen away. Sellers need to exploit a new generation of customer service technology in order to reduce customer effort and to maintain the loyalty of the ones they have already attracted.

Tools are now available that help to measure Customer Effort, enabling organizations to identify and potentially eliminate which particular aspects of a customers experience are causing the most problems, rather than wait until a particular service problem actually occurs.

Build your individual Customer Effort Index

Genesys has developed a Customer Effort Audit that measures a series of interaction parameters: number of extra contacts, number of channels used, interaction durations, transfers, resolution lapsed time and total conversation time. It then scores them according to the priority given to the interaction, which varies from market to market and individual to individual. It’s important to not only count the events, but to also weight their impact based on how each affects the customer, as some events can have a multiplier effect in their impact.

Customer Effort Audits allow retailers to start to understand the customer experience from the customers’ point of view, identify which areas in particular are requiring too much effort and address these issues. They can then generate a Customer Effort Index that can be used to assess the magnitude of the effort needed to complete a request. Understanding this enables retailers to start to eliminate frustrations from their contact centers and use them as a positive force for revenue retention and revenue generation.

The bottom line? Grow your top-line!

Retailers are beginning to recognize that customer loyalty is increasingly a key differentiating factor between a sale or a non-sale. There is a strong case for them to divert some of their spend from ‘loyalty’ schemes and sales incentives into building a truly great customer experience that leaves all of their customers confident to return.

New technology is allowing new customer service disciplines to build a happier, more loyal customer base that will keep coming back, refer more and buy more. With customer frustrations eliminated and expectations met, the impact on top-line revenue could be significant.

About the Author

Keith Pearce is Vice President, Corporate Marketing at Genesys. Genesys provides enterprise-wide customer interaction, computer telephony and e-mail software solutions to more than 300 end users around the world.