Creating an effective customer experience means reducing friction throughout the purchasing process, as customers consider your products and services. Companies focused on optimizing customer experiences and implementing target marketing strategies should start by defining value, as that value relates to how customers interact with their brands and products.
A recent report by Deloitte focuses on four key strategies to consider for maximizing customer engagement:
- Defining value
- Understanding what drives value
- Creating value through customer experiences
- Analyzing the results from value creation.
These four strategies can provide a framework for companies to formulate their own game plan for translating improved customer experience into more effective engagement.
While the importance of customer service has been a fundamental business tenet for years, focusing on customer experience requires a new mindset.
“It is literally an examination of how customers ‘experience’ doing business with you at every point of contact,” says customer experience expert David Avrin, the author of “Why Customers Leave (And How to Win Them Back!).” “Our perceptions of how we as customers experience doing business with a company plays a large role in whether we want to repeat that experience.”
Defining value, according to the Deloitte analysts, requires defining customer value for organization, and for establishing metrics for benchmarking and improving performance.
How your company defines customer value will be unique to your market and organization. But there are some common denominators. For example, the existing or potential revenue a customer represents is a key value metric. Another important consideration is customer acquisition costs. This requires an analysis of how much it costs your company to recruit a new customer.
There are lots of ways you can assess customer value. Retail stores, for example, consider foot traffic and dwell time — how long someone remains in a store. Digital engagement is measured by web traffic, session time, and sales conversions. Many companies also use a net promoter score, which measures customer experience and predicts business growth, to help gauge customer loyalty.
“Of course, these can become much more granular based on how a company goes to market,” says Carlos Castelán, managing director of The Navio Group, a business consulting firm based in Minneapolis. “But traffic and net promoter scores are two basic measures that help companies understand the customer’s ‘brand love.'”
One you have defined value, you need to determine who your best customers are. Deloitte recommends segmenting customers based on their value. That means creating metrics for each segment to help you analyze and measure return on investment.
Avrin says demographic segmentation was once the gold standard for understanding customer behavior and value. But, he notes, “the value of that information was suspect, as the predictive behavior from a demographic group was highly speculative.”
In today’s marketplace, says Avrin, the ability to analyze large amounts of information in real-time means more accurate segmentation based on the tracking and analysis of a customer’s previous behaviors.
“Though never perfect, predicting buyer behavior and preferences based on previous activity is far more predictive than using demographic data,” he says.
Getting a handle on what resonates with your best customers can help you refine their experiences and lead to a better return on investment (ROI) for you.
“Effectively segment and target your most valuable customers and create data-driven, meaningful, and valuable experiences to reward and increase their loyalty,” recommends the Deloitte report. “Reward and invest in your most valuable customers based on their anticipated profitability.”
Creating value through customer experience isn’t just about sales. According to Deloitte, creating value requires investing in each segment of your business proportional to its overall importance to your bottom line. You have to design and execute customer experience strategies that align with your company’s overall strategic objectives, and deliver results that can be measured and improved.
Creating value through experience means connecting on an emotional level with your customers.
“It’s not that people are overly emotional,” says Avrin, “it’s simply that people buy things because they want to. At its most basic level, a company’s primary task is to make people want to buy what they are selling.”
Particularly in crowded market segments, where products are often similar, experience can be the differentiating factor. For example, Apple and Samsung have prioritized customer engagement in an effort to gain market share for their competed smartphones.
“That same product or service delivered faster, more memorably, more intuitively or differentiated in some meaningful way, is perceived as additional value-received by the customer,” Avrin says.
Deloitte defines customer value in terms of both satisfaction and results. Analyzing that value requires the ability to track and enhance your customer experience investments.
One metric Deloitte uses for customer experience is “experience value,” which measures customer satisfaction. An equally important metric is “business value,” which measures how valuable a customer is to your company. Business value includes how much a customer spends, what it costs to retain a customer, and how much they drive new business through referrals and social media.
“Business value is the perceived fairness of the exchange of money for goods and services,” Avrin says. “Experience value has more to do with the perception of the customers’ transaction and interaction.”
PODS understands the value of focusing on a frictionless customer experience. The company was recently recognized as the top moving company for customer service in the 2019 America’s Best Customer Service ranking, conducted by Newsweek.
Companies like PODS that can measure the effectiveness of their customer experience investments can use those insights to continuously improve customer experiences.
“Often companies think about value capture first, which can limit the possibilities for innovation and greater experiences,” says Castelán. “It’s important to think about how a company creates value for a customer and then think about creating business value from that, versus the other way around.”