What is Customer Experience (CX) and Why Does It Matter?

What is Customer Experience (CX) and Why Does It Matter?

To understand the importance of what has become known as CX (Customer Experience), first we must briefly define some terms. UX (User Experience) was initially defined by Nielsen Norman as all aspects of the end user’s interaction with the company, its services, and its products. However, over time, many experience and marketing professionals came to define UX as end-user interactions with a single product or service, with CX emerging as an umbrella term encompassing the sum total of customer experiences with all channels of the brand and their perceptions of those interactions.

Where UX is typically focused on individual touchpoints, measured by metrics judging task completion, success, abandonment and error rates, CX metrics are broader: overall experience, likelihood to recommend or use again. Regardless of which term you use, there’s increasing interest in delivering a consistent positive customer experience, regardless of which touchpoint or channel is involved, across the entire brand.

Here are three reasons providing excellent Customer Experience matters:

1. A Good Overall User & Customer Experience Is a Differentiator

600-x-163-UX-VS-CX-drawingSource: Tim Lowden,  GAS, Digital.gov

Good UX for a product or service will always be a differentiating factor, but it is not the only factor which drives consumer adoption and perception. A fantastic product with terrible customer support can only go so far, while a decent product with a fantastic constellation of customer service, loyalty programs, and knowledgeable point-of-sale staff will have long legs. A few quick examples to highlight the value. Zappos revolutionized the footwear market by demonstrating it was possible to convince customers to buy shoes online with free shipping backed by support staff empowered to solve any problems they might encounter. Outdoor retailers L.L. Bean and REI boast a devoted customer base because of their loyalty programs, program offerings, knowledgeable employees and liberal return/exchange policies.

PWC’s 2018 Future of CX study found that 86% of customers would pay as much as 16% more for the products and services of a company providing great customer experience. 63% of US customers also indicated they would share more information with a company that provides a great experience.

3. Bad Experiences Drive Customers Away

Companies can no longer simply focus on the end-user experience with the product or service, but need to take a broader more holistic approach as retail shifts towards providing personalized customer-centric omni-channel experiences. The goal is a seamless coordinated customer experience regardless of which touchpoints or channels are involved in the interaction. The number of companies attempting to build omni-channel experiences has jumped from 20% to more than 80% since 2020. This approach requires greater internal coordination to hit that high bar, and the margin for error is slim.

Almost 60% of customers won’t recommend a business if it has a badly designed mobile website. Nearly one-third of consumers said they would abandon a brand they love after a single bad experience. About 60% would do so after several bad experiences.

3. Many Companies Claim to Focus on CS; Few Excel

Recent Garner and PWC reports indicate that marketers at most companies believe they are primarily competing with the value of their customer experience. However, it’s clear that while many see the value, they have yet to deliver it. 54% of U.S. consumers feel customer experience at most companies needs improvement.

One of reasons for this may be that despite increasing importance, investment in that area has not kept pace. 54% of marketers with CX responsibilities expected their CX budgets to stay flat or decrease in 2018. So there’s a lot of talk and high expectations around optimizing the customer experience without the money behind it to implement change.

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