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How Customer Experience (CX) Has Changed Over Time

There is a growing consensus surrounding the importance of customer experience.

In fact, research from MarketsandMarkets predicts that the CX management market will grow from an estimated $5.98 Billion in 2017 to $16.91 Billion by 2022.

But the role of CX has not always been what it is today. To understand how we got here, we need to know what came before. That’s why it’s important to explore how CX has changed over time.

What Is CX?

We define customer experience as including everything from the earliest stages of customer discovery and continuing on through research, purchasing, and post-sales interactions (including customer support and success).

CX industry analysts at Forrester take an even more expansive view, defining CX as “how customers perceive their interactions with your company.”

What Are the Primary Factors Affecting CX?

We know that customer experience includes not only the complete set of interactions a customer has with a company, but also their perceptions of those interactions.

Here are some of the key aspects that typically impact those perceptions, particularly for post-sales CX.

Useful, Usable, Enjoyable

As explained by Forrester, good CX is composed of three elements:

  • Useful: the customer receives value from the company’s products or services
  • Usable: that value is easily discoverable
  • Enjoyable: the products or services engage the customer on an emotional level

People and Product

Hubspot takes a somewhat different approach when it comes to defining the key aspects affecting CX, placing the focus on people and product:

  • People: the customer is satisfied with the information and assistance provided by the company
  • Product: the customer is “blown away” by the product or service offered by the company

Forbes has also written about the concepts of people and product in relation to customer experience but makes a distinction between B2C (business-to-consumer) and B2B (business-to-business) organizations.

For B2C companies, post-sales CX teams must straddle the line between the practical (product performance) and emotional (the much-bandied-about concept of customer delight).

In contrast, the customers of B2B organizations are by definition other businesses who themselves have their own customers. Accordingly, “emotional considerations, while still important, play a backseat to customer outcomes.”

A Brief History of CX

Our exploration of the history of CX will focus on the following phases:

  1. Pre-Industrial Revolution
  2. First Industrial Revolution
  3. Before and During the Internet Age
  4. The Rise of Customer Success
  5. The Future of CX

Pre-Industrial Revolution

For hundreds of centuries prior to the First Industrial Revolution, the interaction between businesses and customers was determined by proximity, i.e. within walking distance, or perhaps a horse or slow-moving boat ride.

Although their choices were limited by geography, customers could largely expect an excellent experience, characterized not only by attentive customer support but also the type of relationship building typically associated with today’s customer success.

“Business owners had a very finite market they could address so every customer and how they perceived the business really mattered,” explains Intercom. “They did their best to build a relationship with new customers, treated good customers well, and endeavored to build an extremely loyal customer base.”

First Industrial Revolution

Customer experience changed dramatically in the 1700s as the First Industrial Revolution brought a new technology – steam – that enabled the transport of people and products faster and further than ever before.

As physical proximity became less of a barrier, customers benefited from some expanded choice in products and services, but in turn lost the close relationships with businesses that had previously produced a strong customer experience. As Intercom puts it, service became “an afterthought instead of a fundamental part of business.”

Before and During the Internet Age

Following the First Industrial Revolution in the 1700s, a second took place in the 1800s with the advent of electricity, followed by a third in the 1990s related to computing.

It was this Third Industrial Revolution that marked the next major shift in customer experience, particularly for software products and services.

Pre-Internet

At the time of the Third Industrial Revolution, customer choice was certainly higher than ever before, but access to information and competitors was still nowhere near today’s levels.

Business-friendly contracts were the norm, which resulted in customer experience efforts being concentrated on sales with little to none focused on customer care since customers couldn’t easily switch to a competitor.

“Service didn’t matter too much because contracts, for software companies as well as professional services, acted as ‘lock-ins’ on customer loyalty,” Hubspot explains.

Forbes describes the CX environment at the time in similar terms: “[T]he enterprise software market traditionally focused on enterprise license deals. Once a vendor closed such a deal, the customer had little choice but to pay for years of service and support.”

Birth of the Internet to Now

The Internet “allowed anyone to run a business selling goods and services to anyone else in the connected world,” writes Intercom. “They were no longer constrained by physical location or poor communications technology.”

This removal of geographic barriers benefited businesses by vastly increasing the number of potential customers. But the impact on sales cut both ways, as customers were empowered with greater access to information about companies (and their competitors).

This greater access to information led to customers having less trust in sales and marketing. Specifically, Hubspot Research found that 55 percent of customers no longer trust the companies they buy from as much as they used to, while nearly 70 percent don’t trust advertisements.

Instead, today’s customers are more likely to rely on recommendations from other customers, with more than 80 percent saying they trust advice from friends and family over that of a business. Moreover, other studies have found that 94 percent of customers read online reviews, with 72 percent waiting to take action until after doing so.

In addition to the removal of physical restraints and increased access to information, the Internet Age has been marked by the growth of software as a service (SaaS) companies.

A key characteristic of SaaS providers is their subscription business model in which customers pay for software on a monthly, quarterly, or annual basis.

The end of long-term contracts impacted CX by shortening the sales cycle. On the post-sales side, the prevalence of SaaS companies, along with other businesses offering their products on a subscription basis, created a new problem: churn.

Churn is when an existing customer stops doing business with a company, which can be calculated as either customer churn or revenue churn. Some amount of churn is inevitable in any business. But a business’s growth (i.e. the bottom line) is dependent on keeping churn as low as possible.

This focus on churn increased the importance of customer support and also led to the birth of a new aspect (at least in a formal sense) of CX: customer success. As Gainsight sums it up, “After all, the reason the Customer Success organization came into being, and exists to this day, is to retain customers and revenue.”

The Rise of Customer Success

The Internet Age, particularly the growth of SaaS businesses, clearly had a substantial impact on CX, not least of which was the emergence of customer success.

Early Customer Success Efforts

Even though the Internet provided customers with greater choices and information, business-friendly contracts initially continued to lock in customers.

“[C]ontracts were still the norm that provided businesses with some protection,” writes Hubspot. “In addition, acquiring customers was intoxicatingly cheap, so why would companies overspend on retaining customers when it was so cheap to acquire new ones?”

To the extent that businesses did focus on the retention of existing customers and not just the acquisition of new ones, there was still little attention paid to the true needs and goals of the customer.

“In essence, this approach to customer success focused on customer retention as the goal, not successful customer outcomes,” explains Forbes. “In other words, sales and customer support simply had to do the bare minimum possible to keep customers from leaving.”

Customer Success Blossoms

As of 2018, customer success has blossomed into a robust and integral aspect of CX.

In fact, LinkedIn’s 2017 U.S. Emerging Jobs Report found that Customer Success Manager is among the fastest-growing positions. LinkedIn’s Most Promising Jobs of 2018 research also placed the role in the #3 spot on its list of jobs with high median salaries, strong openings, and year-over-year growth.

So how are all of these newly-minted Customer Success Managers contributing to CX?

At a time when customers have increased choice and greater ability to switch to a competitor, combined with higher costs for businesses to acquire new customers, “businesses start paying a whole lot more attention to keeping existing customers very, very happy,” describes Hubspot.

Using Customer Success to Keep Customers Happy

How can companies keep existing customers happy?

  • Proactive customer outreach
  • Focus on the customer’s goals
  • Build deep relationships

As CustomerThink explains, “Rather than waiting for customers to have difficulties, [today’s customer success] advocates proactively helping customers get more out of their purchase on day one and therefore drive a better overall experience.”

Through educational content and training programs, success teams play a critical role in ensuring customers have a swift and smooth onboarding process and are kept apprised of on-going product updates.

But it’s not enough that customers know how to use the product; in order to truly be successful, they need to know how to leverage the product to meet their own particular goals. This is especially important for B2B businesses.

“Customer success [for B2B customers] can no longer be a euphemism for ‘just enough to keep you from leaving’ or even ‘whatever it takes to sell you more stuff,’” writes Forbes. “In the digital era, customer-focused efforts must truly focus on customer outcomes.”

And the most effective way for companies to focus on customer outcomes is to form a close relationship with customers built on regular communication and a genuine effort to understand the customer’s own business, industry, and objectives.

The good news is businesses across the board seem to have gotten the message, with the State of Service report finding that 70 percent of “service teams say their strategic vision over the past 12–18 months has become more focused on creating deeper customer relationships.”

Graphic shows the basics of the four industrial revolutions

Image credit: Salesforce

The Future of CX

We are now in the thick of the Fourth Industrial Revolution, which is marked by the predominance of “intelligence.”

Salesforce has identified 10 technologies that triggered this period, including artificial intelligence, virtual and augmented reality, and new computational technologies.

Such innovations have further transformed customer expectations such that the “only way to cultivate true customer loyalty in the Fourth Industrial Revolution is through…having customer success bred throughout every layer of the organisation,” explains Salesforce. “Every single person within an organisation should be focused on the long-term success of customers.”

That’s why Squelch promotes alignment between customer support and success and the marketing, sales, and product teams. In order to provide a seamless experience for customers, seamlessness must first exist among employees of different departments.

In a recent webinar co-hosted with the Technology Services Industry Association (TSIA), I shared actionable tips for achieving this type of cross-departmental integration. Click here to access the full webinar recording and slide material: How to Align Customer Experience Across Your Company to Achieve Business Success.

Also, for a deeper look at driving alignment between customer support and the company as a whole, be sure to download your free edition of The Value of Customer Support Across Your Organization. In this new eBook, we examine the relationship between CS and other internal teams and offer advice for improving the ROI of your support initiatives.

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