What Is Customer Experience and How Does It Impact the Bottom Line?

Squelch Team | May 2, 2018

Photo of desktop during meeting to analyze bottom line of customer experience impact

It’s likely you already have some familiarity with the concept of customer experience and some understanding of how important customer experience is to a healthy bottom line. 

Creating a better customer experience means realizing higher revenue, lower costs, and stronger customer loyalty.

But diving in deeper, what exactly do we mean when we talk about the customer experience? Where does it begin and end?

Defining Customer Experience

Over the last few years, the definition of customer experience (CX) has continually broadened.

There is now widespread recognition of CX as including everything from the earliest stages of customer discovery, continuing on through research, purchasing, and post-sales interactions (including customer support and success).

Industry analysts at Forrester take it a step further by defining customer experience as everything that impacts “how customers perceive their interactions with your company.”

According to this definition, CX is not only the actual process of interacting, it’s how the customer is feeling throughout that process. Under such an expansive point of view, every employee inside the company must be thinking about how their work might influence – for better or for worse – the customer emotionally.

The Customer Journey Map

So how can we optimize every interaction between a customer and company?

Some experts suggest starting with what they call a customer journey map. This is different from a sales funnel or buyer’s lifecycle used by sales and marketing.

A journey map is a more detailed, granular review of customers’ interactions with a company and includes the steps they take, as well as their needs and perceptions along the way.

Journey maps tend to elicit a great deal of empathy for customers as businesses recognize ways in which they’re falling short of providing the ideal experience.

Understanding the customer journey allows companies to deliver the highest quality customer experience by focusing on continually improving all of a customer’s interactions and making CX a competitive differentiator.

Customer Experience as a Competitive Differentiator

Today’s customers are educated and empowered with access to a plethora of available — and instantaneous — purchasing options.

They expect flawless experiences every time they engage with companies, and they will quickly go to a competitor if they don’t feel they’re receiving that experience.

That can be a scary message for businesses to hear. But the good news is that customers are often willing to accept a higher price tag in exchange for a better experience.

In fact, a recent Walker study revealed that a full 86 percent of buyers will pay more for a product if they receive a higher-quality CX.

Customer Experience Is Everyone’s Responsibility

As we’ve shown, customer experience should be important to everyone in the company, from back-office and operations roles to those on the front lines with customers. Furthermore, every employee should understand how CX impacts the bottom line.

Recently, Temkin Group, a customer experience research, consulting, and training firm, released a compelling infographic that makes this business case.

According to Temkin Group’s research:

  • When consumers have a very good experience, they are 3.5x more likely to make additional purchases than if they have a very poor experience.
  • When consumers have a very good experience, they are 5x more likely to recommend than if they have a very poor experience.
  • After a bad experience with a company, 22% of consumers decreased their spending and 19% completely stopped doing business with the company.
  • After a bad experience, 30% of consumers tell the company, 50% tell their friends, 15% provide feedback on a ratings site, and 14% tweet about it.

Make sure your organization understands at all levels the importance of the customer experience.