Why organisations need to understand the connection between a great customer experience and loyalty

You can ask any CEO, SLT, Executive Team around the importance of customer experience (CX) and you will hear a resounding, ‘it’s critically important’. Then ask them to provide the CX data that measures how well they are performing against service excellence, and I predict you will see a blank stare. W. Edwards Deming said, ‘without data, you’re just another person with an opinion’. We all know the real value of most of the opinions we are given, most we are happy to leave on the shelf.

Customer loyalty is essential to a company’s bottom line and most importantly, for accurately forecasting revenue. So why is it that very few leaders can give you little more than an internal company opinion on their assessment of customer loyalty? I have worked with hundreds of companies developing their CX process, and for the vast majority, they had no accurate measurement of customer goodwill and most importantly, procedures to protect it. There are so many distractions today in managing a business, and the hard work and dedication from the leadership team rarely allow time to stop, think and reflect about the two most valuable assets, their team and their customers.

For a company to have clarity on CX, it must engage the entire team in the processes and the responsibility everyone has to protect it. CX is the most critical focus to protect future revenue. The team are the custodians of ensuring excellent CX occurs and for managing repeat business. There is a lot of confusion around what creates an excellent CX process and why it’s so important. Like many challenges today, multiple theories are relying upon numerous types of experience, yet very few can provide an accurate prediction.

We only have to look at our behaviour as a consumer to find the answer. For all of us, we have experienced the difference between brilliant service and lousy service. Our reaction is predictable in each case, we go back and refer our friends to those who appreciate us and provide service excellence, and we do all we can avoid the others. It’s not rocket science to work out what to do; however, the way many companies approach CX, you would think it was. Amazon has built its global domination based upon one primary focus. Obsess over CX and not over the competitors. The experience and ease of transacting with them is how they define their point of difference. This focus has made them one of the most powerful consumer companies in the world.

If you want to test how well a company understands the critical role of CX you only have to look at how they invest in it. You will find 100% investing in marketing strategies to generate customer acquisition and branding and approx. 10% will be investing in customer retention. There is so much investment in acquiring new customers, yet there is hardly any investment in keeping them. Any experienced business leader will confirm they have heard the numbers; six times more expensive to buy a new customer then it is to get an existing one to return. Very few can demonstrate how they invest in getting them back and most importantly, how they measure this critical asset. The opportunity to lead the market is enormous.

Organisations must direct their focus to their existing customer base and secure their future revenue. For many, the market is under stress, and the reality bites hard for some. If you’re not relevant, you’re irrelevant, and that means buying back the same customer you had in the first place. To be relevant, you must base your loyalty on a great experience, not on your convenience, exclusive supply or price. Unfortunately for many they will find out when it’s too late, and their only weapon is price, it’s a lose-lose game. Building your business model on great CX is a win-win game, with revenue predictability, margin, and loyalty the return.

Loyalty is primarily based upon experience; the key is knowing what types of experiences drive the most significant impact. There are head drivers and heart drivers, and the ratio is critical. Head drivers are the hard stuff: stock, knowledge, logistics, efficiency, delivery, price, etc. Heart drivers are the soft stuff: helpful, friendly, reliable, understanding, communication, trust. Heart drivers create an emotional experience and loyalty is more powerful when driven by emotion. Head drivers are easier to replicate, and loyalty isn’t anywhere near as secure. The ideal mix is to have three of your top four loyalty drivers be heart drivers. This will make you highly relevant as you have an emotional connection with your market. What you sell is irrelevant, we all sell to people, and that’s the common link that most companies completely miss.

Written by Darrell Hardidge.

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