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The Ultimate Customer Experience Guide: Importance, Metrics, and Improvement

The race between manufacturers is no longer limited to the quality of their products and services, rather, Customer Experience has become one of the factors that determine the advantage of a brand over its competitors.

Companies providing a good customer experience stand out amongst their competitors by leaving a long-lasting positive impression on their customers, thereby encouraging them to repeat the experience of dealing with this company. That in turn facilitates the retention of these customers, turning them into ambassadors for the company, who will help market it amongst their circles for free.

This comprehensive guide provides everything you need to know about Customer Experience and the concept behind it. It will also explain the difference between Customer Experience and other similar terms that might be confusing, as well as the importance of investing in designing an excellent user experience, and finally, how to measure and improve Customer Experience.

The concept of Customer Experience

Customer Experience [CX] refers to the set of emotions that remain with the customer after an interaction with the brand. These feelings may be negative resulting from a very bad experience, or positive that generate loyalty to the brand.

These feelings are generated within the customer as he passes through each stage of the marketing funnel; that is, they begin with the customer becoming aware of the existence of the brand. Then it is followed by the customer learning about the products and services the brand offers, comparing these products with their alternatives, and starting to take the purchase decision into consideration. The last level is where the company’s role comes in retaining customers, converting them into permanent customers after having made their purchase.

In other words, designing a good customer experience requires the team to consider customers’ motivations and desires, their dislikes or concerns, to take these feelings into account to provide them with a unique experience when interacting with a brand.

Customer Experience, User Experience and User Interface

Due to increasing focus on Customer Experience and the details of this process, similar terms have emerged that refer to different concepts, possibly causing confusion for those wishing to invest in improving their User Experience, which makes it necessary to understand these terms and be able to differentiate between them.

The term User Interface, or UI, refers to the technical design that connects the user to the product. One example is the design of smartphone applications, where the User Interface is the medium in which the user interacts with the product, enabling the user to benefit from the product in solving the problem the application is designed to solve.

The term User Experience, or UX, refers to the experience of using  a product from A to Z, such as the experience of using a smartphone application in terms of user interface, speed of performance and taking the needs of the user into account.

This makes the User Interface one part of the experience of using a product, while the experience of using a product as a whole is, in turn, a part of the Customer’s Experience with the brand that manufactured it. Customer Experience is an all-encompassing concept which involves those other concepts as in the image above.

Therefore, when designing the Customer Experience, it is necessary to pay attention to the experience of using the product so that it is satisfying, comfortable and achieves the desired purpose of the product. Achieving this requires the design interface to be fluid, intuitive and to steer away from complexity.

Another concept worth defining is Customer Service, which refers to the interaction between the buyer or product user and a representative of the selling company. It often begins after the completion of the purchase process, and aims to answer the buyer’s inquiries, to help buyers and even compensate them at times. Good Customer Service helps enrich the overall Customer Experience with the brand.

The importance of Customer Experience

Customers having a good experience when interacting with the brand reflects positively on both the customers and the brand, which renders it necessary for brands to pay attention and give importance to the concept of Customer Experience. 

The following are the top features that good Customer Experience offers to brands:

Increased Customer Spending

Retaining existing customers is known to be less expensive than acquiring new customers, therefore, the concept representing the value of customer spending during the period of their interaction with the brand [Customer Lifetime Value] is very important, as increasing this rate means achieving the maximum benefit from retaining the existing customers of the brand.

A good Customer Experience encourages customers to repeat their interactions with the brand and increase their spending on the brand’s products or services, especially if they had an excellent experience using the product, if the company provided them with amazing Customer Service, and if the payment and shipping processes are fast and convenient.

Improve Brand Reputation

When a customer has a good purchasing experience from a brand, they share this experience with their friends and social circles, and suggest purchasing from this brand, which is useful in building an excellent reputation for the brand.

By combining excellent Customer Service with the use of social listening tools, you are able to verify how reputable your brand is amongst your customers, which will reflect positively on your sales, and thus help you achieve greater profits.

Lucidya helps you  verify your brand reputation and offers you the solutions and tools you will need to deal with problems you may encounter.

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Retention of existing customers

Retaining existing customers is less expensive than acquiring new customers, by up to 25%. Of course, this percentage varies depending on the field of work and other factors, but it remains less than acquiring new customers. That is why it is necessary for brands to focus on retaining their existing customers. 

There are a lot of strategies that can be used to retain new customers; providing an excellent Customer Experience is one of the most important reasons that convince existing customers to repeat the experience of dealing with a brand.

Word-of-mouth marketing

Word-of-mouth marketing is one of the  most effective marketing methods, since it relies on trust resulting from personal relationships of customers satisfied with your brand, which increases the chance others will be driven to make the purchase.

Word-of-mouth marketing does not bear any additional costs, however, it is very difficult to control. In any case, it is certain that a positive Customer Experience will prompt customers to recommend the brand to their acquaintances, and this is backed up by studies, with  69% of customers indicating that having a good experience prompted them to recommend dealing with the brand to their acquaintances. 

Overcoming Competitors

Before making any purchase decision, customers often research alternatives, in search of better prices, services and better interactions. Designing a good Customer Experience means offering all of those attraction points to customers, which influences them to prefer dealing with the brand offering an excellent Customer Experience over other available options.

Increasing Profits

All the previous benefits resulting from investing in improving the Customer Experience lead to one sure result: an increase in profits. Gaining customer loyalty by providing them with a unique experience, customers recommending your brand to their friends, increasing their spending on your products, and your brand rising above competitors, will reflect positively on your profits.

Of course, it is to be expected that investing in an excellent Customer Experience will bring about additional costs to the business owner, but in return this investment will reflect positively on the company’s profits, increase its sales, and the effectiveness of its marketing campaigns.

Evaluation of Customer Experience

There are many metrics and indicators that quantify customer satisfaction with the experience of interacting with your brand. It is necessary to monitor these indicators to intervene and improve the Customer Experience should there be any problems or obstacles. The following are the most important of these indicators:

Customer Effort Score (CES)

This metric refers to the extent of the effort a customer puts into completing a task, and this can be seen through the support requests that the customer may send to reach the product they want, or the time spent to complete the purchase.

To measure this metric, you can request a review from the customer after completing the purchase process, asking them about their experience and the difficulties they faced in completing the purchase process. This should help you identify weaknesses and work to improve your Customer Experience.

Net Promoter Score (NPS) 

The Net Promoter Score represents the likelihood your customers will suggest interacting with your brand to their acquaintances, which indicates how satisfied they are with your product or service, and how efficient it is in solving their problems that prompted them to buy that product.

This can be measured by conducting a survey among your customers about their willingness to suggest your products to a friend on a scale of 1-10, and by collecting and analyzing the data of this survey, you can see how satisfied your customers are with your products and services.

Customer Retention Rate

A satisfied customer is the one who is ready and willing to repeat the experience of buying from the same brand. Brands seek to retain their existing customers and turn them into their permanent customers, with the aim of increasing the customer’s spending rate on their products.

Customer retention is measured by a simple equation that requires three pieces of information, the number of customers at the beginning of a time period, the number of customers at the end of that time period, and the number of new customers acquired.

Customer retention rate = 100 X (number of customers at the end of the time period – the number of new customers acquired)/the number of customers at the beginning of the time period. 

First Contact Resolution (FCR) 

This metric is used in areas such as Customer Service, and it refers to the number of customers whose problems are resolved through the first contact or interaction with the brand. Improving the First Contact Resolution leads to improving the Customer Experience with the company in general.

To calculate the First Contact Resolution, it is sufficient to divide the number of problems resolved through initial contact with customers by the sum of these problems and interactions.

Average Resolution Time (ART)

This measure is also useful in the field of Customer Service, and gives an impression of the quality of work done by your customer service team, the less time it takes to solve a problem the customer has, the more satisfied they are with communicating with the company, and the more this gives the impression that problems are uncomplicated and easy to solve.

This factor is measured by calculating the time spent solving customer problems over a given period of time, by the number of these problems during this period of time.

Customer Satisfaction Rate (CSAT)

This metric, as the name suggests, indicates how satisfied your customers are with your brand and the services or products you offer, and is often calculated by surveys, so it provides a lot of necessary information from the customers themselves.

These questionnaires are useful in identifying the problems customers are struggling with and whether these problems are individual or collective. This facilitates the task of improving the Customer Experience by revealing its shortcomings, as well as allowing the customers to participate in suggesting ways to solve these problems which can be taken into account.

Improving Customer Experience

After evaluating the Customer Experience and collecting and analyzing the data, improving the Customer Experience shifts towards solving these problems and working to improve the calculated metrics; yet this will not come without additional costs, but it will reflect positively on the company’s profits and reputation.

Social listening tools can also be used to monitor what is being said about your brand and services on social media, and to analyze this data in order to come up with plans and actions that promote positive experiences and mitigate negative ones.

Conclusion

Customer Experience is one of the most important concepts companies should pay attention to and invest in improving, as it reflects positively on the company’s reputation and turns existing customers into permanent customers and even ambassadors, which reflects positively on the company’s profits and performance in the market compared to its competitors.

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