Data Analytics

Why is Customer Experience Strategy So Important?

Actian Corporation

October 10, 2022

charts and icons to give an idea of a customer experience strategy

Use the Good to Outweigh the Bad

Instead of reacting to negative customer experiences and feedback once damage has already happened, an organization is more successful when it takes a proactive approach. It may seem obvious, but the time and effort it takes to overcome a negative experience is much greater than that of maintaining a positive one.

Consider a study on romantic relationships from the 1970s. Two researchers discovered the difference between happy couples and unhappy couples was the balance between positive and negative interactions during conflict. The study found happy relationships had a ratio of 5:1, meaning happy couples had five or more positive interactions to counter each negative interaction. That same recipe for success translates to other types of relationships too, including relationships with customers.

In the business environment, customers require even more positive interactions for the good to outweigh the bad. For example, when it comes to customer reviews, the positive-to-negative ratio can be as high as 40:1, as explored in this Inc. article. This happens because unhappy customers are far more likely to write a review than happy customers. Add in word-of-mouth, and recency bias – there’s more trouble than meets the eye. Customers have higher expectations of product and service quality now than in previous years, which makes vying for their business even more competitive.

We can also look at this from a Net Promoter Score (NPS) perspective. NPS is a market research metric that asks customers how likely they are to recommend a company, product, or service to a friend. NPS is a valuable way to gather insight into how an organization is currently performing and identifies opportunities for improvement. NPS responses fall into three ranges:

  • The detractor range is 0-6, categorized as unhappy customers who are unlikely to repeat customers or refer a friend.
  • The passive range is 7-8, which includes customers who are satisfied but not excited enough to promote the company or product.
  • The promoter range is 9-10, the most loyal and enthusiastic customers. It takes constant dedicated effort to maintain this high score.

The Negative Impacts of a Poor Customer Experience Strategy

When navigating the customer experience, past performance is not indicative of future performance. We’ve all heard it, and when it comes to your brand, it is 100% true. Customers are constantly evaluating and comparing brands. Brand equity takes years to build but can be destroyed by a single tweet – that’s reflective of the impact of a poor customer experience strategy. It adversely impacts the premium a business can command for its product and services and diminishes customer lifetime value. Brands that score low are less profitable and brands that score high are more profitable. The London School of Economics estimates that a 7% increase in NPS increases revenue by 1%.

That’s not all though. Bad customer care has a ripple effect beyond customer retention and growth; it impacts internal team morale and attrition, increasing stress and deteriorating emotional health among employees. Just as it takes lots of time and effort to overcome a bad customer experience, the same is true for employees. It’s difficult to replace great employees. Happy customers and happy employees go hand in hand.

The Importance of Product Design

The most ever-present way a customer interacts with a company is through the company’s product. It’s one of the forefront factors in how customers judge you. Some argue the product is the brand and experience; others say the experience is the product. I believe the entire customer journey is the experience, and products and services provide valuable decisioning influence.

Product design is important in a customer experience strategy, but it is not a magic bullet that can overcome other poor areas of the experience, particularly bad customer service. Examples include long wait times, no live agent to resolve an issue and having to repeat the same information when transferred to different agents. Before, during and after the product, are experiences that either add to, or detract from the journey. This reminds us to break down functional-based silos and not project those onto customers.

All of this leads us to some key customer experience strategy advice:

  • Make the customer experience so enjoyable that people don’t want to leave you. Think long-term.
  • Stay grounded, honest, respectful, and open to feedback. Learn and pivot quickly.
  • People first. Do what’s best for others.
  • At the root of all design and product goals, deeply understand what problem or solution you are trying to solve. How are you making someone’s life easier?
  • Once you’ve solved this, look at it from different perspectives.
  • Challenge assumptions, and always be mindful of ways to improve.

Further Reading

Check out this resource for more customer experience strategy tips Customer Data Analytics Hub provides details on how to get real-time actionable insights across all your customer experience data silos. There’s also some useful information on a reference architecture to build a unified customer profile.

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About Actian Corporation

Actian is helping businesses build a bridge to a data-defined future. We’re doing this by delivering scalable cloud technologies while protecting customers’ investments in existing platforms. Our patented technology has enabled us to maintain a 10-20X performance edge against competitors large and small in the mission-critical data management market. The most data-intensive enterprises in financial services, retail, telecommunications, media, healthcare and manufacturing trust Actian to solve their toughest data challenges.