What is customer experience (CX)?

What is customer experience (CX)?

The transformations to remote work and e-commerce over the past few years have changed how businesses engage with and serve customers. Now that more browsing and buying take place online, organizations are looking for ways to stand out from competitors to attract new customers and maintain strong relationships with their existing ones.

In a digital marketplace where consumers can hop between brands at the click of a mouse or tap on a mobile screen, customer experience can be the determining factor in choosing one brand over another. This means companies must raise the bar when it comes to providing stellar experiences — or risk losing out to the ones that do.

What is CX and why does it matter?

Customer experience (CX) refers to a customer’s emotional response when interacting with a brand. It covers the entirety of the customer’s relationship and encompasses every touchpoint. Receiving marketing emails, browsing inventory online, tracking shipments, reading user manuals, and making returns and exchanges are all part of the customer experience. That means they all have the potential to either strengthen the relationship or hurt it.

Think about the last time you struggled to open a product’s packaging or were placed on hold with customer service listening to crackly music. Frustrating moments like these can have a lot of influence over a customer’s decision to keep buying from a particular brand. In many cases, one bad experience outweighs other factors, such as favorable pricing or positive reviews.

Customer service vs. customer experience

It’s no great secret that a personalized customer experience builds unbreakable customer loyalty. Look no further than the recommendations you receive on many digital shopping experiences or connected-tv streaming services. Personalized experiences sell themselves.

You’ll sometimes see CX used interchangeably with customer service (CS). In fact, CS falls under the umbrella of CX. Every interaction with customer service is part of the customer experience, but not every experience is crafted or managed by the CS team. Marketers, product engineers, sales reps, and even billing specialists are also part of the larger CX picture. This means CX is an organization-wide responsibility that shouldn’t be left only to service agents.

Customer service is, by nature, a reactionary branch of business that typically only kicks into action after an issue has already occurred. Additionally, CS is usually separated from other departments, creating data siloes that can have a negative impact on experiences, no matter how friendly and helpful your agents are.

For instance, it can be incredibly frustrating for customers to repeat information to a service agent that they’ve already given to a sales rep. When customers interact with a brand — whether over the phone, SMS, chatbot, or email — they want those interactions to be communicated across the organization so they don’t have to repeat their needs or issues.

Keeping customer data siloed in teams can make even long-lasting customers feel as if the brand doesn’t know them at all (or doesn’t care to).

However, the new focus on speedy and convenient CX is changing yesterday’s siloed and reactive practices. Today, crafting positive experiences relies on keeping customer-facing teams connected so everyone has a 360-degree view of their customers’ preferences, needs, and history with the company.

With all that customer data at their fingertips, CS teams can help transform their department from cost centers to profit centers by leveraging in-the-moment opportunities to make personalized recommendations.

Customer experience data: The impact on customer lifetime value

In general, it costs about five times as much to take on a new customer as it does to keep an existing one. In addition to the cost of acquisition, however, is the loss of the potential lifetime value a departing customer might have brought to the table had they stayed.

Once a customer leaves, the abandoned brand misses out on future purchases, cross-sell and upsell opportunities, and customer advocacy. The customer lifetime value is cut off, and the brand must start all over again with a new customer. On one hand, people’s emotions can be hard to quantify. However, their reactions to those emotions have been the subject of much research and study. It turns out, consumers aren’t shy about taking action if their expectations for good experiences aren’t met. Studies and surveys from Deloitte and the Twilio State of Customer Engagement Report have shown that:

• 56% of customers say they will stop doing business with a brand after a frustrating experience with support.
  
• 59% of customers report they’re willing to pay more money for a great experience.
• 61% of customers have stopped buying from a brand because a competitor offered a better experience.
• 61% of customers report sharing bad experiences with others, while 70% say they share good experiences.
• 83% of customers say a company’s experience is just as important as its products and services.

These numbers are very telling. Crafting a positive customer experience isn’t just a nice gesture to consumers; it’s good business strategy. When competition is tight, a positive experience can lend one company an edge over another even if their products are similar. Additionally, with 59% of customers reportedly willing to pay more for a great experience, good CX is a smart, revenue-building strategy.

Crafting personalized CX: Examples and use cases

Meeting customer expectations for speed and convenience is the baseline for good CX. To truly differentiate themselves from the competition, businesses are looking to exceed those expectations with hyper-personalized experiences that resonate with their audience. These experiences aren’t just fast and easy — they demonstrate that the brand knows and understands exactly what their customers want.

As a consumer, you’ve likely been the target of personalized CX efforts. The most obvious examples of this are probably in retail and digital entertainment. Streaming platforms like Netflix make recommendations for new programs based on the other shows you’ve watched and liked. Online retailers like thredUP display banners that show the items you’ve liked on their site but haven’t yet purchased.

Of course, CX isn’t only for retail and entertainment. Companies from across industries have been innovating new ways to engage with consumers, as shown in these three separate case studies:

• Automotive retail. Using Twilio’s communication tools, Vertu Motors created a fully digitized vehicle purchasing and showroom experience. The result? The company has maintained sales volume despite pandemic restrictions, and finance signups have nearly risen to pre-Covid levels.
  
• Hospitality. TravelPerk leveraged Twilio Segment and Flex to gain deeper insight into their customers and to create a context-driven contact center. This gave everyone across the organization the data they needed to provide seamless customer experience to traveling SMB professionals, resulting in an impressive Net Promoter Score (NPS) value of 95%.
• Healthcare. Twilio Voice and Messaging tools helped MaineHealth engage with patients for trying to quit smoking or receiving vaccinations. The company shifted its call center from a slow, outbound system to an automated workflow and omnichannel communication model, slashing the average 45-minute wait time for callers down to virtually no wait time at all.

Avoiding CX pitfalls

Every CX strategy should be uniquely designed to please the organization’s ideal customers. Don’t forget that the customer experience is centered around human emotion. Someone trying to access healthcare will be in a very different state of mind than someone shopping for a car or planning a world trip.

But regardless of needs, crafting a customized, multifaceted experience can be a major investment of time, budget, and energy. It’s important to create a detailed plan for how to create loyalty-building customer experiences, but it’s also worth your effort to know what pitfalls to avoid before putting it into action.

Here are some of the most common traps businesses fall into when strategizing a new CX approach:

• Failing to leverage data from all departments to build a 360-degree view of customers.
  
• Using legacy systems that can’t meet demands for speed and convenience.
• Failing to measure CX success and optimize experiences on a regular basis.
• Lacking the flexibility to iterate and make changes quickly to accommodate customer and industry demands.
• Keeping call centers and CS separated from the overall CX strategy.

Using CX solutions to optimize experiences

Even if you manage to avoid these pitfalls, a large part of your CX success depends on the technology you use to implement your plans. Superior digital experiences can only run on a superior platform — but there’s a lot to consider before committing to one.

As with all technology, the end goal should inform which platform you use. Suppose you try to mold your strategy into the capabilities of a platform rather than the other way around. In that case, you can greatly limit your CX capabilities, or you’ll find that you can’t scale with emerging trends and channels.

Before launching a serious search for CX tools, you need to ask some critical questions. Which channels do your customers prefer for communication? What integrations do you need so data can be shared across platforms and between teams? Will you need ongoing support services and updates so your CX strategy can keep up with new trends? How much support do you need for deployment and ongoing use?

A huge part of CX technology revolves around customer data — collecting, analyzing, and sharing it across teams to create a seamless journey from awareness to conversion to lifetime advocacy. Curious to learn more? Check out some of the data-driven solutions that are helping businesses transform their customer engagement and contact centers into CX powerhouses.