Loyalty cannot be bought. Whilst price points continue to be something of a factor for individuals on restricted budgets, competitively-priced goods and services are not enough to win customers' hearts. Indeed, the reality is much more complex; human beings are emotional creatures, and trust and loyalty have to be earned over time. Once achieved, the financial benefits for an organisation will be unlocked. However, these changes have to begin with a solid customer experience strategy.

 

Where to start

Price points don't feature at all in The Six Pillars of customer experience excellence, which form the underpinning of any good CX strategy. And in terms of winning customer loyalty, Personalisation is the most important, with 22 per cent of the individual's potential loyalty relying on this pillar. This means that customers place the highest value on a company's ability to tailor the experience to their specific needs and sensibilities. As such, the 'old chestnut' that a person's name is the sweetest sound they can hear is, in fact, true. Addressing an individual directly reminds them that the organisation is focused on their specific needs, and isn't simply reading from a pre-prepared script. This pillar also requires brands to be flexible in how they react to particular requests, showing a willingness to go 'off-piste' in their eagerness to serve.

Integrity is also a key pillar for customer loyalty, standing at 18 per cent. Many organisations support charitable causes and engage in ethical activities, but the very best customer experience management brands weave Integrity deep into their company culture, and indeed, their CX strategies.

The cosmetics retailer Lush is a good example of such an organisation. For instance, it is vocally against animal testing, and believes passionately in acquiring ingredients for its products from sustainable sources. It is also deeply invested in the wellbeing of the planet, and many of its soaps and bath bombs are sold using so-called 'naked packaging' - which, in fact, means no packaging at all, and in 2006 the brand reportedly prevented 3 million plastic bottles from being made by encouraging shoppers to buy shampoo bars instead of liquid.[1] It is also worth noting that, in 2016, Lush ranked at number three in the UK customer experience excellence rankings, making it one of the strongest CX brands in the country.

 

The financial implications

Of course, just being nice to customers is not enough. Brands need to truly understand the economics of achieving customer experience excellence, and must grasp the relationship between fixed and variable costs when it comes to delivering a superior experience. Simply put, the customer experience strategy becomes a balancing act. Organisations need to weigh their customers' expectations against what makes financial sense, something which is often made easier through customer journey mapping, where brands can - over time - design out those processes which they identify as unnecessary.

 

The financial benefits

The United States boasts some of the strongest CX brands in the world, and their financial achievements reflect this. In 2017, the top 25 companies in the US CEE achieved almost double the percentage revenue growth of the top 25 Fortune 500 companies. This equated to an average of $3.5bn in incremental revenue for each of the companies in the CEE top 25, vs. $1bn for each of the Fortune 500 top 25 companies. Moreover, over one year, the top 25 CX leaders achieved five times the percentage EBITDA growth of those in the bottom 25 of the ranking. This led to an average profit of $367m for the CX leaders, vs. $189m for each of customer experience laggards.

However, radical CX changes cannot be brought about overnight, and brands should be acutely aware of their customers' needs when they start to devise a new strategy. The alternative is to focus on The Six Pillars alone which, undoubtedly, would produce a strong customer experience, yet run the risk of over-delivering and over-spending, negating any financial benefits that could have been unlocked through increased customer loyalty.  

    

 

[1] https://uk.lush.com/article/go-naked