Here’s how you can set up the customer experience as a loyalty driver, along with the specifics of what needs to be done. (Hint: It starts with understanding customer needs, expectations, and jobs to be done – and goes from there.)
[inlinead-1]
Problem Statement: Loyalty, incentivised or otherwise, is harder to win than ever before, and in a competitive marketplace, more companies are looking to customer experience as the loyalty driver. How do we make that connection? How do we ensure that the experience drives customer loyalty?
It’s true. In a highly competitive marketplace – a marketplace where products and services are becoming more and more commoditized – customer loyalty is indeed harder to win than ever before. Companies must shift priorities to design and deliver a customer experience that drives customer loyalty.
RELATED CONTENT: Which is most valuable: Solicited or unsolicited customer feedback?
Definitions
Let’s start with some definitions, so that I can help make that customer experience->loyalty connection.
Customer experience is the sum of all the interactions (including with product and price!) that a customer has with an organization over the life of the “relationship” with that company… and, more importantly, the feelings, emotions, and perceptions the customer has about those interactions.
Customer satisfaction is a measure of how well a company’s products, services, and overall customer experience meet or exceed customer expectations. It reflects the degree of contentment or fulfillment customers feel after interacting with a brand, encompassing aspects such as product quality, service efficiency, and overall experience.
Satisfaction Level = Expectations - Performance
Customers try your brand with a set of expectations (rooted in your brand promise and a host of other factors) in mind. How you perform against those expectations leads to some level of satisfaction (or dissatisfaction).
If performance meets or exceeds expectations, then customers have a higher level of satisfaction. If performance is less than expectations, then the brand promise has been broken – no explanation needed on what that means for your company.
Customer loyalty is a customer's willingness to consistently return to a company to conduct some type of business due to the delightful experiences they have with that brand. It is characterized by a preference for a particular brand over its competitors, often resulting in repeat purchases, emotional attachment, advocacy and deeper engagement with the brand.
OK, let’s take a look at that connection between experience and loyalty.
RELATED CONTENT: How legacy brands can extract value from first-party customer data
Making the experience ->loyalty connection
Truly, the experience has always been a loyalty driver. Perhaps we just haven’t talked about it in those terms long enough. Those feelings and emotions (in the experience definition) are part of that customer satisfaction (or dissatisfaction) definition. And as you can see in the equation, expectations and your brand’s performance against them drive satisfaction levels.
As customer experience professionals, we’ve had tools like quadrant charts, where we plot drivers of satisfaction or loyalty against their importance to customers, and the Apostle Model, where we plot customers on a four-quadrant basis using satisfaction and repurchase intent. Both tools provide a visual that aids in understanding the connection between what’s important to customers (expectations) and outcomes (loyalty, especially in the form of repurchase intentions).
On top of that, there are tons of stats out there that show that:
- Satisfaction leads to repeat business.
- Personalized experiences enhance the emotional connection to a brand.
- Emotional connections drive long-term loyalty.
- Consistency builds trust, and trust is the cornerstone of loyalty.
- Great experiences drive word of mouth.
- Listening, acting, and closing the loop also drives loyalty (i.e., the brand listens and cares).
Here’s some research to back up my points.
- Emplifi says 49 percent of customers who left a brand to which they’d been loyal in the past 12 months did so due to poor CX.
- The software provider also found 86 percent of consumers would leave a brand after as few as two poor experiences.
- The CX Trends Report 2023 by Zendesk, found 60 percent of consumers have purchased something from one brand over another based on the service they expect to receive.
- Customers are 2.4 times more likely to stick with a brand when their problems are solved quickly.
- 88 percent of online shoppers are more likely to continue shopping on a retailer website that offers a personalized experience, including 96 percent of Gen Zers and 97 percent of Millennials.
- 60 percent of consumers report that they will become repeat buyers after a personalized purchasing experience.
- Consumers place high importance on “previous good CX with the brand” and “speed of availability/delivery” as their top two criteria when considering a new purchase.
- According to Gartner, customer experience (CX) now drives 66 percent of customer loyalty, more than price and brand combined. [Note: don’t forget that price is part of CX, and your brand is what your customers say it is.]
- Brands that provide a high degree of personalization gain customer loyalty that is 1.5 times higher than brands that struggle with personalization.
- As many as 74 percent of customers believe that brand loyalty grows when customers feel understood and appreciated. Simply offering customers discounts and loyalty rewards has a lower impact.
- On average, companies that put in the work to improve the customer experience see a 42 percent improvement in customer retention, a 33 percent improvement in customer satisfaction, and a 32 percent increase in cross-selling and up-selling.
And on that note, let’s talk about putting in the work. How can you ensure that you design and deliver the experience customers expect, the one that will drive their loyalty?
RELATED CONTENT: A golden rule for gaining C-suite
buy-in for your CX initiatives
Ensuring experience drives loyalty
Let’s not leave it up to chance or quad charts or anything else. Let’s make sure that the experience actually does drive customer loyalty. Here’s how you can set up the customer experience as a loyalty driver, along with the specifics of what needs to be done. (Hint: It starts with understanding customer needs, expectations, and jobs to be done – and goes from there.)
1. Understand your customers
Specifics
- Listen: Create listening posts to gather customer feedback and marry that feedback with the breadcrumbs of data that customers leave behind as they interact and transact with your brand.
- Characterize: Conduct interviews and surveys and marry that with existing customer data to create detailed customer personas that outline their needs, pain points, and problems to solve.
- Empathize: Map the customer journey to identify key touchpoints and moments of truth and create service blueprints that outline the people, tools, systems, and processes that support and facilitate the customer journey.
Notes
- Implement tools for collecting and analyzing customer feedback, and then close the loop by communicating how you’re addressing customer concerns.
- Continuously improve based on the insights gained from feedback. Test improvements and iterate.
- Regularly update your personas and journey maps as you gather new insights.
2. Deliver personalized experiences
Specifics
- Orchestrate the journey: Understand customer behavior across all channels and apply that data to help them – wherever they are in the journey – to achieve their desired outcomes and to encourage further interaction with the brand.
- Personalized communication: Use customer data to personalize emails, recommendations, and offers.
- Customizable products/services: Offer options for customers to customize their products or services to fit their preferences.
Notes
- Implement a robust CRM system to manage and analyze customer data; ideally, there’s a journey orchestration component integration.
- Use machine learning algorithms to predict customer preferences and behavior and to prescribe next best actions.
- Ensure all customer-facing employees have access to customer data and insights.
3. Ensure consistency across channels
Specifics
- Omnichannel integration: Ensure a seamless and consistent experience across all channels.
- Consistent messaging: Maintain a consistent brand voice and message across all touchpoints.
Notes
- Invest in an integrated communication platform to manage interactions across channels.
- Train staff to provide consistent service regardless of the channel.
- Monitor customer feedback and performance metrics across all channels to identify and address inconsistencies.
4. Foster emotional connections
Specifics
- Brand storytelling: Use storytelling – grounded in truth (e.g., brand history, mission, values, impact, etc.) – to create an emotional connection with your customers.
- Community building: Create a sense of community around your brand through events, social media groups, and loyalty programs.
- Understand and reflect customer values: Know which values and causes resonate with your customers. Communicate your mission, vision, and values through messaging and interactions.
Notes
- Share customer stories and testimonials that highlight positive experiences.
- Host events, webinars, and online forums to engage with customers.
- Develop a loyalty program that rewards not just purchases but also engagement and advocacy.
- Personalize interactions and create memorable experiences.
This is just some of the work that needs to be done. I’ll just add a reminder that a customer-centric culture is the foundation of an organization that will do this work and make a real difference.
In closing
Ensuring that customer experience is a loyalty driver requires a strategic approach that includes understanding your customers, delivering personalized and consistent experiences, providing exceptional service, fostering emotional connections, and continuously soliciting and acting on feedback. By focusing on these areas, you can create a customer experience that not only meets customer expectations but ultimately drives loyalty and a competitive advantage.