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What is customer experience (CX)?

Last updated

15 February 2023

Reviewed by

Miroslav Damyanov

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Running a company is very difficult, and nearly every business owner wants their customers to be extremely satisfied with their experiences so that they regularly return. Fortunately, there are many ways to achieve this. 

What is customer experience (CX)?

Customer experience consists of the customers' perceptions and feelings which have resulted from doing business with a particular company. 

Customer experience versus customer service

Customer experience is drastically different from customer service: Customer service consists of how a business treats its clientele, while customer experience is composed of the actual experience customers had when they received your products or services.

What is a good customer experience?

If you have a multitude of returning clients who rave about how much they adore your products and services, that means you have done an excellent job with the customer experience and have nothing to worry about. While it's always nice to continue improving, this means you are quite successful, and these buyers will probably have a positive impact on your bottom line as a result. 

What is a bad customer experience?

If you have clients who are constantly posting negative reviews about your business, that is a cause for concern: They are having a bad experience at your company, whether this is because your employees are overly rude or your shelves are not regularly stocked with the necessary items. 

Why does customer experience matter?

Regardless of the kind of business you run, customer experience matters because you will have to cater to your clients. Happy clients usually keep returning for items and services they love, while dissatisfied buyers tend to look elsewhere. Needless to say, this affects your bottom line: your company’s earnings, profit, net income, or earnings per share. 

The top ten measures of customer experience

There are actually quite a few metrics you can use to measure customer experience. 

1. Customer Satisfaction (CSAT)

Customer Satisfaction refers to how happy customers are with a given product, service, or interaction. You can measure your customers' sentiment with one simple question:  “How satisfied were you with [product/service/interaction]?” on a scale from 5 or 7 with opposing sides very dissatisfied to very satisfied. In short, if they enjoy everything you have to offer along with your incredible customer service, they are likely to continue doing business with you for a long time to come.

2. Customer Effort Score (CES)

This metric accounts for the ease in which your customer has to complete a transaction, resolve an issue or interact with your business This might include how quickly a customer’s questions are answered if they have an issue with one of your product’s for instance, and how swiftly returns are handled. The CES survey question, “[Company/Officer] made it easy for me to handle my issue”, with a 5 or 7-point scale ranging from strongly disagree to strongly agree provides your benchmark over time. In short, the customer process should be as efficient and as convenient as possible. 

3. Net Promoter Score (NPS)

A Net Promoter Score is based on a single question asked to consumers: How likely are you to recommend [service/product/company] to others?  On a 5 or 10-point scale your customers tell you if they are very unlikely or very likely to promote you. Your NPS is the percentage of promoters minus the percentage of detractors. Of course, a score above zero is essential. 

4. Customer Churn Rate (CCR)

The Customer Churn Rate refers to the percentage of customers who have stopped purchasing your items during a certain amount of time. 

5. Customer Retention Rate

The Customer Retention Rate refers to the percentage of a company’s existing customers who remain loyal within a specific time frame. You can simply take a peek at the numbers on your back-end system to track this metric. 

6. Customer Referral Rate

This refers to the percentage of customers who have been referred to your products and services. More often than not, this is through a referral link by a social media influencer: If your customer referral rate is 1%, for instance, that might indicate that you need to improve this metric as a company. 

7. Monthly Active Users (MAU)

If you offer a particular product or service, this is an excellent way to track how many people are generally interested in doing business with you. This metric can help you have a sense of your typical sales and gauge which items and/or services are the most popular so you can have as many sales as possible. 

8. Average Resolution Time (ART)

This is another important metric, because a lot of consumers are impatient and want all issues to be resolved immediately. If you have a resolution time of about five minutes, this is excellent. That being said, a longer wait time could potentially lead to a decrease in both sales and customer satisfaction. 

9. Customer  Lifetime Value (CLV)

The Customer Lifetime Value measures approximately how much a customer is expected to spend with your business during the lifetime of an average business relationship. This is an important metric to measure financial return on your investments. 

10. First Contact Resolution (FCR)

Ideally, customer complaints would be resolved immediately during their first call. This means that your processes should be as streamlined as possible. 

These measures, generally speaking, will tell you how you are doing as a company and which areas you need to improve upon.

How to improve customer experience

You can improve customer experience in several ways. 

You might consider: 

  • Doing UX research will help you craft usable, accessible, and delightful products with direct customer feedback

  • Using live chat tools, email-based support, social media or a self-service knowledge base to capture and analyze customer feedback in real time 

  • Analyzing the business and product in a design studio workshop whereby a cross-functional  team comes together to brainstorm, critique, and prioritize a set of ideas to optimize the entire customer journey

  • Hiring more people if doing so is in the budget, and your employees are spread thin so much so that it's affecting their performance 

  • Documenting customer data and interactions to deliver a personalized service or product through tailored messaging, offers of features will make your customers feel more valued and loyal 

Examples of excellent customer experience

There are quite a few companies that provide a phenomenal customer experience. These include Netflix, Microsoft, and Chewy.

Netflix provides personalized recommendations to viewers, making their movie-watching experience tailored so that they feel considered and pampered. It's always nice to have a company take your preferences into mind, especially if it's an entertainment company. This also makes it easier for people to find something to watch in many cases.  

Microsoft does an excellent job collecting customer feedback, so they know which areas they need to improve on so they can take action.  While no company will ever be 100% perfect, it helps to identify your pain points and grow from there. An added benefit is that customers are usually more satisfied when they know a business is at least trying to improve and values their input, even if the progress takes longer than they'd like for it to.

Chewy stands out among many pet supply e-commerce companies because it goes to the trouble of sending flowers and hand-written cards to customers whenever their pet dies. This fosters a deep level of trust and loyalty because it signals that they care about these people's well-being and it's not just business.  

If your customers are satisfied, they are much more likely to continue doing business with you. If they are deeply dissatisfied, on the other hand, that could potentially impact your business in a negative manner. 

What does customer experience mean in customer service?

It's important to figure out why your customers had a bad experience and if that had anything to do with bad customer service. If you operate a grocery store and the cashier is always grumpy because they're sleep-deprived, for instance, that might result in rude interactions with shoppers that lead to a bad customer experience. 

There are many ways to remedy this situation, including: 

  • Making sure your employees work reasonable hours so they can get enough sleep 

  • Considering benefits for your employees that might contribute to their well-being, such as free gym memberships (if that's feasible for your company) 

  • Considering a raise if that's within the budget 

  • Making sure your employees are adequately trained for all that they are expected to do during the day 

  • Hiring more people if your team is overly small and burnt out (if that's in the budget)

  • Always apologize when customers complain 

  • Sending out surveys to customers to collect feedback and striving to improve every single day 

What is a customer experience strategy?

To implement a phenomenal customer experience strategy, you will need to intricately plan all sorts of elements of your business: If you are running a store, consider the layout of the floor, the position of the items on the shelves, and any decorative posters or signs that point people in the right direction. If you are running a hair salon, consider a shelf with inviting beauty products for your customers to purchase after their appointments.

You will need to have a creative vision for your business that draws people in and keeps them coming back for more. There are four key elements that go into an excellent customer experience strategy. 

These are: 

  • The Vision 

  • The Who 

  • The How 

  • The Metrics 

The vision is arguably the most enticing element of a good customer experience strategy. Think about realtors, for instance: The best ones will stage the home for every potential buyer so that it looks as inviting as possible and they can see themselves living there. They might even bake chocolate chip cookies, so their clients feel more comfortable during the tour.

It is absolutely essential to know your audience: It's nearly impossible to please every single person from every single demographic, so you'll simply have to consider the majority of your clientele: 

  • Are they primarily female? 

  • Are they primarily male? 

  • What is their average socioeconomic status? 

  • Are they young or old?

  • What factors influence their buying decisions? 

These considerations will help you cater your products and services to the proper demographic and its behavioral pattern. For instance, you might want to raise your prices if you are running a hair salon and suddenly realize that most of your clients are quite well-off and can actually pay you a lot more than they currently are. 

The business landscape is extremely competitive, so you'll want to make sure you are striving to stand out in some way: Perhaps you would like to hire someone to create a gorgeous mural on the wall of the bar you run, for example. This is a creative way to differentiate your company.

Finally, it's important to measure how much progress you are making in the customer experience department consistently. You can use customer relationship management platforms such as Salesforce, HubSpot, SAP, Oracle, and Microsoft to help you organize and consolidate this information if you wish. 

The bottom line

Customer experience, or CX, is crucial when running a business because your goal is to attract customers who absolutely adore your products and services. Customers should feel welcome whenever they set foot in your store or checkout online thanks to your streamlined processes and excellent services. Last but not least, consider building your brand through enticing visuals and immersive experiences for your clientele.

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