Only 12% of F500 have remained since 1955. 40% of F500 will disappear in 10 years. Why?
For years, companies have been competing on product and price because customers were looking for the best product at the best price. But the rules of the game have changed, especially since we entered the fourth industrial revolution. Building upon the digital revolution, the fourth industrial revolution is characterized by a fusion of technologies that blurs the lines between the physical, digital, and biological spheres.
This new era comes with a hyper-competitive marketplace where customers are in the driver’s seat. As we are accustomed to having all the information we want within seconds and switching brands is a near-frictionless experience, customer expectations have risen higher than ever before. We are no longer satisfied with quality, a good price, good customer service etc. Customers don’t care if you claim you offer them a smooth omnichannel experience, they only care about connecting with you, the way they want and when they want.
Only companies that succeed in engaging with their customers on a one-to-one basis, responding to their needs and (exceeding) expectations, have a chance to grow long-term loyalty.
Welcome to the experience economy
The new battleground is personalized customer experience (PCX). In order to remain competitive, brands will have to invest in customer experience (CX) as a key differentiator and driver for growth. Customer experience management (CXM) is emerging as the key strategy to gain competitive advantage in today’s competitive business climate.
Consumers are undoubtedly desiring experiences, and therefore we can identify and describe this as a distinct fourth economic offering next to commodities, goods and services. Experiences are not just vague concepts that help companies sell their offering. By creating true engaging experiences, businesses can realize the full benefit. According to Gartner, CMOs spend almost 20% of their marketing budget on CX related projects.
What is CX?
Ok, so we all agree customer experience is essential, but what does it mean exactly?
Every interaction between a customer and a company – a store visit, an ad or a chat with a virtual assistant – leaves an impression. Customer experience is made up of all of these touchpoints. At The House of Marketing, we summarize it as follows: “CX is the perception of your brand based on all the interactions with your company.”
Taking a closer look at the experience itself, Joe Pine, author of The Experience Economy, indicates that an experience occurs when a company intentionally uses services and goods to engage individual customers in a way that creates a memorable event. But experiences are not just about creating entertaining events. It is about engaging your customer in a personal and memorable way, going beyond functionality and delighting your customer.
Let’s talk business
Now we know what CX is, and how important it is, we want to know what businesses can get out of it. The long-term output of any CX program is to create business value through acquiring, retaining and growing profitable customers. A company wants to grow its customer base by capturing new or additional customers. Afterwards, it is important to keep your customers and to increase their life-time value.
Companies are facing a big challenge as product and price are no longer enough to remain competitive. By investing in your CX strategy, companies can achieve multiple KPIs that can be measured. First, CX is a great way to boost your customer satisfaction, loyalty and advocacy. Better interactions with a brand enhance customer engagement and satisfaction. When focusing on CX throughout the whole customer journey, you are on the right track to delight your customers. Delighted customers will want to come back to you. These loyal customers are your best brand ambassadors.
As retaining customers is less costly than acquiring new customers, reducing customer churn is another result that CX helps companies achieve. Lastly, a happy customer is more likely to spread positive word of mouth, which results in additional sales and will eventually add revenues.
Personalization: CX’s recipe for success?
Consumers want extraordinary and memorable experiences. They expect companies to exceed their expectations. For this, we need to get personal. At The House of Marketing we believe that putting personalization at the center of the customer experience strategy enables profitable growth in the long run.
What is personalization, by the way? The following quote from Jeff Bezos sums it all up.
“If we have 4.5 million customers, we shouldn’t have one store. We should have 4.5 million stores.”
– Jeff Bezos, CEO of Amazon.
Personalization is not customization. Customization is about modifying a basic product or service to fit a single customer’s unique preferences. You usually need customer’s explicit input to do customization.
Personalization is not segmentation. Segmentation is a marketing strategy that consists in taking a target market and breaking it down into smaller groups based on their perceived interests, common needs, and/or priorities. Segmentation helps marketers better understand how a group (= a segment) of like-minded consumers act and interact.
Personalization is catering to the individual 24/7 365 days a year.
It can be seen as a method or approach that allows you to transform into a customer-centric organization that can make highly scalable improvements to the digital experience.
How? By delivering greater relevance to customers and by serving the right message at the right time and on the right channel. Each being tailored to the customer, without the customer having to give an explicit input. It is about content, context and channel. This means companies need to invest time in getting to know their customers, so you can target the right individuals or groups at the moments that matter.
Personalization goes from basic to advanced personalization efforts. The most advanced form uses “fingerprint” data and external data that it processes in an intelligent way in order to deliver tailored and relevant messages to the right user at the right time. This is where artificial intelligence (AI) comes into the picture. This combination of data and technology enables companies to provide an advanced one-to-one experience.
Some companies go a step further and provide ‘hyper-relevant’ CX to their customers. This is about having a continuous understanding of your customers in order to meet their needs and expectations. All of this happens in real time and in this way, it is possible to respond to changing circumstances. It’s all about being dynamic and not static.
How is Belgium doing?
This year’s Yearly Marketing Survey (YMS) was about growth through innovation, which of course includes personalization as a critical growth factor. Belgian marketers are not there yet: most personalization efforts are limited to A/B testing, customer journey mapping and marketing automation. This means there are still great opportunities for enhancement in Belgium, as customers expect similar experiences from all companies they interact with, regardless of size or sector.
Time to step up your game! Our secret recipe? A human foundation backed up by data and technology and the right skills. Read more about the building blocks of personalized experiences in the YMS 2019.
“Stakeholders from across the business need to be fully on board. Make personalization and customer experience tangible: having regular reporting at board meetings, celebrating quick wins, communicating about personalization efforts and sharing best practices are ways to do it.”
– Personalized customer experiences expert Stephanie Tang
How are YOU doing?
Perform our free customer experience quick scan to discover your company’s maturity and get tips on how you can step up your customer experience efforts!