Companies that rely on marketing or another sole department to take care of customer experience are not only less effective on executing, but often end up spending more money on it, according to a survey conducted by Cincinnati, Ohio-based research association Loyalty360.
The finding was gleaned from a survey of more than 250 brands conducted online between April and October 2014, sponsored by ResponseTek and Ansira. Not only did Loylaty360 find that companies had a variety of different ways of managing customer experience, but they can’t even agree on a definition of what it means in the first place. Almost six out of 10 customers define customer experience as having “many interactions or touch points,” 27 per cent say infinite number of interactions of touch points, and 15 per cent of companies see it as a single interaction or touch point.
“Our expectation was that companies had actually evolved more than they actually had,” says Emily Heitkamp, senior director of content and business development, Loyalty360. “We thought they’d be tapping into customer data more to understand customer experience.”
The most useful definition of customer experience for companies to keep in mind is all about the outcomes, she adds. Focusing on an end goal of customer loyalty and even advocacy is the most important thing to include in the definition. Companies should also recognize that every customer interaction impacts experience.
When it comes to assigning responsibility for marketing, more than half of companies have more than one group as accountable for customer experience. The next most-popular option is to assign it to marketing, with 26 per cent of companies doing so.
“As a customer of the company, you see it as one entity with consistent communication, no matter who you’re talking to,” Heitkamp says. “By having more than one group held accountable, it ensures those groups will have that unified communications towards the customer.”
Marketing is likely still a popular option for companies that view customer experience in a more traditional mode, she says. Before the digital age took hold, marketing owned all communications between the company and the customer. But now companies are recognizing other frontline employees are impacting on the customer relationship in important ways.
Loyalty360 holds an annual CX Awards program, and it asked its winners how they were divvying up responsibility. No surprise, they hold more than out group accountable for the customer experience.
Budgets show short-sighted goals
When it comes to budgets, the average company is spending just 1.5 per cent of revenue on customer experience. That’s less than the three to four percent that Heitkamp expected, but is likely reflective of a more narrow definition of what customer experience actually entails.
But at companies where marketing is solely responsible for customer experience, marketing spend is likely to be higher by as much as eight per cent. In these scenarios, the companies are also more likely to focus on short-term outcomes like acquiring a customer, rather than on long term outcomes like creating customer loyalty.
“It doesn’t take days or weeks to build customer loyalty, it can take months or years,” Heitkamp says. “But once you’ve established that loyalty, you’ve got a customer for life.”
Companies should be looking to boost metrics like Net Promoter Score – which rates how likely a customer is to recommend them to a friend – when expending budget towards customer experience, she says.
The key is to move beyond the traditional marketing goals of achieving customer awareness and acquisition, to an approach that looks at a longer journey that ends with customer loyalty, repeat purchases, and advocacy.