When a manufacturing organisation looks at developing a product further for enhancement of its features and functionalities, all expenses incurred for the same are viewed as investments. There is never confusion around the same irrespective of whether the expense has been made for R&D, competitive benchmarking studies, testing labs, or any other related activity.
It is an undeniable fact that the customers’ ‘experience’ while using the ‘product’ serves as a crucial competitive differentiator. Hence, investing in customer satisfaction also becomes vital. Thus, anything spent towards a business’ customer experience strategy to help raise the ‘experience’ of product usage is clearly an investment, and there should be no confusion around the same.
What is Customer Experience Enhancement?
Customer Experience Enhancement refers to the process of improving the overall interactions and perceptions customers have with a business throughout their journey. It involves understanding customer needs, addressing pain points, and creating positive, memorable experiences at every touchpoint.
Enhancement efforts focus on providing personalised service, ensuring seamless communication, delivering quality products or services, and resolving issues promptly. The goal is to exceed customer expectations, foster loyalty, and build strong, long-lasting relationships.
Key aspects of customer experience enhancement include:
- Personalisation: Tailoring products, services, and communication to meet individual customer preferences.
- Consistency: Maintaining uniform experiences across all channels, whether in-store, online, or via customer support.
- Feedback Utilisation: Listening to customer feedback and using it to improve processes and offerings.
- Technology Integration: Using tools like CRM software, chatbots, and analytics to streamline interactions and understand customer behavior.
The confusion lies in where and how we should be investing in customer satisfaction—whether the expense amount has been worth it and what steps to take to keep the expenses minimum.
Cost vs. Investment in Customer Experience
Should a customer be given any advice, guidance, or help after they have bought the product? Is the expense of providing the same a ‘cost’ or an ‘investment’ to deliver a good post-sales experience? If seen as a ‘cost’ of customer experience, the focus shifts on cost curtailment by various means—limiting access points, shifting the responsibility to trade, creating digital self-help channels that do not serve the needs of customers well, under-resourcing manpower, etc.
Viewing the same expense from an ‘investment lens’ leads to ensuring multiple support channels are made accessible to customers to get prompt responses for information and services. Self-help capabilities are created for customers to avail if they choose to do so. Also, the services provided are measured and monitored regularly to ensure the customer experience strategy is best in class.
Understanding the Customer Experience ROI
Since customer experience is a sum total of all touchpoint experiences, any expense incurred towards customer experience ROI and to enhance or improve the touchpoint experience should therefore always be treated as an ‘investment’ and never a ‘cost’ as the aim is to expand business growth through customer experience.
R&D, a crucial step in the customer experience strategy seen as an investment in customer satisfaction, is incurred to improve a ‘product experience’ and the customer experience ROI.
The ROI from investing in customer experience strategy comes from better ‘competitive rankings’ and better sales as a result of the steps taken to improve customer experience touchpoints. This delightful customer experience ROI can be seen in terms of higher recommendation scores, repeat purchases, and stronger brand loyalty. Customers can be seen trying other products from the same brand.
Key Factors for Customer Experience ROI
While it is true that expenses incurred for business growth through customer experience are always an ‘investment’ and never a ‘cost’, CX leaders have to analyse how this investment in customer satisfaction can be made more efficient.
- Touchpoint Investments:
Investments made for increasing customer experience ROI by improving/enhancing each touchpoint experience should be made only after properly understanding customer expectations of different customer segments. Here, the customer segmentation/VOC programs of organisations are extremely important to be in place. A rightly designed and deployed CX program will maximise value by ensuring expenses incurred are well aligned with meeting targeted customer segment expectations.
- Categorising Support Needs:
- Avoidable: Support sought by customers for issues that shouldn’t have arisen in the first place (e.g., poor customer education, communication gap from the company). Expenses incurred around these are ‘costs’ that can be brought down through better processes and tools.
- Unavoidable: Genuine needs of customers during usage (e.g., service upgrades). These expenses are ‘investments’ in delivering memorable experiences to meet the expectations of customers, be it for manpower, technology, process improvement, training, or audit.
- Agent Support Needs:
- Desirable Calls: Include purchase decisions or urgent requests, where expenses enhance the customer experience and generate revenue. E.g., an aeroplane passenger needing a change in date for his flight or taking additional services. These services provide additional revenue to airlines, and a customer expects a quick connect to complete his requirement. Today it is a frustrating experience to even reach an agent in many cases.
- Undesirable Calls: For issues resolvable via self-help tools, expenses are costs. Strategy for Delivery Process CX Alignment and Automation should be deployed to reduce these undesirable calls or have them attended by chatbots/diverted to self-help channels.
Conclusion:
The importance of customer experience is no secret. However, to sum up, a cost vs. investment in customer experience analysis can be made after a clear segregation between investments and costs. This can help organisations optimise their customer experience strategy and resources while enhancing business growth through customer experience. The clarity in expenses for investment in building CX at different touchpoints for unavoidable/desirable calling reasons and reducing/eliminating cost at avoidable/undesirable points will help unlock huge potential and reduce the dilemma that organisations face, thereby proving the expense to be an investment.
FAQs on Customer Experience Enhancement
Why are expenses on customer experience enhancement considered an investment?
These expenses are considered an investment because they improve customer satisfaction and loyalty, leading to repeat business, positive word-of-mouth, and increased revenue. Over time, the returns far outweigh the initial costs.
What are the long-term benefits of investing in customer experience?
Long-term benefits include higher customer retention rates, increased customer lifetime value, stronger brand reputation, and a competitive advantage. These benefits contribute to consistent business growth and profitability.
How can businesses justify the expenses on customer experience enhancement?
Businesses can justify these expenses by tracking key performance indicators (KPIs) like Net Promoter Score (NPS), customer retention rates, and revenue growth. Improved metrics demonstrate the tangible benefits of these investments.
Do small businesses also benefit from spending on customer experience enhancement?
Yes, small businesses can achieve significant benefits, such as building customer loyalty and improving word-of-mouth marketing. Even small investments, like personalized customer interactions, can yield valuable returns.
What risks do businesses face if they view customer experience enhancement as a cost?
Viewing it as a cost may lead to underinvestment, resulting in poor customer satisfaction, increased churn, and loss of competitive advantage. This short-term thinking can harm the business’s long-term growth and profitability.
