insights! episode #39: good customer experience as a success factor

Joubin Rahimi:
Wonderful to see you again in a new episode of insights. My name is Joubin Rahimi, and today is the first of several sessions on the topic of customer experience. That is why we will also explain the term customer experience. Where it comes from and why it is so important today and not just a trend topic. 
Customer experience is a term that comes from the Anglo-Saxon world. Customer experiences was also said here before, but with the topic of CX we really entered the market almost eight, nine years ago. Over the last three years they've also renamed it towards customer experience. Customer experience, digital experience platforming is one such topic. But what does that actually mean? We want to look at it holistically. Customer experience isn't just about a digital experience and the UX, i.e. user experience or the user interface of a website. No, customer experience is entirely a holistic, all-encompassing view. 

Let's unfortunately take the Galeria Kaufhof group, which has run into trouble again. Galeria Kaufhof was already the Amazon of its time, lots of products in one place, a one-stop shop. They just didn't manage the shift into digital. But it's not only that they didn't manage the shift into digital, the customer experience was simply poor. The website back then wasn't good either. Even today it's not really ahead of the game, and the services not at all. Customer experience also starts with small things. Why is there now only one till point on a floor at Galeria Kaufhof, where I used to be able to pay? There used to be several. Okay, maybe that was inefficient, but if there's one till point, why are there two queues? Why do I as a customer have to think about where to stand? I always end up in the wrong one typically - that annoys me. I rarely feel pleased when I've picked the right one. Those are the kinds of small things that can of course already bring about improvement in that environment.  

We Germans haven't managed to really think about customer experience, because we're process optimisers. We think about how we can make things more efficient, more effective. In the end, though, Amazon showed us how it's done, with good customer experience, not with great design, because the Amazon webshop doesn't look nice, and it doesn't have the best UX either. But with great services they deliver a good customer experience. Easy returns, fast delivery. No hassle if I call for some reason, or have problems with a marketplace seller. Many aspects matter, and it means Amazon has more than 50% of the market share of B2C revenue in Germany. So every second euro goes through the Amazon platform, either marketplace or sold by Amazon. We really need to picture that. The second reason customer experience is so important: we're changing our buying behaviour, we'll go into that in a new and later episode much more, but IFH says 70% of all purchase decisions are already prepared very heavily online in advance. 70%. And where do we operate online, customer experience? It's very closely linked. How can I bring the customer, who was anonymous online, over to me? Only if I've shared or created a good experience. That's why nine ultimate points, so nine ultimate points, why customer experience is exactly the right thing for you.  

Point number one. Customer loyalty. Loyal customers are repeat buyers. You don't need to buy repeat buyers expensively through marketing. Great lever for you.  

These customers who keep coming back, the repeat buyers, the loyal customers are top number two: positive word of mouth. They pass it on. They recommend you. You gain new customers without spending on marketing.  

Point number three follows directly from that. You have a competitive advantage. A functioning system with great experiences and customer experiences, word of mouth, is another additional marketing engine that allows you to deploy marketing dollars even further-reaching than your competition.  

Point number four. Collecting customer feedback. Great experiences also mean customers are much more willing to give you feedback, including about bad things. You can use that to get even better. And these improvement mechanisms, the four we mentioned before, ultimately lead to more revenue. Not directly profit. We'll come to that later, but first to more revenue, which you can then convert further.  

Point number six: cost reduction. We talked about revenue, not contribution margin. But you can bring about cost reduction — for one, marketing costs are reduced in that context. But you can also make certain other mechanisms much leaner if you align customer experiences with customer so they're happy with it. That way you also save unnecessary add-on processes, escalation processes, calls to feedback centre or call centre. That's big lever.  

Point number seven. Brand perception is of course quite different when people speak positively about your brand, about your company. And this lever is difficult to measure financially, but it's sustainable. Brands work for a very, very long time. Apple certainly achieved a lot at its peak, isn't at its peak anymore with new products. But the brand still shines today.  

Top eight. If the brand shines, I have customer trust. And that customer trust resonates for a relatively long time in the relationships. I mentioned Apple. Someone who has bought from Apple stays with Apple for a very, very long time. Someone who comes from PC to Apple stays there for a long time. And this customer trust means the customer is also willing to pay higher prices, because they have good experiences. Good quality, good service. Can everyone afford that? No. Is that a strategy for everyone? No. But for those who want to say: I want to go in the high margin direction. It is the strategy.  

Finally, there's point number nine. Top nine: a study by Watermark, which they conduct year after year, is how customer experience affects companies' market capitalisation. For this, you look at the top American companies, compare the corresponding market capitalisation figure of recent years with the average market capitalisation figure of the top 500 shareholder-led companies, and compare the whole thing with the top-notch CX companies and with those that are actually falling behind. And the truly dramatic thing is this metric, which is hugely important. The companies they identify as CX leaders have achieved three times higher market capitalisation over the last ten years than the average of the S&P 500. And if that's not an argument for engaging with customer experience, then we don't know what is.