Bill Gates once said, “Your most unhappy customers are your greatest source of learning.”
They also might be your greatest source of lost revenue. According to customer intelligence leader CallMiner, U.S. companies lose $136.8 billion per year due to avoidable consumer switching.
Often, companies don’t want to dig into the reasons a client leaves; they instead focus on replacing that customer as quickly as possible, leaving a valuable learning opportunity unrealized. Constantly pouring money into lead generation and new customer acquisition while failing to understand why customers leave is anathema to growth.
Losing repeat business and referral opportunities damages Customer Lifetime Value (CLV) and hurts the bottom line. Very often, a high customer churn rate—meaning high customer attrition—is caused by a fundamental misunderstanding of the customer experience.
Too many companies equate customer service and the customer experience. This is a major mistake. In reality, customer service is one component of the customer experience, which is the total perception created within a customer by his or her experience with any and every aspect of your brand.
But what’s the difference between customer service and the customer experience? Without a clear understanding of the distinction between these two facets of your operation, it’s very difficult to create a successful strategy.
First, let’s define each term as a jumping-off point for the larger discussion.
The Customer Experience:
How your customers perceive their interactions with your company. The User Testing Blog offered a great, succinct definition of the customer experience: “In other words, CX is about providing a useful, usable, and enjoyable experience to every customer, on every device, across every touchpoint—in a way that fulfills the expectations that you set and the promises you made.”
Investopedia defines customer service in this way: “Customer service is the process of ensuring customer satisfaction with a product or service. Often, customer service takes place while performing a transaction for the customer, such as making a sale or returning an item. Customer service can take the form of an in-person interaction, a phone call, self-service systems, or by other means.”
Distinction #1 Providing A Total Experience
The first thing to understand is that the customer experience is a measure of the totality of an individual’s experience of your brand.
Customer service is one aspect of the customer experience that also includes in-store experiences, social media engagement, website interactions, and any other interface they have with your brand.
Customer service is just one part—albeit an important component—of the customer experience delivery system. Understanding this is critical to creating and executing a great experience platform.
Distinction #2 Customer Service is no longer the entire sum of the Customer Experience
Following on distinction #1, a helpful way of looking at the difference is that customer service used to be the customer experience. Today, it is just one strand in a complex web of customer engagement points.
Before the internet became widely used, customer service alone created a customer’s perception of a brand, as the engagement points were typically an in-store experience or a phone conversation.
Today, omni-channel engagement is the norm and a customer can interface with your brand across a vast spectrum of media types and platforms, including in-store experience and one-on-one dialogue with live service agents. Again, the paradigm has flipped from customer service as customer experience to customer service as one cog in the customer experience machine.
Distinction #3 Customer Experience is proactive, not reactive
Generally speaking, the customer experience is a proactive strategy consistently pushed out to customers whereas customer service tends to be more reactive—a customer has an issue and reaches out to engage your brand to solve a problem. The customer experience, if done well, should proactively limit the number of issues that arise, ultimately reducing the instances of reactive customer service.
We all know even the best customer experience strategies can’t completely eliminate customer issues or problems, but they certainly can help. AMEYO notes the following about this relationship: “ business can take action to optimize the customer journey before the customer becomes dissatisfied. Customer experience is a holistic approach that goes beyond customer service and takes into account the overall customer journey by building long-term relationships with customers. According to McKinsey, companies focused on providing a superior experience across customer journeys realized a 10-15% increase in revenue and a 20% increase in customer satisfaction.”
Now, we need to qualify our statement that customer service is reactive. When customer service is not anchored by an effective customer experience strategy, it becomes reactive in a bad way. The very nature of customer service is reactive. However, how your customer service staff (or bots for that matter) executes your customer experience strategy in that reactive moment is critical to keeping your customers happy and coming back.
In summary, customer service is one part of your customer experience. The customer experience is the collective perception of your brand generated by a host of engagement experiences. By creating a powerful customer experience strategy, and executing it consistently across all of your engagement channels, including customer service, your business will retain its customers, win repeat business, garner more and higher quality referrals, and significantly increase revenues and CLV.
If you’re ready to develop or reimagine your customer experience strategy, we can help. Illumine8 has helped organizations of all sizes create, maintain, and tweak their branding strategy and customer experience platforms to maximize customer loyalty, increase repeat business, and amplify their brand reach to generate new, high-converting leads.
Reach out to us today. We’d love to discuss your vision and how you see your company getting there.