Why customer experience can help retailers find a place in their customers' hearts, minds… and walletsby
As inflation persists and economic uncertainty lingers, retailers face mounting pressure to retain customers amidst rising prices. Eric Jorgensen highlights the importance of customer experience to build trust and loyalty.
In December 2021, a pint of low fat milk was around 45% cheaper than it is today, the average household energy bill was up to 80% lower and the cost of kids footwear was 18% less. The list goes on. From heating their home to going on holiday, the morning commute to the weekly shop, almost everywhere people look, the pressure on their personal finances is mounting.
Fortunately, the spiralling inflation we saw towards the end of 2022 appears to be slowing. Yet even so, the economic and political uncertainty that fuelled it continues, meaning that high prices are here to stay – at least for the foreseeable future.
It is not just consumers who are feeling the pinch. From large companies like Ikea and Sainsbury's to the UK's many small high street brands, the vast majority of retailers are finding their profits squeezed by a combination of higher operating costs, reduced consumer spending and a rising wage bill.
Customer relationships are more important than ever
At a time when retailers have little choice but to increase the price of their products and services, how can they ensure that doing so does not come at the expense of attracting and retaining their customers?
The answer lies in supercharging their focus on customer experiences (CX). Whether in-store or online, by making every interaction as enjoyable, convenient and frictionless as possible, retailers can significantly strengthen their relationships with the people they serve. This, in turn, leads to greater trust, loyalty and advocacy.
The cost of falling short in CX has never been higher.
On the flipside, the cost of falling short in CX has never been higher. According to Zendesk's CX Trends report 2023, 61 per cent of people say they are willing to walk away from a company after a single bad experience and 58 per cent base purchasing decisions on the level of service they expect to receive. Worryingly, among customers who often interact with support services, nearly half say their frustration levels have grown over the last year.
The move towards immersive CX
The good news is that the majority of retail leaders recognise the importance of getting their CX on point. Seventy-seven per cent agree doing so is essential to achieving their goals and 81 per cent see it as key to competitiveness. Meanwhile, 79 per cent believe that providing excellent customer service during an economic downturn becomes even more vital, with 74 per cent expecting to increase their CX budget during the year ahead.
Given current economic challenges, it is crucial that this planned CX spending delivers the best possible return on investment. And as the Zendesk report reveals, that means embracing a new era of immersive CX. One where retailers step up and meet consumers' growing demand for natural, fluid interactions. Where conversations move effortlessly across channels. And where, most important of all, every experience leaves people feeling not like a transaction or ticket but as the highly valued customer they are.
Technology has a significant role to play in this new world order.
Technology has a significant role to play in this new world order. In the course of the last year, artificial intelligence has made huge strides, with 62 per cent of retail leaders acknowledging it is becoming more natural and human-like and 61 per cent reporting performance improvements. The key now is to continue – and accelerate – this transition, by introducing synthetic agents, chatbots and voice-based AI solutions that solve customers' issues and requests more quickly and effectively than ever.
The need for seamless, personalised interactions
Equally important to organisations' success will be their ability to deliver seamless interactions across every customer platform and touchpoint. Whether it's with a human agent or AI-powered bot, face to face or via WhatsApp, 72 per cent of customers want immediate service and 71 per cent demand natural, conversational experiences.
Tellingly, 70 per cent expect anyone (or anything!) they interact with to have full knowledge and context of the issue at hand. Right now, only 52 per cent of retail leaders say their agents can access conversations and respond across all support channels in one place. Overcoming geographical and functional barriers between customer service teams should therefore be a priority for any firm seeking to deliver the standard of cross-channel, conversational CX their customers want.
What is more, breaking down historic data siloes carries the added bonus of helping retailers deliver on another important customer expectation: personalisation. The Zendesk report found that 62 per cent of consumers prefer personalised recommendations to generic ones while 77 per cent of leaders recognise that deeper personalisation leads to increased customer retention. Retailers must therefore connect customer and sales data from every part of their organisation while leveraging untapped service data to inform and improve future customer interactions.
The focus on personalisation should also include tracking and responding to customer emotions.
The focus on personalisation should also include tracking and responding to customer emotions and sentiment. This is something only 29 per cent of retailers currently do although, encouragingly, 50 per cent plan to increase their budget for this in relation to CX over the next 12 months. Given that 66 per cent of consumers who often interact with support say one bad interaction can ruin their day, improving their ability to understand how customers feel and then optimise interactions accordingly cannot come soon enough.
From cost centre to revenue driver
The benefits of free-flowing knowledge and data across the organisation do not stop there either. Only 18 per cent of retail leaders say their business is excellent at sharing information – lower than the global average of 22 per cent. Yet by empowering CX teams to access and share customer insights with other internal departments and by training them on new ways to sell products and services, retailers can move from treating their customer service and support operations as a cost centre to deploying it as a genuine driver of revenue.
Likewise, in the same way customers expect a unified experience across channels, the agents who deliver it should be able to do so regardless of whether they sit in service, sales or somewhere else. Merging teams and responsibilities is therefore a sensible course of action – one that 64 per cent of retail leaders have plans for in 2023. What matters is that the customer gets the right experience in the right place at the right time.
This is, perhaps, the most important lesson of all. Immersive CX must be exactly that: immersive. Whether it is delivered by a human or a bot. Whether it takes place on a high street or via a mobile device. Whether it is the customer's first interaction or their 100th. The successful businesses of tomorrow will be the ones who centre their entire customer journey around delivering personalised, empathetic and seamless interactions every time. In an uncertain world where people have a whole host of reasons not to spend with them, retailers who offer excellent CX can secure a place in their hearts, minds and wallets alike.