You likely have a personal understanding of what constitutes excellent customer experience (CX) versus a poor one. Imagine wanting a simple latte. Is the coffee shop staff attentive and welcoming? If you’re a regular, do they greet you by name? Is the store layout intuitive and easy to navigate? Do they efficiently take your order and serve your coffee with a smile? If you encounter a problem, is it resolved quickly and effectively? Do they proactively seek feedback to understand your overall experience?
These questions touch upon various elements that define customer experience. CX encompasses four key components: brand, product, price, and service.
Fundamentally, CX represents everything an organization undertakes to provide exceptional experiences, value, and foster growth for its customers. In today’s world, the way a business interacts with its customers is as, if not more, important than the products or services it offers. In a digital landscape where customers can easily share their experiences in public forums, creating emotional connections across all customer journey touchpoints is critical. Prioritizing customer experience is not only beneficial for the customer but can also lead to 3x returns to shareholders.
The COVID-19 pandemic served as a test of how businesses could connect with customers during a crisis. Many businesses responded remarkably well, swiftly adapting to prioritize customer safety, security, and convenience. E-commerce companies and food delivery services, for example, implemented contactless delivery methods to ensure the safety of both customers and drivers as the virus spread.
This article provides an overview of customer experience-related topics, addressing questions like:
Understanding Customer Journeys
A customer journey maps out the customer’s end-to-end experience, going beyond satisfaction at individual transactions or touchpoints. This includes everything that occurs before, during, and after a customer interacts with a product or service. Examples include onboarding a new customer, resolving a technical issue, or upgrading a product.
Consider the process of onboarding a new customer. One company’s onboarding process involved approximately three months, nine phone calls, a technician visit, and online and mail interactions. While individual touchpoints had a 90% success rate, overall customer satisfaction decreased by nearly 40% during the journey. The key takeaway was to reimagine service operations focusing on the most crucial CX journeys, rather than fixing isolated touchpoints.
Focusing on complete customer journeys yields better business results. A McKinsey survey revealed that customer satisfaction with health insurance is 73% higher when the entire journey is seamless, compared to focusing solely on touchpoints. In the hospitality sector, hotel customers who experience a smooth customer journey are 61% more likely to recommend the hotel.
Companies aiming to improve their customer experience can take these three actions to shift from touchpoints to journeys:
- Observe: Empathize with your customers. What do they experience? This helps align employees around customer needs. Beyond identifying and understanding the journey, quantify customer priorities and define a shared aspiration.
- Shape: Redesign interactions into coherent sequences. Even small initial steps can scale rapidly, involving process digitization, cultural shifts, and iterative improvements.
- Perform: Prioritizing journeys is a long-term commitment requiring full company engagement, from leadership to frontline staff.
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Measuring Customer Experience
Measuring customer experience can seem daunting, but it’s achievable. Employ these three principles to optimize customer experience measurement:
- Measure CX at the journey level, not just touchpoints or overall satisfaction.
- Invest in technology for continuous feedback capture across multiple channels, integrating survey results and data into dashboards.
- Foster a culture of continuous improvement at all levels.
Depending on the maturity of CX within the organization, consider the advantages of predictive CX to proactively address churn and dissatisfaction. Survey-based systems have limitations, being reactive, ambiguous, and unfocused. Predictive customer insights provide deeper insights for improvement.
The Consumer Decision Journey Explained
The consumer decision journey (CDJ) reimagines the traditional marketing funnel as a circular process with four phases:
- Initial Consideration
- Active Evaluation (researching potential purchases)
- Closure (brand purchase)
- Post-purchase (brand experience)
The consumer decision journey is continuously evolving due to new technologies. Brands must actively shape decision journeys, potentially compressing or eliminating the consideration and evaluation phases to gain a competitive advantage. To accelerate customer loyalty, four capabilities are critical:
- Automation: Streamlines the customer journey (e.g., mobile check deposit).
- Proactive Personalization: Instantly customizes CX using customer data.
- Contextual Interaction: Delivers relevant interactions based on the customer’s journey stage.
- Journey Innovation: Creates new value (e.g., new services) for both the customer and brand by mining customer data.
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Understanding Customer Care
Customer care typically resides within contact center operations, supporting customers across their journey regardless of their point of contact (in-store, online, mobile apps). This supports an omnichannel customer experience. A forward-thinking vision for contact centers involves hyperpersonalization to meet customer expectations in a strategic and experience-oriented manner.
The Impact of COVID-19 on Customer Experience
COVID-19 significantly altered customer experience. Companies shifted to alternative digital experiences and their interactions impacted customer trust and loyalty. Empathy and care are essential in crises to build resilience and adapt to changing preferences. Notably, over 75% of consumers changed their buying habits, driven by value, convenience, and purpose.
Defining Digital Customer Experience
Digital customer experience encompasses online interactions facilitated by digital tools and analytics, making interactions holistic, predictive, prioritized, and value-focused.
For instance, a leading airline built a machine-learning system to track and prioritize customers at risk of switching carriers due to flight delays. The system, built in three months, improved customer satisfaction by 800% and reduced churn for priority customers by 60%.
Companies are moving towards predictive insights for digital CX, using predictive CX platforms composed of:
- A customer-level data lake with customer, financial, and operational data.
- Predictive customer scores based on analytics that track factors influencing customer satisfaction and performance.
- An action and insight engine shared with employees via CRM platforms using an API layer.
These platforms connect CX to value and provide clear business cases for CX improvement. It’s crucial to be attuned to customer privacy and build security into the digital customer experience.
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Customer Experience and Loyalty
Excellent CX fosters customer loyalty. However, this requires deliberate effort. “Consumers are changing, and consumer trends are driving this,” according to former McKinsey partner Jess Huang regarding new generation customer loyalty programs. “With the move to digital over the last ten years, consumers are spending more and more time on their phones and various digital channels. This makes it much easier to access the consumer, but there is also a lot more noise. Brands are trying to figure out the right way to break through that noise and develop a relationship with the consumer.”
Loyalty programs are important, yet two-thirds fail. Focusing on these eight elements enhances loyalty program performance:
- Offer incentives for redeeming loyalty points.
- Address “breakage” (expired points) for improvement opportunities.
- Incorporate strategic partnerships to enhance offers and rewards.
- Provide points-plus-cash options.
- Measure success based on engagement, not just accruals.
- Segment customers into manageable groups.
- Personalize test-and-learn across customer segments.
- Create a standard P&L to accurately measure the impact of loyalty programs.
B2B vs. B2C Customer Experience
B2B CX differs from B2C in several ways:
- B2B relationships are often deeper.
- B2B journeys are longer and involve more individuals.
- B2B customization is more prevalent.
- B2B deals involve higher stakes, often worth millions.
However, more B2B customers desire a better experience similar to B2C. In complex B2B sectors like industrial services (e.g., aftermarket service contracts), better CX is crucial for growth. A survey of 1,000 B2B decision-makers highlighted slow interaction speed as the primary pain point, mentioned twice as often as price.
Understanding emerging B2B customer needs is important, particularly given the shift to omnichannel. Adapting to a mix of traditional, remote, and self-service channels is increasingly vital – 94% of B2B decision-makers find new omnichannel sales models as or more effective than pre-pandemic models. This case study shows how a B2B organization in China became more customer-centric.
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Industry-Specific Approaches to Customer Experience
CX approaches vary across industries due to differing customer needs and expectations.
Customer Experience vs. Employee Experience
While the design thinking behind CX is transforming employee experience (EX), some differences exist:
- Customer journeys are generally shorter than employee journeys.
- Employee interactions are often top-down, lacking the iterative nature of successful customer journeys.
However, happy employees are vital for good CX, linking EX and CX. Improving employee experience to build a customer-centric culture is powerful.
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Improving Customer Experience: A Three-Pillar Approach
Transforming or improving CX requires three essential building blocks:
- Build Aspiration and Purpose: A clear CX aspiration aligns with your company’s purpose and brand promise. Do you have a customer-centric vision linked to value and a concrete roadmap?
- Transform the Business: Discover customer needs, design solutions, and deliver impact via journeys, products, services, or business models.
- Enable the Transformation: Sustain efforts by transforming employee mindsets, building capabilities, leveraging technology and data, and establishing governance and agile operations.
Approaches based on these building blocks have delivered significant results for over 900 companies, with increases of 15-20% in sales conversion rates, 20-50% reductions in service costs, and 10-20% improvements in customer satisfaction.
It’s crucial to be aware of customer experience pitfalls to avoid them. These include failing to link CX to value, taking a narrow view of CX, and applying limited creativity; don’t miss the examples of how other organizations have sidestepped these issues in transforming CX.
For more in-depth exploration of these topics, see McKinsey’s Customer Experience collection. Learn more about the Marketing & Sales, Operations, and McKinsey Digital Practices, and check out customer experience–related job opportunities if you’re interested in working at McKinsey.
