How Evolving Customer Experience Recession-Proofs Your Business
Preparing for a recession
With tough times on the horizon, business leaders continue to look for ways to minimize the impact of pending changes. The initial reaction is to be more conservative: cutting expenditures and improving cash flow. Some common tactics include freezing discretionary spending, renegotiating credit terms, and optimizing pricing structures and profit margins.
Many companies, including Amazon, Meta, and Salesforce have even recently engaged in reductions in force as a pre-emptive financial measure, as experts predict the possibility of a continued economic downturn.
While these measures may be necessary to ensure that a business survives a recession, an economic downturn could be the perfect time to establish and gain a long-term competitive advantage.
A recent study found that companies that proactively balance cost containment efforts with strategic growth investment are more likely to come out ahead of the competition when the economic environment improves. In fact, balancing these two priorities can boost the probability of rebound to 37%.
In a difficult business environment, companies that invest in improving customer experience stand to gain meaningful, measurable, long-term advantages over competitors that only cut back and conserve. By focusing on what your customers want (speed, transparency, and predictability), you can increase your efficiency and improve your operations. A great customer experience makes your company more resilient to environmental changes and macroeconomic challenges as they arise, and makes it more competitive when the economy recovers.
Better CX helps to recession-proof your business through:
Customer retention
According to 89% of business leaders, providing excellent CX has a major impact on customer retention.
Keeping existing customers is less expensive than attracting new ones. Long-term customers not only reduce the cost of attracting new audiences and converting them, but they also spend more money as the relationship progresses. According to recent studies, the top 10% of loyal customers spend 3x more per order and the top 1% spend 5x more.
On average, a loyal customer will spend 67% more in their 31st-36th month with a brand than they did in during months 1-6.
Customer loyalty and retention will improve if you create an exceptional customer experience - helping you to reduce the costs associated with onboarding and converting new customers, while making your existing customers more profitable.
Customer Lifetime Value
Engaging customers throughout their relationship with your brand increases retention, spend, and word-of-mouth promotions. A report from Capgemini found that 70% of emotionally engaged customers spend twice as much per purchase; and 81% will promote a brand to family and friends.
customer engagement
One of the first functions to look at is the call center or service desk. These are the employees that are on the front lines, interacting directly with customers. It is critical that they meet expectations for quick response times and fast/first call resolution.
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Improving contact centers and service desks requires a review of the people, processes, and technologies that support these employees. Customer support functions require a solid foundation where all three categories work together effectively and efficiently. A gap in any of them will cause a failure to provide consistent customer support, which affects engagement, retention, and profitability. In the end, this will impact a business’ potential for coming out of an economic downturn stronger than when it started.
Other factors impacting customer engagement include real-time data, a personalized and consistent omnichannel experience, and building trust over time. There are opportunities to build an excellent customer experience throughout the customer lifecycle. Check out our next blog in this series for more information about recession-proofing your business through better customer experiences.
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References:
(1) https://www.westmonroe.com/perspectives/point-of-view/cut-costs-and-improve-cx-at-the-same-time
(2) https://www.semrush.com/blog/customer-retention-stats/
(3) https://smith.ai/blog/customer-experience-statistics
(4) https://www.capgemini.com/wp-content/uploads/2017/11/dti_loyalty-deciphered_29nov17_final.pdf