Recession-Proof Your Business by Improving the Customer Lifecycle
Improving business resiliency during an economic downturn can take many forms. Some companies focus on reducing expenditures, while others may pull back from growth plans to a more conservative stance until the outlook improves. Tactics depend largely on existing circumstances and the strategies that it believes will be most effective in weathering an economic storm.
However, one area that almost all businesses can improve - regardless of the company’s size, function, years in business, or industry - is through operational changes that focus on a better end-user experience.
Making operational changes with the customer in mind can make a business more agile, flexible, and resilient to an economic downturn.
When a business adopts a customer-first approach, it exposes opportunities to make improvements that will benefit the overall customer experience. Customers across the board want transparent, reliable, and responsive services. Focusing on providing these services fundamentally changes business operations, making them efficient, collaborative, and strategic - which circles back to support CX outcomes.
The Importance of Customer Experience
It costs five times more to attract a new customer than to keep an existing one. Making your existing customers happy means they will stick around; allowing your business to maintain revenue without requiring a major financial outlay in customer acquisition.
This doesn’t mean that businesses should stop trying to attract new customers; just that investing in current customers can help a business achieve measurable goals in an efficient and effective way.
Providing your customers with a better experience from the time they are onboarded benefits a business financially by:
More volume
A customer that has purchased products or services from your company once is more likely to come back for more. The likelihood of selling to an existing customer is 60-70%, while new customers only purchase 5-20% of the time.
Higher value
A current customer is also more likely to spend more on each purchase. Recent research shows that repeat customers typically spend 33% more than new customers, consistently, on each purchase throughout the lifecycle.
Price flexibility
According to research from SuperOffice, 86% of customers are willing to pay more for the same product or service if it comes with a superior customer experience. In most cases, keeping customers happy allows businesses to charge more for their offerings.
Stability
A loyal customer base provides a company with stability, allowing them to accurately forecast and plan for the future. A business that has high customer churn is always managing unpredictable acquisitions and terminations. Improving customer loyalty stabilizes the customer base, improving the accuracy of forecasting and allowing a business to be proactive, rather than reactive.
Investing in the customer experience leads to more impactful interactions between the customer and brand, strengthening the relationship and extending customer longevity. Improving the value of these interactions results in a positive ROI for investments related to CX: helping the business channel resources effectively and ultimately, improve resilience to recession.
Improving the value of these interactions results in a positive ROI for investments related to CX: helping the business channel resources effectively and ultimately, improve resilience to recession.
Customer Experience Strategy
With the benefits listed above, improving CX sounds like a great idea. But how can a business address the different stages of the customer lifecycle, and improve CX at each stage? How can an organization achieve operational excellence?
First, break down the journey. At Peak, we look at four areas of the customer experience process: onboarding, support, satisfaction, and termination. Then, think about what your customers are most concerned about at each stage. What is a new customer thinking about - and how would that change for a customer three to five years from now? Address these concerns as specifically as you can when outlining a CX improvement strategy.
Customer Onboarding
Typical customer pain point: responsiveness
Communication is critical when a business gains a new customer. Depending on the product or service in question, and the complexity of getting a new customer onboarded, the process could take five minutes, five days, or even five months. Businesses can set customer expectations for onboarding ahead of time. Customers are more concerned about responsiveness than anything else: can I get in touch with an agent if I have questions concerning the product or encounter problems?
To improve customer onboarding, consider the following:
Create a journey roadmap that sets clear expectations for the customer
Streamline processes and automate where possible
Provide training for support staff
Measure results from customer POV and staff POV
Investing in operational analysis and improvement means better intake, response and tracking of customer contact throughout the onboarding process. This ensures that the customer support team is responsive to customer concerns and has the knowledge and agency to resolve any issues that arise. As a result, customers are also less likely to fall through the cracks or have redundancies throughout the process.
Customer Support vs Customer Service
Typical customer pain point: resolution
Not only do customers expect to reach a responsive customer service agent at any time, and on their preferred channel - they also expect that any problem that they have will be resolved immediately upon contact with a customer service representative. This is an important CX metric known as First Call Resolution (FCR).
Recent research from the SQM Group found a greater than 1:1 correlation between FCR and customer satisfaction (CSAT) scores. This means that for every 1% increase in FCR, companies can expect a 1-5% increase in CSAT. Additionally, 1% of FCR improvement results in:
1% reduction in operating costs
1-5% improvement in employee satisfaction
1.4 point increase in Net Promoter Score (NPS)
To achieve these benefits, businesses can take steps to improve the number of customer issues that are resolved on the first customer contact. Accurate tracking of whether an issue is resolved on a single contact is critical. Ensuring that representatives have the agency, training and knowledge to resolve customer issues should be addressed. With a higher rate of FCR, businesses can dramatically improve the customer experience; and therefore become more resilient in the face of economic issues.
Importance of Customer Satisfaction
Typical customer pain point: personalization
Once a customer is past the onboarding stage, and is satisfied with the level of customer support that is available, they move into the ‘satisfaction’ phase. This is not an excuse for businesses to coast, however; showing customers care and consideration even with a strong brand relationship can have a number of important benefits for the business.
To keep customers happy - and keep them buying - a business must demonstrate its understanding of them as an individual through personalized messaging, offers, and other communications.
A personalized customer experience is foundational to the ongoing success of a relationship between customer and brand. Investing in personalization may involve more advanced technology that supports data unification across channels, and representative training to ensure a consistent approach.
Customer Offboarding
Typical customer pain point: effectiveness
From the customer perspective, an effective termination of services boils down to the services actually being terminated. To make this happen, the termination must be properly communicated from the customer to the business, and then throughout the entire organization. Investment should also be made in internal processes, to ensure that nothing falls through the cracks.
This is a critical step in limiting wasted resources. For example, Peak recently had a client that had an ineffective customer termination process, and services (paid by the company) were continued long after the client relationship was terminated. Revising the client termination process to include timely termination of associated services helped the client save $600K in the first six months - and over $1M per year on an ongoing basis.
Additionally, an efficient termination process is important to the overall success of the customer relationship. Much like customer onboarding sets the tone for future interactions, customer termination sets the tone for the time after. While the official customer relationship may be over, a good termination experience can leave the client with a good feeling about your company, and lead them to provide references for your products or services. And according to Gartner, client references have an 80-85% chance of influencing B2B buying decisions.
To learn more about recession-proofing your business with better CX, check out the next blog in our series, which will cover methods of attributing measurable ROI to CX investments.
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References:
(1) https://www.invespcro.com/blog/customer-acquisition-retention/
(2) https://www.cxservice360.com/customer-experience-statistics-you-need-to-know-in-2022/#:~:text=Customer%20Experience%20Increases%20ROI&text=Brands%20that%20provide%20a%20good,drives%20customer%20loyalty%20and%20retention.
(3) https://www.semrush.com/blog/customer-retention-stats/
(4) https://bloggingwizard.com/customer-retention-statistics/
(5) https://www.superoffice.com/blog/customer-experience-statistics/
(6) https://www.sqmgroup.com/resources/library/blog/fcr-metric-operating-philosophy
(7) https://startupbonsai.com/personalization-statistics/
(8) https://www.gartner.com/en/sales/insights/b2b-buying-journey