What is the term for the benefit or satisfaction received from using a good or service?

How customer experience works

Customer experience encompasses all of the touchpoints that customers have with a brand. Examples of touchpoints include opening a product's packaging, reading the instruction manual, speaking to customer service, having the product repaired and exchanging the product for a different model.

Customers experience feelings and emotions at each touchpoint, which causes them to form judgments. Feelings can range from joy to apathy to disappointment. Judgments can range from positive, such as viewing the company as helpful when a customer is efficiently assisted, to negative, such as seeing the company as incompetent when dealing with slow and frustrating customer service. The emotions and judgments can vary wildly from one touchpoint to the next.

Importance of customer experience

Brands must provide a customer experience that meets or exceeds customer expectations. Brands that provide a poor customer experience will not survive. Providing excellent customer experience results in satisfied and loyal customers who will purchase again. These customers may also become brand ambassadors or advocates, recommending a brand's products and services to friends, associates and colleagues. Many brands use customer experience as a competitive advantage, taking market share by providing a superior customer experience compared to competitors.

Customer experience vs. customer service

Customer experience and customer service are similar, related terms, but they are not interchangeable. Customer service is a facet of customer experience, but customer experience refers to a broader spectrum of the customer journey.

Customer experience describes the emotions, judgments and reactions that a customer has throughout every step of the process -- from researching the product to making the purchase and even beyond, such as reviewing the product and service and potentially recommending it to others.

Customer service, on the other hand, is limited to the interactions that a customer has with a business's employees -- often customer support representatives -- before and after a purchase. These interactions can occur through communication channels such as live chat, social media, phone calls, chatbots and email. Customer service can focus on helping a customer choose the right product and troubleshoot problems.

Customer experience management

Companies can use processes to track, oversee and organize customer touchpoints through customer experience management (CEM). With CEM, the organization can evaluate and improve every interaction between a customer and the company throughout the customer lifecycle.

In a small business, such as a bakery, produce market or dry cleaner, only a few individuals provide the customer experience. In larger companies that sell complex products and services, numerous groups and departments may contribute to providing the customer experience. Whether the customer interaction is direct or indirect, every group plays a role in customer experience. Sales and customer support interact directly with customers, while engineering, marketing, finance and legal create products, services and processes that affect and influence customers.

For more complex products, excellent customer service requires close coordination across groups. For example, sales and customer support shares customer feedback to engineering, which creates a new feature to address a product deficiency. Engineering coordinates with marketing to communicate the new feature to the market. Without such coordination, the product deficiency may not have been addressed, which leads to a poor customer experience.

Examples of good CX

A positive customer experience often revolves around listening to customer feedback to understand and respond to customer needs. CX strategies and examples include:

• Netflix's personalization strategies. Personalization provides customers with content and other marketing materials that are based on their individual preferences or past behaviors. Personalization can improve CX, boost sales and improve brand loyalty by offering customers products and services that they are more likely to be interested in. An example of good CX in this area includes Netflix's personalization strategies. Netflix's personalization engine recommends media that its users will enjoy, which increases in accuracy as customers input more ratings.
• Microsoft's customer feedback collection. When companies can listen to their customers' thoughts and feelings about a product or service, they can respond to that feedback positively. Companies can collect customer feedback through deploying post-interaction surveys, listening to recorded phone calls, using analytics tools and looking at social media Microsoft exemplifies good CX in this area by offering customer feedback forums on which customers can make suggestions and vote on their favorite feature ideas.
• Chewy's ability to foster emotional connections. Customers are more likely to engage with brands that they have emotional connections to. To spark this connection, companies should identify their customers' emotional motivators; e.g., the desire to feel successful or unique or a sense of belonging. For example, the pet supply e-commerce company Chewy does this. The company is known for sending flowers and hand-written cards when a customer's pet dies, which fosters trust and loyalty.

Causes of bad CX

The quality of a customer's experience can make or break a company. Take this example: A brand may sell an innovative product that wins industry awards. However, the customer service they provide is a weak link; when customers ask for assistance, the requests fall on deaf ears and customers' issues go unresolved. In this example, the poor quality of customer service defines the customer experience, minimizing the value that the innovative product delivers.

CX strategies can fail due to a variety of factors, such as:

• Lack of alignment across the organization. Achieving good CX requires the entire organization to be aligned across a variety of different departments. All team members should understand and be working toward the same CX goals. A customer support team, for example, can be fully invested in a CX project, but if the sales team is not, then poor CX is likely to occur.
• Unclear customer journey. Mapping out the customer journey allows CX teams to identify pain points and the factors that influence a customer to make a purchase. Without a true understanding of the customer journey, it is more difficult for brands to connect with their customers at the right time using the appropriate communication channels.
• Lack of technology. CX technologies can enable customer experience teams to collect the right data, measure customer satisfaction and organize customer information. Without these tools, brands can struggle to effectively deliver a positive experience.

Measuring customer experience

There are a variety of metrics to measure customer experience. These include:

• Net promoter score. Net promoter score (NPS) is one of the most common customer experience metrics. It attempts to measure brand loyalty through one question: "How likely is it that you would recommend [company/service/product] to a friend?" Customers typically give a 0-10 rating, which corresponds to not at all likely and extremely likely, respectively. To calculate an overall NPS score, eliminate the neutral responses and subtract the percentage of detractors from the percentage of promoters.
• Customer satisfaction score. Customer satisfaction (CSAT) is another common metric that is gauged through the question, "How would you rate your overall satisfaction with the [service/product] you received?" Customers can respond with a 1-5 rating; 1 represents very unsatisfied and 5 represents very satisfied.
• Customer churn rate. This metric can measure the rate of repeat customers. There are a variety of ways to calculate this metric, which includes using the number of lost subscribers or monthly reoccurring revenue. A good churn rate depends on many factors, such as the company's industry and location.

Customer experience management vendors and tools

It can be helpful for brands to assess the customer experience they provide through CEM. Companies can use several techniques and technologies, including:

• Customer relationship management (CRM) platforms. CRM platforms organize and consolidate customer information into a single database. Most CRM platforms include functions such as marketing automation, lead management and workflow automation.

  Major CRM vendors include Salesforce, HubSpot, SAP, Oracle and Microsoft.

• Customer data analytics. Customer analytics platforms enable organizations to analyze user data and implement customer segmentation. These tools are often a feature of a CRM system, but they can also serve as standalone platforms.

  Customer analytics tools include Adobe Analytics, Google Analytics 360 and IBM Watson Customer Experience Analytics.

• Contact center Contact center software can enable organizations to analyze customer conversations, analyze customer sentiment and monitor calls.

  Vendors include Five9, Twilio and RingCentral.