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    Why customer experience is now considered the number one differentiator -nlightencx

    Businesses and brands work extremely hard at differentiating themselves from their competitors – with good reason. You create loyalty, establish credibility and enhance your market status, among other things.

    Some businesses do it very well, and truly cement their place in the hearts and minds of their target market. Think of Nando’s with its playful, cheeky and often daring advertising campaigns. Or Coke’s iconic, consistent, and near-ubiquitous imagery that portrays an aspirational lifestyle.

    Trader Joe’s, a popular US grocery chain, relies not on big ad budgets, but on being informal and super-friendly. Staff are always smiling and do random acts of kindness, such as handing out balloons to children in the store. Signs advertising special deals are handwritten, funky and say things like “Our chicken tenderloins are as tender as a Lionel Richie ballad”.

    Price is a differentiator too. “Cheapest prices in town” slogans turn up everywhere. The problem with that strategy is that, as soon as a competitor undercuts you, your point of differentiation is lost unless you go lower. And so it goes…until you’re bankrupt.

    Product excellence is a better differentiator. Just ask Apple. The drawback, though, is that you’re only as good as your latest product. If someone out-innovates you, your advantage disappears unless you can, in turn, out-innovate them with a new product. It’s an expensive and never-ending technology race.

    Similarly, if a competitor replicates your product and sells it at a lower price (…did anyone say “China”?), you may be in trouble.

    Customer experience emerges as the biggest differentiator

    But while all of the above strategies can be a differentiator for your company or brand – either alone or in combination – there’s a new and rapidly evolving world out there. Customers, whether in B2B or B2C, now have different attitudes, motivations and expectations than just a few short years ago.

    Time and again, research by credible organisations like PwC, Gartner and Salesforce is showing that customer experience (or CX if you prefer) has emerged as the most important differentiator.

    PwC, in a research article created for its Consumer Intelligence Series, notes that “Good customer experience leaves people feeling heard and appreciated. It minimises friction, maximises efficiency and maintains a human element.” Emphasises PwC: “Experience is everything. Get it right.”

    Gartner, the global technological research and consulting firm, highlights the value of CX in one of the key findings of its ‘Creating a High-Impact Customer Experience Strategy’ report, noting that “CX drives over two-thirds of customer loyalty, outperforming brand and price combined”.

    Salesforce, international customer relationship management software company, published a 29-country study in 2022 entitled ‘State of the Connected Customer’, which found that almost 90% of respondents believed the experience a company provides is as important as its products or services.

    CX in the South African context

    “Ah”, you say. “But that’s in developed-world countries. South Africa is different.”

    No, it’s not. In mid-2023, shortly after the release of the FNB/BER Business Confidence Index for the second quarter of the year showed that South Africans had not been as uncertain about their economic wellbeing since the third quarter of 2020, we did a snap poll among our clients at nlightencx to explore the state of the market.

    Surprisingly our clients, which are all businesses, reported that their customers were not basing their purchasing decisions on price alone. Instead, it was excellent customer service that was most important. Better products/services were on a par with price in order of importance.

    Given the lack of economic confidence and steep price rises at that time, we wouldn’t have been surprised if people told us they were basing every purchasing decision on price.

    Instead, what we found was that ‘it all comes down to price’ was only listed by 22% of respondents to our snap poll as their decisive factor. ‘Great customer experience’ came out tops (56%), with ‘better products/services’ also listed by 22% of respondents.

    What this tells us is that a knee-jerk strategy based on internal cost-cutting to achieve the lowest possible price point is unlikely to deliver the right results for SA businesses. Of course, people want a good deal, especially when they’re hurting financially. But many are also smart enough to know that ‘good deal’ and ‘lowest price’ are seldom the same thing.

    The importance of retaining customers

    The results of that snap poll tie in with findings from statistical long-term research conducted over two years by Professor Charlene Gerber, Head of Research at nlightencx and an Associate Professor at the University of Stellenbosch Business School. This showed a clear correlation between consistently high levels of customer satisfaction and sales, which could be up to 30% higher.

    The important takeout from this is that companies which keep their existing customers happy are in a better position to grow than those who are throwing lots of money at sales and marketing efforts to get new customers. Put another way: you can increase sales by almost a third, without ever signing up a new customer. That’s significant.

    Figures published in 2023 in Accountants Daily, an Australian publication, are even more bullish on this point. They indicate that 65% of a company’s new business comes from existing customers, and that loyal clients spend 67% more than new ones.

    Further statistics from the publication show that the probability of selling to an existing client is 60-70%, while the probability of selling to a new prospect is only 5-20%. Similarly, existing clients are 50% more likely to try new products.

    These figures shouldn’t be a surprise. If a well-cultivated CX relationship is already in place, it’s usually an easier sell. This is where cross-selling and up-selling opportunities work their magic; businesses that offer their existing customers relevant add-ons are far more likely to achieve solid growth.

    In summary, if I had to give SA businesses two pieces of advice for achieving success in 2024, they would be: ‘keeping clients is more important than getting new ones’; and ‘put client relationships at the centre of every action’. Put simply: Have great CX!

     

    My top tips for achieving CX success

    These are my top tips for creating an excellent customer experience and building outstanding loyalty:

    • Empathise. Consumers are uncertain and they’re hurting. Take some time to talk to your clients and understand what they are going through. See how you can adjust their plans or contracts to suit their financial situation at this time.
    • Communicate your intentions. Take this empathy and include it in all your communication so that your client knows that you are behind them.
    • Walk the walk. People will pick up on meaningless slogans and empty marketing promises and use them against you. Make meaningful and deliverable undertakings.
    • Meet your client where they are at. Communicate via the channels that work best for them – not the cheapest and easiest for you.
    • Don’t get too caught up in automated CX – not when your customer is so vulnerable. Certainly, it’s useful, helps with quick responses 24/7, and can save time and money. But remember that automated CX is easily replicated by your competitors, eroding any point of competitive difference. 

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