The Business Benefits of Customer Experience Strategy
A recent McKinsey article makes clear that customer experience is a business imperative. Companies that haven’t yet shifted their approach to focus on their existing customers will lose the race to the companies who have.
McKinsey summed up the benefit of what they’re calling an experience-led growth strategy, as follows:
This is a compelling claim, and they’ve done the research to support it, building on the estimates that:
- It takes the acquisition of three new customers to compensate for the value lost when one customer leaves.
- Established companies realize 80% of the value they create from their core business, mostly expanding their relationships with existing customers to realize revenue growth.
- Specifically in the U.S., companies that are customer experience (CX) leaders, “achieved more than double the revenue growth of ‘CX laggards’ between 2016 and 2021.” This growth comes from increased cross-selling rates (10-15% higher) and increased share of wallet (5-10% higher).
As practitioners of CX strategy, it’s always nice to see numbers that back up what we know to be true but haven’t been able to quantify ourselves at a large scale. CX strategy work is some of the most powerful work we can do to identify effective means to grow businesses. It identifies the best ways for companies to build, maintain, and grow relationships with their customers over time—by explicitly including the customer.
In the article, McKinsey focuses exclusively on—and shares examples from—established companies, pointing out that they are better-positioned than their newer competition to enact experience-led growth strategies. This is because they have an established customer base to learn from, and years’ worth of data to lean on to ensure that experiences are designed and personalized to meet their customers’ common and unique needs.
This is certainly an advantage, but even if experience can’t take the lead, experience-influenced strategies are good for all companies. For younger companies, building a culture focused on the customer experience from day one will mean less need for focus and culture shifts in the future.
CX strategies look different for every company, as they’re sensitive to that company’s context. For new companies, focused on customer acquisition, and without the benefit of statistically significant data to hone their experience strategies, these strategies will center around the needs and preferences of potential customers and will be shaped to reflect the companies’ brands. For more established companies (as soon as data are available—and this can be very soon for companies with short customer lifecycles), they should be grounded in the lived experience of their customers—the good and, more importantly, the frustrating—and they should be evaluated to ensure that they are aligned with the companies’ brands.
For companies working to establish themselves, experience strategy is an important part of an overall business strategy; for those that are more established, it should take the lead, just as McKinsey recommends.
How are you including the customer experience in your business strategy?
The One North CX Strategy team works with companies, young and more established, to develop CX strategies that align with both their business goals and their customers’ needs. We help them strengthen and deepen their relationships with their customers, across all touch points, to the benefit of all involved. This work can lead to recommendations for the customer experience itself, for employee experience, for service design, and for data strategy. Regardless, our approach is always the same:
- Get to know our client and their customers, and establish a relationship-based experience vision for the future that is mutually beneficial.
- Explore experience-related concepts that support that vision and identify the enablers (people, process, and technology) needed to bring them to life.
- Create a roadmap to realize the intended future state, and begin working toward it.
This approach is aligned with the first of the three pillars McKinsey highlights to support experience-led growth strategies (Build Aspiration and Purpose), and the broader One North and TEKsystems Global Services teams have the expertise and experience to fulfill on the other two (Transform the Business and Enable the Transformation).
In the market for a CX strategy partner? We’d love to help.
Photo Credit: Joel Filipe | Unsplash
Kat Kollett is the Director of Customer Experience Strategy, leading the CX Strategy team. She brings a multidisciplinary, user-focused approach to innovations in brand, digital, analog, environmental, and interpersonal experiences, and helps clients apply those innovations to meet their strategic objectives.