Love me? Love me not? Why customer relationships matter

“We’re in the customer relationship business.” Yes, many companies make that claim. And no wonder―customer experience has never been more important. Increasingly, it’s at the heart of the most competitive, successful business strategies. It’s also a key component of the digital disruption that is redefining entire industries and our lives.

Think Uber, Apple, your service provider, your apps, a restaurant with glowing Yelp reviews, or any professional you choose to do business with. A great customer experience maintains your loyalty. Anything short of that and you’re open to something better, given the choice.

So be honest: Is your company really providing a great customer experience? And, aside from stats on service calls and customer churn, how do you really know?

McKinsey & Company, one of the world’s leading management consulting firms, has been studying customer service in companies around the world. They’ve posted podcasts and blogs on what they’ve uncovered. The research has led to valuable insights into how you can:

Better understand your customer’s experience
Design a better customer journey
Establish a feedback loop that keeps employees at different touchpoints aware of what customers are experiencing every day

Perception is Reality

In a popular Ted Talk in 2009, ad man Rory Sutherland famously said most problems relate to perception. Perceived value is how luxury fashion brands support high prices far above competitors. Take a Gucci denim jacket priced at $2950 versus one from Levi’s for $69.99, for example. Two similar products. But very different perceived value of each among diverse customer niches.

So it’s vital to understand what your customers consider a great experience, not what you assume that experience should be for them.

Customer Experience as a Brand Differentiator

We all have horror stories about poor customer service. In the past, monopolies like public utilities had little incentive to improve. Now, with competitive pressures, they do.

Focus on the customer experience is now percolating from leading-edge companies to more staid B2C firms. Even some B2B companies are now recognizing that a great customer experience can be effectively touted as a competitive advantage and that it provides a variety of other benefits, including:

Higher new customer conversion rates
Lower support costs because of lower frequency of calls
Customer referrals
Accelerated digitization
Elimination of repeat transactions
Higher revenues due to lower churn and cross-selling/up-selling

How to Get the Customer Experience Right

At the European utility, McKinsey consultants created a cross-functional team with representatives from different departments to look at all of the customer touchpoints. Their task was to find ways to simplify and shorten the customer journey.

Complexity accrues over time, especially in large corporations. Government regulations, different IT systems, cultural approaches that vary by geography, the addition of new service features, marketing initiatives, and many other factors can produce very cumbersome processes and customer experiences. Customer journeys in these organizations are optimized for the company, not the customer.

Here are some tips learned from McKinsey on how reduce touchpoints and improve customer experience.

Create a vision
Start with a vision of what you want to achieve. Do you want to improve the customer experience based on a competitive challenge? What does improved customer experience in your company look like?
Study the problem
How do customers perceive your company? Why do they have this perception? What are your customers’ expectations? How do you measure up to your competitors? Once you understand the issues, acknowledge them honestly.
Merge silos
Often companies are organized in different silos, including sales, marketing, IT, operations, and finance. This means multiple, separate, customer journeys. Representatives from the different departments need to collaborate to create one, streamlined journey. So identify the most important touchpoints of your customer’s journey. Designate a leader of a cross-functional team (perhaps the person whose group has the most customer touchpoints) and work on improvements. Prioritize touchpoints and processes that are the most important to the customer.
Create an ongoing feedback loop
Rework the customer journey in your company until you have clear data on improved customer satisfaction. Put in place a measurement system that ask customers, at the end of a journey (e.g., signing up for a service, buying a product, making a support call) to rate their experience. Feed the results back into your organization so that individuals in different departments can see the positive and negative reviews. Amplify what your organization is doing right and fix what it’s doing wrong.

A great customer experience is like the best friendships or romantic relationships. Sensitivity and attention are golden while neglect breeds discontent.