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Customer Experience vs Customer Retention and Profitability

Customer experience can make or break or a business. We have heard this term multiple times over the past few years but what is it? Customer experience refers to the entire interaction that a customer has with a business. It includes all the touchpoints, from browsing the website to purchasing a product, and even after-sales support. It is a crucial aspect of any business as it determines customer satisfaction, loyalty, and retention. A business with a positive customer experience is likely to see an increase in retention and profitability. To improve customer experience, businesses need to focus on the following key areas:

  1. Understanding the customer journey: A business needs to understand how its customers interact with its products or services. This involves mapping the customer journey and identifying areas that can be improved. For instance, a business can streamline its checkout process or make it easier for customers to find what they are looking for on their website.

  2. Personalization: Customers want to feel valued and appreciated. Businesses can achieve this by offering personalized experiences. This can be done by using customer data to offer tailored recommendations, promotions, or content.

  3. Consistency: Customers expect consistency in all interactions with a business. From branding to communication and support, businesses need to maintain consistency to build trust and loyalty.

  4. Responsiveness: Businesses need to be responsive to customer inquiries, feedback, and complaints. This shows that they value their customers and are committed to providing quality services.

  5. Employee engagement: Employees are a critical part of the customer experience. Businesses need to invest in employee training and engagement to ensure that they deliver quality services and are committed to providing positive customer experiences.

Improving customer experience can lead to increased retention and profitability for a business. Happy customers are more likely to return and recommend the business to others. Additionally, they are likely to spend more money on the business's products or services. A business that focuses on improving its customer experience is likely to see an increase in revenue, reduce customer churn, and improve its overall reputation. Customer experiences can either be positive or negative. The same is true of their impact on your business. A positive customer experience can lead to increased retention, new customers and higher profits while the inverse is also true.





Customer experience and how it impacts customer retention and business profitability


Positive customer experience example:


A customer wants to purchase a new laptop from an electronics store. They visit the store and are greeted by a friendly and knowledgeable salesperson who helps them identify the best laptop for their needs. The salesperson provides information about the laptop's features, benefits, and pricing. The customer decides to purchase the laptop and is offered free setup and installation. The salesperson also provides their contact information in case the customer has any further questions or concerns.


Negative customer experience example:


A customer orders a product online from a clothing store. They receive an email confirmation that the product has been shipped but do not receive any tracking information. The product does not arrive on the expected delivery date, so the customer contacts customer support. The customer support representative is unhelpful and cannot provide any information about the product's whereabouts. The customer is told to wait a few more days and call back if the product does not arrive. The customer does not receive the product for another two weeks, and when they finally receive it, it is damaged. The customer is frustrated with the experience and decides to never shop from the store again.

How does positive versus negative customer experiences influence customer retention in a business

Positive customer experience influences customer retention positively in a business. When customers have a positive experience, they are more likely to become loyal to the brand and recommend it to others. This leads to increased retention, as customers keep coming back to the business for repeat purchases. Customers who have positive experiences are also more forgiving when things go wrong, as they believe the business is committed to providing them with excellent service. This makes them less likely to switch to a competitor and more likely to remain loyal to the brand.


On the other hand, negative customer experience influences customer retention negatively in a business. When customers have a negative experience, they are less likely to return to the business for repeat purchases. They may also share their negative experience with others, leading to a bad reputation for the business. Negative experiences can lead to decreased retention and reduced revenue. In so

me cases, a negative experience can lead to customer churn, which means the customer stops doing business with the company altogether.


In conclusion, positive customer experience is essential for customer retention in a business. It is critical to ensure that customers have a positive experience at every touchpoint with the business. Negative customer experience can have a detrimental effect on customer retention and should be avoided at all costs. To increase retention, businesses should focus on providing personalized experiences, being responsive to customer needs, and maintaining consistency across all touchpoints.

Advice for startups that are just building out their customer service teams

For startups who are just building out their customer service teams, here are some pieces of advice:

  1. Hire the right people: Customer service representatives should be empathetic, patient, and knowledgeable. When hiring, look for candidates who have a passion for helping people and are excited about your company's mission. It's also important to provide your customer service representatives with the right tools and training so that they can deliver high-quality service.

  2. Focus on the customer journey: Startups should focus on mapping out the customer journey to understand where the touchpoints are that require customer support. This will help to identify areas where improvements can be made and the right resources allocated to customer service.

  3. Use technology: With advances in technology, there are now many tools and platforms available to help startups streamline customer service operations. For example, chatbots can help answer simple customer inquiries, while social media can be used to respond to customer complaints and feedback.

  4. Respond promptly: Customers expect a prompt response when they have a question or issue. It's important to have customer service representatives available during business hours, as well as offering 24/7 support where possible.

  5. Collect customer feedback: Startups should actively seek customer feedback to understand how their customer service is performing. This can be done through surveys, customer reviews, and by monitoring social media channels. This feedback can be used to improve the customer service experience and drive customer loyalty.



The success of any business is heavily reliant on the success of their customer support team. Startups and established businesses should invest in their customer service team from the outset, with a focus on hiring the right people, mapping the customer journey, using technology, responding promptly, and collecting customer feedback. By providing a high-quality customer service experience, startups can build a strong reputation and drive customer loyalty, which is essential for long-term success.


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