What Is Customer Experience? (Importance and How to Improve)

By Indeed Editorial Team

Updated June 16, 2022 | Published January 3, 2022

Updated June 16, 2022

Published January 3, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Customer experience entails everything related to a company's ability to help customers succeed with a product or service. Providing a quality experience is important for any business because it can help increase customer loyalty and brand reputation. Understanding this aspect of the business-to-client relationship can help you develop a business model that focuses on maximizing customer success. In this article, we answer "what is customer experience," discuss its importance, contrast customer experience with customer service, and explore the causes of poor customer experience with suggestions on how to improve.

What is customer experience?

The answer to "What is customer experience?" may vary depending on the company. For example, some companies use an online platform to interact with customers, while others employ an in-person model of service, such as in retail. Consumers may use their experience with a product or service representative to form an opinion of the company. A positive consumer experience is an important aspect of most profitable business models. Creating a positive experience with a product or service can promote customer loyalty and increase success in a business.

Related: 6 Tips for Managing Customer Relationships (With Benefits)

Why is customer experience important?

Understanding the customer's experience from engaging with a company's platform to purchasing a product or service can help companies determine how they're being perceived. If companies can identify the essential interactions an average customer has with the company, they can use this information to leverage and moderate a sales environment that supports their needs. Here are a few reasons the customer's experience is important:

Higher customer lifetime value

Customer lifetime value is an evaluation of the worth of a customer to a business over the period of their relationship. Lifetime value may include the projected future net profit of a customer relationship. Optimizing the consumer experience can help companies determine a reasonable value for marketing investments and strategies.

Lower churn rate

Churn rate is a measure of the number of contractual customers who leave or unsubscribe to a service during a period. Companies can offer incentives that discourage customers from changing suppliers, such as loyalty programs. A focus on developing a strategy to achieve a positive experience can help companies reduce churn rate and increase the value of a customer relationship.

Read more: What is Churn Rate? How to Calculate it (With Examples)

Higher customer retention

Customer retention refers to the likelihood of a customer renewing or repeating a service within the same company. High customer retention often means that customers prefer a product or service from the original company because of the perceived worth of their services compared to those of competitors. Consumer experience strategies, such as communication and problem-solving tools that focus on improving the perception of the quality of service, can help increase customer retention.

Better brand advocacy

Brand advocacy means that satisfied product or service users are more likely to promote them to other potential customers. Brand advocacy can help your company appeal to a wider audience and communicate a company's message, which can lead to a higher profit margin. Asking for customer feedback and reviews can demonstrate the value and reputation of a company to consumers seeking a particular product or service.

Related: What is Brand Marketing? (With Elements of Branding)

Customer experience vs. customer service

The major difference between customer experience and customer service is that customer service is more focused on assisting customers with a product or service, while customer experience considers what the customer may think or do after the transaction. A strong customer service strategy includes having product knowledge, problem-solving capabilities, patience, and access to a simple and effective communication network to offer solutions to customer inquiries. A strong experience strategy can be broader and may consider the customer's next steps after completing the purchase, improving a retail environment, and creating a method for examining brand perception.

Customer experience includes customer service and attempts to increase the availability of touchpoints, which are how a customer may find and interact with a business. There are several types of touchpoints that companies can use to create a positive experience for the customer. For example, company-created touchpoints are banners or decorations that advertise a product or message, and customer-initiated touchpoints refer to the communication between a customer and a business before a transaction. Customer service deals exclusively with customer interactions.

How to improve customer experience

Companies can evaluate the potential methods for assessing customer experience by using relationship strategies. Some of these strategies can allow companies to determine the value of existing customer relationships, understand current methods of establishing positive brand perception, and design a platform that encourages more efficient customer relationship management. Here are some strategies companies can use to help ensure a positive experience for customers:

1. Personalize the experience

Companies can help establish trust and increase customer loyalty by personalizing their experience. Consumers typically prefer companies that understand their target audience and know how to engage with them. Companies can make their platform feel more personal by handing out surveys, using geolocation to personalize their offering based on country or city, or by creating a more flexible online experience with adjustable user settings.

2. Empower employees

Empowering employees to take initiative and work toward solutions faster can lead to more positive consumer experiences. The benefit of providing employees with resources and a designated time to incorporate feedback is that they can help customers with a product or service at multiple different touchpoints. Enthusiastic employees committed to delivering quality service can help create a positive perception of the brand.

3. Track the customer's experience

The customer experience mapping method shows and explains important customer interactions across different touchpoints. Knowing each step of the process can help companies determine a customer's feelings, motivations, and attitudes about their brand at all times. Implementing a mapping approach can enhance the quality of experience for potential customers by identifying patterns in behaviours and choices that lead to positive impressions of products or services.

4. Improve user experience

Online platforms can help companies adopt new methods of expanding their online presence through social media. In a rapidly changing digital sales environment, customers can use social platforms to learn about products or services more easily. Companies can analyze consumer data to determine the important factors customers may use to distinguish between products. For example, a customer might show an interest in a product at a physical store, then leave to purchase it online. Companies might explain this behaviour by relating the customer's ability to compare prices online or the convenience of shipping heavier items to their home.

5. Encourage customer feedback

One traditional method of understanding how a customer feels about a product or service is to ask them directly. Using open-text feedback in online surveys gives customers the ability to express their thoughts more openly about their experience. Companies can use incentives such as contests or draws to encourage customers to fill out a survey or provide feedback once they've purchased a product. The company can then use this feedback to devise a strategy to improve the quality of the experience.

Read more: What is the Customer's Voice? And How it Benefits You

Causes of poor customer experience

It's important for companies to understand the causes of all experiences to learn how they can improve in each scenario. Here are some of the common reasons customers may not have a positive experience:

Poor customer service

Customers may report a negative experience in situations where there are long waiting times for online or in-person queries, navigating a complicated retail environment, or with a lack of available customer service members. If a customer receives less attention than they want to help them understand a product or service, they may be less likely to return to that company in the future. For example, identifying improvable areas in their customer service strategy can help a company decide to improve labels, include price comparisons in-store, or hire online support personnel to answer customer questions remotely.

Related: 10 Important Components of an Ideal Working Environment

Unable to find a product or service

Customers might develop a negative perception of a company if they can't easily locate a product in-store. Instances, where desired stock is unavailable, may also contribute to a higher customer churn rate. One way for companies to address stock issues or customer confusion is to organize products according to the frequency of purchase. They may also invest in larger storage facilities for their inventory.

Unavailable customer service staff

If customers cannot find staff members that can answer their questions about a product or service, they might choose another company's services. If a customer service team is routinely unavailable, this can indicate a higher ratio of customers to employees, or represent motivational concerns in the staff. Companies can address these concerns by asking their employees for feedback on the sales environment and by considering expanding the team to balance their customer-employee ratio.

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