Creating Memorable Customer Experiences

Stages of Customer Experience

80% of CEOs surveyed recently claimed that their organizations delivered an exceptional customer experience.

8% of customers of the said organizations agreed.

This chasm between what service providers think and what their customers think has a new name – the experience gap.

Mature customer experience programs have five principal objectives:

1.    Improve customer retention and loyalty.

2.    Increase customer share of wallet and lifetime value.

3.    Optimize customer acquisition.

4.    Reduce cost to serve.

5.    Improve brand awareness and equity.



Why do customers desert and defect?

How many organizations can you think of that have high retention rates rooted in great customer experiences?

The fact remains that no matter what, some customers will defect. Any organization that claims to have zero or near-zero defections is living in a delusionary world.

The best organizations are happy to have single-digit defection rates.

What type of customers do you want – defectors or apostles?

According to the TEMKIN Group:

Apostles have 6 – 12x more customer lifetime value than defectors, hostages, and mercenaries.

A Bain and Company study shows that 86% of customers are willing to pay more for a better customer experience.

What is holding back organizations from providing the “better customer experience”?

It appears that the tools we use to measure customer satisfaction are flawed.

Consider a typical Likert Scale of 1 – 5 where one is “very dissatisfied” and 5 is “very satisfied.”

Most organizations would consider a score of 4 to be good and acceptable.

And they would be wrong.

A Forrester Study shows that customers who rate their experience at 5 are 6x times more likely to recommend the product or service to others compared to those who rate their experience at 4.

Further, customers who rate their experience at 5 are 4.5x times more willing to pay a higher price than customers who rate their experience at 4.

The problem is that customer satisfaction surveys are lagging indicators. The more the interval between the experience and the feedback, the more distorted is the result.

What is the solution?

Instant feedback. Even-numbered scales that force customers to take a position and avoid ambivalence (neither satisfied nor dissatisfied).

One change that I see in the great organizations is the speed with which they gather feedback. For example, all the Ivy League institutions implore you to provide feedback the moment a Webinar is over. And consciously work to avoid the pitfalls that you may point out.

To quote the Wallet Allocation Rule:

“Customers may be satisfied with your brand and happily recommend it to others – but if they like your competitors just as much (or more), you are losing sales.”

In fact, recent studies show that Customer Effort Score (CES) is a better predictor of the propensity to repurchase as well as increased spending than either Net Promoter Score (NPS) or Customer Satisfaction Score (CSAT).

Source: Harvard Business Review

Swiss Re, a leading global re insurer made the painful decision to jettison unprofitable segments (it is still true that 80% of revenues emanate from 20% of customers), measured the cost of customer acquisition (both visible and invisible costs), captured instant feedback, adjusted strategic initiatives and improved its market share by 3% in just six months in a highly competitive market.


In hyper-competitive industries and markets, the difference between the winners and the also-rans is often the cost to serve. Creative organizations incentivize performance that matters (customer loyalty and higher spend) and are quite ruthless in punishing underperformers. It is vital to track costs in real time. Since accounting tends to be historical in nature, organizations may find themselves out of their depths by the time they realize something is amiss. The key drivers of marketing efficiency and the corresponding costs are best measured synchronously so as to derive the best ROI on every dollar spent.

Cross-industry research by the Temkin Group shows that happy customers are:

5x times as likely to repurchase.

6x times as likely to forgive.

8x times as likely to try the organization’s other offerings.

3x times as likely to spread positive WOM.


Customer experience programs seek to change brand detractors to promoters and promoters to evangelists or apostles. Mature CX companies combine analytics and comparative assessments to understand customer behavior and brand performance in the context of competing options (Source: QUALTRICS).

Customer centricity is not a project.

Customer focus is not a program.

Placing the customer at the focal point at every level in the organization is critical to success. In the words of Chris Fisher of Allianz, “True customer-centricity is a culture and a way of doing business that will help us grow and be successful for decades.”

According to Forrester Research:

84% of firms aspire to be a CX leader.

Only 1 in 5 ultimately succeed.

Where are you on this journey?

For an extensive discussion of CX Maturity Levels, please read the White Paper by QUALTRICS.

Dilshad and Krishna

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