What is customer experience (CX)?

This definitive guide to customer experience (CX) for CX practitioners and leaders covers every aspect of creating a great customer journey, including understanding why it is important to businesses, developing strategies for customer engagement, techniques for measuring success and a selection of CX Network's case studies showcasing the benefits of a strong CX strategy.

What is customer experience?

The customer experience (CX) is the sum of all experiences a person or company has when interacting with a business, its products or services. CX covers all touchpoints, including pre-purchase, consumption and post-purchase interactions making it relevant to all points of the buying journey, from initial marketing to customer service. It is also relevant for consumers across all industries, from fast moving consumer goods (FMCG) to hospitality, public services and utilities.

At the heart of CX is creating positive and memorable experiences, which will ultimately encourage loyalty and advocacy from the customer. This also means that companies must continuosly deliver great experiences.

CX Network's own research has found that among our network members, 65 percent agree that customers are more willing to switch brands if they are unsatisfied. Further research by CX expert Shep Hyken found that 74 percent of more than 1,000 surveyed consumers would switch to a competitor brand or company if they found it provided a better customer experience.

"We want to be so good that the emotional connection that a customer has with us is more than a perk. We want them to love our people and love our experience.”

Shep Hyken, chief amazement officer, Shepard Presentations

CX sits alongside user experience (UX) and employee experience (EX) as part of the total experience (TX) ecosystem. This is known as the experience lifecycle and it is evolving rapidly.

In addition to the heightened consumer activity at present in the private sector, the public sector is also now sharpening its focus on the TX ecosystem. Here, the focus is on the citizen experience, which cascades into the experiences provided by different public services, for example, the patient experience (PX) in healthcare.

What is the difference between customer experience and customer service?

As outlined above, a customer's experience is about their interactions with a business, brand or organization and broadly covers the products and services they receive. When customers have a great experience it can boost brand strength, loyalty, sales, revenue and other factors, and great experiences can be crafted both online and offline. In fact, with a comprehensive journey map it is even possible to design a journey that seamlessly takes the customer between channels and touchpoints.

Customer service, however, is specifically about the support a customer receives when something goes wrong, or they reach out for assistance. This occurs via the channels a business offers to its customers - for example, email, phone, social meddia, app-based messaging - which often comprise a mix of self-service and live-service options.

Why is CX important to businesses?

While the products and services offered by a business are key to its success, the experience it offers to customers can be a true differentiator, directly impacting customer satisfaction and loyalty.

A great customer experience reflects a brand’s values, fosters loyalty and boosts competition – it is also now proven to positively impact revenue. In fact, research by Deloitte and Touche has found customer-centric companies are 60 percent more profitable than those that are not focused on the customer.

For this reason, companies are investing heavily in new, experience-related capabilities (see graphic opposite). According to CX Network's Global State research, in 2023, these investments are focused on building loyalty, meeting customer demand for instant and effective service and ensuring that journeys take a customer seamlessly between channels.

Securing buy-in for such investments, however, can be tricky and many companies remain focused on the “profit imperative” over experience. As Bain & Co’s Stan Swinton told CX Network, many companies say they are obsessed with customers but remain locked in a financials-first attitude.

"If you focus on the customer longer-term, the financials tend to work themselves out as opposed to the other way round.”

Stan Swinton, executive vice president, Bain & Co

This is because positive customer experiences are contagious. Due to reviews, word of mouth, personalized advertising and other factors, customers can easily recommend a brand, product or service to those they know. This drives repeat business and earned loyalty and is an essential element of the experience toolkit during challenging economic conditions.

Steps for creating a successful CX strategy

A CX strategy is a plan containing the actionable steps needed to improve the overall experience customers have when they interact with a company. A successful CX strategy should include all departments – not just those that are customer-facing – and must take into account the customer's needs, expectations and emotions. The ultimate goal of a CX strategy is to increase customer loyalty, satisfaction, and advocacy for the brand.

Broadly speaking, a CX strategy should include these steps:

Set clear objectives such as improving customer satisfaction, increasing loyalty, and getting higher conversion rates.
Conduct research to understanding the needs and the pain points of your customers.
Create a customer journey map of all the touchpoints customers have with your business.
Use the customer journey map to identify areas for improvement and set specific goals with timelines based on this.
Continuously improve by monitoring your plan and getting feedback from customers, employees and stakeholders.

Why customer loyalty is vital

Customer loyalty is about repeat business and positive referrals and is imperative for any CX strategy to be successful. Research shows that 64 percent of customers are more likely to purchase more frequently from brands that offer a customer loyalty program. Additionally, 31 percent of customers are willing to pay a higher price to remain with a brand that offers a loyalty program.

Companies may offer rewards-based schemes such as those giving redeemable points with purchases, exclusive access programs, perks or discounts in exchange for subscriptions, or rewards for shopping and referring new customers, to name a few examples.

“It has become an expectation from the customer… it is about how we use the loyalty program to understand our customers, so we can continue to meet and surpass their expectation.”

Hollie McLellan, director of customer marketing, Boots

Just as important to loyalty are the non-transactional elements of a customer's experience. Ensuring customers have a frictionless, positive interaction with the business and providing personalized experiences targeted to individual customers, will help drive the emotional connections that underpin a consumer's loyalty to a brand.

How to measure CX

There is no single definitive method by which to measure a customer's experience, or the return on your investment in that experience. In fact, in 2022, our Global State research found that 51 percent of CX practitioners use a range of metrics to paint a clearer picture of their CX success.

The most popular metrics include:

Net Promoter Score (NPS). Probably the most-widely known CX metric, it measures a customer's willingness to recommend your brand. This guide explains how to implement a good NPS strategy.
Customer Satisfaction (CSAT). This is based on feedback to a single question: how would you rate your overall satisfaction with our company/product/service? The customer then selects their choice on a five-point scale.
Customer Effort Score (CES). Customers are asked whether they agree or disagree with the following statement, on a seven-point scale: "The company made it easy to handle my issue." There are some handy tips for optimizing surveys and tracking customer effort scores in this guide.
Customer feedback surveys. Giving customers detailed questionnaires can help businesses understand how they feel about their experience with the company.
Voice of the Customer (VoC). VOC programs capture detailed information about how customers feel about all their interactions with a company. They gather data from various sources, such as surveys, customer service interactions and social media campaigns.
User testing. With user testing, businesses can get insights into how a product or service is performing by noting customers responses and reactions.

There are many other internal CX metrics that businesses use to measure their success in the eyes of their customers. These can include, but are not limited to: churn rates and retention rates, customer reviews, customer lifetime value and referrals.

If you are unsure which metrics are the right ones for your business, use this checklist to help you decide what to measure to help you better understand your customers and how you can drive customer loyalty.

How to prove ROI in CX

Return on investment (ROI) is defined as the profit generated over the total cost of a financial investment. In CX, however, the financial gains generated by investments in customer satisfaction are not always as straightforward to identify or measure.

CX Network's Global State of CX 2023 found that 36 percent of our network members feel there are a lot of CX benefits that go unmeasured in their organization, while a mere nine percent said they have visibility on all benefits gained due to CX. Despite the challenges in measuring success, 42 percent of our network members said the pressure on them to demonstrate ROI is increasing. These challenges continue even once budget is secured. In 2023, our network members said their greatest investment obstacles are integrating new tools with old, integrating new initiatives in company culture or processes, and finding budget (see below).

The challenges that exist around ROI stem from competing priorities between stakeholders. C-suite executives, board members and shareholders all want to define the success of the business through accounting measures, but these are not always aligned with a great customer experience. In fact, in 2022, 60 percent of CX practitioners told CX Network they doubt their brand’s ability “to calculate the linkage between CX initiatives and business benefits”.

what is cx It is imperative, therefore, to get a handle on ROI to avoid delaying CX investments and projects. There is no single method by which to measure the return on a CX investment, but there are many different ways to demonstrate a customer initiative is bringing value and driving returns for the business. To do so, existing measures of experience, satisfaction and retention that can be used to indicate overall ROI. These include VoC, customer lifetime value and churn rate.

To assist, CX Network has a roundup of ROI calculators, each of which can be used to assess a different area of a business’s performance and measure the returns that could be achieved by attaining specific objectives.

“Companies still, to this today, do not measure that magic flywheel of how much of your business is coming from existing customers buying more – repeat purchase – and referring their friends. Accounting doesn’t measure that.”

Fred Reichheld, fellow, Bain & Company

Real-life case studies demonstrating the importance of a strong CX strategy

CX Network has gathered a number of case studies in a range of industries to demonstrate the importance of a robust CX strategy. We have included a selection of these here.

How Virgin Money created a customer-centric solution during times of uncertainty

During the Covid-19 pandemic, Virgin Money realized its customers were becoming increasingly worried about money. With branches closed or operating at severely reduced capacity, and contact center staff struggling to adapt to working from home, Virgin Money approached market research company InMoment with the idea of funnelling customer money queries to dedicated remote working teams. This would mobilize staff at home and expand the number of customers supported during a highly uncertain time.

In two weeks the Money on Your Mind initiative was live, available to existing Virgin Money clients as well as non-customers, giving the bank the opportunity to attract new customers. The project fielded more than 10,000 queries, and around 90 percent of people who used the initiative said they would stay on as a customer or consider moving to Virgin Money in the future.

Both Virgin Money and InMoment won three categories at the 2020 UK Customer Experience Awards for the initiative, which has now become a permanent feature in the bank’s offering.

“We turned the traditional survey model on its head by allowing customers to communicate with Virgin Money and share their concerns."

Simon Fraser, VP of customer experience strategy, InMoment

An omnichannel approach to speed up resolution times

ShowPo, an Australian eCommerce fashion brand, was experiencing an incredible level of growth to the tune of 50 percent year-on-year. This rapid expansion, however, was proved to be a double-edged sword as its rise in popularity was negatively affecting its customer service.

With many more customers, and therefore many more customer queries, the average resolution time was beginning to slip and the company’s 9am to 6pm support model was leading to missed calls.

"It is very easy to say, ‘our goal is to provide great customer service,’ without answering what that looks like. For us, it is fast resolution times.”

Paul Waddy, head of operations, ShowPo

The solution was to implement an integrated omnichannel solution, that included a central repository to store data across teams based in Sydney and the Philippines, along with using Slack to improve internal communications. As a result Showpo’s agents are now able to answer chats within 26 seconds, four seconds faster than their KPI.

According to Paul Waddy, head of operations at ShowPo: “eCommerce, particularly in fashion, is becoming more and more competitive. Customer happiness can differentiate us if we do it right."

A Voice of the Customer program to act on consumer insights

David Hicks, facilitator of the CX Network Masterclass and founder of the consultancy TribeCX, once worked as a trainee at a food and beverage company that delivered milk to customers’ homes. When many similar businesses were losing customers to supermarket chains, Hicks realized that the businesses that were not experiencing this downturn had developed strong relationships with their customers.

Hicks came up with the idea of simply handing out postcards with deliveries asking for customer feedback. The business was surprised at the amount of feedback customers had, and senior leadership became very interested in the initiative. As a result, the business discovered that many customers were ready to leave due to a recent change in supplier. The company was able to retain them simply by switching back, proving that sophisticated technologies are not necessary gather valuable customer insights.

“You are the one person whose job it is to make absolutely sure that the voice of the customer is being listened to and understood. As a result of this you will not always be popular, but it is important that you build in confidence and ensure that the team believes in the metrics.”

David Hicks, founder and president, TribeCX

The future trends that will shape CX

As consumer behavior changes and technology becomes ever more sophisticated, companies will need to adapt to meet the evolving needs and expectations of their customers. The common theme emerging is an increase in the demand for personalized customer experiences. Here are a few key trends to look out for:

Artificial Intelligence (AI) and Machine Learning (ML) are increasingly used to automate and personalize customer interactions. Among the capabilities, conversational AI can be used to automate many enquiries of various complexity and respond to customers through chatbots or virtual assistants. ML meanwhile, can analyze customer data to create personalized recommendations and predict future preferences.
Omnichannel integration gives companies a complete view of the customer, including their purchase history and preferences. By leveraging AI and ML, it can enable businesses to use data from multiple touchpoints such as in-person, online, and mobile to deliver more personalized experiences.
The metaverse. The Covid-19 pandemic forced companies to rely on remote interactions with customers, while opening up a whole new world of virtual events and immersive shopping experiences. Some companies have aimed to get ahead of the trend by creating digital products such as Nike’s NFT sneakers.
Data management and security is increasingly important as companies leverage more and more data to learn about their customers’ behavior. As more channels and interactions generate more customer data, organizations can leverage this to drive future experience improvements, as outlined in this CX Network guide. There are drawbacks however, around keeping this data secure and there will need to be a greater focus on ensuring all personal and financial information is protected to avoid data breaches, such as the hack JD Sports experienced, that affected millions of customers.
Gamification, where game-playing elements are incorporated into the customer journey, is on the rise as a way to build brand loyalty and even drive up sales.

**More resources from CX Network to help you understand customer experience**

To support customer experience professionals around the world, CX Network offers:

A library of business reports that feature analysis and commentary from leading brands.
A masterclass program to support CX leaders, practitioners and teams in their continued professional development.
Exclusive articles, insights and interviews from the biggest names in experience management.
Live webinars on key topics and emerging trends that impact experience professionals in their day-to-day work.
On-demand webinars that allow new members to catch up on CX Network’s biggest online events.
Live events in major global markets throughout the year.
Sponsorship opportunities for those who specialize in solutions for customer experience professionals.