- By Keith Kirkpatrick
- October 12, 2022
It is no secret that the economy has made life difficult for companies and their customers. Rising prices due to inflation, a challenging interest rate environment, and near-daily predictions of a full-on recession have done little to instill economic confidence in either the short or long term. Some organizations have responded by redirecting their focus to cutting costs, which in some cases results in the pruning of customer experience programs or staff.
However, making across-the-board cuts to CX programs can be short-sighted, and a more targeted approach to reducing costs may be prudent. Reducing headcount and redirecting spending into self-service tools that use artificial intelligence and automation can make it easier for customers serve themselves independently, often more quickly than using the services of a live human agent. Done correctly, using automation and AI can help improve call and email deflection rates, thereby allowing live agents to spend more time satisfying customers that need assistance with more complex tasks, while reducing the labor costs spent handling basic inquiries.
A key challenge that can arise during periods of economic uncertainty is a hesitancy to spend money. According to a 2022 survey from CNBC and Momentive, Americans across income brackets have started to cut back on their spending, particularly around luxuries such as dining out (53%), vacations (40%), monthly subscriptions (35%), and switching from a brand-name product to a generic one (32%). That is why companies should focus on making the purchase experience as smooth as possible, across all channels. If there is friction in the purchase process, customers may be more apt to simply choose not to make a purchase.
That is also why it is important to focus on CX to retain current customers. Increasing customer retention rates by 5% increases profits by 25% to 95%, according to research conducted by Frederick Reichheld of Bain & Company. And in an economic environment where budgets are stretched and spending plans trend more conservative, many customers will simply opt to do business with a company they know and trust, rather than seek out new options.
Smart organizations should review purchasing, support, and product-return policies to ensure that all processes and options are clear, easy to navigate, and are focused on the needs of the customer. They should also consider offering incentives to loyal customers, which demonstrates empathy (particularly for products or services that are deemed essential), as well as engendering loyalty.
Treating customers well will not only enhance loyalty, but can also help drive recommendations, which can help enlarge your customer base with little incremental cost. People are significantly more likely to trust recommendations from existing customers than any other marketing source. That is why making sure that each customer’s experience is exceptional, as their ratings of a company are extremely valuable.
According to Qualtrics research, 93% of customers read online reviews before buying a product, and 93% of consumers say that online reviews influenced their purchase decisions. As many people will also share their experiences with the purchase process, customer service interactions, and technical support engagements, it is important to keep the focus on providing a positive customer experience to ensure these reviews are complimentary to the company.
Most importantly, customers that continue to focus on CX, even during tough economic times, tend to fare much better than companies that choose to cut investment into CX. In June 2022, consulting firm Watermark reviewed data collected during the Great Recession, which lasted from approximately 2007 to 2009. Over those three years, companies delivering poor customer experience posted a cumulative total return loss of 57%, whereas customer experience leaders gained an average of 6.1% in returns.
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