Why Customer Experience Trumps User Experience

Whenever I’m asked to explain customer experience, I’m always hard-pressed for a short, easily digested answer. It’s just so huge! What doesn’t it cover? Not much. And the real stumper: Who is responsible? Customer experience is often translated into user experience as the front-end digital experience of users. Although they’re not the same, they aren’t that different. So which comes first? Here’s how user experience can inform customer experience strategy, and vice versa.

Whenever I’m asked to explain customer experience, I’m always hard-pressed for a short, easily digested answer. It’s just so huge! What doesn’t it cover? Not much. And the real stumper: Who is responsible? Customer experience is often translated into user experience as the front-end digital experience of users.

Although they’re not the same, they aren’t that different. So which comes first? Here’s how user experience can inform customer experience strategy, and vice versa.

Our first contender: user experience
Digital experience provides some simple and convenient ways to connect with customers, gain real-time feedback and allow for innovation. Consider the following:

1. Website analytics highlight user behavior, which is usually more factual than what they tell you. Watching where users drop off, where they linger and where they act can put your entire organization on the right path.

2. Users visiting your site are there with a purpose in mind. Inviting feedback in that critical moment allows you to collect emotional and immediate responses. In the heat of a disappointing moment or the happiness of a successful mission, customers will provide real-time feedback reflecting what they REALLY feel, not just the option on the survey that best suits their reaction.

3. Customers can show you what they really want through A/B testing and experience innovations. Ever since the dawn of the digital era, we’ve been testing and experimenting. We test context and see what works better. We experiment with design and gain knowledge on what resonates with customers. It’s so much easier to do this with user experience than any other channel or touchpoint.

Remaining mindful of reactions and analytics can absolutely inform your customer experience. But what about trends? There’s an ongoing debate about how user interface design is based on current trends (as well as guessing at future ones), and therefore is always at risk of being overshadowed. Consider what happened to MySpace, Netscape and others of yesteryore. The problem, as I see it: Too often, user experience is based on what works in the moment rather than the overall mission.

Customer experience takes the lead!
Customer experience is about understanding how customers interact with your organization at any touchpoint. Here are some tips to providing the best experience possible for your customers.

1. Customer experience must be tied to brand promise. The brand promise, often touted in marketing context, is what drives the experience. If you’re promising one thing (convenience) and delivering another (pain), then customers will likely desert you.

2. Mobile, digital and all other touchpoints should reflect the overall experience. Real Simple, which promises “life made easier, everyday” prominently on its print magazine and website, created a user experience to reflect that mantra. The digital experience is one where it’s easy to find things, full of surprises and offers choices for how users can consume the content. The site even includes “Today’s Thought,” fitting right into the everyday promise.

3. Customer experience is still about trends, but anchored in mission. Yes, experience must change to reflect the times. Car culture changed casual dining forever. The digital era ushered in global shopping, education and more. Mobile and social engagement allows for convenience and immediacy not available in the past. However, reflecting just the changes in how customers interact with their environments won’t serve an organization long term. The experience must be anchored in a bigger mission. Amazon.com started off selling books, but it was never about the books. Now it touts its revolutionary e-commerce experience in commercials. Not a book in sight.

So which came first, and what are the benefits of focusing on one experience over the other?
There aren’t hard-and-fast rules around this, as we’re still learning every day. Humans are so weird. We like something on Facebook and then can’t recognize the logo again to save our lives. We swear we won’t be one of “those people” who use a text message/tweet/email over calling, then we fall in line. Life moves very quickly, so taking advantage of the pace of user experience feedback is critical.

Trends and fast-paced innovation only work, however, if the bigger picture of customer experience is in focus.

When Companies Lose Customers …

United Parcel Service suffered staggering customer defection as a consequence of its 15-day Teamsters work stoppage in 1997. The result was that, even after their 80,000 drivers were back behind the wheels of their delivery trucks or tractor-trailers, many thousands of UPS workers were laid off. A UPS manager in Arkansas was quoted as saying: “To the degree that our customers come back will dictate whether those jobs come back.”

United Parcel Service suffered staggering customer defection as a consequence of its 15-day Teamsters work stoppage in 1997. The result was that, even after their 80,000 drivers were back behind the wheels of their delivery trucks or tractor-trailers, many thousands of UPS workers were laid off. A UPS manager in Arkansas was quoted as saying: “To the degree that our customers come back will dictate whether those jobs come back.”

The UPS loss was a gain for Federal Express, Airborne, RPS and even the United States Postal Service. They provided services during the strike that made UPS’ customers see the dangers of using a single delivery company to handle their packages and parcels. FedEx, for example, reported expecting to keep as much as 25 percent of the 850,000 additional packages it delivered each day of the strike.

UPS’ customer loss woes and the impact on its employees was a very public display of the consequences of customer turnover. Most customer loss is relatively unseen, but it has been determined that many companies lose between 10 percent and 40 percent of their customers each year. Still more customers fall into a level of dormancy, or reduced “share of customer” with their current supplier, moving their business to other companies, thus decreasing the amount they spend with the original supplier. The economic impact on companies, not to mention the crushing moral effect on employees—downsizing, rightsizing, plant closings, layoffs, etc.—are the real effects of customer loss.

Lost jobs and lost profits propelled UPS into an aggressive win-back mode as soon as the strike was settled. Customers began receiving phone calls from UPS officials assuring them that UPS was back in business, apologizing for the inconvenience and pledging that their former reliability had been restored. Drivers dropping by for pick-ups were cheerful and confident, and they reinforced that things were back to normal. UPS issued letters of apology and discount certificates to customers to further help heal the wounds and rebuild trust. And face-to-face meetings with customers large and small were initiated by UPS—all with the goal of getting the business back.

These win-back initiatives formed an important bridge of recovery back to the customer. And it worked. The actions, coupled with the company’s cost-effective services, continuing advances in shipping technology, and the dramatic growth of online shopping, enabled UPS to reinstate many laid off workers while increasing its profits a remarkable 87 percent in the year following the devastating strike.

UPS is hardly an isolated case. Protecting customer relationships in these uncertain times is a fact of life for every business. We’ve entered a new era of customer defection, where customer churn is reaching epidemic proportions and is wrecking businesses and lives along the way. It’s time to truly understand the consequences of customer loss and, in turn, apply proven win-back strategies to regain these valuable customers.

Nowhere are the effects of customer defection more visible than in the world of Internet and mobile commerce, where the opportunities for customer loss occur at warp speed. E-tailers and Web service companies are spending incredible sums of money to draw customers to their sites, and to modify their messages and images so that they are compatible and user-friendly on all devices. Because of this, relatively few of these companies, including many well-established sites, have turned a profit. Customer loss (and lack of recovery) is a key contributor. E-customers have proven to be a high-maintenance lot. They want value, and they want it fast. These customers show little tolerance for poor Web architecture and navigation, difficult to read pages, and outdated information or insufficient customer service. Expectations for user experience are very high, and rising rapidly.

Internet and mobile customers, to be sure, have some of the same value delivery needs as brick-and-mortar customers; but, they are also different from brick-and-mortar customers in many important and loyalty-leveraging respects. They are more demanding and require much more contact. They require multi-layer benefits, in the form of personalization, choice, customized experience, privacy, current information, competitive pricing and feedback. They want partnering and networking opportunities. When site download times are too long, order placement mechanisms too cumbersome, order acknowledgment too slow, or customer service too overwhelmed to respond in a timely fashion, online shoppers will quickly abandon their purchase transactions or not repeat them. Further, they are highly unlikely to return to a site which has caused negative experiences.

What’s more, the new communication channels also serve as a high-speed information pathway for negative customer opinion. If unhappy customers in the brick-and-mortar world usually express their displeasure to between two and 20 people, on the Internet, angry former customers have the opportunity to impact thousands more. There are now scores of sites offering similar negative messages about companies in many industries, and giving customers, and even former employees, a place to express grievances. It’s a new form of angry former customer sabotage, which adds to the economic and cultural effect of customer turnover.

For many of these sites, part of their charter is to help consumers find value; and, like us, they understand that customers will provide loyalty in exchange for value. They also recognize that the absence of value drives customer loss, and that insufficient or ineffective feedback handling processes can create high turnover. As one states: “The Internet is the most consumer-centric medium in history—and we will help consumers use it to their greatest personal advantage. We will increase the influence of individuals through networks of millions. We will raise the stakes for companies to respond. We will require companies to respect consumers’ choice, privacy and time, and will expose those that do not.” This may sound a bit like Orwell’s “Animal Farm,” but it does acknowledge the power of negative, as well as positive, customer feedback.

Some businesses seem minimally concerned about losing a customer; but the only thing worse than the loss of high value customers is neglecting the opportunity to win them back. When customer lifetime value is interrupted, it often makes both economic and cultural sense for the company to make an active, serious effort to recover them. This is true for both business-to-business and consumer products or services.

So how does a company defend itself against the perils of customer loss? The best plan, of course, is a proactive one that anticipates customer defection and works hard to lessen the risk. Companies need defection-proofing strategies, including intelligent gathering and application of customer data, the use of customer teams, creating employee loyalty, engagement and ambassadorship, and the basic strategy of targeting the right kind of customers in the first place. But in today’s hyper-competitive marketplace, no retention or relationship program is complete without a save and win-back component. There is mounting evidence that the probability of win-back success and the benefits surrounding it far outweigh the investment costs. Yet, most companies are largely unprepared to address this opportunity. It’s costing them dearly, and even driving them out of business.

Building and sustaining customer loyalty behavior is harder than ever before. Now is the time to put in place specific strategies and tools for winning back lost customers, saving customers on the brink of defection and making your company defection-proof.

Why Advertisers Need to Think Native

Native advertising is the latest buzzword. Even venerable publishers such as The New York Times, The Atlantic and Forbes, are trying it out. Is the trend bound to fade, or is it here to stay? Despite some shoddy applications, it’s here to stay.

Native advertising is the latest buzzword. Even venerable publishers such as The New York Times, The Atlantic and Forbes, are trying it out. Is the trend bound to fade, or is it here to stay? Despite some shoddy applications, it’s here to stay.

Although the term “native advertising” was coined by the venture capitalist Fred Wilson just under two years ago, the concept is neither new nor unprecedented. It covers any advertising format that is customized to the user experience of a given platform. Or, in the words of Gini Dietrich, native advertising “integrates high-quality content into the organic experience of a given platform.” A 30-second ad during the Super Bowl? Native. Sponsored stories in Facebook? Native. Paid results on Google? Native. The brilliant humor pieces produced by the Onion that overtly pitch products? Native.

All of these advertising formats work within the existing user experience of a medium to deliver messaging that enhances the experience, or at the least does not interrupt the flow of it. Where it goes wrong is when it interrupts or detracts from the user-experience in fundamental ways.

Take the controversy over the The Atlantic‘s favorable article on scientology, which was paid for by Scientology in response to another more negative story. Readers of the magazine had a hard time distinguishing that this was, in fact, bought. The tone and the format mimicked standard Atlantic articles. By eliding the distinction between paid and editorial content, Atlantic was undermining its reputation for objectivity. Users come to the Atlantic for powerful, independent thinking on society and current affairs. An ad that mimics the form of an independent piece of writing on an important cultural topic detracts from its reputation for independence. Andrew Sullivan goes even further:

“This is corporate propaganda, not journalism. Yes, it is identified as such—but on the video page, actual journalism by brilliant writers like Alexis Madrigal is interspersed with corporate-funded propaganda. You can easily mistake one for the other.”

Not all publishers need to be as careful about creating clear divisions between their editorial content and their sponsored content. Aggregators and news repackagers, such as BuzzFeed or the Huffington Post, are already taking information from a variety of sources. But even they need to ensure the quality of the content and the clarity of tags that show the content as sponsored. People don’t mind paid content if it provides useful information or entertainment value—or if the paid content resides in a context where all of the content is highly opinionated. SayMedia has thrived in this niche by providing content with strong positions on trends, tech and society. Including paid content fits right in.

The real potential for native advertising, however, is where it actually enhances the user experience in new media formats. The Onion has proudly embraced its cynicism, best stated in a column by its advertising columnist Hammond Morris, “Look, I know this may all seem somewhat untoward, and we can go through a whole dog-and-pony show here where I pretend that this column exists as a forum for ideas, and that I act as an independent voice who isn’t beholden to advertisers, and the power of the First Amendment, and blah blah, etc. etc. But let’s get real for a second here, okay? This column—nay, this entire website, this entire industry we call journalism—exists for one purpose and one purpose only: to sell ads. Lots of ads.”

It’s not just that it’s completely self-aware, it produces advertising that’s genuinely funny. The Onion has gone as far as setting up its own in-house creative group called Onlon Labs with the goal of creating funny, self-aware advertising completely in-line with the rest of the Onion‘s content.

The New York Times last week introduced a native advertising format that likewise provide useful information for its readers. The content appears as a tab in The Scoop, the Times‘ activities discovery app, and it provides information about the Citibank-promoted bikeshare program. According to the press release: “This is just one example of how we are working more closely with our advertisers to create unique and custom campaigns to help them tell their brand story in innovative ways,” said Denise Warren, executive vice president, Digital Products and Services Group, The New York Times. “The integration of Citi Bike’s robust content complements The Scoop app’s main objective—to serve as a guide to New York City. With these new features, we hope to further enhance the experience for users of The Scoop as they explore the city using their iPhone.”

Whether or not the tab gains widespread usage is an open question. But the Times did its homework. It knows how people use its media properties. It knows the information that would be useful to its users. And it knows what will compromise its underlying credibility. With that knowledge, it created a new advertising product. That’s how advertisers need to think.

The key takeaway for advertisers is you need to know how a user interacts with the medium—and that new media might have native advertising formats that completely differ from existing formats. Advertorials and space ads might make sense in a lot of contexts, but even more effective formats might open up if you just think about what actually enhances the user’s experience. That’s the promise of native.

No More Menial Jobs and 2 Other Steps to Customer Experience Transformation

As a marketing consultant, I read great articles about Customer Relationship Management (CRM) every day on the job. Most of them focus on the sales and marketing aspects of CRM … what strategies to employ, tools to use, messages to send out and so on. But let’s not forget that world-class CRM programs also include awesome customer service, essentially creating a Total Customer Experience that fosters long-term, profitable relationships with customers.

As a marketing consultant, I read great articles about Customer Relationship Management (CRM) every day on the job. Most of them focus on the sales and marketing aspects of CRM … what strategies to employ, tools to use, messages to send out and so on. But let’s not forget that world-class CRM programs also include awesome customer service, essentially creating a Total Customer Experience that fosters long-term, profitable relationships with customers.

For many companies, however, the customer service element in CRM is often an afterthought. Banished to a windowless office in the bowels of the company, customer service teams are quite literally out of sight, out of mind. Much of the time, this function is even outsourced entirely. But I have a sneaking suspicion things are going to change big time in coming years, and here’s why.

It’s no secret that companies are now dealing with super-informed, savvy and influential end-users who leverage Social Media and the vast research resources of Web 2.0 to make their purchase decisions. Let’s call this new end-user ‘Customer 2.0.’ In this new paradigm, the balance of power is shifting away from the sales and marketing teams, as firms are discovering that Customer 2.0s are by and large unresponsive to traditional sales and marketing tactics.

This means that customer service is, quite literally, becoming the first and only line of defense. If customer service is poor, it follows that the overall Customer Experience should be lousy, too. Given these facts, it shouldn’t be too controversial to suggest that in the business world of tomorrow, excellent customer service will not only the hallmark of a successful firm, but a Key Performance Indicator (KPI) by which success is measured.

Providing top-notch customer service necessitates transforming the way a firm does business and engages with its clients—aligning it to a model where customer service plays a central role in the firm’s operations. Welcome to the world of Customer Experience Transformation.

For customer service, I define Customer Experience Transformation in three broad swathes:

1. PersonnelIt’s time to view customer service as a profit center, not a cost center.

Say goodbye to the days in which customer service is viewed as a cost center, staffed with bottom-of-the barrel employees who can easily be replaced. To the contrary, customer-focused firms hire smart, savvy and highly motivated customer service representatives, knowing full well that these valuable employees are the firm’s principal ambassadors to the outside world.

I recently read an excellent article in Ad Age titled “Are You Ready for a World Without Menial Jobs?” The crux of the article is that instead of cutting costs, the world’s most successful retailers are actually investing heavily and spending for more than their rivals when it comes to recruiting, training and retaining customer service staff. Turns out, this steep up-front investment ends up paying off in spades down the road, in the form of higher sales and increased profitability.

2. SystemsWorld-class service needs world-class infrastructure supporting it.

Truth be told, customer support is only as good as the systems a firm has in place to support its operations. In the world of Customer 2.0, a Web presence acts as a primary point of engagement with customers. In that vein, it’s crucial to provide customers a Web presence that is not only clean, clutter-free and easy-to-navigate, but also—especially when it comes to providing personal or account info—personalized and secure. Furthermore, a website must be also optimized for ALL major Web browsers and operating systems, including—and especially—mobile.

In the age of Social Media, no firm that’s serious about providing customer service can avoid having a social media strategy. Without getting into a nuanced approach required for firm-wide Social Media engagement, as regards customer service, Social Media can and should be used to listen to, engage with and monitor a company’s customer base. There are some great SCRM (SocialCRM) and Social Media monitoring tools out there. Supported by savvy staff, they can be used to ensure customers are being engaged with quickly and effectively.

Internally facing, there are myriad important questions to ask, as well. Where are customer data stored, and how often is this database updated? How often are these data being synced with information from outlying systems, including IVRs, marketing tools, etc? What CRM solution is being used, and are best-practices being followed? If not, good luck tracking KPIs.

3. DNAChange the way you act, and you’ll change the way you’re perceived.

In many ways, corporate DNA is the most important element in Customer Experience Transformation. Corporate DNA is synonymous with corporate culture, which permeates the way in which an organization engages with its customers. For many companies—especially those in legacy industries—becoming customer-focused requires a major pivot.

To illustrate this point, let’s focus on the healthcare industry. Because in the US, health insurance is almost always procured by the employer, the primary point of engagement with end-users is usually when they call up to see why claims haven’t been paid. Now if you’ve never had healthcare in the US, you know this is most definitely not a pleasant experience. No wonder people don’t care for healthcare companies, in general.

Now, of course, denying and approving claims is far from the only thing that healthcare companies do. But, as a customer, you’d never know it. What this implies is an industry ripe for transformation.

If a healthcare company wants to be regarded as a healthcare company—as opposed to a health insurance company—then why not start by acting like one? Better yet, act like a health partner, providing customers with practical healthy lifestyle tips and ideas that will improve their health and, presumably, lead to fewer claims down the road.

Better yet, find out more about customers and send out highly personalized healthcare information they can use in their daily lives. Or, taking it a step farther, how about using that information to create fun contests and social media engagements customers can participate in, ‘gamifying’ the user experience.

In this model, although the business model has not changed, the overall customer experience has been transformed, resulting in a more positive brand perception, higher lifetime value and, of course, increased profitability.

Is your organization creating an awesome customer experience? If you have any questions or feedback, please let me know in your comments.

Thanks,

—Rio