For years it has been spoken about the importance of providing your customers with a great experience. Now, let's look into how revenue generation is directly linked to customer experience and how companies can maximise their selling and up-selling potential by leveraging the magic of a good experience.
What is customer experience?
To start with, let's just get on the same page regarding what customer experience actually means. According to McKinsey's pretty well-defined description, customer experience, often referred to as CX, is the overall perception and feelings that customers have based on their interactions with a business or brand. It encompasses the entire customer journey and includes all touchpoints, from the initial research and purchase to post-purchase support and beyond. Re-read the second part of that definition please, it's a very important one. Before we dive into the benefits of a great customer experience, it's important to highlight that it needs to cover the full cycle from Awareness to Delight and be consistent in that. Now that we're on the same page about what CX is all about, let's understand what it has to do with revenue generation.
1. Customer loyalty = recurring revenue
Exceptional customer experiences play a crucial role in increasing revenue by fostering customer loyalty. When customers have a positive interaction with your brand, they are more likely to return for future purchases. According to Outbound Engine, acquiring a new customer can be up to five times more costly than retaining an existing one. Loyal customers not only make repeat buying decisions, but they also become strong advocates for your brand, recommending it to others and helping expand your customer base.
2. Increased Customer Lifetime Value
Customer Lifetime Value (CLV) represents the total revenue a business can expect to earn from a customer throughout their relationship. By providing an outstanding customer experience you can significantly extend CLV. Happy customers tend not only to buy from your business but also to spend more over time, and by consistently exceeding their expectations, you can maximise their experience and therefore spending opportunities. This also means that satisfied customers are more open to upselling and cross-selling opportunities, further boosting their contribution to your revenue. As a business, that puts you in a more beneficial position in terms of recurring revenue and a more reliable pipeline.
3. The most powerful form of marketing
Yes, that's right, let your customers do the talking. People buy from people and they also listen to other people's advice when it comes to purchasing decisions. Exceptional customer experiences result in satisfied customers who are likely to share their positive experiences with other potential buyers. With the vast popularity of social media and coverage of online review platforms, these recommendations can reach a massive audience. A single glowing review or recommendation can lead to a substantial increase in sales, as potential customers are more likely to trust the opinions of their peers. We're not even talking about case studies (my personal favourite - client success stories). All these methods are contributing the trust building which in turn should reduce your sales cycle and contribute to upselling opportunities.
4. Reduction in customer acquisition cost
Everyone's favourite - spend less to get more! Unfortunately, customer acquisition is one of those things that can become quite costly quite quickly (especially without a thought-through plan). However, when your existing customers become your advocates and refer new clients to your business, you can reduce your customer acquisition costs significantly. Not only do you save money, but referred customers tend to be more loyal and have a higher CLV, further enhancing your revenue potential.
5. Great competitive advantage
And it could be your main one as well! An exceptional customer experience is a very powerful differentiator. When customers have a choice between similar products or services, they often base their decision on the quality of the experience they expect to receive. By consistently delivering exceptional experiences, you can win over customers who might otherwise have chosen a competitor, leading to increased market share and higher revenues. And speaking of higher revenues, your customers would also be willing to pay a premium for an outstanding experience, meaning you can potentially charge higher prices for your offerings, leading to increased margins and revenue.
As you can see, there are a lot of benefits associated with providing your customers with a great experience which will lead to revenue increase. Just remember, this needs to be done on a consistent basis and cover every step of their journey with you.