Competing on Customer Experience

Ecommerce merchants seeking to acquire and retain customers will compete to provide exceptional customer experiences that may make price and even product quality less relevant, according to a new survey.

Some 53 percent of United Kingdom-based retailers surveyed for a recent Econsultancy report, said customer service and customer experience would be the primary way retail organizations will differentiate from competitors over the next five years. Separately, 23 percent of the retailers surveyed believed customer experience represented the single most exciting opportunity for their business.

No One Wins When Merchants Compete on Price Alone

The focus on customer experience may be a response to years of price competition, which has been particularly challenging for brick-and-mortar or multichannel retailers.

As an example, consider apparel retailer American Eagle. The company reported its eighth consecutive quarter of declining same-store sales in January 2015, citing, among other factors, price competition.

When retailers compete on price alone, the only way to survive is to dramatically reduce costs. But at some point, there is nothing left to slash from the budget as margins approach zero.

Price competition can also be a barrier for ecommerce businesses, particularly when those businesses are pressed to not only offer low prices but also to offer free or very low-cost shipping.

The alternative to competing on price alone is to offer something more than just a product, but a product wrapped, if you will, in service.

In the U.K. retailers survey, only six percent believed price would be how their business differentiated itself in the next five years. There has to be a better way.

Product Quality May Not Be Enough

High quality products have and, perhaps, will always demand a premium. But even those retailers selling the best of products may still need to differentiate around customer experience as much or more than around product quality alone.

Remember that 53 percent of the U.K.-based retailers surveyed believed customer experience would be the primary retail differentiator for the next five years. In contrast, about 14 percent believed they could compete on product quality.

What Is ‘Customer Experience’?

If an ecommerce business has decided, as many of the retailers survey have, that price and product are not enough to differentiate the company from its competition and that customer experience is enough, the business will need a clear understanding of just what customer experience is.

“‘Customer experience,’” wrote Adam Richardson in a 2010 Harvard Business Review article, “has become a very commonly used phrase in recent years, but like ‘innovation’ and ‘design’ it is actually difficult to find a clear, commonly-held definition, even though many businesses see improving their customer experience as a competitive differentiator. …”

“People have been grappling with a definition of customer experience for several years. Sometimes it’s defined as digital experiences and interactions, such as on a website or a smartphone. In other cases, customer experience is focused on retail or customer service, or the speed at which problems are solved in a call center,” explained Richardson.

“To be really successful on a long-term basis, customer experience needs to be seen as all these things, and more. It is the sum-totality of how customers engage with your company and brand, not just in a snapshot in time, but throughout the entire arc of being a customer.”

Being a Customer

The aim, if Richardson and the survey cited here are correct, is to create a positive, enjoyable experience for the customer at every touch point, long term. Or, in the context of competition, a positive, enjoyable, and better experience for the customer.

Interestingly, the way to provide this sort of better-than-the-competition customer experience may be to focus on customer service fundamentals and useful marketing.

• Smooth service. Stay out of a customer’s way, provide frictionless shopping, allowing the customer to easily find and buy the product she wants with as little interference or resistance as possible. This includes order fulfillment too.

• Understand your customers. Do your best to learn what motivates your core shoppers, why do they buy, when do they buy, and what problems are they solving. Think of this as listening to your customers.

• Personalize. Seek to treat each customer like an individual, personalizing marketing, content, and offers when possible.

• Communicate. Use chat, phone, email, social media, and any other means you can imagine to communicate with customers. If a shopper tweets a question, he deserves an answer.

• Be useful. Try to move beyond simply offering products for folks to buy. Instead try to be useful to the shopper. This utility may take the form of offering a good return policy, curating orders to help shoppers stay up to date with trends, or providing useful marketing, such as how-to videos or articles.

• Be consistently customer focused. All customer experience initiatives need to be consistent across channels and across time. Provide the same exceptional experience on Facebook that you do on your site, and provide the same experience today that you will next Thursday.

To help wrap up this concept, consider a, perhaps apocryphal, story about Hall of Fame football coach Vince Lombardi. The story goes that on the first day of spring training in 1961, Lombardi stood up in front of his players — who were all professionals — holding a pigskin in his hand and said, “This is a football.”

Even professionals need to be reminded of just how important the fundamentals are.