Customer Experience is the New Retail Tipping Point
While good products and good prices are important, the customer experience matters most. That’s the message from a new survey of more than 8,000 global consumers conducted by Medallia and Ipsos.
Overwhelmingly, consumers say they’re more likely to purchase products or services based on positive customer experiences. In fact, according to the survey results, positive customer experiences are 2.5 times more influential than peer reviews, three times more than brand image, and four times more than advertising. The reverse also holds true; bad customer experiences have a swift and negative impact on sales and customer loyalty.
The good news is that retailers overall scored high marks for customer satisfaction compared to other industries, with consumers reporting 91 percent satisfaction with their in-store retail experiences and 97 percent satisfaction with their online retail experiences. Retailers have their work cut out for them, however, as many younger consumers have rising expectations for retail experiences that are increasingly personal.
Based on the survey’s findings, there are some clear takeaways for retailers as they look to deliver better, richer customer experiences in the future:
- Ensure creating positive customer experiences is part of your culture. Seventy-seven percent of consumers report choosing a product or service because of a positive customer experience with the company in the last 12 months. Similarly, 64 percent of consumers — and 70 percent of millennials — said they avoided a brand because of a single negative experience in the last 12 months. Retailers may not get a second chance to win back dissatisfied customers.
- Take social media seriously as your brand’s ambassador. Respondents ranked online and social media reviews from trusted groups as nearly twice as influential as brand advertising when making a purchase decision. Consumers also have high expectations for customer service on social media, with more than half of respondents (54 percent) expecting companies to respond to their online reviews within two days, and one-fifth expecting a response in less than 24 hours.
- Respond quickly when problems arise. Seventy percent of customers expect a quick response from companies after a complaint. Responding to a customer complaint after several days or with an auto reply and a vague promise of a resolution simply won’t cut it. Those customers who feel that companies aren’t meeting them halfway in their efforts to resolve a problem are two times more likely to share that negative experience with friends/peers, and four times more likely to stop buying from that company.
- Treat each customer as a unique individual, not a number. One in three consumers (35 percent) expect online retailers to give them the option to chat with a live agent, and nearly the same number (30 percent) expect agents to be instantly familiar with their contact history. Consumers also expect the same treatment regardless of the channel. More than half of all survey respondents said they want the same level of service from a company regardless of whether they’re shopping online or in-store.
A closer look at the survey data reveals some interesting demographic splits as well. For example, younger consumers — millennials and Gen Xers — have higher expectations for customer experiences now than they had two years ago. While older consumers had slightly lower expectations, they were also less likely to report that their customer expectations had been exceeded, an area of concern for retailers when you consider that consumers 55 and older are the fastest-growing consumer group. Geographic disparities were also sometimes striking. American consumers, for example, were three times more likely to expect free shipping from an online retailer than German consumers.
If investing more money in customer experiences seems counterintuitive in a digital age, retailers should take stock of these important findings from the survey: three out of four consumers are willing to pay more money for a better customer experience, and nearly half would pay significantly more for a guaranteed better online customer experience. Clearly, the consumer experience has become the new tipping point for customer loyalty and profitability. Today’s consumer knows they can get the same (or similar) product from someone else at the same (or similar) price. What they want, more than a good price, is a good experience.
Rachel Lane is digital solution principal at Medallia, an enterprise customer feedback management software platform.
Related story: Retailers Are Missing the Mark When it Comes to Customer Experience
Rachel Lane is Digital Solution Principal at Medallia, an enterprise customer feedback management software platform.