Customer Experience Management (CXM)

According to a study conducted by Walker, by 2020, user experience will have a greater influence on a customer’s purchasing decisions than price. For the traditional marketing mix based on the 4Ps (or more) model, this is revolutionary.

The concept of Customer Experience, or user experience, encompasses the entire experience originating from the purchase of goods or use of services of a particular company. Although the term emerged relatively recently, the idea behind it is as old as the commerce or services themselves.

Customer experience: from seller to automation

Before the advent of online commerce, Customer Experience depended on the seller’s skill and the product quality. A competent and polite merchant was able to attract local buyers to their shop. Whereas, products of exceptionally high quality and with a very attractive price-performance ratio needed no promotion – e.g. legendary shoes from Stanislaw Hiszpański, in which – as customers claimed – one could walk 2,000 kilometres.

The omnichannel era greatly complicated this interaction model. In the traditional model of commerce and services, customers had contact with a particular company exclusively at a store, where they could see or buy the company’s products. Later, the number of contact points gradually grew. In 2000, the majority of customers (66.2%, to be exact) contacted a given company via two channels. At the same time, only 16.4% of buyers used only one method of contact throughout their entire purchasing process. Ten years later, the majority of buyers (39.4%) were already using three channels before making their purchases. There was also a small percentage (0.4%) of customers who made purchases using 5 methods of contact.

In 2015, the biggest group of the people surveyed (32.7% of respondents) still used three channels to interact with a brand; however, only 2.1% used just a single method to reach a company. To sum up, 67.6% of consumers reached for three or four tools of contact during their purchase process.

What this means for companies is that 16 years ago, the number of places where a user could have a bad purchasing experience was much more limited, and the factors that were behind forgoing a purchase could be easily named. Most often it was the price – just a few voices advocated other methods to convince a customer to make a purchase than competing with price.

CX as the foundation of modern commerce

The e-commerce era represents a particular challenge mainly due to the globalization of competition. Most online businesses operate based on “the winner takes it all” principle. The data published by Infront indicates that 91% of clicks go to the first page of Google search results.

Google itself is an example of an Internet hegemony that pushed the competition out of the majority of markets, and the only things able to stop it were the language and the alphabet. According to ReturnOnNow, in 2015 Google was the most popular browser in all the countries surveyed except for China (where Baidu reigned), South Korea (where Naver dominated) and Russia (where the leader was Yandex).

A similar mechanism governs online commerce, the biggest portion of which has been swallowed by Amazon. Last Christmas, 26.2% of USA residents bought their gifts in that very online shop. Thus, it was even more popular than Walmart.

With Amazon’s scale of operations and the technology they possess, it is impossible to compete with them in a traditional way, i.e. with prices or speed/convenience of delivery. In this case, Customer Experience is not so much a way to gain an advantage, but simply to survive.

Success built on CX

In 2017, according to Gartner, 89% of companies will perceive user experience as the biggest market differentiator.

Exceptional user experience is behind the success of brands such as Zappos and Zalando. Both fashion stores build their positions, among others, by offering a long time for product returns, fancy packaging or sending a few pairs of shoes to try on. The media regularly write about other amazing Zappos events, such as a merchant’s 10-hour conversation with a person who called just because they desperately needed to talk to someone, or the creation of a dedicated category of vegan shoes, manufactured without the use of animal skin.

Purchasing experience is also used as the basis by the Outfittery online store, whose business model involves selecting outfits for men based on completed surveys, photos and size details. Based on this information, stylists employed by the store compose the entire attire – from a shirt and trousers to shoes, belts and accessories. Ordered items are delivered to the customer in a special gift box and with a handwritten letter containing styling tips.

Thanks to its innovative business model, Outfittery recently won a $22 million funding from the Octopus investment fund.