By: Eric Klein

The experiences of 2020 and the Covid-19 pandemic have shown that many transactions have gone digital (in 2020 global digital sales grew 45 percent year over year) and this means rethinking our approach to customer experience.

A survey by Catalyst showed that businesses lose more than $75 billion a year from poor customer service. In another survey, by Uniphore, 68 percent of respondents said they would stop patronizing companies with which they had a bad customer experience. With the cost of new customer acquisition being two to 25 times more expensive than customer retention or upselling, good customer care is imperative for a company’s bottom line. It is well known that a good customer experience is directly related to the Net Promoter Score (NPS) of a company. A high NPS leads customers to recommend the service to their friends and acquaintances.

To put this in more concrete terms, consider a case where upselling or repeat business is worth $100, and a new customer is worth $1,000. For each unhappy customer, you lose at least $1,100: the upsell to them, and at least one free referral that they would have given.

Enrich the experience

How can you prevent losing that $1,100? By enriching the customer experience.

You may have heard one of the various variations of the red rose story, a classic in many MBA programs. Here is a brief summary. A woman has a problem and calls in an expert. In some of the versions it is a plumber, in others an exterminator. As she didn’t have a recommendation, she searched (yellow pages or Google) and hired the first one she found. The expert comes, solves the problem and leaves their bill. Sometime later the problem returns, but she does not call the original expert, so she goes back and searches—the logic being that one expert is more or less the same as another. The second one comes and does the job, leaves their bill, a red rose and a note thanking her for her business. The story always ends with the question “If she needs help again, whom do you think she will call?”

Now the implication is that the good service combined with the red rose will make sure she remembers the vendor and will use them again. Implicit is that she will be so impressed that she will mention the story to her friends, and this will lead to more business—all for the cost of a $2 rose. So, to come back to the difference between the initial sale and the benefits of a happy customer: That $2 rose potentially leads to repeat business and multiple referrals, which cost nothing. And if you don’t think that the customer acquisition cost (CAC) is important, then you need to be reading a very different article, one that talks about things like Net Promoter Scores (NPS) and why they are important.

But assuming that you already understand why customer referrals are invaluable for your business, we can proceed to the question: how can you improve your digital customer experience?

The keys to improving digital CX

Going back to the Uniphore survey, the researchers found that 50 percent of the respondents fully expected the organization to have some clue as to why they are calling (known as intent detection). So, let’s take a walk through two versions of the customer experience to see which will lead to the red rose experience.

Imagine for a minute that it’s a beautiful day and you’re driving alone down a suburban road singing along with the radio. You pull up to a four-way stop, see you are the only car there, and proceed through the intersection. A car comes speeding out of nowhere and crashes into you. Your car skids sideways, over the curb, and comes to a screeching halt. You step out of the car, shaken but otherwise unharmed, only to see the entire side of your car is smashed in. You look around and see the driver of the other car is also unharmed. As you move to contact your insurance company, how the rest of this story pans out is entirely dependent upon which road or customer experience your insurance company uses. Let's contrast two approaches.

The Road Over-Traveled 

Before making another move, you make sure to first write down the other driver’s insurance details. You then pull out your cell phone and dial your insurance company. An automated message answers and tells you to dial 1 for insurance claims. You then reach an automated message that tells you to enter your policy number. You do so, wait for verification, and after a good amount of elevator music, a live agent answers the call. You then have to give the agent your name, your car details, your location, the other driver’s details, and explain what had occurred. A tow truck is sent out and you are left waiting, in which time you take any relevant photos of the damage to your car and your surroundings. You email them in and continue to wait for the tow truck.