Personal experience with retail
all insights

Make it or break it: Customer experience

Three reasons why the success of your brand depends on customer experience

by Jen Travis

A good or bad customer experience can make or break a brand.

When you think of your favorite brands, are you reminiscing about their well-designed logo? Or how great their bus ads are? Probably not. Most likely, you’re thinking about specific positive experiences—your favorite jeans that always fit, or the mobile banking app that makes transferring money really easy. And, conversely, when you think about those brands that you no longer like, you most likely fixate on the time you were disconnected five times while talking to customer service and your problem was never really resolved.

A positive customer experience is key to these three brand success factors:

  • Brand trust: Confidently knowing what you can expect. For example, “I go to Starbucks because it’s the same wherever I go.”
  • Brand value: The brand’s value exceeds the cost. For example, “I pay more for these jeans because I love them.”
  • Brand loyalty: Closely associating the brand as part of your identity. For example, “I’m an Apple girl.”

Investing in the customer experience builds all of these and ultimately contributes to the financial health for your brand.

Brand trust: Consistency and transparency don’t make you boring.

When a customer has a consistent experience with your brand—whether online, in store, or on a mobile device while waiting for the bus—you have given them the gift of confidence. You’re telling them that no matter what, they can expect that you will deliver on your brand promise. This kind of trust drives repeat business.

Take Amazon, for example. It provides a seamless shopping and purchasing experience from web to app to delivery that earns the highest levels of brand trust, as indicated by it being voted as the second most trusted institution in the US, just behind the military. 

Transparency and clarity are also key to earning brand trust.

Target lost a significant amount of brand trust when its data was breached during the holiday shopping season. And, when it waited days before alerting customers and wasn’t immediately clear about how it was going to protect customer data in the future, its brand trust further plummeted. The retailer suffered a decline in fourth-quarter profits of 46% and is still recovering from this gaffe.

Progressive Insurance builds trust by granting visibility into insurance rates with its rate comparison engine and the name your price concept—providing clarity and transparency in an industry that has historically competed on price. This fresh approach has garnered them the most positive sentiment in social channels of any insurance company.

Takeaway: An investment in customer experience—whether a website experience or content that can support a customer’s research, transparency in pricing, or employee training that promotes consistency in service delivery—builds brand trust that pays off.

Brand value: Being different makes you more valuable.

Why are some people willing to pay more at Nordstrom or Starbucks? Because those brands offer a unique experience. When brands create discernible differentiation in their product and customer experience, they are able to command a price premium that protects them in market downswings and drives greater profitability overall.

Nordstrom, Disney, Starbucks, and Whole Foods are able to charge more for their products, even if those products are comparable to their competitors’, because of the difference in the experience they provide and in the values that drive that ethos. Customers not only expect to pay more, but actively choose to pay more because they know the experience will provide the value they are looking for.

Customers report they will pay up to 16% more for a better experience with products or services. And, 73% say that a good experience is a key influencer in their brand loyalty.

When brands fail to differentiate, they end up having to compete on price—resorting to deep discounting and, ultimately, loss of brand value.

Takeaway: An investment in understanding customer needs, innovative design to uniquely meet those needs, or delivering a differentiated experience can drive significant brand value—and position your brand to command a price premium against competitors.

Brand loyalty: Being loved by your customers gets you loved by many.

There’s a strong correlation between positive customer experience and loyalty factors, such as brand evangelism, higher customer satisfaction, lower customer loss rates, incremental revenue from existing customers, and more. "Experience-led businesses also have 1.7x higher customer retention" reports Forrester. One of the easiest examples is Apple. Its intense focus on user experience and product design that addresses customer pain points has earned Apple top billing on the Brand Keys’ Loyalty Leader List year over year.

But, what happens when you don’t focus on the customers you already have? Online reviews have become a critical step in most consumers’ purchasing decisions. When customers leave a bad review on their bullhorn of choice (Facebook, third-party rating sites, or even your site), these are some of the first search results a potential customer will see, thanks in large part to Google’s search algorithm. So, not only do you lose an existing customer, but you are potentially losing a prospective one as well.

Takeaway: Building brand loyalty requires an investment in customer retention strategies: loyalty programs, personalized experiences, rewards, and ongoing value delivery. Those types of investments often have an exponentially positive effect for new customer acquisition, too.

Investing in your bottom line

Rather than looking at customer experience investments—such as store design, customer service, or employee training—as a cost center, think of them as brand-shaping and revenue-building opportunities that drive customer retention.

Building a strong brand is worth the investment. Strong brands have proven that they can weather the storm of financial crises, as well as outperform competitor brands in their space. Business Insider found that "the [most] relevant brands saw 10-year revenue growth increase 2.8 times faster than the S&P, with profits (EBIT) rising 205 times more quickly. Best-in-class customer experience-driven companies grow their business, attract prospects, and win new customers at a much higher rate than their competitors.

Investing in customer experience—by thinking and developing an overall customer experience strategy—is a proven key to brand success. The first step is actively trying to understand your customer. If you haven’t already, create personas, or buyer profiles, of your customers based on data and customer research. Then, identify the opportunities where you can create more wow moments. Your customers will thank the form of loyalty.