Should CFOs Be Concerned About Customer Experience?

You’re sitting down with your fellow executives, sipping coffee, and discussing the latest business strategy trends. As the conversation flows, you naturally land on the topic of customer experience (CX).

It’s everywhere these days, isn’t it?

But why should CFOs be paying closer attention to it?

Let’s break it down.

Companies have realized they can’t rely solely on product features or pricing to stand out. It’s all about the experience provided to customers.

Think about your own experience – have you ever stuck with a company because of how they made you feel, even if there were cheaper options out there?

That emotional connection is what keeps customers coming back.

However, what triggers can make or break a customer’s experience with a company?

We are discussing everything from customer satisfaction and brand reputation to employee engagement and emotional connections.

Take customer satisfaction, for example. Did you know that a mere 5% increase in customer retention can boost profits by up to 95%?

And when it comes to brand reputation, a single bad review can turn away potential customers faster than you can say ‘damage control.’

So, what’s the bottom line here?

Customer experience isn’t just a fluffy, feel-good concept – it’s a game-changer for businesses.

As CFOs, you not only have a unique opportunity to understand the economic impact of CX but also help steer the ship toward smoother waters.

By making strategic investments in improving the customer experience, you’re not just ensuring customer satisfaction – you’re securing the company’s future success.

Let us look at some triggers and how they impact the customer experience.

Customer Satisfaction

High levels of customer satisfaction are directly correlated with positive customer experiences.

A study by Bain & Company found that increasing customer retention rates by 5% can lead to an increase in profits of 25% to 95%.

Conversely, dissatisfied customers are likelier to churn and share their negative experiences, damaging the brand’s reputation.

Let me give you an example.

I wanted to buy a laptop recently. I compared features across several brands and decided to go ahead with one. However, I decided to read the customer reviews. The first review said the laptop generates much heat faster than any other brand, and I decided against it.

Quality of Business Processes

Delays, errors, and inconsistencies in processes can lead to customer frustration and dissatisfaction.

For instance, a survey by PwC found that 32% of customers would stop doing business with a brand they loved after just one bad experience.

Let me give you an example.

I was with an Internet Service Provider for 15 long years and had no reason to call or interact with them for anything. It worked like magic.

After 15 years, I wanted the connection to be relocated to a new location. Nothing happened 15 days after my request to shift, and I had to follow up with them with no solution repeatedly. The experience was so bad that I moved away from that provider. 

Customer Relationships

Strong customer relationships are built on trust, communication, personalized interactions – and most importantly, communication.

Brands that prioritize building and nurturing customer relationships often enjoy higher retention rates and increased customer lifetime value.

According to research by Temkin Group, loyal customers are 5 times more likely to repurchase, 5 times more likely to forgive mistakes, and 4 times more likely to refer others to the company.

I will give you a classic example.

In one of the organizations where I worked, we offered testing services to a Fortune 500 company. They visited our office in India for a discussion and said they had to meet another company in the afternoon, which happened to be our competitor.

We were a bit curious, and we asked why they were meeting with them. They mentioned they were their development partner.

And the next question from our side was, why did you not consider us for development? They responded that they did not know that we also offered development services. They thought of us as a testing company.

This was a slap on our face, as we did not feel the need to communicate to a customer traveling with us for almost ten years about other services we offered.

Brand Reputation

Negative reviews, scandals, or public relations crises can severely damage a brand’s reputation and erode customer trust.

According to a study by Brightlocal, 86% of consumers read reviews, and 57% of the consumers will only use a business if it has 4 or more stars.

One notable real-life example that illustrates the impact of brand reputation on customer behavior is the case of United Airlines and the incident involving passenger Dr. David Dao in April 2017.

In this widely publicized incident, Dr. Dao was forcibly removed from a United Airlines flight to make room for crew members.

Videos of the incident went viral on social media, sparking outrage among consumers worldwide.

The incident led to a significant backlash against United Airlines, with many customers expressing their outrage through social media channels and boycotting the airline.

Despite United Airlines’ efforts to address the fallout from the incident, including issuing apologies and implementing policy changes, the damage to its brand reputation was significant and long-lasting.

Employee Engagement

Happy and motivated employees are essential for providing excellent service and building strong customer relationships.

Gallup found that companies with highly engaged employees outperform their competitors by 147% in earnings per share.

Let us take the example of Zappos.

Zappos has built its brand around delivering exceptional customer experiences, and a key driver of this success is its focus on employee engagement and satisfaction.

Zappos’ commitment to employee engagement is exemplified by its practice of offering new employees a “Quit Offer” after completing their initial training.

This offer gives them a cash incentive to leave the company if they feel Zappos isn’t the right fit.

The rationale behind this unconventional approach is to ensure that only employees who are genuinely committed to the company’s values and culture remain on board.

Customer Perception of Value

Customers must perceive value in the products or services they receive. Price increases without corresponding increases in perceived value can lead to dissatisfaction and churn.

A study by Walker found that customer experience has overtaken price and product as the key brand differentiator.

A classic example of this is Apple.

Apple has long been synonymous with innovation, design excellence, and a premium brand image. Despite its products’ premium pricing, Apple has maintained strong customer loyalty and market leadership, thanks in large part to the perceived value it offers consumers.

Emotional Connection

Emotional connections with customers can lead to stronger brand loyalty and advocacy.

Harvard Business Review found that emotionally connected customers are more than twice as valuable as delighted customers.

Take the example of Starbucks.

Starbucks’ baristas are trained to greet customers warmly, remember their names and favorite orders, and engage in friendly conversations, creating a sense of familiarity and belonging.

This personalization helps customers feel valued and appreciated, fostering a deeper emotional connection with a brand.

Customer experience (CX) is a fundamental shift in how companies must approach their relationships with customers.

As CFOs, it’s essential to recognize that CX isn’t merely a matter of customer satisfaction – it’s about driving tangible business results.

CFOs have the opportunity to lead the change in prioritizing CX as a key driver of growth and profitability. By doing so, they not only ensure the financial health of the company but also cultivate lasting relationships with customers that transcend transactional interactions.