How to Invest in Experiences for Your Best Business Breakthrough This Decade
Recent Forrester and IDC studies show how companies that focus on customer experience significantly outperform competitors.
What do you remember about the last purchase you made? Was it online or in the store? How long did you look for the right item before buying? Did you do any research or get any help? What was the checkout experience like? All these steps combine to define the experience you had with that brand.
Now look at it from the perspective of the brand you represent. How do you define a great experience? How do you know if you could do better and even what to do to make the experience better?
An “experience” is intangible. You can’t see it and it’s hard to measure. It makes sense that it’s good for business, but how do you get your company to invest in an abstract?
To better ground the idea of “experiences” and make investing in experiences an easier business decision, Adobe commissioned the Forrester study, “The Business Impact of Investing in Experience.” The study compares the marketing activities — and the business results — of 1,269 global enterprises in nine countries.
The headline news, as reported by CMO.com, is that experience-driven businesses have a 15 percent average revenue growth rate, compared with an 11 percent average growth rate for other companies. They also have higher brand awareness, average order values, customer retention, and customer satisfaction rates — outperforming others on metrics across the entire customer life cycle.
But the report reveals much more. To arrive at those findings, there had to be some definition of an experience business. For the study, Forrester defines an experience-driven business as a company that has strong scores across investments in all three areas of people, process, and technology.
“The result of investments in these areas is that organizations see a higher return against their KPIs,” says Wendy Steinle, Sr. Director of Web Strategy for Adobe’s Digital Experience business. “You have to focus across all of those aspects in order to really move the needle on the customer’s experience because they work together.”
The right people, process, and technology are needed to be an organization that truly focuses on — and receives the benefits of — being customer experience-driven. So, while many companies may think they are experience driven because they make investments in a few areas, the truth is just under one-third (31 percent) of organizations in the Forrester study qualify as an experience-driven business. Most aren’t there yet and are missing out on significant financial and non-financial benefits that come from being so customer-obsessed.
To bring your company to the reality of being an experience-driven business, it takes a consistent commitment and hard work. Here are three recommendations that will help you move down the path to becoming a true experience-driven business — and realize the ROI that comes with it.
Step #1: Determine the urgency and articulate a “why” for executive support
Moving to the people, process, and technology of an experience-driven business takes effort from the entire organization, starting with leadership at the top — and the resources they can provide. For an experience-driven business, the average year-over-year budget increase across customer experience investment categories is 7 percent, compared to 4 percent for other organizations. At that rate, it just becomes more and more difficult to compete with companies that are ahead of the curve.
The pace at which an organization transitions can be influenced by the need for urgency in your specific market. The vertical market with the highest proportion of experience-driven businesses in the study is financial services, at 44 percent. In this vertical, revenue growth is the biggest priority and financial services experience-driven businesses are 1.3 times to 1.9 times more likely than other firms to exceed expectations – not just for revenue growth, but for profitability and market valuation metrics as well. Consumer-focused companies versus B2B models also are more likely to be identified as an experience-driven business (33 percent and 25 percent, respectively).
Forrester recommends reviewing these questions to identify the urgency of your particular situation:
- Can customers easily switch to competitors?
- Are competitors likely to provide greater choices in the near future?
- Can customers easily do without your firm’s products or services?
- Do the firm’s products or services create up- or cross-sell opportunities?
Then evaluate the proficiency of your major competitors as it relates to customer experience:
- Do they offer a better customer experience?
- Do they promote their great customer experience in marketing materials?
- Do they have large customer experience investments underway?
- Does the current state of their customer experience create an opening for a disruptor with a superior customer experience?
Being able to articulate a level of urgency will help you secure the appropriate resources to devote to the investments necessary for your experience-driven business. But urgency can be difficult to quantify and every level of urgency needs to have some balance. Too little urgency can lead to complacency in a market where customer experience is an issue for everyone, whether today or tomorrow. On the other hand, too much urgency may lead to chaotic short-term change that undermines the very processes and technologies you are trying to improve.
And short-term isn’t the goal when it comes to an experience business transformation. Experience-driven businesses are willing to sacrifice short-term wins in favor of creating holistic experiences. For example, experience-driven businesses report a greater average year-over-year increase in time-to-market than firms that are more likely to go to market in silos. But remember, even though they may not be as fast, they also are the businesses that outperform others on a variety of metrics, and have a higher average revenue growth rate.
“Taking the time to get customer experience right can slow speed to market, but that’s no reason to avoid making the investment to succeed in the long-term,” says Wendy. “If companies only focused on short-term gain, we never would have moved into ERP and CRM systems. Now it’s time to have an experience system of record, and companies will need to make that investment to stay relevant.”
Getting the resources for that investment may be one of your biggest challenges, but without them, your customer experience transformation will fail. Defining the urgency also helps you zero-in on the why, and you can take that a step further by connecting it to executives’ hot buttons. Use that to develop a vision and shared customer experience values, Forrester recommends. The vision, coupled with a plan, will provide grounding and justification as an organization encounters the short-term sacrifices required to become experience-focused.
Step #2: Focus first on experience metrics, then use the tools you have to meet those goals
Experience-driven businesses start with customer experience success metrics and then identify the necessary technology, people, and process investments to achieve those goals. This is a shift from the typical marketing process of using every available channel to blast promotional offers and then look at superficial engagement metrics to measure campaign success.
Customer experience evangelists understand this shift, and are at the point where they no longer have to explain the benefits of a well-honed customer experience process to business leaders. To focus more on your customers, think more broadly about what your marketing technology can do for you. For example, use email as a strategic asset for innovating the customer experience, rather than simply for product promotion.
The study “Email Can Provide a Wedge Into Customer Obsession,” also conducted by Forrester Consulting on behalf of Adobe, found email marketing doesn’t meet the needs of companies — or customers — and isn’t being used with the customer in mind. Sixty-nine percent of emails are used to deliver promotions, with 61 percent of companies measuring marketing performance by the number of opens and clicks. More than half of email marketers (58 percent) think their emails are interactive, but only 26 percent of consumers agree. In addition, only 27 percent of consumers even think the promotional emails meet their needs.
Experience-driven businesses look at email differently. An overwhelming majority (91 percent) of Forrester-identified customer-obsessed firms use their email marketing as a strategic asset for innovation. They say email innovation is critical to the company and is used to test and learn what customers like, to collect insights that are used in other programs, and that personalized email marketing is a core competitive differentiator. Businesses that were customer-obsessed also said increasing customer satisfaction was a top email marketing program goal.
This study demonstrates that email and other marketing channels are more than just another tactic to promote products or services, or to grow revenue — they’re tools that an experience-driven business uses to learn more about its customers, and then, in a second step, uses that data to create a more customer-focused marketing organization.
For brands that haven’t yet adopted the digital foundation necessary to use advanced technology for dynamic personalization at scale, the transition may take time, but will be worth the effort because personalization is the keystone for an experience-driven business.
“Keep doing what you’re doing at the same time as you are putting in the effort for the longer-term gain,” advises Wendy. “You can bring systems on as they’re ready and just get stronger and stronger with more and more insights and abilities over time, but doing nothing is no longer an option.”
Adobe Experience Manager (AEM) is a content management system ( CMS) that helps marketers design flexible, cross-channel experiences throughout the customer journey. IDC’s studies found that companies that use these solutions have a distinct advantage in creating better customer experiences.
Three-year ROI for companies using AEM Assets, an asset management solution for all of a company’s content, increased 366 percent, and companies broke even on the investment in 12 months. Productivity for teams was 19 percent higher than for those that didn’t use AEM Assets, with less time needed to create new assets, render existing assets, or to find and download assets.
AEM Sites, a web content management platform, also drove business value for companies.
Companies that used AEM Sites had a three-year ROI of 348 percent, with a 12-month period to break even. Digital content teams using the platform had 23 percent higher productivity than those that didn’t use AEM sites. Pages could be launched 56 percent faster and a brand or country page could be delivered in 66 percent less time. But equally as important as business value, organizations that used AEM Assets and AEM Sites earned more — to the tune of $2.2 million in additional revenue.
The Forrester and IDC studies amplify the differences in behavior, focus, and use of technology between companies that are truly experience-driven and those that aren’t. Creating a better customer experience takes commitment and time. The ROI for companies that focus on customer experience — whether measured in revenue, productivity, customer growth, or other metrics — illustrates that these businesses significantly outperform other companies across the entire customer life cycle.
Step #3: Invest in changing organizational habits because customer satisfaction and employee satisfaction go hand-in-hand
An important finding from the Forrester business impact research identified a strong correlation between higher employee satisfaction rates and higher customer satisfaction rates.
“I think they go hand-in-hand — when companies put a focus from the c-level on down, on being experience-driven, employees are empowered and inspired to deliver the kind of experiential service and interactions with customers that drive that satisfaction,” says Wendy. “So it’s a virtuous cycle of happier employees and happier customers, and they feed on themselves in a very positive way.”
In the research, experience-driven businesses reported 1.5 times more personal satisfaction by employees, 1.4 times greater team satisfaction, and a 1.3 times greater department satisfaction. The superior employee job satisfaction was in line with superior growth in customer satisfaction metrics: 1.6 times higher for customer satisfaction ratings, 1.7 times higher for customer retention rates, 1.9 times higher for repeat purchase rates, and 1.6 times higher for customer lifetime value.
To inspire employees to deliver exceptional customer experiences, it’s not just a matter of switching on the right technology. Forrester recommends first identifying and removing the systems, processes, and policies that prevent employees from delivering great customer experiences. Perhaps there is no way for teams heading different marketing channels to collaborate on orchestrating their campaigns, or maybe different database owners are hesitant to open access to their data-sets.
Once you’ve identified and removed the roadblocks, and updated policies, be sure to empower your employees to move forward confidently by providing role-specific training on the new behaviors you are trying to encourage. Establishing a routine of feedback and coaching will enhance their commitment, inspire their performance, and better satisfy their customers.
“Focusing on customer experience has to be a company-wide mindset,” says Wendy. “And when it truly is driven from the top and becomes part of the DNA of the company, then your employees will live it and your customers will feel it.”
Your best business breakthrough this decade
Of course improving your company’s focus on customer experience is going to be good for business and good for your customer. But that doesn’t mean it won’t require a significant investment of budget, time, and people, and that can be difficult to wrangle.
By making customer experience initiatives more tangible with a focus on people, process, and technology, we can put some rigor around the question of, “Is the investment worth it?” And now we have the answer. Companies that make strategic technology, budgetary, resource, and staffing investments in customer experience perform better than their peers.
“I think we’ve all been excited about the idea of experience and buy into it in theory, but have wondered what difference it really makes,” says Wendy. “And now we have proof – making an investment in being an experience business pays off.”
If your organization is interested becoming an experience-driven business, Adobe can be an invaluable partner to help with your digital transformation. Learn more from the Experience Makers — some of Adobe’s most successful customers who know the power of putting customer experience first in their organizations.