Retailers must make return on experience the new ROI

22 May 2019 Consultancy.uk

In addition to the traditional return on investment (ROI) metrics such as NPS, which are used to determine a company's success, it is time to introduce another metric. A new report has claimed a focus on customer experience is vital to the future success of companies, following a survey of more than 21,000 consumers in 27 countries.

Technology has changed the relationship between customers and companies so much a good shopping experience can be make or break for repeat purchases. Now, consumers are in a position to demand a tailored, channel-agnostic, socially conscious and social-media-powered experience, and if they do not receive it, they can easily find another company which will provide it.

John Maxwell, PwC's Global Consumer Markets leader, explained, "Whether your organisation sells household goods, health services, cars or financial services, delivering a superior experience will be what makes you a winner… Because consumers today are so discerning and powerful, it's our perspective that most organisations need to invest far more in customer experience (CX).”

Almost a third of consumers buy products online weekly or more frequently, up 5 percentage points YoY

In order to tap into this major potential, measuring the ‘return on experience' a company provides will become a key metric. According to PwC’s study, understanding a firm’s return on experience can help understand earnings on investments, particularly in relation to the front-line of a brand, which directly interacts with customers.

Changing field

Digital disruption has led to a myriad of shifts in consumer behaviour. First and foremost, it has led to the rise of e-commerce, which has continuously eaten into the market share of bricks-and-mortar stores since the turn of the century. PwC found that respondents who buy something online weekly or more frequently rose by 5% year-over-year, to 31%, and the share of consumers who never shop online fell by 3%.

At the same time, this has been compounded by the rise of smartphone technology. The boom in mobile internet use has seen consumers start to shop on all devices, with 24% of PwC’s global sample using a mobile phone to shop at least weekly, compared with 23% using a PC and 16% using a tablet. PwC added that the firm had never before seen mobile phones being used more than other digital devices for ordering, as they are now.

 Consumers shop on smartphones more often than on PCs

Mobile technology and digitalisation mean that consumers now expect a seamless end-to-end experience. 65% of PwC’s global sample does at least some shopping with Amazon, while of those individuals more than one-third suggested they shop more frequently because they use Amazon. The researchers believe this suggests that there must be something about the experience that encourages shopping, and argued that it is likely this idea of ‘frictionless’ consumption.

The report suggests that when designing frictionless experiences, businesses should think about where the pain points are in their current customer interfaces.  For instance, concierge desks in hotels or checkout counters in department stores might seem like opportunities to engage with customers, but they can actually slow down and frustrate people, hurting ‘real engagement’. According to David Clarke, PwC's global Chief Experience Officer, mobile shopping is taking off because it comes with no physical barriers, such as checkout lanes or parking lots, and no emotional barriers, such as store clerks who don't make eye contact.

"In a way," Clarke said, "mobile is actually helping consumers enjoy deeper relationships with their favourite retailers and brands. It makes for fewer frustrating, high-friction interactions for customers."

This does not mean physical or human elements should be removed from all consumer experiences, however. The study found that mixing real interaction with digital ones can provide better customer experiences, especially in sectors where customer acquisition requires education, explanation or personalisation. Financial institutions, for example, often have trouble moving past servicing customer needs online to selling to consumers online and building a relationship with them, showing the need for a human touch.

Return on Experience

While customer experience might seem familiar to businesses built on chasing consumer sentiment, employee experience is a concept less talked about. This is one major area which often sees businesses come up short when it comes to meeting customer expectations. It is all too easy for a firm to demand its lowest paid employees – who work the longest hours, and face the stress induced by direct contact with disgruntled customers directly – to always smile, up-sell, and immerse themselves in the happiness of those they serve, but is this a realistic prospect?

Without providing a better employee experience, PwC stated, it is unlikely that companies will see a heightened return on customer experience. After all, the firm found, employees directly interact with customers and shape the consumer experience, provide information, advice and assistance at the point of purchase, set the emotional tone and often make the difference between winning consumers' affections or leaving them cold. In fact, another study from PwC in 2018 found that companies that invest in and deliver superior experiences to both consumers and employees are able to charge a premium of as much as 16% for their products and services.

Building ROX metrics reinforces a virtuous cycle and amplifies value

The best way to monitor a company’s performance on this front is to design performance metrics around them. PwC suggested that rather than concentrate resources primarily on the ROI from advertising, internal IT systems, shared service centres and the like, companies should concentrate on measuring the return on investments in customer and employee experiences.

The problem is that current measurement approaches are valuable, but limited and piecemeal. For example, the well-known Net Promoter Score, which as many as two-thirds of Fortune 1000 companies use, is based on a single question concerning whether the consumer would recommend a product service or company. In addition, many companies hire vendors to track customer experiences with call centres and web properties, while ignoring the experience of employees.

Matthew Egol, Chief Strategy Officer of Digital Services at PwC’s Strategy& wing, said, “What typically happens is that companies set up some kind of brand health score, but they must go much further. An effective return on experience framework should focus in on customer touch-points that need shoring up. It can also help identify the things your company does exceptionally well, and then make sure your IT systems, data infrastructure, business processes and performance metrics are aligned with those core capabilities.”


Profile

More news on

×