Forrester: Overlook emotion as the magic ingredient in CX at your peril

Businesses must create positive emotion in customers to build loyalty and meet rising customer expectations

Businesses that lose sight of the human element and building loyalty in customer experience (CX) risk not seeing the benefits to the bottom line when undergoing digital transformation. That’s the stark message from Forrester for brands grappling with the rising expectations of customers.

As companies undergo digital transformation, a lot of initiatives are being driven by a checklist of criteria, yet these investments intended to improve CX don’t always succeed in driving business growth, he said.

Benefits of digital transformation missing with building loyalty

“The key benefits businesses seek when they go through a digital transformation project is to reduce costs, improve CX, and to grow the business overall,” Vikram Sehgal, vice president APAC analytics strategy, Forrester, told CMO.  

“Yet we find loyalty continues to be the most important factor for ROI and leads to business growth.

“A lot of companies go through digital transformation and need to be able to provide a better experience with their apps, website or customer service. But what we find is when measuring CX there is not much improvement in scores. The CX scores in our index have plateaued since about 2016.

“Businesses are doing just about enough to continue to meet expectations of customers. All these investments in technology are really just keeping pace with rising expectations.”

Knowing the customer is key

And it’s not just rising customer expectations that are the challenge, according to Sehgal. It’s differentiating the different types of customers to interact with your business.

“A lot of digital transformation doesn’t take into account the different types of customers, and different expectations are based on different types of channels customers are using to interact with the company.”

The key question, according to Sehgal is: “Who is the most likely type of customer to interact with you over what channel? The expectations will be very different depending on that type of channel.”

Use the technology to build loyalty for success

One thing remaining a constant, regardless of the different type of customer, is the role of loyalty, which is developed through positive emotion in relation to brand experiences, in improving CX.

Sehgal told CMO the ‘three Es’ are key to improving CX: Effectiveness, ease and emotion. But, while the role of emotion varies in different industries, it plays a vital role in fostering loyalty, which translates into business growth.

“Regardless of industry, emotion plays a much larger role in the overall experience a brand delivers. Depending on the industry, emotion can play a slightly higher or slightly lower part. For example, in financial services emotion has a higher role, whereas in retail emotion has a smaller impact.”

The analysis on the importance of emotion is borne out in Forrester’s 2018 Australian Customer Experience Index, which ranked 36 brands across six different industries on crucial CX metrics and how brands are faring in the ongoing quest to build customer loyalty and drive CX quality. The report makes three important findings on the state of CX in Australia.

Putting the emphasis on the right emotion to become a CX Leader

Emotion, which has a bigger impact on brand loyalty than ease or effectiveness, is the key to becoming a standout CX leader according to Forrester. The report finds a clear distinction between brands that are excelling at CX by making customers feel happy, confident and valued and, in turn, building brand loyalty. On the other end of the scale, however, brands lagging behind in CX are missing the crucial ingredient of emotion and instead are actually breeding customer resentment by making people feel annoyed, disappointed, and even frustrated. And even angering customers isn't as harmful to brand loyalty as annoyed or frustrated.

No single brand in Australia was a standout and none achieved a rating of excellent in customer experience and, on average, the CX scores around the brands remained stagnant. The Australian CX experiences, in general, are deemed mediocre with 80 per cent of brands all falling in the middle range.

There was also no clear leader in CX according to the report, with Australian brands unable to differentiate CX and those brands that did improve gained just over three points, on average, moving slowly in lockstep together.

Where is CX going in Australia?

On the subject of where CX is heading in Australia, Sehgal told CMO it’s an evolving journey as businesses undertake digital transformation, particularly in relation to AI and automation, with the aim of improving customer service, supply chain, and compliance for growth. He warns them not to get lost in the technology and forget the human element.

“The successful and unsuccessful are not that far apart in how they make processes efficient and deliver great customer experience. Don’t forget human beings and making the right kind of positive emotion, regardless of the channel through which they’re interacting with the business. The ones that are successful will continue to make sure they’re focusing on emotion in CX.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu 

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