After a difficult year in 2022, the overall social and economic situation does not seem to improve significantly in 2023. Although COVID is fading somewhat into the background, the war in Ukraine is still very present, and many things point to a very weak economy to the point of recession.
In these times, it is even more important for companies to keep and retain existing customers rather than generate new customers at considerable acquisition cost. Even though this should have always been the case – following the old adage that acquiring a new customer is up to seven times more expensive than retaining an existing one – and is therefore not a new trend, it becomes even more relevant with an impending recession and thus scarcer financial resources for advertising and acquiring new customers.
An elementary criterion for successful customer retention and loyalty is trust – the customer’s confidence in the brand, the company and the products. According to a study by GWI, trust in the brand is the most important argument for buying a particular brand after quality (53%) and price (36%) with 32%. Other arguments mentioned in the evaluation, which are listed separately in the study, such as good reputation, positive evaluations and also good customer service, are ranked behind this, but of course also essentially pay off in terms of trust. In another study, Bain & Company says that a 5% increase in customer loyalty can account for up to 25% more profit.
And that makes retention or customer loyalty and building trust in one’s own brand one of the trends in customer experience management in 2023 from my point of view!
But how do I build trust in my brand, my company and my products to increase customer loyalty?
In addition to the aforementioned quality of the products and a fair price-performance ratio, the company’s transparent and ideally authentic communication is crucial. The company’s statements must be consistent and homogeneous in terms of content across all channels, although of course adapted to the respective channel.
In addition, it is crucial to show empathy for these very situations of the customer, especially in these times when customers are also often in very difficult situations. It is extremely beneficial if the customer can be offered alternatives or support for their particular challenge, such as the offer of an instalment payment or support in applying for government aid in the energy sector. Customers will thank the company with higher loyalty.
Across the board, it is necessary to analyse precisely in the communication processes how the customer moves between the channels and where breaks can occur under certain circumstances. We consider that as customer journey mapping to outline the path of customer communication and customer journey analytics to record, evaluate and analyse these paths quantitatively and qualitatively with the support of tools. These tools can be used to determine where communication needs to be optimised.
The use of communication channels is changing
These analyses should also take into account overarching developments in communication channels and their use. The GWI study mentioned above, for example, shows that the amount of time people spend online currently appears to have peaked. After a decline between 2017 and 2019, online time increased during the pandemic, but is now starting to fall again, from 6:56 hours per day at peak in 2021 to 6:43 hours per day currently.
Additionally, the way this lower online time is used is also changing. Less Google, more social media, and in turn increasingly product reviews and generating new ideas in the social media channels. This means that the desired trust is also generated to a large extent via other customers with reviews and product videos in Facebook, Instagram, TikTok & Co. This gives the much-described, literal willingness to recommend, also measured by means of NPS® among other things, a new and further dimension.
The controlled, but still transparent and authentic communication of a company, especially in the social media channels, is thus becoming increasingly important. In addition, very useful information for the company itself can be generated in this way. More data is collected about customers, their impression of products and services, etc., which can be used later. For example, our Majorel X partner FindaSense generated the idea for a new product for a food manufacturer in Latin America while evaluating the operations of the social media channels, and this product is now successfully manufactured and distributed. However, in order to do this, I have to use the aforementioned channels intensively and inspire the trust and interest of customers to share their ideas with me.
Trust is therefore an essential criterion for customer loyalty and the continued success of the company. Trust is significantly influenced and generated by holistically successful customer experience management.
Holistic and efficient customer experience management creates trust
According to McKinsey, companies that organise and manage customer experience effectively can realise a 20 percent increase in customer satisfaction, a 15 percent increase in sales conversion, 30 percent lower service costs and 30 percent higher employee engagement. As a result, improving the customer experience leads to 2 to 7 per cent higher sales and one to two per cent higher profitability. Additionally, shareholder value increases by 7 to 10 percent.
To achieve these results, it is of course still necessary to meet the basic requirements of customer experience management and within it customer service and customer management („Fix the Basics“). Efficiency in processes, optimisation and automation, especially with the support of AI and intelligent dialogue management on all channels, will remain a key task in 2023. This is particularly important in order to be able to provide the capacity for the very trust-building, customer retention and sales opportunities that are urgently needed.
Accenture has found that organisations that have developed their customer service as a revenue driver or value centre, i.e. that have focused on customer retention, customer development and sales in service, achieve up to 3.5 times higher revenue increases than customer services that are operated as pure cost centres.
And all of this is increasingly driven by data. Data-driven services and processes will occupy us even more intensively in 2023. With more data-driven, proactive communication – transparent and authentic – based on good analysis of existing data, customer trust in the company, the brand and the processes and procedures will be further strengthened. „I feel I am in safe hands here“ – that is trust! We look forward to working with you to further build and expand the trust of your customers!
Last but not least: On our own behalf at the start of the year
Dear readers of the Tip of the Week, dear customers, business partners and friends of junokai,
the entire junokai team wishes you and your families a happy, healthy and prosperous New Year. We would like to continue to inspire you weekly in 2023 with our short thoughts on topics from the world of customer experience management and thus motivate you to consistently continue on the path to a positive experience for your customers.
All the best for the new year!
Sven Beiling – Managing Director