Defining Digital Customer Experience Strategy: It Matters for Business

88% of executives recognize that a digital experience strategy significantly impacts company revenue.

Key Takeaways ūüďą

  • Strategic Gap in Execution: Despite widespread recognition of CX’s importance, with 88% of executives acknowledging its significant influence on revenue, there is a notable gap in its effective execution. Only 9% of companies rate customer engagement as excellent, revealing a discrepancy between theoretical understanding and practical application‚Äč‚Äč.
  • Impact on Revenue: Effective CX strategies are directly linked to revenue growth, fostering brand loyalty, customer retention, and opportunities for upselling and cross-selling. When implemented well, these strategies can enhance customer satisfaction and increase economic gains by 20-50%‚Äč‚Äč .
  • Role of Strategy: About 92% of leaders agree on the necessity of a well-defined customer engagement strategy, yet less than half invest in technologies and systems to support personalized omnichannel encounters. This highlights a clear gap between strategic commitment in theory and its demonstration through actual investments‚Äč‚Äč.
  • Mapping the Customer Journey: A successful CX strategy requires a deep understanding of the customer journey, focusing on empathy for customer needs and pain points. This strategy should be unique to each brand, emphasizing the need for customization based on the company’s strengths, challenges, and customer personas‚Äč‚Äč.
  • Digital Experience vs. Omnichannel Marketing: Digital customer experience differs from omnichannel marketing. While omnichannel marketing focuses on integrated touchpoints for cohesive messaging, digital CX is about how customers perceive and emotionally connect with the brand during these encounters. This requires a two-pronged approach, combining omnichannel reach with tailored experiences‚Äč‚Äč.
  • Reducing Expenses: Digital CX strategies can also significantly reduce costs, primarily through process automation and self-service experiences. This saves on labor and allows resources to be redirected towards growth priorities‚Äč‚Äč.
  • Total Experience Approach: The digital experience economy necessitates a ‚Äútotal experience‚ÄĚ approach, integrating customer experience (CX), user experience (UX), and employee experience (EX). This holistic strategy enhances workforce engagement and customer satisfaction, leading to better sales results‚Äč‚Äč.

Why is Customer Experience Important?

Customer experience has emerged as one of the most important business priorities of the modern era. Studies reveal it is now viewed as a vital differentiator and contributor to financial success across industries. However, while awareness is high, execution often falls short.

Recent research indicates that most companies recognize the sizable impact customer experience can have. 88% of executives surveyed believe it significantly influences revenue streams. 92% say that having a well-crafted customer engagement strategy is critical to the health of their business.

Yet fewer feel they have mastered the art and science of cultivating quality customer interactions. Based on common industry benchmarks, only 9% rate their current customer engagement levels as excellent. Less than half actively invest capital and resources into improving technologies, analytics, and personalization capabilities required to shape a seamless, modern experience. Using data analytics to improve customer experience has become a business imperative.

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Necessity for Strategy Update: Many companies’ digital customer experience strategies are outdated, highlighting the need for a reboot to keep up with evolving customer expectations.

This reveals a concerning gap between understanding the customer experience’s importance in theory and making it a reality through strategic priorities and investment. Many leadership teams vocalize the right ideas regarding customers’ elevated expectations for personalized omnichannel journeys. However, they fail at infusing the organization with the tools and culture needed to deliver.

The data highlights the massive market opportunity open to those companies willing to walk the walk regarding customer experience excellence. With less than 10% of businesses impressing their customers today, there is room for improvement. Leaders must set the tone from the top down and back it up with concrete commitment.

When properly prioritized with financial and operational support, customer experience can pay dividends that compound over time. It strengthens brand loyalty, increases customer lifetime value, and drives sustainable growth as happy customers become vocal advocates. The numbers confirm its significance, even as many stumble in execution. Businesses must address this now more than ever to gain a competitive advantage. Those who progress from awareness to action will reap the rewards.

The Impact on Revenue

Recent research from Harvard Business Review spotlighted the revenue potential of customer experience done right. They surveyed senior executives across industries about perspectives on engagement. 88% see a clear correlation between keeping customers satisfied and business growth. Those able to drive consistent positive interactions believe they can amplify sales, repeat purchases, and referral levels.

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Customer Engagement Impact: A significant majority of executives acknowledge the direct impact of customer experience on revenue, yet few have excellent engagement strategies in place.

However, very few feel they are capitalizing on this opportunity currently. Only 9% rate their organization’s proficiency at customer engagement as excellent. This massive gap indicates most see room for improvement in their strategy and execution. The surveyed leaders grasp the conceptual value in engagement, evidenced by nearly 90% connecting it to revenue generation. But turning theory into practice remains elusive. This highlights a pivotal need for many companies to advance from recognizing the importance of customer experience to making actual investments in it.

The research shows there is no shortage of revenue growth to pursue if they can close this gap by crafting excellent engagement models. The companies that figure out how to progress from talk to action will gain a meaningful competitive advantage.

The Role of Strategy

The executive survey also explored the strategic orientation towards customer experience. An overwhelming 92% agree that having a clearly defined customer engagement strategy is critical for any organization hoping to connect with audiences. Leadership teams comprehend the need for an intentional plan to guide interactions across channels.

However, most have yet to implement such strategies within their operations. Less than half state they currently invest in engagement-focused technologies and systems for delivering personalized omnichannel encounters. Additionally, only 40% believe they leverage data sufficiently to serve customers contextually. This lays bare a discernible gap between acknowledging the importance of strategic commitment to customer experience in concept and demonstrating it through budgets, headcounts, and infrastructure.

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Beyond Basic Tools: Improving customer experience requires more than just adding chatbots or social media channels; it demands a customer-obsessed approach and an integrated strategy.

While the survey confirms businesses understand the merits of cultivating this competency, many still struggle to back words with substantive action. Until executive teams institute tangible processes for bringing strategies to fruition, the full financial and competitive advantages will remain out of reach. Those able to break through the execution roadblock to activate ambitious engagement plans will likely pull ahead of peers still stuck in neutral.

Creating a Digital Customer Experience Strategy

Constructing a customer experience strategy that catalyzes real change requires moving beyond theory into action-oriented execution. This necessitates examining the complete ecosystem customers traverse when engaging with a brand across access points. The sequence of interactions and needs varies based on internal and external variables unique to each business.

Mapping the End-to-End Journey

Table: Steps in mapping the customer journey

Step in Customer Journey MappingDescriptionFocus Area
Identifying TouchpointsDetermine every potential interaction point the customer has with the brand, from initial awareness to post-purchase.Understanding where the customer interacts with the brand.
Analyzing Customer FeelingsAssess how customers feel, think, and act at each touchpoint. Identify moments of delight or frustration.Emotional response and behavior at each stage.
Flow of the JourneyEvaluate how the sequence of interactions flows. Look for areas that could be smoother or more intuitive.The overall ease and logic of the journey.
Empathy for Needs and Pain PointsDevelop a deep understanding of customer needs and pain points throughout the journey.Customer challenges and requirements.
Reimagining EncountersBegin redesigning interactions to consistently meet or exceed customer expectations.Enhancing customer interactions.
Holistic ViewKeep the entire end-to-end journey in mind, avoiding over-optimization of isolated interactions.The journey as a continuous experience.
Customization for the BrandTailor the journey based on the company’s unique value proposition, capabilities, and customer personas.Aligning the journey with brand specifics.

Strategists must fully map the customer journey to uncover key moments of influence and opportunity. This means identifying every potential touchpoint along the path and how users feel, think, and act at each one. Where are moments of delight or frustration? How could the sequence flow better? The goal is to develop deep empathy for needs and pain points throughout.

Only then can experience crafters begin reimagining encounters that consistently meet expectations. They must keep the end-to-end sequence in mind, not over-optimizing isolated interactions. Stepping into customers’ shoes is required to pinpoint gaps between the current and ideal reality at different stages. This mapping lays the foundation for major improvements.

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Personalization Expectation: Consumers increasingly expect personalized experiences and feel frustrated when brands fail to provide them.

Customizing for Your Brand

While common principles and best practices exist, customer experience strategies cannot be copied and pasted across companies. The journey for a medical equipment provider navigating regulatory approvals differs vastly from an online clothing retailer focused on convenience. Even less extreme examples in the same sector likely have variations. The customer path should build on a company’s unique value proposition, capabilities, and existing touchpoints.

So, while all brands must map journeys to enhance engagement, the priorities and approach ultimately look different everywhere. Some may need to optimize a complex B2B sales cycle, while others refine a mobile app experience. Strategists must faithfully represent their organization’s strengths, challenges, and personas. This is the only way to develop an authentic strategy that moves the needle.

While benchmarks provide guidance, success requires customization. Teams willing to do the work to uncover what makes their business special and thoughtfully apply those insights to experience design are best positioned to make customers take notice.

Examining Digital Customer Experience Transformation

Defining digital customer experience requires delineating it from omnichannel marketing. While semantics often blur boundaries, these are distinct strategic priorities warranting separate attention.

Omnichannel marketing involves meeting audiences through integrated touchpoints – website, social media, retail stores, etc. The goal is to craft cohesive messaging and interactions across digital and physical spaces. It is an expansion of reach, enabling more impactful engagement.

key insight

Customers expect and are now demanding a streamlined, personalized experience when interacting with brands across all touchpoints; there’s more research to prove it. According to a study by McKinsey, 71% of consumers now expect a personalized experience, and 76% get frustrated when they don’t find it.

Digital customer experience transformation, however, is about shaping how people perceive brands during those omnichannel encounters. It encompasses impressions, emotions, and relationships built through engagements across channels. Experience is subjective, shaped by expectations and sentiment during journeys.

Essentially, omnichannel marketing is how companies connect while experience defines if those connections resonate. Brands must pursue both in tandem to thrive. Omnichannel efforts lay pipes for outreach and conversations. Experience optimization ensures engagements feel meaningful and personal when they occur.

With everything now digitally extensible – events, transactions, even word-of-mouth – experience tightly interlinks with omnichannel. Seamless online and offline integration allows positive experiences to amplify exponentially. Equally, missteps spread rapidly.

Crafting exceptional experiences spans beyond products and services alone. Customers want brands to align with their values through authentic purpose and understanding individual needs. This emotional connection anchors relationships and advocacy.

True digital customer experience transformation requires a two-pronged approach. Brands must foster omnichannel reach while obsessing over tailored experiences. This strategy can elevate engagement markedly when backed by culture and processes supporting customers internally. Pursued in isolation, however, both omnichannel and experience efforts ring hollow. Together they enable brands to form bonds with audiences that transcend transactions.

Breaking Down Gartner’s Digital Customer Experience Model

An image of Gartner's Digital Customer Experience (DCE) strategy

The Gartner Digital Customer Experience (DCE) Model provides a framework for transforming customer service and engagement. While aimed at service teams, its principles can inform company-wide strategies.

At its core, the model examines the foundational components enabling strong customer centricity – people, processes, and technologies. This covers customer-focused culture, staffing and capabilities, systems, and workflows underpinning experiences.

The next layer outlines key DCE programs like marketing, social media, UI/UX design, and in-person retail that shape interactions. Also important is the customer narrative – the overarching brand story conveyed to audiences. And the content strategy for broadcasting messages across channels.

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Strategy’s Scope: An effective customer experience strategy must encompass all touchpoints and understand the buyer’s journey, ensuring every interaction meets customer needs.

Finally, it explores the business benefits of DCE transformation – increased revenue, lower expenses, and boosted customer experience.

Increasing Revenue

An effectively implemented digital customer experience strategy can create tangible revenue growth in several ways. First, by cultivating higher brand loyalty and engagement. Customers who feel a true connection beyond mere transactions tend to exhibit greater retention and spend more over time. DCE fosters emotional bonds, translating to repeat purchases as well as referrals.

Satisfied loyalists serve as vocal advocates. They actively recommend the brand within their networks, generating word-of-mouth interest. This organic outreach continues driving acquisition, even without paid promotions. Especially for millennials and Gen Z, recommendations from peers often supersede traditional marketing.

Additionally, reducing customer churn enables significant revenue impact. Churn measures the percentage of customers stopping engagements during a period. Lowering this KPI means retaining more loyal customers longer – sustaining and growing lifetime value. DCE directly influences churn by crafting continually pleasing experiences that customers don’t want to leave behind.

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Digital Transformation and Omnichannel Focus: It’s important to distinguish between omnichannel marketing and the broader digital customer experience, which includes the impression your brand leaves across various interactions.

Finally, DCE powers the potential for upselling existing customers to higher-tier products. By understanding individual needs, brands can match customers to upgraded solutions. This expands the share of the wallet beyond initial purchases. Additionally, they can cross-sell complementary products to the same pool. For example, a customer buying a software platform may be open to an integrated analytics module to enhance capabilities.

Collectively, these levers – word-of-mouth advocacy, reduced churn, upsells, and cross-sells – unlock tremendous latent revenue streams from current customers. DCE is the key driver in making this possible through embedded loyalty and insight. While new customer acquisition has a place in growth models, the most profitable brands increasingly look internally to existing relationships first. They recognize that the total lifetime value far exceeds net new consumers’ acquisition costs. DCE allows maximizing this value.

Reducing Expenses

A focus on digital customer experience can also decrease costs in key areas. First, through extensive process automation. Manual, human-driven efforts are much more resource-intensive than optimized digital workflows. DCE initiatives identify areas to implement automation, chatbots, and AI to handle high-volume repetitive tasks. This significantly reduces the required hourly labor, leading to major savings.

Additionally, DCE powers effective self-service experiences, allowing customers to find information or conduct transactions independently. Examples include FAQ databases, support forums, tutorial videos, and account management portals. By curating helpful on-demand resources covering common needs, brands reduce live support requests. This lessens expenses on large customer service teams to resolve every inquiry.

Given contact centers are a huge investment, alleviating volume through automation and self-service frees up substantial capital. Those resources can fund growth priorities like acquiring new customers, expanding products, or improving technologies. Or even rewarding employees or shareholders.

The combined impact of process automation and self-service adds up quickly. One study found companies save an average of $8 for every customer service contact avoided through effective DCE capabilities. These savings compound exponentially at even moderate business scales. And they enable reallocating budgets to sharpen competitive positioning. For leadership teams analyzing expenses, DCE represents an obvious opportunity to trim substantial fat.

How to Improve Customer Experience

While revenue gains and cost savings have tangible financial implications, the customer experience impacts of DCE remain equally vital for long-term success.

This starts with enabling easy and intuitive access to information. DCE empowers brands to optimize the findability of critical resources across channels. Whether Commerce sites, mobile apps, or bricks-and-mortar stores, the goal is minimizing confusion to answers. This reduces anxiety and frustration for time-pressed consumers, improving sentiment.

Additionally, DCE platforms facilitate personalization so messaging resonates at individual levels. Leveraging data and AI, next-gen systems can deliver tailored recommendations and offers. This relevance breeds engagement as customers feel understood.

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Gartner’s Model Insights: Gartner’s Digital Customer Experience Model offers insights into building a strategy that includes people, processes, technology, and various customer engagement programs.

DCE also opens dialogue channels soliciting customer feedback. Surveys, forums, and conversational interfaces allow brands to continuously take the pulse on needs. This shapes future experiences and products proactively vs. reactively.

Ultimately, these capabilities position customer experience as a driving force at all levels internally – from cultural tenets to technical capabilities. Customer centricity, enabled by DCE, becomes integral to support teams, loyalty programs, and the brand identity. Rather than an abstract external showcase, it forms the very fabric of operations.

This internal customer experience transformation and externally-facing interactions enable DCE to lift complete life cycles holistically. Transactional myopia gives way to relationship-based customer journeys spanning discovery to advocacy. Delivering at this higher bar pays dividends for years due to elevated engagement velocity and reduced churn. This is critical to help improve customer experience holistically and across the organization.

Developing a Customer Experience Strategy is Good for Business

Research shows that prioritizing customer experience (CX) and digital transformation drives tangible business results. McKinsey found it can increase customer satisfaction by 20-30% and economic gains by 20-50%. However, many CX leaders stall in strategy development without effective implementation.

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Business Benefits: A solid digital customer experience strategy can lead to increased revenue, reduced expenses, and improved customer experience.

True transformation requires customer-first mindset shifts before systems. Chasing goals over human-centricity risks failure. With culture, operations, and technology aligned behind experience, the impacts compound over time.

Digital Experience Economy Requires “Total Experience”

Today’s digital experience economy runs on emotional connections made through interactions. With competitors continually vying for customer mindshare, brands must get creative in service and engagement models. They must leverage data and digital platforms to tailor offerings precisely to user wants.

Delivering the best possible user experience requires looking beyond external-facing CX, though. Internally, the employee experience shapes abilities to wow customers. Brands must take ‚Äútotal experience‚ÄĚ approaches, parallel optimizing CX, UX, and EX. This strategy enables workforce engagement that shines through in customer journeys.

Table: Total experience approach

TypeDescriptionKey ObjectivesIntegration
Customer Experience (CX)Encompasses the entire customer journey with a brand, from discovery to post-purchase.Enhance customer satisfaction, loyalty, and retention.CX shapes customer perceptions and interactions, serving as the brand’s external face.
User Experience (UX)Focuses on product and digital interface design for user-friendliness and intuitiveness.Simplify interfaces, improve usability, and create efficient user interactions.UX ensures seamless, enjoyable customer journey touchpoints, impacting CX directly.
Employee Experience (EX)Involves employees’ experiences, perceptions, and feelings within the organization.Boost employee engagement, foster a positive culture, and increase productivity.EX affects how employees deliver CX and UX, with engaged employees enhancing customer service and UX design.

EX ensures employees feel actively empowered in the experience and building processes. They become force multipliers for CX teams with the proper resources and environment. Collaboration across departments prevents silos and knowledge gaps that fracture integrated journeys.

Customer paths frequently transition between sales, service, marketing, e-commerce, and more. Their needs are increasingly complex and interdependent. Brands must rally all functions through a common customer-centric vision and strategy. This inside-out approach to total experience, addressing employees first, manifests in significantly higher external satisfaction and sales results over time.

Wrap-Up Thoughts

While 88% of executives connect customer experience to revenue, less than 10% rate internal efforts as excellent currently, indicating a concerning strategy-execution gap. Research confirms that properly prioritized CX can drive significant economic lift – McKinsey quantified potential gains from 20-50%. However, realizing such financial impact relies on investment to close the strategy lag. This means committing resources to evolve CX capabilities like service automation and customer journey mapping.

In shaping CX approaches, brands must also differentiate them from omnichannel marketing strategies, though the two function collaboratively. Effective CX concentrates on forging genuine emotional resonance during every micro-interaction across channels. It is meticulously custom-tailored based on company attributes and constantly shifting customer expectations. This requires regularly updating strategies instead of relying on static plans. With nimble CX leadership and customer-informed designs, the cumulative gains compound. When augmented by equally optimized user experience and employee experience frameworks, engagement soars higher still. This interdependency demands a cross-departmental ‚Äútotal experience‚ÄĚ philosophy set from the top.

While multifaceted in composition, holistic CX transformation can yield exponentially greater customer loyalty, revenue growth, and cost efficiency over time. But it first requires dedication to closing the awareness-action divide.

Michael Brito

Michael Brito is a Digital OG. He’s been building brands online since Al Gore invented the Internet. You can connect with him on LinkedIn or Twitter.