Your way to an effective customer experience strategy

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Your path to an effective customer experience strategy
If your measures to improve the customer experience (CX) have had little effect so far, there may be many reasons for this.

The general measurability of customer satisfaction and the analytical identification of weak points and needs are important foundations of an effective customer experience strategy.

But without a holistic view of the customer lifecycle, you will never be able to unleash your full potential.

In this article, I’d like to discuss the differentiated stages in the customer lifecycle and introduce you to a number of highly effective levers that will help you create a sound strategy for your customer experience management (CXM).

Which in the end – and this is the ultimate goal – will enable a great customer experience.
Here's what to expect:

Why measures in customer experience management do not bear fruit

One of the most common reasons for the low impact of CX measures, is the consciously or unconsciously severely limited optimization in only a few sub-areas in the customer lifecycle. More specifically, many companies focus their efforts to improve the customer experience on the “active customer phase”, i.e. on after-sales management.

Yes, it is undoubtedly important to obtain suggestions for optimizing products or services through customer feedback in the active customer phase and to measure the degree of customer satisfaction and willingness to recommend.

However, this is far from sufficient because the sum of all experiences extends across the entire customer lifecycle and therefore cannot be reduced to the active customer phase. Rather, customer experience management must extend across the entire customer journey.

In each phase your customer is in, he has different customer wants and needs, comes into contact with different touchpoints. You must include these differences in your CXM strategy so that your measures don’t miss the target.

The phases of the customer lifecycle as the basis of your customer experience strategy

In the following sections, we’ll dive into the different phases in the Customer Lifecycle. You’ll learn

  • which key objectives,
  • typical weaknesses
  • and success-critical key measures

you should definitely have on your radar in the respective phases of the customer lifecycle in order to take your customer experience management to the next level.

The following figure shows a model of the customer life cycle, which characteristically distinguishes between the initiation phase, the active customer phase, and the passive customer phase. In addition, the phases can be broken down into further sub-phases.

phases of the customer lifecycle cxm
The phases of the customer lifecycle serve as an outline for your CXM strategy

Admittedly, it is difficult to map a complex business relationship in a comparatively simple phase model. Particularly also due to company- and product-specific differences in B2B and B2C.

However, although the concrete course of the respective phases in the customer life cycle differs from company to company, there are characteristic features in each phase that are the same or at least very similar for most companies.

Therefore, the phase model serves as a useful guide for you to derive the optimization measures for your customer experience management for the respective phases in the customer lifecycle. Start by dividing your customer experience strategy into three areas:

  1. CXM strategy in the initiation phase
  2. CXM strategy in the active customer phase
  3. CXM strategy in the passive customer phase

You can now look at the Customer Journey in the three phases and plan a targeted approach that aligns with the needs of your customers in each phase.

1. CXM strategy in the initiation phase.

The initiation phase covers the entire customer buying process as well as the company’s sales process. Your conversion rate and the volume of sales generated depend largely on how well you understand your customers’ buying process and to what extent you are able to align your sales process with the buying process.

Customer acquisition is one of the biggest challenges faced by companies that fail to align their sales process with the customer’s buying process. I will discuss the typical weaknesses and causes in more detail later in this article.

Let’s first take a look at the sub-areas into which the initiation phase is divided. These sub-areas represent the different phases in the customer buying process and should definitely be the basis for designing an efficient customer acquisition process in every company.

Put yourself in your customer’s shoes and try to understand his customer experience in each phase:

  • What information does he need about the subject area or the product?
  • Which touchpoints are relevant for him?
  • What benefits does he hope to derive from your offer?
  • What service do you have to offer at which touchpoints so that they can move forward in their customer journey?

Let’s put on our customer glasses and take a closer look at the three phases.

1.a. How does your customer behave in the attention phase?

At the very beginning of the customer journey, the potential customer has not yet recognized his problem or need. Or he has recognized the problem/need, but it is not sufficiently relevant to him.

He must first realize why the issue is of high importance to him and what consequences he will have to bear if the issue is ignored or put on the back burner. Only then can he make a commitment to act and look more closely at the possible solutions.

1.b. How does your customer behave in the consideration phase?

In the consideration phase, the potential customer needs a comprehensive understanding of the range and suitability of the various solution paths and options. He wants to understand the advantages and disadvantages of the different approaches in order to find the best solution for him. As part of this, the potential customer also wants to know what the costs will be.

customer-experience-purchase-decision

1.c. How does your customer behave in the decision phase?

In the decision phase, the potential customer has decided on a solution path and wants to ensure that he chooses the best provider for him. In order to understand the differences between the various providers, he compares their products/services and obtains quotes if necessary. Finally, he decides on a provider and the purchase is concluded.

Goals of customer experience management in the initiation phase

  • Increase brand awareness
  • Increase reach
  • Build trust
  • Reputation building
  • Expert positioning
  • Demand generation
  • Increase willingness to buy
  • Highlight differentiation from the competition
  • Generate more prospects (increase conversion rate)
  • Attract more new customers (increase conversion rate)

Consider which measures can be used to achieve these goals and in what timeframe. Consider the necessary/available budget as well as the necessary/available resources in the departments involved, such as marketing or sales.

Typical weak points in the initiation phase

Depending on the industry and the complexity of the product or service, the customer’s buying process can extend over several months or even years. In addition, by their very nature, no sales are generated during the attention and consideration phase.

Conversely, this means that you have to invest a lot of time and budget in marketing and sales in order to create a good customer experience at this point. And, to a certain extent, you are making an advance payment when you focus campaigns on the attention and consideration phase.

For this reason, many companies tend to focus their marketing and sales activities on the decision-making phase because they are aiming for a timely transaction.

Although this approach is understandable, it is nevertheless an extreme waste of potential and ultimately even harmful, because it opens the way for competitors and the positive customer experience then takes place with the competition.

A representative study found that only 10% of all search queries on the Internet are transaction-oriented. Another 10% are navigation-oriented, while a full 80% of all search queries have an information-oriented character with no current purchase intention.

As a result, 90% of potential customers are not receptive to advertising campaigns aimed at a transaction. This drives up customer acquisition costs unnecessarily, because costly ads are clicked even without current purchase intent.

Such inefficient customer acquisition can also be seen in the fact that typical conversion rates on landing pages are dwindlingly low between 0% and 3%. Conversion rate optimization measures will inevitably fail to produce major improvements if the content of landing pages is not tailored to the respective phase in the customer buying process.

Those who stubbornly swing the sales club need not be surprised if potential customers ultimately prefer to buy from the competition because they feel better met there. The customer experience begins long before the active customer phase.

Key measures for your CXM that are critical to success

If you want to take a big step forward in terms of conversion rate optimization, there is no way around precisely aligning your sales process with the various phases in the buying process and the corresponding touchpoints.

Conduct a customer survey (interviews and online survey) to find out what specific information your customers need at each stage of the buying process. It is essential that you develop an in-depth understanding of how your target groups prepare and execute purchase decisions.

Based on this validated understanding, you should then develop a content strategy that addresses information needs throughout the buying process. This will take your prospects by the hand and guide them through their customer journey.

But be careful: Such measures can mean that you reach potential customers at an early stage of the customer journey. The positive customer experience ensures that you build a trusting relationship with your customers. And that’s long before they even know they’ll be buying from you later. Do you really want it to get to that point? 😉

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2. CXM Strategy in the Active Customer Phase

The active customer phase comprises the period …

  • from the conclusion of the contract,
  • through subsequent purchases,
  • to the termination of the contract.

As described in detail above, the initiation phase should not be neglected under any circumstances, as it is an essential part of the customer experience and has an impact not only on sales results but also on customer satisfaction.

Nevertheless, the degree of customer satisfaction also depends to a particularly large extent on the extent to which the customer’s expectations of your product or services are actually met during the active customer phase. Of course, the concrete processes differ greatly from company to company, depending on the type of products and services.

Even in the active customer phase, a deep understanding of your customer is essential to plan strategically and create an exceptional customer experience.

2.a. How does your customer behave in the onboarding or delivery phase?

After the customer has made the purchase, he expects transparent information about the next steps in the onboarding or delivery phase.

In the case of an online order, for example, they want to know whether the order was successful, when they can expect delivery, what exactly they should do next, and what further information they will receive, for example, by e-mail.

If the customer has purchased a software license, for example, he wants to get started as quickly as possible without losing unnecessary time. Depending on the industry, it can be helpful here to provide the customer with special onboarding videos that make it easier and faster for them to get started using the new product.

2.b. How does your customer behave in the usage phase?

In the usage phase, the customer wants to know how to get the most out of the product in order to achieve the best possible results. Here it is helpful to provide the customer with tips and tricks and to inspire him with a variety of usage examples.

The more successfully the customer can use the product, the higher their overall satisfaction. Successful use of the product is also a mandatory prerequisite for cross-selling and upselling or contract renewal. The scope and quality of customer support should also not be underestimated if the customer cannot get anywhere on his own.

If these criteria are only inadequately met, the customer will tend to complain and be dissatisfied, and will very likely refuse to make a follow-up purchase or renew the contract.

customer-experience-use phase
A positive customer experience is essential, especially in the delivery and usage phase.

How the company deals with complaints and dissatisfied customers is also crucial for the customer experience.

Do they simply take note of the complaint, or do they go the extra mile and make an effort to steer the customer’s mood back in the right direction with the help of individual measures that are appropriate to the case in question? Good customer experience management takes the second approach.

Goals of customer experience management in the active customer phase

  • Consistency of communicated performance and actual performance
  • Align product expectation and actual product experience in harmony
  • Customer-oriented complaint and grievance management
  • Ensure successful use of the product or service
  • Cross- and upselling
  • Reduce churn rate
  • Increase customer loyalty (retention rate)

Choose which goals you want to achieve. As already mentioned in the initiation phase, concrete measures, implementation timeframe, and human as well as budgetary resources are an indispensable part of your CXM strategy.

Typical weak points in the active customer phase

In many industries, companies do not start asking their customers how satisfied they are and what improvements they would like to see until the active customer phase. This applies in particular to the product development process with its phases: Idea, Conception, Design, Implementation, Ongoing Operation.

If you only ask customers during ongoing operation, i.e. when the product has already been launched on the market, you run the risk of developing a product that either no one needs or that only inadequately meets the customer’s requirements.

It becomes particularly problematic if the customer’s expectations of the quality and usability of the product or service were higher than it is capable of delivering in reality. In addition, many companies are not aware of the following fact:

The later customers are involved in the product development process and the later in the product lifecycle usability is optimized, the more expensive these optimization measures become for the company.

Key measures critical to success

Basically, you should always ask your customers how you can make the onboarding and ongoing use of your product or service easier for the customer and make it an even better experience.

To do this, always be aware of the customer experience your customer has and the company and product-specific processes that affect your customer. Customer experience management is not just a matter of marketing!

In addition, it is recommended that you involve and survey your customers at all stages of the product development process, if possible, to maximize the success of your products or services.

  • Idea: At the very beginning, determine with the help of user research and on the basis of valid data whether your product or business idea is relevant for the customer, how high the market potential is, and what concrete requirements your customers have regarding the product and your services.
  • Conception: Conduct initial usability tests with real users from your target group on the basis of prototypes before proceeding to design and implementation. This is the only way to ensure that customers understand your product, can use it successfully, and have a positive customer experience.
  • Design: Ask your customers what design variations they like best and what aspects they would change to make them feel comfortable while using the product.
  • Implementation: Only develop products and features that you can say with confidence will meet the customer’s needs (idea), provide high usability (concept), and are visually appealing to the customer (design). Consult your customers again as soon as the implementation is finished to be able to correct last mistakes before the launch.
  • Ongoing operations: Regular customer surveys are also indispensable during ongoing operations. Here, for example, your customer service team, a customer success manager or key account manager can check in with customers at regular intervals to find out the status quo of product usage and identify potential for optimization. The identified weaknesses can also be statistically validated via an online survey.

3. CXM strategy in the passive customer phase

The passive customer phase includes all customers who have not made a follow-up purchase in a longer period of time, or who have cancelled or not renewed their contract.

You should not automatically abandon passive customers. First, you should talk to them to learn why they are leaving. And on a case-by-case basis, you should also try to reactivate them with good CXM and service measures.

customer-service-customer-experience
Good customer service creates positive customer experiences and helps you retain customers

To do so, it is necessary to recognize which customers will benefit from your reactivation measures, or when it might even be better to let a customer go. In this case, it is important not to bludgeon them with misplaced marketing measures and end the business relationship.

Goals of customer experience management in the passive customer phase

  • Identify customer churn at an early stage
  • Identify reasons for inactivity or termination
  • Take measures to reactivate passive customers
  • Eliminate causes of justified customer dissatisfaction
  • Revitalize struggling customer relationships 
  • Identify unprofitable customers

In this phase, your CXM strategy should again clarify exactly how, by when, and with what means you want to achieve these goals. Only then will you have measurable KPIs and be able to react to ensure a successful customer experience.

Typical weak points in the passive customer phase

Many companies make the mistake of simply letting churning customers go because they underestimate the revenue potential of inactive customers. Or there is an assumption that measures to win back customers are not profitable and the costs are too high.

However, the reality is that winning back churning customers is significantly more cost-effective than acquiring new customers, and professional win-back management promises high success rates of between 30% and 50%. In the next section, I will discuss the prerequisites for such success rates.

Key measures critical to success

The success of your recovery efforts depends significantly on the following factors:

  • Employee aptitude: In addition to a high level of motivation, your recovery management employees should have extensive technical and communication skills to create a positive customer experience in a difficult situation.
  • Incentives for employees: In order to increase the motivation of the employees of the recovery management, monetary incentives are suitable, which are tied to the success rates of the employees.
  • Target group selection: It is perfectly possible not to segment your data and simply target all churning customers. However, for good and cost-oriented CXM, it is advisable to select and, for example, exclude those customers who are unprofitable. Furthermore, you should also consider criteria such as the level of sales or the contribution margin when selecting the customers to approach.
  • Early contact: The shorter the time between the customer’s cancellation and your contacting the customer, the easier it is for you to change the customer experience for the better and win back the customer.
  • How to contact the customer: In the case of particularly profitable customers, or customers who are served by sales representatives, a direct personal conversation is certainly the best way to persuade the customer to return. Otherwise, a telephone call is excellent because it allows a personal dialogue at low cost. You should only resort to written contact if customers cannot be reached by phone or if they do not wish to be contacted by phone.
  • Individual incentives for customers: As a general rule, every win-back attempt should be accompanied by an apology on behalf of the company. To make it easier for customers who leave to decide to return, you should offer individual incentives that match the reason for their departure.

For example, you can offer a discount or additional free services to a customer who is satisfied but has come across a more attractive competitor’s offer. Or you can offer them a free contract upgrade to the latest product version.

For customers who cancel because they are dissatisfied, you should first find out the reasons for their dissatisfaction and ask what exactly needs to change or improve for the customer to decide to return.

If these changes are realistic for you and can be implemented in a timely manner, you should offer precisely these improvements as an incentive and, if necessary, back them up with a supplementary benefit argument.

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Conclusion: Effective CX management requires a holistic strategy.

Admittedly, many of the CXM measures recommended in this article dig deep into the company’s infrastructure and processes. However, this is exactly what you need to do if you want to sustainably strengthen your competitiveness by creating a great customer experience.

  • If you fail to adapt your sales process to the customer’s buying process in the initiation phase, you open the way for competitors.
  • If you fail to meet the customer’s expectations in the active customer phase and cannot ensure the successful use of products and services, you will contribute to customer churn.
  • Those who simply let their customers go in the passive customer phase without making any effort to win them back are wasting enormous revenue potential and, on balance, require significantly more budget for new customer acquisition.

The key to successful CXM therefore lies in taking a holistic view of the customer lifecycle.

To gradually extend customer experience management to the entire customer lifecycle, it is essential to cooperate across departments. For example, product development, marketing, sales, customer care, and the shipping and logistics departments should share their insights into customer requirements and needs.

After all, no department in the company will ever be able to create a great customer experience on its own, because the myriad touchpoints throughout the customer lifecycle are each the responsibility of different departments within the company.

If you consider these aspects in your customer experience strategy and align your goals and measures accordingly, nothing will stand in the way of successful CXM.

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