Customer Experience: The Key Brand Differentiator [Proven by Research]

Patsy Nearkhou
May 13, 2021
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Customer Service
Patsy Nearkhou

In 2013 a research study predicted that by 2020, customer experience would overtake both product and price as the key brand differentiator. 

In 2018, PWC research proved this prediction correct: customers are now willing to pay a 16% price premium for better customer experiences. What’s more, 90% of businesses now agree that the overall customer experience is their primary focus - regardless of industry or sector. 

But why is this the case? How can the customer experience alone prove a more important brand differentiator than product and price? 

In this article, we’re going to explore that very question, outlining why customer experience has become so important to both customers and businesses alike. 

What is customer experience and why is it an important differentiator for businesses?

The term customer experience describes a customers’ overall impression of your business throughout the course of their customer journey - from first discovering your brand to using a purchased product or service. 

As such, there are many strategies a business needs to invest in to create fantastic customer experiences. These might include offering stellar customer service, driving proactive customer engagement, and building positive customer relations - all potential brand differentiators for customers in their own right. 

Either way, the reason a great customer experience is so important to businesses is that it’s proven to increase customer satisfaction, retention, and profit. In fact, customer-focussed companies are 60% more profitable than companies that neglect the customer experience. 

This leads to an interesting question. Customer experience might have a whole host of benefits for companies, but what are the benefits for customers? Why will they factor customer experience as a key differentiator over price? 

Why has customer experience become a key differentiator for customers? 

The answer is simple: customer experience is the key differentiator because a great experience provides outstanding value for money. 

Thanks to technological advances like the rise of the internet, customers now have more choice than ever before. So when a customer is faced with a choice between two competing products, they’ll always opt for the product which not only meets their needs, but also comes with the added perks of a great experience. 

These days, a good product at a fair price is no longer enough to turn heads: it’s expected.

In fact, studies have found that customers are getting more demanding as technology becomes more entwined with everyday life. With 67% of customers citing ‘bad customer experience’ as their reason for leaving a service behind, it means that customers are more likely than ever to try out competing brands. 

While this might seem daunting news at first, this is actually a great opportunity for businesses. If customers see great experiences as a key differentiator over price, there no longer needs to be a ‘race to the bottom’. Companies who want to have the competitive edge can set themselves apart by placing a higher focus on customer experience instead.  

The best companies at doing this make the customer journey so seamless that the customer ends up leading themselves to the value. They do this through two key ways: personalising their product and service, and communicating effectively with their customers. 

The importance of personalisation in the customer experience

If you’re attempting to capitalise on the key differentiator of customer experience by providing maximum added value, the importance of personalisation cannot be understated.

In fact, 80% of customers have said that they prefer businesses who offer personalised experiences over those who don’t. What’s more, these customers are ten times more likely to be that company’s most valuable customers. 

A personalised customer experience doesn’t just mean sending the odd email with the customer’s name in the header though. For example, many online retailers and SaaS companies are now going the extra mile by using algorithms to offer their customers personalised content, landing pages, and recommendations.

Intuitive and helpful personalisation tactics like recommendations help the customer feel valued and appreciated. It means they are more likely to enjoy and further advocate the product or service they are purchasing. 

Furthermore, by making personalised recommendations, the company is proactively solving their customers’ problems - once again improving the customer experience and setting themselves apart with that all important key differentiator. 

To demonstrate, let’s take a look at a personal example. 

An example of personalised customer experience

My favourite music streaming app is Spotify, and I use it to listen to a lot of music - mostly RnB and musical soundtracks. Every time I open the app on my phone, Spotify gives me a list of suggestions for other playlists and albums which I might be interested in listening to. These are based on my previous preferences. 

For example, if I’ve been listening to the Hamilton soundtrack, Spotify might suggest I listen to The Greatest Showman album next. I’ve discovered lots of great new music this way, and this has prompted me to return to Spotify again and again. I use their service almost on a daily basis, and I’ve recommended it to many friends. 

The reason I love Spotify so much is because they have anticipated my wants and needs as a customer. The customer experience team at Spotify uses algorithms to understand my musical preferences, which then allows the app to offer me suggestions. Ultimately, this means a fantastic customer experience for me and increased revenue for Spotify. It’s proof of how powerful the customer experience is as a key brand differentiator. 

The importance of communication in the customer experience

The reason why customers see communication as essential to great customer experience is once again rooted in technological advances. 

Everywhere we go, we take our smartphones with us to stay permanently connected. ‍These days, we are used to communicating with friends and family quicker and more often than ever before. Immediate connection has become the expected norm. 

As a natural progression, customers are more frequently using technology as a means to communicate with companies. For most customers, a communicative company has become an important customer experience differentiator in its own right. 

Whatever product or service they are buying, clear and comprehensive communication throughout the whole customer journey is seen as great added value. It’s why more and more retailers now offer delivery tracking and updates when orders are placed online. 

With the importance of communication in mind, companies must offer their customers maximum accessibility for a truly great customer experience. 

Companies who make the most of the customer experience as a key differentiator already have these communication tools in place. By incorporating several contact channels into a multi or omnichannel presence, these companies are able to provide the best customer service, increase meaningful customer engagement, and strengthen their customer relations. 

Let’s take a look at another example to illustrate this. 

An example of communicative customer experience

American Express is a great example of a financial institution that understands the importance of customer experience as a key differentiator. One way they have achieved vast improvements in this area is by focusing on improving communication.

To make sure they weren’t at risk of offering poor customer service, the company made a simple change to their customer care philosophy: they decided to give their contact centre agents much more freedom when speaking to customers.

For example, to improve customer satisfaction, American Express have done away with scripts when dealing with customer service queries. Instead, they have allowed agents to deal with the query in the way they see appropriate. 

After using internal tracking software to understand how their customers used their website, the company also made changes to their online journey to ease customer tension. This increased their customer retention by 400%.

In changing their philosophy and recognising customer experience as a key brand differentiator, American Express improved their reputation and loyalty rates, attracting more customers in the process. It’s proof that great communication can help customers to set your business apart from your competitors. Still, there’s a lot more you can do to really go the extra mile. 

How to differentiate your customer experience from competitors

While we could write a whole book on how important the customer experience is as a key differentiator, making effective changes to your strategies is easier than you think. In fact, the quickest way to set yourselves apart is by taking the lead from the examples we’ve already discussed. 

Both Spotify’s personalised customer experience and American Express’s attitude to customer service highlight the importance of personalisation and communication. 

For instance, while Spotify isn't directly speaking to its customers when their algorithms make personalised recommendations, they are getting in touch with their customers with added value services. They’re communicating, but in an automated way. 

What’s more, while American Express might not seem to be packaging their service in a personalised manner, by getting rid of their contact centre scripts, they are creating a much more personalised and empathetic approach to each individual customer service issue. 

To make the most of the customer experience as a key differentiator for your brand, you first need to make sure you’re being as communicative as possible. The great news is that there are a number of website engagement tools available to make talking to your customers a breeze. 

For example, feedback and survey tools can help you prove receptive to customers opinions and insights. Social media can be leveraged to offer updates and promote content that will keep your customers engaged. 

Most crucially though, a customer service platform can be put in place to make sure you solve your customers’ problems quickly and keep them smiling. 

An omnichannel customer experience: a key customer differentiator

An omnichannel approach to customer service is one of the easiest ways to improve your customer experience overall. By offering support to customers pre- and post-purchase from a variety of contact channels, you are offering personalised communication that will truly differentiate you from your competitors. 

For example, an omnichannel approach allows your customers to communicate with your company in whatever way works for them - from online web chat to video chat. Even messaging apps like WhatsApp can now be integrated. 

While these examples are more in line with modern customer needs, customers who prefer traditional contact channels like phone and email can be catered for too. 

A great way of doing this is to use integrated software like web chat or web calling. Having a click to call button on your website satisfies the need to have a fast and pain-free method of contact. It’ll also help to increase your inbound calls

One minute a customer can be looking through the website, and a click later they are speaking with a service agent who can help them with any queries they might have. 

From a customer experience perspective, an omnichannel approach proves dedication to personalised communication and problem solving. By placing a clear emphasis in these areas, you can make sure you're proving to your customers that you’re making the most of the key brand differentiator: customer experience. 

Customer experience: the key differentiator in summary

Ultimately, the reason why customer experience has become the key differentiator for customers is the amount of choice they now face when researching potential purchases. 

However, while technology has helped shine a spotlight on the importance of the customer experience, the basic principles of good business still remain in place. Personalised and communicative customer service is still essential. 

The important takeaway is to remember that it’s the experience that really sets apart competing businesses, and this is great news for a lot of companies. More often than not, creating great customer experiences is still a relatively untapped gold mine of value for businesses. 

By realising the importance of customer experience and investing in it now, you can differentiate yourself from the competition to retain existing customers and attract new ones alike. You just need to set yourself apart by making the effort to deliver the best experiences possible. 

Download the ‘Inner Circle Guide to Video & Next-Generation Customer Contact’

Discover use cases, implementation tips, and ROI for video chat as a contact channel

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