The last 12 months have been a crash course in customer experience for business leaders. Throughout 2020 and into 2021, enterprise organizations have been forced to rethink every customer touch point and rebuild their customer journeys at record speed. According to a McKinsey survey of C-level executives and senior business leads, digital transformation initiatives for U.S. businesses were accelerated by three to four years as companies were forced to activate new ways to reach customers and manage customer care.
The driving force behind these digital transformation efforts? Empathy. As the adoption of digital channels skyrocketed, the businesses able to thrive were the ones that understood—and were sensitive to—their customers’ needs and the struggles they faced. Business leaders prioritized digital transformation initiatives, not only to manage purchase transactions but to anticipate customer expectations. A Gartner survey of more than 6,000 customers underscored the need for empathetic business practices, revealing that proactive customer service programs (those that anticipate customer needs) increased net promoter scores and customer satisfaction scores by a full percentage point.
Now, more than a year into such massive business disruptions, the customer experience gap continues to remain a challenge for nearly every industry. Businesses have had to play catch-up as the number of customers going online to engage with businesses jumped significantly, with many consumers moving across the digital landscape, browsing brand websites, using apps, and switching between social platforms on a regular basis. After the roller-coaster ride of the past year, business leaders are facing multiple questions: How do we retain customers? How do we increase customer lifetime value? And, more important, how do we grow our revenue?
The key to these challenges hinges on a brand’s ability to close the customer experience gap by building more empathetic business practices.
What is the Customer Experience Gap?
The customer experience gap is centered on a customer’s expectations and the brand’s inability to meet those expectations: Brands believe they are delivering a top-notch customer service, while consumers report a less than satisfactory brand experience. The concept is not new. More than five years ago, research showed that 85% of brands believed they were delivering exemplary customer experiences, while less than 65% of customers were happy with brand experiences.
The disconnect between brands and customers has only intensified during the past year due to a number of reasons. For one, the Gen Z population is growing faster than any other demographic. These young adults are digital natives—they have grown up on screens, navigating their adult life through their mobile devices. This consumer segment is not connecting with a brand via a single channel. They are jumping in and out of the customer journey, visiting a brand’s social account, messaging the brand via Snapchat, and comparing products on Amazon, all channels outside of the brand’s control. The cross-channel proliferation of Gen Z is becoming more and more significant to the customer journey while simultaneously widening the customer experience gap.
And it’s not just a specific demographic impacting the customer experience gap. Social media adoption for customer care issues boomed during the pandemic, with many consumers turning to a business’s social page, not only to research a product or service but to purchase a product or engage with the brand over a product question or customer service issue.
With the introduction of in-app purchasing capabilities on sites like Facebook and Instagram, the full customer journey can now happen within one visit on a brand’s social media page—again, on platforms not directly controlled or owned by the brand. This social commerce trend means brands must devise new strategies to identify, acquire, and retain customers outside of their owned digital properties.
How empathy can close the customer experience gap
If your primary KPI (key performance strategy) is revenue growth, then your focus should be on boosting retention rates and increasing the lifetime value of your customers. These objectives go hand-in-hand with customer experiences built on empathy. Customers want to do business with brands that care about them and demonstrate the same values that they practice. (Last year, a survey of more than 1,000 U.S. consumers found that 60% want companies to take a position on social issues.)
Brands aiming to grow their customer base, retention rates, and revenue must demonstrate that they care not only about the customer but about social issues and the world at large. Organizations that fail to align their values with their customers’ values are not only ignoring the customer experience gap, they risk losing millions of dollars in revenue. In fact, three years ago Forbes reported that poor customer experiences were costing businesses $75 billion a year, with many consumers ceasing to do business with a brand because they did not feel appreciated.
While the trend to adopt more empathetic practices began well before the pandemic, COVID-19 has aggressively accelerated the need for businesses to show more empathy toward their customers. It’s no longer enough simply to provide a positive customer service experience. Brands must care about the communities they serve. In return, empathetic practices will build customer loyalty and improve retention rates, resulting in higher revenue gains and measurable business outcomes.
Tactical steps to put empathy at the core of your business
If you want to put empathy at the core of your customer experience, you must have someone who stands for it internally—who wakes up every morning focused solely on your customers and their experience with the brand. Adding a chief experience officer (CXO) to the C-suite makes sure you have a top-ranking executive advocating for your customers when business decisions are made at the highest level.
Because so much of the C-suite is focused on financial outcomes, enterprise organizations benefit from having someone not tied to revenue numbers be part of the conversation when building customer strategies. A CXO looks beyond whether transactions are happening at an efficient rate or if ad campaigns are effectively upselling the customer on new products. Instead, the CXO looks at the entire customer journey, making sure each touch point is tailored to the customer’s needs. In the same way that a chief revenue officer manages specific revenue KPIs and a chief product officer oversees product initiatives, the CXO determines what’s best for the customer.
Another key step toward building an empathetic brand: making sure every employee understands their “line of sight” to the customer. This means every team member, even those who may not be customer-facing, knows how their work impacts the customer.
For example, you may have someone in your finance department who isn’t directly involved with customer issues. Instead they are focused on building transactional processes and ensuring those processes benefit the organization. This person may not be thinking about the customer, but the transactional processes they design may directly impact how a customer interacts with, and therefore feels about, the brand. Their line of sight to the customer enables them to understand how their work influences the customer experience, and improve it.
When employees make decisions based on their line of sight to the customer, they help build a more empathetic framework.
In the end, to be a truly empathetic brand, an enterprise organization must make empathy core to its DNA. It must be the driving force behind the organization’s customer experience strategy as well as a crucial component of the company culture. A brand that is able to fully adopt empathetic practices at every level of the business is more likely to build loyalty among its customer base and create lasting outcomes that diminish the customer experience gap, delivering major revenue gains for years to come.
Mark Zablan is the CEO of Astute, a leading customer engagement platform.