How big a factor is customer experience in organisations’ competition with industry rivals?
Given that any commercial organisation’s fundamental purpose is to extract maximum profit for its shareholders, with this being generally achieved through a combination of driving up revenue and lowering costs, it is instructive to consider the role that customer experience has in the realisation of these objectives in the 2020s.
Factors like widespread Internet access and large-scale advertising have altered the landscape
Historically, businesses have principally focused on the variables over which they could exercise a significant degree of control, such as managing the internal costs they incur in production and service provision, as well as the likes of price setting and employee salaries.
However, there have been certain big changes in recent years that have served to transform the business landscape. One major factor has been the ever-greater use of technology across almost any and every aspect of a business’s operations, which has resulted in unprecedented volumes of data that can be analysed.
Also greatly impacting on the ‘field of play’ for businesses has been large-scale advertising and customers’ increasing tendency to turn first to the Internet for information on the products and services that they seek.
This has helped to make customers more aware of alternatives to the best-known brands’ offerings. It is a situation that has led to greater price competition and companies feeling the need to differentiate themselves in ways that aren’t detrimental to their ‘bottom line’.
Customer experience is playing a more profound role for many businesses
In the past, businesses have often sought to achieve differentiation in the eyes of potential customers, through one of two routes: offering a lower-cost product or service than rivals, or selling goods that are perceived to be higher in quality than those of competitors, with the latter option allowing for greater flexibility in pricing.
Recent times have seen customers increasingly come into contact with businesses through touchpoints – such as online shopping or contact centres – that could be considered as holding them at arm’s length to the business.
Alongside this trend, businesses have increasingly competed with each other in order to deliver the best all-round CX, and therefore win customer favour.
What do the statistics say about the role of CX in competition between firms?
Recent research, as set out in ContactBabel’s “UK Customer Experience Decision-Makers’ Guide 2022-23”, entailed organisations being surveyed on the importance of multiple factors on which they competed with rivals. They were asked to rank three factors in order of importance: quality, price, and customer experience.
B2B organisations that responded to the poll put little emphasis on price as a competitive differentiator; indeed, a mere 15% ranked this factor in first place. That shouldn’t be a great surprise, as B2B firms competing with each other on price tends to mean lower profit margins for all the businesses in that sector.
However, B2C firms gave an even lower score to this factor, with only a tenth (10%) of them stating that their organisation competed mainly on the basis of price.
These findings contrast with 38% of B2B respondents and 37% of B2C firms claiming that quality was their primary competitive factor.
It was particularly fascinating, however, to see that according to 48% of the B2B firms quizzed and 53% of those in the B2C sector, it was customer experience that constituted their number one means of gaining competitive advantage. Such figures are all the more interesting given that they have been going up on a year-on-year basis.
It can be seen as highly significant that about half of all the businesses surveyed stated that customer experience, instead of price or quality, was the principal factor upon which they wished to compete in the market.
Such data would seem to indicate that as far as the UK’s senior business leaders are concerned, CX is becoming ever-more important for achieving profitability; however, it will also be intriguing to see how future economic pressures alter or reshape organisations’ strategies.
Allow the latest ContactBabel CX research findings to guide your thinking
Would you like to learn more about how organisations’ relationship with CX – and how to optimise it – varies in a range of key markets around the globe? If so, please feel free to consult our free contact centre and CX research, which could help inform your decision-making as an organisation over the months and years ahead.