Does Digital Transformation Really Drive Customer Loyalty? |

Does Digital Transformation Really Drive Customer Loyalty?

Every company wants to create “lifetime” customers, which is the very essence of customer loyalty. Likewise, everyone has opinions on how to create customer loyalty. Including delivering a great customer experience, building a great digital experience, maintaining a loyalty program, providing comprehensive digital self service, and on and on.

When you hear about a digital transformation effort, you might associate that with creating a great digital customer experience that leads to a lifetime, loyal customer. Or you might hear that digital transformation is all about driving growth by becoming more agile and more responsive to customers. A recent study by Altimeter shows that over half the companies interviewed said their digital transformation goal was to “integrate all social, mobile, web, commerce, service efforts and investments to deliver an integrated, frictionless, and omnichannel customer experience”.

Frictionless Digital = Customer Loyalty?

Naturally, an integrated, frictionless digital customer experience should lead to more loyal customers. Is this really true?

According to Forrester’s Customer Experience research, presented at their recent Customer Experience Conference, the digital aspects of customer experience have now entered “table stakes” mode. Digital is a very important part of the overall customer experience picture, but digital is no longer the driver of customer loyalty. As with many other table stakes capabilities, digital done right is the minimum expectation for customers. We expect a company we deal with to have great digital experiences. We  expect their competitors will also have great digital experiences. So switching loyalty to a company with a great digital experience is no longer a driving factor for modern consumers.

But, as with all table stakes, when your digital experience is bad or doesn’t meet expectations, it becomes a detractor for your brand that will negatively affect customer loyalty.

So what drives customer loyalty?

Forrester’s data says that Customer Service is the number one factor driving loyalty. It also shows that customer service agents correctly answering consumer questions is a key element of customer service. Customers always place higher value on the ability to get their problems solved by talking with someone.

Over the past 20 years, many companies have put great effort to “digitizing” customer service. Whether that’s by providing digital self service options or automating the answering systems, the goal has always been to reduce the cost of live customer service or improving the it’s efficiency.

Forrester’s CX research shows that this is now the wrong approach. Or maybe, we need to re-approach the idea of live customer service. In light of all the digitization that we’ve implemented over the years.

How can you re-implement live customer service on limited budgets?

Combining both physical and digital approaches leads to the best solutions. Forrester cited Whole Foods as an example. In stores that addressed  physical aspects of customer service, they had improvements in CX scores by 3.6 points, which is a lot. The stores that combined physical and digital approaches saw their CX index went up by 6 points, almost double.

So what do you need to do to improve customer loyalty?

  • First, you absolutely have to digitally transform your business. Great digital experiences are now required and expected. If you don’t get your digital capabilities competitive, your customer will see that as a negative.
  • Second, become innovative around live customer service. You should provide a way to provide answers for the mundane questions and free agents up for the tougher problems. Here AI can be a great help to screen a customer’s live call for common problems and provide the right solutions or move quickly to a live agent.
  • Third, find ways to make your agents have frictionless, integrated experiences. Frustrated agents are not going to be as customer focused as happy agents. More and more research is pointing to employee experience as a critical piece of delivering great customer experiences.

 

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