What Is Customer Experience? Definition, Examples, & Tools

Discover why investing in customer experience increases customer loyalty and retention.

March 18, 2022

Solutions Consultant, Amplitude

Customer experience is how your users or potential users receive and interact with every touchpoint of your business. This goes beyond their interactions with your contact center or support team. The overall customer experience includes their perception of your brand, their experiences interacting with your digital touchpoints, and their whole journey throughout the customer lifecycle.

Investing in providing a great customer experience is a surefire way to improve brand loyalty, increase your bottom line and even cut extra business running costs. Collect valuable customer data in order to optimize your customers’ journeys, leading to positive customer experiences.

Key takeaways

Investing in your customer experience leads to increased customer loyalty and retention.
There are four key components of customer experience—a customer-centric culture, well-designed touchpoints, consistent quality, and customer satisfaction.
Providing a quality customer experience means listening to your customers. Develop a system to collect, analyze and utilize customer feedback. This will help you find ways to reduce friction throughout your customer journey.

What is customer experience (CX)?

Customer experience, or CX for short, is a term used to describe the customer interactions with your business across multiple levels. The experience they have with your customer support team is part of CX, but it isn’t everything. Customer experience could be anything from navigating your mobile app or website to consuming your marketing campaigns or directly using your product or service.

In other words, it’s the way a customer perceives the experiences they’ve had with your business and their overall impression of your brand. Positive client experiences and an affinity toward your brand make it more likely that people will keep coming back to you.

There are two types of customer experience—direct and indirect contact:

Direct customer experience refers to any interaction initiated by the customer. This includes the purchasing lifecycle, the experience of using the product or service, and any interaction they have with your team.
Indirect customer experience refers to the passive encounters with your company. This can mean your marketing efforts and also external advocacy or opposition, such as reviews, word-of-mouth communication, and external media coverage.

Customer experience (CX) vs. customer service (CS)

Customer experience and customer service are often used interchangeably. This can be problematic, as customer service is only one part of the customer experience.

Customer service refers to the direct interactions between you and the customer. This happens when a customer requires assistance or help through any of the different communication channels you might offer. This could include:

Face-to-face interactions at a shop or office space
Over the phone
Via email
On social media
Through chatbots
On website support pages

Good CS is vital to harnessing a good customer experience, and it is only one part of a bigger concept. CX goes beyond customer service to practically every aspect of your organization. It’s more than how long it takes your team to follow up on a query or whether or not they manage to successfully address a complaint. It’s also about the design of your product, the music you play in your store, the reviews written about you on Yelp, and so much more.

Why CX is important for your business

Many companies see positive CX as a competitive differentiator. According to a report by Dimension Data, businesses that prioritize offering great customer experiences reported a 92% increase in loyal customers, an 84% increase in revenue, and cost savings of 79%.

Improving CX will reap many benefits for your business:

It helps you better understand your customers. To improve consumer experience, you first need to understand your customers and how they’re interacting with you. This means learning more about your users and their behaviors. With this information, you can offer more personalized experiences across all customer touchpoints to increase your value proposition.
It increases customer loyalty and retention. Customer experience is the single largest determinant of your retention rate. A good experience harnesses loyalty, which drives your retention rate. The higher your retention rate, the more your business grows. According to this Zendesk report, 61% of customers will end their engagement with a company after having a bad experience.
It improves your brand value. Positive perceptions of your company’s brand increase its value. The better your reputation as a brand, the more it’s worth. Understanding how your customers feel about your brand can help you take the steps needed to shift perceptions in a positive direction.
It attracts new customers. Customers are more likely to promote your brand after having good experiences. Satisfied customers are your best ambassadors and are likely to bring in new customers through word-of-mouth, posting good reviews, and leaving glowing recommendations. High-quality customer experience is a great way to increase your net promoter score (NPS).
It limits your costs. Gaining CX insight sheds light on what’s currently working and what isn’t. By understanding what isn’t working, you can stop spending money on the elements of your business that aren’t meeting customers expectations. Instead, you can spend on things that are addressing customer needs and pain points, and will ultimately drive revenue for your business.
It reduces customer complaints. Happy customers are less likely to complain, and fewer complaints mean less customer churn. It also means your contact center is spending less time putting out fires and more time nurturing quality relationships with your users.

What is CX? 4 key components

These four components give you a clearer picture of the quality of your customer interactions and how to improve them.

A customer-centric culture: Customer service should be a priority for every member of your team, not just your customer service center. You need to create a sense of ownership and shared responsibility toward creating positive customer experiences. This starts with creating positive employee experiences. Team members who feel valued and who understand the organization’s goals are more likely to embody them when interacting with the customer.
Well-designed touchpoints: What does your customer journey map look like? What are the likely customer perceptions at each touchpoint? Quality CX comes from ensuring that every touchpoint is optimized to satisfy customer needs. This includes things like intuitive web design, friendly customer service, and a well-designed product. Understanding your user journey is an ongoing process and by doing so, you’re more likely to ensure customer retention.
Consistent quality: Your company’s goal of delivering quality CX should always be front-of-mind for your team. A bad experience can have negative effects on your organization. Delivering good CX is an ongoing effort and must be delivered consistently if you’re going to retain customers and maintain your brand reputation.
Customer satisfaction: Customer satisfaction is a good indicator of overall CX. It’s also one that can be measured quickly and easily at every touchpoint and interaction. It’s a great way to gauge the type of experience a customer has with you in real-time. The method used for measuring customer satisfaction should be accurate and provide you with the insights needed to constantly improve.

Traits of a quality customer experience

Offering quality customer experience involves understanding your customer needs and expectations and trying to satisfy them across all points in their journey with your business. To uncover some of the most tried and tested ways of doing this, Hotjar surveyed 2,000 CX professionals across different industries. According to the findings, quality customer experiences are characterized by:

Prioritizing listening to your customers: It’s impossible to provide quality CX without knowing what that means to your customers. To do this, you must start by listening to and learning about your customers’ encounters at each step of their journey.
Using feedback to learn more about your customers: By obtaining feedback from your customers, you learn more about who they are, what they need, and how they perceive your organization. Understanding this helps you provide a better experience and ultimately harness greater customer value.
Implementing systems for collecting, analyzing, and utilizing customer feedback: These systems should be designed in a way to make them easily replicated on a regular basis. This way, you ensure the information you’re receiving about your customers is consistent and accurate.
Finding ways to reduce friction throughout the customer journey: Understanding your buyer personas and their experiences helps you identify the points where they’re likely to abandon their journey. With this in mind, you’re able to take the right steps and implement initiatives to avoid these points of friction.

Examples of great customer experience

Companies like Burger King and Walmart provide us with great customer experience examples. With the help of Amplitude, they have used data to optimize the consumer experience.

How Burger King uses data to enrich CX

Burger King, one of the largest fast-food hamburger chains in the world, started working with Amplitude to harness the power of behavioral data to better understand their user experiences. One of the first things they noticed is how much customer expectations have changed—particularly, how important it is for customers to be able to order through their mobile phones.

With the data they collected, they noticed major pain points that they needed to address. They found many customers were dropping off the app when using the store locator function to find nearby outlets. This was due to slow loading times, which were off-putting for customers. Within a month, Burger King fixed the loading time and offered a better digital experience.

How Walmart enhanced their omnichannel customer experience

The multinational retail giant, Walmart, relied on customer data to foster great customer experience across the different channels available to their customers. The data they could access via Amplitude was crucial when they opted to consolidate their grocery and general merchandise apps in 2020.

They understood and monitored the different cohorts of both apps and their behaviors. They monitored this prior, during, and after app installation. They used information such as customer context, user cadence, key events, and the timing of those events to increase engagement and reduce churn.

The issues that define a bad customer experience

Just like good CX helps your business, negative experiences can hurt your business. It’s important to identify where things are going wrong and how you can avoid these obstacles.

According to Hotjar’s customer experience stats, the most common causes of frustration for customers are:

Long wait or response times
Employees not understanding their needs
Issues or queries that remain unresolved
Too much automation in the company’s processes
When the service customers receive is impersonal
Rude or angry employees

Interestingly, 12% of Hotjar’s survey respondents believed their customers experience no frustrations whatsoever with their company. While this would be a great reality to work toward, it’s immensely unlikely. This means that 12% of respondents are entirely unaware of the CX issues their company is facing. If such problems are left unchecked, they’re likely to get worse.

When customers interact with the digital touchpoints of your business, there are a number of other issues that can negatively affect customer experience if they aren’t addressed:

Slow loading times
Inconsistent messaging across social channels
Unresponsive mobile app design
Too many emails or notifications
Impersonal emails or notifications
Over-automation

What stops companies from tackling bad CX

Not all companies give the same level of importance to avoiding a bad customer experience. Very often, the problem is not denial, but the approach being taken to solve it. This inertia is normally caused by:

Expecting the CRM to do all the work. Many companies invest a lot of time, energy, and money into customer relationship management (CRM) software, assuming this will solve all of their CX problems. CRMs can provide you with great information about your customers (such as their history with customer service and product returns), but they don’t capture experience-specific information. This is where customer experience management comes in. CEM is focused on providing a more holistic view of customer experience. It also provides you with this information in real-time.
Fear of the data. Some business leaders are likely to avoid collecting data on customer experience because they don’t feel data-savvy enough. While the thought of carrying out data collection and analysis might feel daunting, avoiding it altogether can lead to bigger consequences further down the line.
Not having the right tools to understand and optimize your CX. When it comes to CX, data is your secret weapon. That’s why it’s important to invest in easy-to-use, self-service data analysis tools that will help you obtain the most accurate data and know what to do with it.

Tools to help create better user experiences

There are a number of different solutions available to help you enhance your CX.

Amplitude

With Amplitude Analytics you can utilize tools like behavioral analysis, persona identification, and engagement tracking to create unrivaled CX. Amplitude helps you map the entire user journey in a way that easily helps you locate friction points and analyze trends. With this information, you can build a more comprehensive customer experience strategy to set you up for growth.