What is customer experience (CX) analytics?
Customer experience analytics refers to the process of gathering and analysing data related to customers' interactions and experiences with a company's products, services, and brand.
It involves collecting data from various touchpoints such as customer feedback, online interactions, social media, surveys, and more.
The goal of customer experience analytics is to gain insights into customer behaviour, preferences, and satisfaction levels in order to enhance and optimise the overall customer experience.
By analysing customer data, businesses can identify patterns, trends, and areas for improvement, allowing them to make data-driven decisions to better serve their customers.
Why does it matter?
At every moment, customers are interacting with brands across an ever-growing number of touchpoints.
And things are changing… fast.
Today’s shopping journeys are omnichannel. For some users, the path to purchase can be quick and straightforward. For others, it can be long and convoluted – with users taking time for deliberation, poring over reviews, and using digital as well as offline channels.
Customers are moving from discovery to conversion (and beyond) in a way that is increasingly unique and personalised to them. And they are less loyal to brands than they ever have been.
So how do we ensure that consumers are getting the best experience we can give them? How do we know what they really want from our products and services? And how do we figure out the pain points?
The answer lies in CX analytics. The ability to gather the data and feedback necessary to truly understand the overall customer experience and to improve it.
CX analytics is crucial to ensuring we are providing the best user journey we can for each and every customer.
What data does customer experience analytics use?
In recent years, we have seen an explosion in our abilities to gather even more customer feedback data from an even wider array of online and offline touchpoints.
Customer experience analytics solutions use Artificial Intelligence to analyse this unstructured free text feedback from across all of these touchpoints – from online reviews to social media, customer service interactions, to customer engagement, for example.
Then, they deliver actionable insights that help you deliver better customer experiences (and improve metrics like net promoter score, CSAT, and customer retention).
At Chattermill, we call this advanced approach Unified Customer Intelligence – bringing together all of this data in real-time, and at scale, to give a comprehensive view of how your customers are really experiencing your products and your brand.
Why is customer experience analytics important?
It improves customer experience
If we want to be able to improve CX, we need to know what is really going on.
For Dave Ascott – Strategy Lead at Chattermill – CX analytics is fundamental to business success today.
‘It’s basically understanding the way your customers think or feel,’ he says. ‘There’s no other way of understanding the customer’s perception.’
Customer perception is a key detail here. It might not be true that you are the most expensive retailer in your niche, but if that’s what your customers perceive, then something needs to be done about it.
This level of customer insight might not be apparent in the hard numbers or static data. We need to know what they are thinking and feeling in their own words.
Ascott refers to the success story of the money transfer business: Wise.
For Wise, digital customer experience is central to the business. They don’t simply want to gain customers. They are laser-focused on turning their customers into evangelists for the brand.
‘Banks charge 5%. If we charge 4.8%, we may get a customer, but we would never get advocacy,’ Nilan Peiris, Chief Product Officer at Wise, says. ‘In order to drive word of mouth and evangelism, you need to aspire on your product KPIs to be an order of magnitude better than the alternative that’s in the market.’
Of course, Wise can only understand what drives that evangelism by listening to what their customers are actually saying.
The result? Wise has been able to build a sense of ownership and pride among consumers to create that advocacy. It has become more of a movement than a brand. And although it is still a relatively young business, it is successfully competing with the biggest banking institutions.
Customer experience is about more than simply making sales.
It reduces customer churn
CX analytics can drive customer acquisition, and it can turn shoppers into advocates. But customer retention is a growing area of focus for businesses.
In recent years, the reasons customers are giving for leaving brands are becoming increasingly varied. They can include general economic factors, being out of work, and coping with rising inflation.
But, of course, churn can also occur for reasons of poor customer experience. 88% of consumers say they will switch to a competitor after three or fewer bad experiences. In the US, avoidable churn is costing businesses a massive $136 billion a year.
In our CX Leaders Roundtable, How to win back churned customers, Ro Nattiv of MeUndies highlights churn that she sees within the fashion vertical, which is completely avoidable.
‘It’s the loss of a customer and revenue that could have come from that customer,” she says. “Losing customers to something that you had the ability to solve should not be a factor that is impacting your customer retention.’
CX analytics is helping Nattiv and others win back customers who have churned, but it is even more valuable as a means to stop customers from leaving in the first place.
Unifying conversion data with actual consumer sentiment can help retailers segment their most valuable customers to give better retail customer experience. They can then identify who is most worth investing in to keep them loyal.
With enough data and an understanding of real-time user behaviour, across every stage of the customer journey, brands can even spot customer pain points as they are happening and intervene before the churn occurs.
It increases repurchase rates
Reducing churn and nurturing customer loyalty can be seen as two sides of the same coin.
Just as CX analytics can help ensure your most valuable customers do not churn and shop with a competitor instead, having a proper understanding of how they think and feel can promote more purchases from returning customers.
We know that today retailers are much more likely to sell to a returning customer than to a new customer. In fact, there’s a 60% to 70% chance of selling to an existing customer compared to a 5% to 20% chance of selling to a new one.
Using CX analytics can not only help you understand which customers are most worth investing in to keep loyal, but it can also identify who will be most receptive to messages which will drive repeat purchases, more frequent orders, or perhaps buying higher-cost items.
It improves personalisation
Of course, when we start diving into CLTV and engagement with high-value customers (HVCs), we can’t ignore the importance of personalisation.
Optimising personalisation is key to improving the experience your customers have.
In another of our CX Leaders Roundtables, Winning customer loyalty in a disloyal world, Boots’ Hollie McLellan discusses the insight she gets from CX analytics and segmentation.
‘We wanted to really understand our customers so that we could talk to them in a way that resonated with them,’ McLellan says. ‘Personalisation is the most important thing we’re doing right now. You can use personalisation in a clever way that doesn’t have to eat into the margin.’
In simple terms, Boots can use CX analytics and previous sales data to target customers who might be due to replenish their vitamins, for example. They can also identify customers who have a stock of loyalty points and can signal to them the products they could buy with those points.
It creates a more customer-centric culture
Chattermill’s Dave Ascott points to how CX analytics can help evolve the business culture of your organisation.
It is clearly still a challenge for some brands, but Ascott identifies four grades of customer-centricity in businesses today.
There are those brands for whom CX is effectively unimportant. Above these are the organisations that know the customer is important but are yet to really have the strategies in place to listen to them.
At the other end of the scale, there are those businesses that do believe they are customer-centric, with the extreme end of that being the companies where the customer is everything.
One example of the latter, according to Ascott, is Zappos – a company which boasts the core value of delivering WOW through service.
‘We are first and foremost a service company. We happen to have a website and we happen to sell shoes but, beyond that, we’re about service,” says Zappos’ Jonathan Wolske. “If we provide great experiences now, our brand will be very strong in the future.’
Having comprehensive CX analytics data can really help steer the path that brands take into the future. It can help shape the product, the service, and the culture.
According to Ascott, businesses need to be asking themselves: To what extent does CX data need to be used in decision-making? To what extent are we KPI’d on it?
Ultimately, good CX – that which is providing that wow factor for customers, that can beat the competition, can stop churn and promote customer loyalty – needs all elements to be understood.
‘That takes investment and people-power,’ Ascott warns. ‘If no one cares about CX, no one has the time to do it, and it won’t happen.’
How customer experience analytics drives ROI and improves customer satisfaction
Here at Chattermill, we know that linking CX to ROI is a perennial challenge for brands. Businesses need the right data and the right skills in play.
Ascott also notes that one of the key ways to understand the impact customer experience is having on ROI is to focus on customer retention.
As we touched upon earlier, we can use CX analytics to increase the number of buyers buying again and reduce customer churn.
Even something as simple as changing the messaging during checkout on an eCommerce site can improve that experience for the customer and have a quantifiable return for a small outlay.
According to Ascott, a brand might be adding a 5% service charge for customers but notice that shoppers are dropping out at the last minute before they convert. A cut to the service charge might reduce shopping cart dropout rates here. But this would result in a loss of return from the service charge itself.
Alternatively, ensuring that customers are aware of the 5% charge at the outset of the shopping journey – so it is not a last-minute surprise – might be just the level of CX transparency in this instance, shoppers need to see the journey through to purchase.
Why CX Analytics matters more than ever
Before businesses cared about customer experience, it was more of a level playing field.
Today, the likes of Amazon – who are so laser-focused on CX – are constantly changing the landscape and forcing customer expectations to shift.
We see this resetting the bar again and again. Brands like Amazon, Wise and Zappos know that the service they provide needs to be an order of magnitude better than what came before.
Unsurprisingly, we regularly see established companies pushing the CX envelope. New brands frequently come along and shake things up too. It’s rare for a disruptor to enter into the finance, retail, or service industry and do CX worse. It’s almost unthinkable.
And while our competitors continue to reset the bar, our customers have never had it so easy when it comes to being able to seek a better alternative. It might be a quick search on Google or simply opening another app on a smartphone.
‘If you don’t get it right, you’ll be crushed by those that can,’ Ascott says. ‘It’s only going to matter more.’
In short, businesses are increasingly competing on CX. If you are in the dark when it comes to your customer behaviour, and what they think and feel, you simply aren’t going to know how best to manage your resources to keep your best customers loyal.
To learn more about how CX Analytics tools like Chattermill can help you gather and analyse customer feedback at scale, book a demo.
