Shopify Ecosystem

Why (And How) Customer Experience Drives Business Growth

why-(and-how)-customer-experience-drives-business-growth

The overall experience a customer has while shopping can ultimately impact several things – whether they will follow through with their purchase, become a repeat customer, develop loyalty to your brand, and/or spread the word by posting an online review or sharing their thoughts with family, friends, and co-workers. 

The more positive a customer’s experience is with your brand, the more beneficial the impacts are on your business.

It’s undeniable that customer experience drives business growth. According to Bain & Company, companies that are dedicated to improving their customers’ experience can increase their revenue to 4 – 8% above their market. 

A study by Dimension Data also reported that 84% of companies that improved their customer experience saw an uplift in revenue, and 79% of those companies saw cost savings.

Customer Experience Drives Loyalty 

Customer experience is pivotal in maximum retention. 

It makes sense that if a person leaves the shopping experience happy they are more likely to return as compared to if they had a negative experience. Studies have shown that for 92% of companies, an improved customer experience saw an increase in customer loyalty. Additionally, 73% of consumers think that a good experience is key in influencing brand loyalty. 

Brand loyalty positively impacts a business in many ways.

First, a returning customer is more likely to spend a greater amount of money than a first-time customer. An article on Brand Folder refers to a Cap Gemini study that shows that customers with a strong brand attachment deliver 23% more profit and revenue than the average customer. A report by BIA/Kelsey and Manta revealed that returning customers spend 67% more than new customers. 

Additionally, according to Forbes, it is much easier to sell a product to an existing customer. When marketing to a customer, you have a 65% chance of converting an existing customer, while that likelihood decreases to 13% for a potential new customer. 

The Customer Experience Drives Recommendations and Employee Engagement

Another key reason that the customer experience affects business is the inevitability that customers will describe their experience to others. A good experience can lead to a positive online review or a recommendation to potential new customers as they share with friends, family, co-workers, and even on social media. A study by Power Reviews said that 95% of consumers read reviews and 86% considered them to be an essential part of their decision-making process. Unfortunately, negative experiences are passed along even quicker than positive. How many times have you had a negative experience with a store or brand and immediately relayed those frustrations to your partner, friends, or co-workers? Those anecdotes stick.

There are also more subtle ways in which making the customer experience a priority can positively impact a business. An emphasis on improving the customer experience can even lead to more engaged employees. After implementing initiatives to improve customer service, companies saw employee engagement increase, on average, by 20%, according to McKinsley. This also resulted in them having 1.5x more engaged employees than other companies. 

How to Create a Positive Customer Experience

While there are many facets to creating an exceptional customer journey from start to finish – managing inventory, prioritizing convenience, and maintaining consistent responsiveness are vital pieces of the puzzle. 

Manage your Inventory with Automation

An efficient inventory management solution, such as Linnworks, is essential to a positive customer experience. This automation ensures that you avoid stockouts as well as overselling. If a product is out of stock but is listed on a selling channel as in stock, you could create a negative, disappointing experience for the customer. 

Inventory turnover, also known as stock turnover or inventory turns, is an important factor in managing products and creating a positive customer journey. Calculating inventory turnover can give you a clearer picture of where you stand, and help ensure that you have enough stock to meet customer demand. 

Prioritize Convenience

Customers generally expect an easy shopping experience. In a shopper survey conducted by Linnworks, among the top eCommerce trends, convenience takes the cake. For 76% of respondents, convenience is the number one priority for customers when selecting a retailer. Almost half of the survey respondents (46%) even said they would be willing to sacrifice cost for convenience.

Here are some examples of expected convenience: 

  • The ability to start shopping on one device and pick up where the customer left off on another device
  • A personalized shopping experience
  • A simple way to search desired items 
  • A quick checkout experience with few forms to fill out
  • An easy, convenient return policy
  • Seamless, fast delivery

Quick, convenient delivery is vital to creating a positive customer experience. The survey mentioned above showed that 95% of consumers believe that delivery is an important factor in making a purchase. Nine out of ten of them expect free delivery.

Improve Responsiveness and Engagement

More than anything, customers would like to be engaged, feel heard, receive accurate answers to questions, and they expect their feedback to be addressed as a part of their experience. In a report by Microsoft, 74% of millennials said social media responsiveness improves their perception of a brand. According to Linnworks research, 71% of customers would rather complete a purchase on a social site than exit to a retail site.

Customers want to know that you value their opinion – 77% of customers have a more positive view of a company that actively seeks out customer feedback.

Another important part of the engagement, as well as convenience, is a personalized shopping experience. Customers want an experience that feels like it is made for them. Epsilon research shows that 80% of consumers are more likely to make a purchase when a company offers personalized experiences. In that research, respondents also said that if they believe companies are successfully offering personalized shopping experiences, they will shop three times more frequently.

Here are just a few examples of personalized shopping experiences:

  • Product recommendations based on past purchases
  • Offers based on past purchases or preferences
  • Offers based on a customer’s physical location
  • Customized communications
  • Shipping information stored for future purchases

According to McKinsey, creating a personalized shopping experience can not only increase sales, but it can also reduce marketing and sales costs by up to 20%. 

It is evident that creating an outstanding customer experience–from the start of their shopping journey, until the end–is essential for retaining customers and gaining new customers. Small steps, if done right, such as being more responsive, soliciting feedback, focusing on personalization and convenience, and implementing an inventory management system, can effectively drive business growth. 

This is a great post from Linnworks. Linnworks helps you grow, automate and control your business, meeting customers exactly where they are and capturing every revenue opportunity. The cloud-based software seamlessly connects and automates all of the processes related to multichannel selling, allowing businesses to manage their inventory, orders and fulfillment from a single dashboard. By providing deep insights across sales channels and operations, businesses are equipped to drive profitability and growth.

Special thanks to our friends at HawkeMedia for their insights on this topic.
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