Customers' profiles are changing rapidly. According to a report published by the Brookings Institution in September 2018, just over a half of the world population was wealthy enough to be classified as middle class. Today, emerging economies such as Bangladesh are witnessing a significant increase in household incomes. And customers constitute a strong link in economic activities globally and nationally. It is therefore imperative that businesses should proactively address the changing behaviour of their customers.
Businesses use a metric, which is known as return on investment (ROI), to gauge their performance. The money they invest to address customers' needs should therefore generate an adequate growth in revenue and profit to recover the investment over a period of time. However, with the emergence of the digital economy, customers are opting for experiential buying more than for traditional modes of buying goods and services. Such an emphasis on experiential purchases will require the businesses to improve their experience delivery. Consequently, a new metric, called return on experience (ROX), is henceforth going to be as important as ROI.
This change in customers' behaviour is set to be the key driver for improvement in their buying experience. Going forward, the experiential metric will comprise two components – customer experience (CX) and employee experience (EX). In this context, we need to keep in mind that employees' experiences quite often drive customers' experiences. And while companies do deploy new technology to improve customers' experiences, human capital continues to be as important.
According to the Global Consumer Insights Survey 2019 conducted by PwC, shopping in physical stores continues to rise, despite the proliferation of e-commerce and online retailing. Customers regularly communicate that their shopping experience improves significantly when they can interact with knowledgeable in-store personnel who answer their queries.
An important way of improving the customer experience is to avoid frictional interactions. It has been observed that customers reward retailers who make their shopping experience as pleasant and frictionless as possible. For example, shoppers in developed countries drive their own cars to the stores. Their shopping experience is significantly influenced by ease of parking. Similarly, shoppers around the world prefer short queues and faster bill payment. Therefore, retailers who manage these factors effectively are able to deliver an enhanced experience to their customers.
The same experience is magnified in the digital world. For example, while visiting online retail stores, customers do not have to bother about parking their cars. However, the amount of time taken to log in to an online store and navigate to the right product is an indicator of the absence or presence of friction in cyberspace. Similarly, although the process of online checkout may not have physical queues, it may require shoppers to enter their credit card-related information and shipping details. Online retailers that use their regular customers' securely saved credit card details and shipping information significantly ease and facilitate the latter's checkout process, and thereby offer them a significantly improved shopping experience. Customers tend to visit such online stores and buy their goods and services frequently.
However, knowledgeable in-store personnel will continue to influence the shopping habits of buyers. For example, let us take the case of an outstanding sales associate in a physical store. She is passionate about providing excellent customer service and is very knowledgeable about products. When customers walk into the store, she assists them with all relevant information about the products they want to buy. She shows them products of various types in the category they are looking for. The customers are delighted, but do not buy. The associate thanks them for visiting the store. After their departure from the store, the customers search for such products on the internet by using their mobile phones. Subsequently, they visit the online portal of the same store they had visited and buy the products.
In this scenario, it is important for the company that owns both online and physical stores to determine how it will incentivise such sales agents in recognition of such successful sales. By adopting suitable technology such as geolocation-based sales tracking, and by rewarding and incentivising such sales personnel, the company can improve their experience. If the business of retailing has to succeed, it needs to sharpen its people strategy significantly, since the demand for passionate in-store salespersons is going to stay or may even increase in the future. Going forward, physical stores will no longer be the only source of sales, but they will also be the catalysts of sales through other channels. Therefore, retailers with a significant physical presence will have to invest more in developing their people and enabling them with the right kind of technology.
While organisations attempt to gauge customer satisfaction, most of their tools and techniques are meant to measure their ROI. But to remain successful, they should start focusing on improving their customers' overall experience and measuring the corresponding return. Creating frameworks to define and measure the metrics required to measure ROX could be the first step on this path for businesses. An ROX framework identifies customer touch points that require careful calibration of experiences delivered. These can be digital or physical, and the measurement parameters and techniques need to be defined accordingly.
For example, a retail outlet in Dhaka may have undertaken a cost-saving measure by keeping a minimum number of lights on at a time when their customer footfall is expected to be low. However, this will make some aisles dark and drive away many customers. While keeping all the lights on will certainly enhance the customer experience, the store's objective of saving costs will not be realised.
Deployment of technology such as motion sensing switches will be helpful in keeping the lights on while customers walk through particular aisles, and these automatically switching off when they move to a different aisle. In this example, the retail outlet could define a key performance indicator (KPI) by combining energy-related cost saving and an increased customer footfall to determine whether an optimal experience can be delivered at a reduced cost.
In addition, e-commerce companies in Bangladesh need to focus on how efficiently they can provide their customers a frictionless experience in online shopping. Since the proliferation of mobile internet, customers can now visit and buy goods from large foreign online retailers as well as local e-commerce businesses. Hence, the benchmark for experience delivery needs to be set at the global level.
The writer is a partner at PwC. The views expressed here are personal.