All the signs are there that we are about to enter a long, and deep, recession. Though people like economic historian Adam Tooze, believe that we never really left the 2008 recession, the indicators suggest that the next few years will be tough.
In B2C commerce, this means shrinking consumer spending. For B2B operators, this means smaller budgets, higher materials costs and disrupted supply chains.
So most commerce companies, whatever their particular niche, will be in for a bumpy ride during the recession.
But can commerce players soften some of the effects of a recession? Can they take control over a set of circumstances that sometimes feels completely beyond their control?
The good news is that improving customer experience (CX) can help your business to sail through choppy economic waters. We will look at how CX can achieve this and what companies should and should not do.
Let’s focus on the customer and find a little light in the gloom.
Beat The Recession With CX – Don’t Cut Customer Service
Customer service and support is an often neglected area of customer experience. In tough economic conditions customer service teams are often the first team to suffer cuts.
But this is a mistake. Especially if you have a good customer service team. If you do decide to cut customer support, customer experience suffers. It is clear that customers will not accept that.
Research from Zendesk suggests that “61% of customers would now defect to a competitor after just one bad experience. Make it two negative experiences, and 76 percent of customers are out the door.” That is a staggering number of customers you can lose with poor service. Even before you take into account the bad word of mouth that results from this which causes damage to acquisition efforts. According to Qualtrics XM, only 13% of customers will recommend a company whose service they have rated as “very poor”.
If the impact of negative customer service on customer experience is huge, the positive benefits are bigger.
Salesforce research says, “If a company’s customer service is excellent, 78% of consumers will do business with a company again even after a mistake.”
Good customer service even aids company growth. Zendesk’s research asserts that “64% of business leaders say that customer service has a positive impact on their company’s growth”.
So cutting customer service functions may give a short term bottom line boost. But it can have serious negative consequences long term. Instead of cutting customer support, consider investing in the support function and making it part of a bigger, aligned customer experience team. Unlike most CX designers or project consultants, your customer support staff actually talk to your customers. Use their knowledge to help your CX optimisation efforts.
Beat The Recession With CX – If You Invest In CX, CX Invests In You
Cutting costs in a recession is standard practice for most companies. But this should happen strategically to avoid long-term damage and secure long-term growth.
As mentioned, customer experience can often bear the brunt of these cuts. Especially in functions like customer support.
But there is data available that suggests this is a bad idea.
According to analysis from Watermark (methodology is also available), companies that lead in customer experience often outperform the market. In fact they generate a return that’s 108 points higher than S&P 500 index. Companies that do not focus on customer experience are the reverse; they post total returns that are 110 points lower than the S&P 500 index. Watermark found that companies who are customer experience leaders generate 3.4 times greater returns than companies who lack good CX.
This is even more pronounced in a downturn. Watermark’s data looking at the 2007-2009 recession suggests that companies that are CX leaders, while not immune to recessionary pressures, fare better than companies that do not offer great CX.
So cutting customer experience functions is a false economy. Qualtrics XM’s research states, “89% of companies with “significantly above average” customer experiences perform better financially than their competitors.” Bad CX will also affect business recovery post-recession or even mid-recession when sentiments become more positive.
If you invest in customer experience and you are investing in your profits.
Beat The Recession With CX – Great CX Keeps You In The Purchase Journey
We have spoken about the “messy middle” before. It is a space in the purchase journey where customers are still researching their options.
That messy middle gets a lot messier in a recession. Customers will be weighing up other pricing options and whether they should purchase what you are selling at all.
Great customer experience can keep your brand at the front of a customer’s mind. Consumers do not always behave in an obvious way. In a recession it is more reasonable to assume more consumers will be price driven. But data shows that perceived value drives a lot of customers, not only price.
Great customer experience can increase a sense of perceived value. Poor support or bad website experience can decrease the value of your brand to customers. So call that another win for good CX!
Beat The Recession With CX – Great CX Helps Retention
As customer acquisition budgets also tend to get cut during a recession (another big mistake), retaining customers becomes even more important.
We have already seen the negative impact that poor customer support experience can have on retention. But to underline this, according to American Express, 33% of customers will immediately switch to a competitor after poor customer service. So poor CX can make you lose customers and you will never get them back.
Keeping customers with you is far cheaper than acquiring new customers. So it is even more important to keep your existing customers happy during a recession. Investing in your CX, especially with strategies like conversational content and tech like good chatbots, will increase your customer retention numbers.
Beat The Recession With CX – If You Work in B2B Offer Self-service CX NOW!!
We have spoken about the need for B2B companies to offer self-service options before. Numerous times.
That is because it is vital for B2B digital growth. Users also expect it.
According to research from Gartner, “A recent survey of customer stakeholders found near equal usage of a supplier’s websites versus sales reps to complete the most common
buying jobs.” B2B buyers are spending far less time with sales reps across the board. When dealing with different age demographics the differences become even more stark.
“Perhaps most troubling is a pronounced generational shift in skepticism of sales
reps. Our research finds millennial business customers over twice as skeptical as baby boomers, with 44% of millennials preferring no sales rep interaction in a B2B purchase setting. As baby boomers retire, and millennials (the first digitally native generation) mature into key decision-making positions, a digital-first buying posture will become the norm.” – Gartner, 5 Ways the Future of B2B Buying Will Rewrite the Rules of Effective Selling
More B2B decision makers are digitally native. This means they want a digital first customer experience. If you operate in the B2B space and do not provide a digital self-service customer experience in recession conditions, you will lose customers to companies that do.
Key Takeaways – Why You Should Invest In CX In A Recession
- Cutting customer services is bad for growth
- Investing in CX initiatives will help you weather the storm
- Optimizing the CX purchase funnel will aid conversion in recession conditions
- B2B buyers do not want to deal with sales reps anymore
- B2B companies need to invest in digital first purchasing experiences to survive
Talk to MAQE
Are you a B2B company that needs a digital first purchasing experience? Or an eCommerce operator that needs to align its CX efforts? Talk to MAQE. We are personalized commerce experts dedicated to creating engaging customer experiences. Get in touch with us via [email protected].