Importance of CX in Retail
A customer experience (CX) strategy in retail is immensely important. Our research found that a CX strategy is important in retail because it can (1) produce good business results, (2) foster word-of-mouth marketing, (3) retain customers, (4) establish early relationships with non-customers, (5) create an ever-important emotional connection with customers, (6) create personalized experiences, and (7) it has arguably become more important than customer service and market share.
The Importance of a CX Strategy in Retail
1. A CX Strategy Yields Good Results
- Research from Forrester found that retailers deemed leaders with respect to CX outperform other companies by 26%.
- Per Infosys's Rethinking Retail report, all 50 U.S. retailers surveyed said they "experienced at least one benefit from" using customer personalization technology. Among those retailers, 74% reported a sales increase, 61% saw profit increase, 58% experienced more online traffic, and 55% reported "an increase in customer loyalty."
2. A CX Strategy Fosters Word-of-Mouth Marketing
- Customer loyalty is the connection between a CX strategy and word-of-mouth marketing. Customers who have good experiences are more likely to be loyal to a brand and, in turn, "[c]ustomer loyalty results in more effective word-of-mouth marketing."
- Word-of-mouth marketing is so important to retailers for two main reasons. First, "84% of consumers act upon" recommendations from family and friends with regard to retailer selection. Second, the effectiveness of marketing can receive a 54% boost from word-of-mouth happenings.
- If CX is done correctly, "each customer can bring in tens of new potential visitors."
3. A CX Strategy Helps Retain Customers
- Many customers are quick to leave a brand for a competitor if they have a bad customer experience.
- After just two bad customer experiences, "42 percent of consumers stop shopping with a brand . . . regardless of whether they are loyal customers."
- Consumers are increasingly leaving brands' websites "due to a poorly-curated experience," as 48% did so in 2018, which is up from 40% in 2017.
4. A CX Strategy Can Establish Early Relationships With Non-Customers
- Many consumers leave digital and brick-and-mortar stores without purchasing products, which actually presents a strong opportunity for companies to use CX to provide value to those people and thus establish early relationships with them.
- According to research conducted by InMoment, "72% of digital non-buyers are only online to browse, research or comparison shop. For in-store shoppers, 44% of customers who leave without making a purchase do so for the same reason."
- The aforementioned statistics could "prompt substantial shifts in . . . [companies'] CX approaches" by treating those browsing consumers "as valuable customers from the" get-go instead of focusing on remarketing and similar efforts to try to convert them into customers.
5. A CX Strategy Is Arguably More Important than Customer Service and Market Share
- According to consumer insights company TruRating, "[f]or many retail professionals, Customer Experience (CX) is now regarded as the biggest driver of organizational growth, competitiveness and revenue for businesses today."
- According to TruRating, 72% of companies cite customer experience as "their main priority." That represents a departure from companies' past focus on gaining market share through offering lower prices.
- Industry source TotalRetail said that "retailers that prioritize CX over customer service will triumph."
- TotalRetail stated that "[s]mart retailers recognize the difference between customer service and customer experience, and that a holistic and meaningful customer experience is key to survival."
6. A CX Strategy Helps Create Ever-Important Emotional Connections With Customers
- According to a report from C Space, "[c]ustomers’ emotional experiences greatly influence their transactional behavior" both in terms of purchase amount and purchase frequency.
- Emotional experiences focused on fostering connection and community often result in repeat customers.
- Among shoppers, just 37% "feel like retailers know them."
- Among consumers, 70% think that "direct conversations are the best way for companies to capture consumer sentiment." In contrast, less than half of brands (40%) hold the same opinion.
7. A CX Strategy Can Create The Essential, Yet Often-Missed Personalization
- Per Infosys's Rethinking Retail report (which surveyed 50 retailers and 1,000 consumers in the U.S.), "59% of shoppers who have experienced [customer] personalization believe it has a noticeable influence on purchasing."
- The aforementioned Infosys report found that 31% of consumers want a shopping experience that's more personalized compared to the current level of personalization being offered.
- The Rethinking Retail report states that 64% of retailers think "their consumers' shopping experience should be more personalized."
- Infosys found that 20% of consumers haven't received a personalized promotion or offer resulting from a prior purchase they made.
- According to Infosys, 19% of consumers haven't received a product recommendation resulting from a prior purchase they made.
To identify insights about the importance of a CX strategy in retail, we consulted numerous research studies and articles pertaining to such. Examples of research study findings we cited were published by Infosys, InMoment, TruMoment, and C Space. We also reviewed several articles published by industry sources which included TotalRetail, Qualtrics, and Marketing Dive. We identified insights about the importance of a CX strategy in retail from survey findings because those data points demonstrated why a CX strategy is essential for retailers. As was requested, our research is focused on the U.S. market.