Should a compelling CX strategy focus on more than digital transformation?

Developing a customer experience is at the cutting edge of building a competitive advantage and a priority for businesses and their Chief Marketing Officers.

Strategy

Written by Philip Ricketts, Commercial Director, Marketreach

Gartner flagged the warning “customer experience is the new competitive battlefield” a few years ago, and the message has sunk in at all levels within companies.

A positive CX underpins retention, lifetime value and advocacy - and most importantly, trust. Loyalty is precarious and customer churn is higher than ever, partly driven by the pandemic when people had no choice but to go online for goods and services.

Here many found new brands they’d not encountered before. For instance, only 38% of UK shoppers stayed loyal to their traditional pre-pandemic grocery brands, according to one study.

The inextricable link between CX and profitability

Retention is important for brands and organisations – and their budgets. Studies show that it can cost between 5X – 25X more to acquire new customers than retain existing ones 1, depending on your sector. Retained customers also tend to buy more over time – Bain & Co. demonstrated some years ago that a 5% increase in retention generated a 25% increase in profit for financial services.2

The connection between CX and profitability is also underlined by a Forrester study that shows the revenue growth of CX leaders is 4.4 times that of laggards 3.

If customers enjoy their brand experiences, they will be loyal and even be inclined to pay a price premium. But creating an exemplary CX isn’t just about driving purchase. Creating positive interactions will determine how receptive customers are to carrying out other important actions that have implications for the bottom line, ranging from reading an energy meter to renewing an insurance policy.

Is your CX strategy missing the mark?

But businesses are still failing to strategically focus on CX across all their channels. Even if senior executives recognise the principle of CX they may need further explanation about the right strategies to adopt and levers to pull. The 2022 X Index from Havas CX found a global average of only 40% of consumers think the brands they interact with are “centred on their needs as customer.”

Specific sectors know they still have a ‘CX problem’. For instance, an estimated 60% of insurance executives said their business does not have a solid CX strategy, according to an IBM Institute for Business Value study.

One possible factor distracting organisations from delivering a fully rounded CX strategy is the focus on digitalising all elements of process and operations, including marketing, in the hunt for efficiencies.

Efficiency led Transformation can lead to CX ‘tunnel vision’

Digital transformation is essential for a successful business. The ability to solve customer problems, offer solutions and scale a customer base at speed is vital.

But a digital transformation programme focused solely on a hunt for efficiencies can lead to tunnel vision and a limited view of CX. It risks a loss of understanding of the specific benefits of a wide range of existing consumer touchpoints. The more narrowly focused the CX strategy, the more risk of losing sight of what it’s like to be in the customer’s shoes.

People rarely transform their lives in such a complete way as businesses imagine – for many, email did not dislodge mail and social channels have not ousted email. People still go to the cinema despite an abundance of streaming channels. They still play board games despite the availability of amazing gaming worlds.

Consumers have a nuanced relationship with brands and many feelings are generated by numerous interactions. Over the past few years it’s become evident that what people want to feel most is recognised and valued by organisations they can trust.

How to build brand equity by adding a physical touch to CX

In this light, maybe it’s time to reappraise touchpoints traditionally seen as ‘low priority’ or ‘low interest’ but that contribute immensely to brand perception and the CX.

The essence of effective CX is to build trust. When a brand takes care of how it communicates, it can make customers feel confident that the organisation knows their likes and preferences, what the most important issues are and how to deal with them.

Customer Mail has a big role to play here. Previously, the definition of Customer Mail has covered transactional pieces that are not sales orientated. This could be financial statements, bills and invoices, polices, service agreements and renewal reminders.

But the definition is wider. Let’s not forget welcome packs, loyalty programme rewards and other tangible pieces that are exciting to receive and critical to a smooth-running and positive brand/customer relationship.

Consumers want control over communications

It’s important to remember people do like options. They don’t like being forced down one path and though they may grudgingly accept restrictions on the communications channels they can use, this won’t encourage warm feelings about brand engagement.

Marketreach recently released a report covering the outcomes of an extensive piece of research carried out by Trinity McQueen and written in partnership with leading CX specialist Accenture. There is a strong response to keeping a mix of physical and digital, with 83% of consumers agreeing that they should have the choice whether to receive communications by mail or email and 50% saying being forced to go paperless is not a positive choice.

In addition, 67% agreed that too many organisations expect their customers to download their branded app to complete tasks. If customers downloaded all the apps from the companies they deal with then their mobile screens would be very full – already the average user has 40 apps on their phone but 89% of their time is split between an average of only 18 apps.4

As you might imagine, social, video and photo apps dominate attention with seven out of every 10 mobile app minutes spent on these pursuits 5. What are the chances of real engagement and understanding of important brand messages in this environment?

Customer Mail encourages customers to take action

Organisations need effective ways to grab attention and make sure an important message sinks in and is acted upon. If a consumer ignores a prompt, it can be costly for all concerned.

For example, failing to notice and pay a bill from a telco company means a consumer risks the all-important Wi-Fi being cancelled; spending frustrating amounts of time and money to be reconnected, and engineers having to be redeployed when the account is settled. Definitely not a good experience and a cost to the company too.

And a missed health appointment that was communicated only by email could have more catastrophic results. Even if not a problem for the recipient’s health, it will disrupt the planning and ‘flow’ of outpatient appointments at GPs or hospitals.

Benefits of Customer Mail for consumers

Digital and Customer Mail offer distinct opportunities and experiences for consumers and can work well together. Mail’s particular strengths include:

  • It is a stronger reminder: 57% of respondents agree they are less likely to miss something if they receive mail
  • It is filed and referred to: 40% of recipients file it for reference or records (meaning mail keeps delivering on brand awareness over an extended period)
  • It has strong engagement: 99% interact with Customer Mail in some way, from reading to filing and sharing
  • Clear messaging which strongly reflects brand values shines through when mail design is well-executed. Customer Mail can be a real superpower within CX with its ability to be easily read and digested

Mail engages with all ages, is sustainable and prompts action

It’s important to tackle a couple of misconceptions around mail. One is that only ‘old people’ receive and handle mail. Not so. The recent research shows that 85% of 18-34-year-olds open and read mail, compared to 70% who open email and 49% who open app notifications.

In fact, 77% of Gen Zs and younger Millennials rate mail favourably. It is trusted by 45% of 15-to-24-year-olds and 42% have searched for a brand online after receiving a piece of direct mail 6.

Another misapprehension is that digital communications are more sustainable than mail. In reality, it appears that digital technology may have an environmental impact possibly worse than previously thought – a Lancashire University research team recently suggested that ICT’s true proportion of global greenhouse gas emissions could be around 2.1-3.9%.

This contrasts with the low emissions of the paper, pulp and print sector, measured at 0.8% of European emissions. Our research shows that 77% believe paper is one of the most recycled products in the world and this is borne out by a European recycling rate of 72%, making paper one of the most recycled materials in the world.

And very importantly, we know mail does drive significant commercial actions. Research from industry body JICMAIL shows 43% Customer Mail prompts consumers to plan a purchase or buy something.

Measure mail in a wider context

Customer Mail’s contribution to campaigns should not just be measured in a narrow cost-focused way. Organisations should regard Customer Mail as an investment in a broader CX approach.

The value goes beyond the costs of the specific mailings and should include wider thinking around all the relationship opportunities it generates. Indirect metrics can be evaluated – for instance, is customer mail reducing customer service costs, including cost-to-serve and call centre investment? NPS scores can be measured and brand awareness and sentiment tracking measurements can be assessed.

Mail made loyal customers feel Waitrose was just for them

Waitrose noticed that its extremely valuable loyal customer base was slowly eroding purely because the supermarket had failed to show them how much they loved and appreciated them.

Solution

Waitrose created the Just for You Best Customer programme - a highly targeted, highly personalised mailing programme that rewards best customers. Mailings are sent 5-6 times a year to loyal customers. Using programmatic technology Waitrose targets offers & imagery based on shopper history. Personalised category coupons, driven by the customers’ purchasing behaviour, incentivise purchase & trial.

Results

Voucher redemption is over 50% and their NPS score increased +55 points.

Where Customer Mail is most powerful

Brands should want people to feel positive about their interactions – no engagement should feel either irrelevant, unwanted or a chore for the targeted audience.

There’s a role for all channels to play their part in delivering a great CX but leveraging the strengths of each touchpoint is key. For real effectiveness it makes sense to align channels with the goals. The Marketreach and Accenture report shows that mail is particularly powerful as a channel when:

  • The information is important
  • The information is complex
  • Communication needs to be read thoroughly
  • The recipient needs to act
  • It needs to be kept for reference (or used in the future)
  • Security or privacy are possible concerns

Banking on Customer Mail in the media mix

Brands and organisations have used Customer Mail effectively in multi-channel campaigns to deliver a positive experience and influence customers to take action.

TSB wanted customers to read its contract terms & conditions (T&Cs) created to protect customers. Most T&Cs are dry, overly complex and go unread.

TSB humanised its T&Cs by using a warm tone, clear language and simple icons. The bank helped make customers feel valued by creating something easy to understand, that makes the banking experience better and changes how customers use the service.

When asked, 82% of customers agreed it was easy to understand the changes. In fact, TSB received its first ever ‘thank you’ letter for a T&C document!

Conclusion

The customer experience is going to be the essential differentiator as consumers look to be recognised by and receive personalised communications from the brands with which they interact.

Consumer behaviours evolve constantly, so it’s important to keep re-examining the organisation’s overall approach to CX to take advantage of every channel that can promote the brand, attract customers, and increase loyalty.

The medium needs to meet the message. In the right circumstances, mail is an excellent addition to a multi-touch programme for customers. It can be married with newer channels and practices to craft coordinated programmes that deliver winning CX and the associated pay-offs to the bottom line.

To understand more about the potential for Customer Mail to integrate with other channels to optimise the overall CX, take a look at our latest report produced in collaboration with Accenture.

 

Further reading

1https://www.elasticpath.com/blog/customer-acquisition-vs-retention-infographic

2https://media.bain.com/Images/BB_Prescription_cutting_costs.pdf

3https://www.forrester.com/report/improving-cx-through-business-discipline-drives-growth/RES137906

4https://www.simform.com/blog/the-state-of-mobile-app-usage/

5https://www.bbc.co.uk/news/technology-59952557

6Royal Mail MarketReach, Coronavirus Research, Trinity McQueen 2020

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