What is Customer Experience?

Think about a time you interacted with a business near you and the experience was top-notch. Employees were friendly, attentive, and helpful when you were at the store. But they also went the extra mile—texting you a week later to notify you that an out-of-stock item you were interested in was now available. And they made it simple for you to complete the transaction by texting you a link to pay with the ability to select either curbside delivery or ship-to-home.

This series of events—and how easy or difficult they were to execute—is referred to as customer experience. It’s the customer’s perception of your business based on all their interactions with your brand. And it’s not just about one interaction, but every single interaction—from a billboard they see on the side of the road to a visit to your office/store to what another customer tells them about their own experience with your business.

Customer experience vs. customer service

Customer experience (CX) is often confused with customer service. While the two are linked, in so much that they have a shared goal—to please the customer—they are two different animals.

Customer service is the level of care and attention you give your customers when interacting directly with them, whether in your store or office, over the phone, on a service call, or via email. An entire customer service team or department may provide support for customers and field questions.

Customer experience is more than that. It is a broader concept encompassing every touchpoint between a customer and your business. This includes your marketing and advertising, your online presence, how the customer discovers you, their interaction with your business, product, or service, and their experience after the sale. In short, customer experience comes closer to describing your customers’ long-term relationship with your business. It spans every interaction a customer has with your business—online, in-person, word-of-mouth, advertising, and the products or services you sell.

Why Does Customer Experience Matter for Local Businesses?

The concept of customer experience initially gained popularity among large enterprise companies around 2015. But there is a lot that small businesses with local customers can learn from the strategies and tactics enterprises apply to their own CX.

As small business owner Joel Masters of Portland Window Coverings notes, large enterprises like Apple and Amazon do a great job with customer experience. They also set an expectation of what CX should look like with his clients. “We really try to mimic some of those bigger box ideas, like making sure that we thank customers via text for a sales order, and that we keep them updated on their status via text, and having a payment system that is easy and flexible for them to use,” says Masters.

“We really try to mimic some of those bigger box ideas, like making sure that we thank customers via text for a sales order, and that we keep them updated on their status via text, and having a payment system that is easy and flexible for them to use.”

–Joel Masters, Owner at Portland Window Coverings

Customer experience is the fundamental driver of loyalty. Customers in your area crave a delightful experience, and they are willing to spend more when they find it, which is why every business should be delivering an exceptional customer experience.

Customers say the #1 factor influencing CX for local business is “ease of doing business.”

54% say it’s a top reason they choose to work with a local business

57% say it’s a top reason they refer friends and family

60% say it’s a top reason they repeat their business

Source: Podium’s 2022 State of Local Business Research

Benefits of a Great Customer Experience

The biggest benefit of CX is revenue. But it’s HOW CX generates revenue that makes it so powerful. CX can dramatically increase your customer loyalty and advocacy, word-of-mouth marketing, brand reputation, and recognition, to name a few benefits.

New customer acquisition costs, on average, five times more than customer retention. Existing customers are also 60-70% more likely to buy from you than new customers, seven times as likely to purchase a new product, and four times as likely to refer a friend to your business. Clearly, you want to keep your good customers. It’s far less expensive than finding new ones. And research shows that the best way to keep your good customers happy is a good customer experience.

86% of customers who received a great customer experience were likely to repurchase from the same company compared to 13% of those who received a poor CX.

Companies that create exceptional customer experiences can also set themselves apart from their competitors. This has proven true for Trane Technologies. They knew their sales depended not only on the product itself but also on the customer experience. As a result, Trane revamped their dealer elite program to allow their dealers to choose from a list of software products and services that would enhance their digital presence and improve the experience for customers.

Worker approaching home

Dealers who took advantage of the offer and chose Podium to text customers, interact with website visitors, gather online reviews, and implement touch-free payments found that the smooth and personalized experience was unmatched by competitors. This helped these dealers deliver 8% more revenue for Trane Technologies than those not using Podium.

“It is very clear how important customer experience is to the success of our business. Our dealers’ ability to connect with customers should drive strong online reputation scores and provide a better homeowner experience. Now that thousands of our elite dealer partners are operating their businesses with Podium, they are delivering a higher quality customer experience to homeowners. Podium is helping Trane Technologies deliver a differentiated experience which has translated into meaningful growth of our business.”

– Jason Bingham, President, Residential HVAC & Supply

Over time, customers share their great experiences, reputation grows, and your business sees more referrals due to your customers’ outstanding experience with your brand. We’ll dive into the tactical details of creating and measuring a great customer experience in the following sections.

2/3 of companies with strong CX are 3X more likely to have significantly outpaced their competition.

88% of customers are likely to recommend a business after a good experience.

CX leaders achieve 5% to 10% revenue gains and 15% to 25% cost reductions within two to three years.

How to Measure Customer Experience

Now that you have a solid understanding of customer experience and why it matters, let’s identify how to make this actionable in your local business. The first step is to benchmark where your customers rate their experience with your brand currently. There are several ways to do this, but all of them hinge on gathering feedback from your customers.

Online reviews

Your online reputation is part of the customer experience as it’s part of how customers perceive your business. But, it’s also an important measure of your business’ customer experience overall. How customers perceive your business based on what others say can make or break whether customers consider doing business with you.

In fact, 81% of shoppers research online before visiting a local business. What they learn about your business in your online reviews will be a major factor in whether they choose to do business with you.

3.4 star rating is the average star rating for a customer to even consider engaging with a business

~½ of consumers are willing to pay more and travel further for business with good reviews

Source: Podium

In addition to having good reviews of your business online, the number of reviews also matters. If you currently have a low number of reviews on your Google Business Profile, you may not have the full picture of what the customer experience really looks like. Gathering a high number of reviews from a wide variety of customers, both happy and unhappy, will give you more accurate insights into your customer experience.

We recommend a tool like Podium Reviews to consistently collect reviews from the most customers possible. Using text to collect reviews after customers visit your store or your technician completes a service call, can dramatically impact your collection rates—helping you to collect more reviews more frequently so that you can keep a good pulse on the customer experience.

TAB Bank, for example, struggled to both request and collect positive customer reviews. Before Podium, the bank only had 30 reviews on Google, and the average star rating was 2.4 stars. “Clearly, something had to be addressed—whether that was the actual experience of customers or we just weren’t capturing more of what was actually going on,” explained John Huntinghouse, VP of Marketing at TAB Bank.

By utilizing text messages instead of email, the response rate for review requests took off. Email brought in close to a 0% response rate. Texts blew past that by 300%—rounding up at least 3% of all review requests that went out to customers. Within just three months, TAB Bank collected 12 times the number of reviews.

TAB Bank online reviews take off with text

300% increase in response rate

12X the reviews in 3 months

Reviews Illustration

Gathering reviews also has many additional benefits for local businesses, such as lead generation and SEO. Reviews can also improve customer trust in your business, ultimately leading to more sales. According to HubSpot’s trust survey, 81% of consumers trust friends and family over brands.

Net Promoter Score

Net Promoter Score (NPS) measures customer loyalty by determining how likely customers are to recommend your business to a friend. It also helps evaluate the likelihood of customers to stop doing business with your company.

To gauge the customer experience, an NPS survey asks customers to rate how likely it is that they would recommend your business or product to a friend or colleague based on a scale from 0 (not likely) to 10 (extremely likely). Depending on how they rate their likelihood to promote your business, customers fall into one of three NPS categories:

Promoters (9 to 10 pts): They are typically loyal and enthusiastic customers.
Passives (7 to 8 pts): They are satisfied with your service but not happy enough to promote your business.
Detractors (0 to 6 pts): They are unhappy customers who are unlikely to buy from you again and may even discourage others from buying from you.

After aggregating a high number of responses (subtracting the percentage of detractors from the percentage of promoters), you can determine your overall NPS score for your business. Your NPS could range from -100 to 100, with the ideal score being 100, based on 100% of customers being promoters.

To gather feedback, however, you need an NPS tool. And, with a tool like Podium Surveys, collecting NPS feedback is easy to do. For example, Ashley Homestores of DFW relies heavily on NPS to gain insight into the customer experience and how they can improve. Using Podium Surveys, they’ve been able to dial in their process even more by speeding up how quickly they get feedback so they can fix anything that’s gone wrong with the customer experience.

In less than 12 months, Ashley HomeStores of DFW collected more than 20,000 feedback results, with an average NPS of 91 out of 100. Not only were they able to get better results, faster than before, but with the added benefit of Podium, they could respond faster when a customer was unsatisfied.

“There is a much higher response rate with messaging versus email, which increases the amount of feedback that we need to continue improving our business!”

–Ryan Levitz, Director of Business Development at Ashley Homestores of DFW

Executive Feedback Product Screen

Customer Satisfaction Score (CSAT)

Another common measure of customer experience is the customer satisfaction score (CSAT). Businesses commonly use this metric as a key performance indicator for customer service and product quality. Some industries have specific customer experience indicators, like CSI for automotive dealerships.

Businesses measure CSAT through customer feedback based on asking customers how they would rate their overall satisfaction with the goods/service they received (i.e., very satisfied to very unsatisfied). The metric is typically scored as a percentage—with 100% being the best possible score and 0% being the worst.

The most common way to capture feedback is through a survey, whether that’s a traditional questionnaire, a form on a website, inside an app, via SMS, or some other method. Whatever method your business uses to collect CSAT feedback, there are three key principles to keep in mind:

Choose a tool that makes it easy for your business to solicit feedback
Make it easy for customers to give feedback
Respond to feedback

Using a tool like Podium Surveys ensures you can easily achieve the above goals. At Griffin Fast Lube, they used to collect CSAT feedback from a phone survey that would call random customers from the previous week. But it was a cumbersome process to collect phone numbers, call customers, and ask questions. And most importantly, they were then left trying to respond to feedback and fix issues that happened over a week ago.

By switching to Podium and adding the ability to text their customers for CSAT feedback, Griffin Fast Lube streamlined the process, and feedback skyrocketed. According to Bryce Cutler, the Marketing Vice President at Griffin Fast Lube, “Podium has allowed us to get more insight on the way they make our customers feel, and use that to improve our customer service.”

Customer Effort Score (CES)

A Customer effort score (CES) is a metric that measures how much effort a customer has to put forth in order to get an issue (like a request, a return, or a question) resolved. It is measured by asking customers to respond to the statement: [Business Name] made it easy for me to resolve my issue.” Respondents are asked to choose from responses ranging from strongly disagree (1) to strongly agree (7).

To measure CES, you take the total sum of responses and divide it by the number of responses. So, say you asked 100 customers to rate you, they all responded, and the total sum of their responses was 450.

450÷100=4.5.

What’s considered a “good” CES? Typically anything 5 or higher is considered good, and anything below 5 tells you there is room for improvement.

Customer Lifetime Value (CLV)

Customer lifetime value (CLV) is another valuable customer experience metric that measures how valuable a customer is to your company—and not just on a purchase-by-purchase basis. CLV measures the total worth of a customer across their entire relationship with your brand.

Calculating CLV is a little complex, as it involves multiple numbers.

First, you need to determine the value of your average sale over a given time period.
Then, calculate the average number of transactions during the given period.
Next, measure customer retention. How long does the average customer stay loyal to your brand?

Now, you’re ready to measure CLV. Take your average transaction size, multiplied by the number of transactions, multiplied by retention period. For example, if your average sale is $10, a typical customer buys from you 10x per year, and they tend to stick around for about 5 years, 10x10x5 = $1000.

Time to Resolution (TTR)

Time to resolution (TTR) is another key metric used to measure your overall customer experience. TTR measures the average time it takes for customer issues to be resolved. Ideally, your TTR should be low. No customer wants to wait hours, days, or even weeks to get their issues resolved. Furthermore, research shows that responsiveness and ease of working with a business lead to higher customer satisfaction and loyalty.

This metric is fairly easy to measure. Simply start tracking how long it takes from the time a customer reaches out with an issue to the time that issue is resolved. From there, you can find an average time.

A “good” TTR depends on the type of business you run and the kinds of issues customers run into, but a good rule of thumb is to never let an unhappy customer go without a resolution for more than one business day.

Ask for feedback

A simple email or text request like “how was your experience today?” Can build trust and start a conversation. It can also help you gain critical insights into your customer experience and other aspects of your business so you can understand what’s working and fix what isn’t.

As Bill Gates is known for saying, “your most unhappy customers are your greatest source of learning.” But you’ll only know if someone is unhappy if you ask. And the best way to do this is to reach out to recent customers in a timely fashion and on the channel where they’re most engaged—such as text.

Using Podium Surveys, you can gather feedback through quick automated messages—no links or lengthy surveys. You can even set custom follow-up questions based on the responses customers give. Making feedback this simple and convenient for customers means you’ll get more feedback—and you’ll get it in minutes, not months.

“We look at Surveys as an opportunity to learn and improve; I’m trying to get as much information as possible to see if there’s something we can do to make the customer happy. Being able to text with our customers to collect feedback and answer questions makes it easy for us to do that.”

–Cody Alexander, Administrative Manager, Alpine Specialty Cleaning

Customers also appreciate that you care enough to ask for their feedback. In one study, 77% of people said they have a more favorable view of brands that collect and accept customer feedback. For younger generations, it is even more important to ask for feedback—82% of those aged 18 to 34 say they have a more favorable view of brands that ask for feedback.

77% of people say they have a more favorable view of brands that collect and accept customer feedback.

How to Deliver a Great Customer Experience

“Do what you do so well that customers will want to see it again and bring their friends.” –Walt Disney

Unfortunately, it’s all too easy to deliver a poor customer experience. If you don’t have the right tools and you don’t understand your customers’ pain points, you’ll find it difficult to keep people coming back for more. Things like slow response time, a lack of transparency, and of course, low quality products or services, will send customers running to the competition.

The most important key to delivering a great customer experience is focusing on delivering what your customers value most. Depending on your business, this may be value, great service, dependability, or quick responses. But the only way you’ll know is by collecting feedback (as mentioned above) and speaking with your customers and frontline employees.

Not only do you need to listen carefully to what your customers and employees tell you, but you need to act on that feedback. And be able to show that you’ve taken action.

Great customer experiences take conscious thought and effort, but they are much easier to deliver with the right tools and understanding of what your customers value.

Here’s a look at what tools and processes you need in place at your business to ensure you’re able to deliver a great customer experience.

Listen to your employees

Your employees spend the most time talking and interacting with your customers. Not only do they have a direct impact on the customer experience, but they likely have good ideas of customers’ goals and what they value most.

Simply taking the time to listen and engage your employees in improving the customer experience will set you apart from 93% of businesses. Employees not only hold a vast amount of information about your customers, but they will also feel more valued and invested in the customer experience when they feel listened to and see that you’re incorporating their feedback into how you do business.

93% of business don’t engage HR and employees in building a customer experience culture.

Just like you ask customers for feedback, you can use surveys and quick feedback texts to collect employee feedback. You can also create a culture that is open to accepting feedback, so employees feel comfortable speaking with management and sharing when they see issues that may impact the customer experience.

Another way you can utilize employees to improve the customer experience is by including them in the process of collecting customer feedback. Letting frontline employees provide you with first-hand perspectives on the customer experience you’re trying to measure can be very useful—they may see areas you’re not currently measuring that are critical.

You also want to empower your employees to respond to customer feedback. Using a tool that centralizes feedback into a single location allows employees to see feedback and respond quickly. By giving your employees the power to respond faster, they can proactively create a better customer experience, turn negative customer experiences into positive ones, and help you win more repeat business and positive word-of-mouth referrals.

Podium Feedback Example Conversation Question.

Consider your customer journey

Customer experience is not just one interaction—it’s every interaction. So you need to be thinking about the entire customer journey, including what channels your customers use (or would prefer to use) when communicating with your business.

While customers don’t think about channels—they want to solve problems and find options—they do want it to be easy for them to do so. When they can use the channels they want to use, their experience is more likely to be frictionless and positive.

When considering how to make the entire experience easier for your customers, think about which channels customers are most frequently using to connect. They likely touch several channels when finding and communicating with your business—your website, phone, email, text, etc. Now, think about which channels provide the best experience? How can you improve those that do not?

We recommend using texting as the main channel for as much communication as possible. It’s what customers prefer! Yet only 12% of local businesses use text. There is a huge opportunity here for your local business to use text in a number of ways—from collecting feedback to using it for payment, promotional offers, or simple communications about delivery or appointment times. However you choose to use text, it can streamline interactions and greatly improve the customer experience.

Consider your digital customer experience

→Invest in tools that create a modern, streamlined customer experience

We just covered why having text as part of your customer experience toolbox is critical, but how do you find the right tool to make texting, along with all the other communication channels you need to manage, simple for you and your customers?

Your customer experience tools should allow you to consolidate all customer information in one place for a single record of truth for the entire customer journey. This includes:

Conversation history
Purchase history
Reviews or feedback

The goal with whatever tool you choose is to gain information across all communication channels throughout the customer journey in order to make the experience as seamless as possible. When a customer contacts your company online—maybe through a webchat widget—and then calls or visits your business later in the week, you want the experience to be seamless. This means your employees need to be able to see the conversation that happened previously in the week via webchat so they can pick up right where the customer left off. When experiences are consistent across all channels, you avoid the frustration that comes with customers having to repeat themselves, and you make the customer experience frictionless for the customer.

Podium is built for local businesses to accomplish these types of seamless experiences. Podium’s Contact Pages and Contact Profiles combine conversation history, purchase history, reviews, and feedback into a single inbox. And you can segment your customers based on the information in their profile for use in future customer service and marketing opportunities.

“It’s [Podium] been very helpful in completing that white-glove branding experience throughout all of our platforms. We respond to all text messages, all social media, all emails from customers within 10 minutes”

– Andrea Mascaro, Lux Bond & Green

→Keep communication consistent and seamless

Customers use multiple channels throughout their customer journey with local businesses, such as Facebook, Google, your website, and text. To keep the experience consistent and seamless, you need a way to easily track all your customer interactions, no matter the channel.

Podium uses one centralized inbox for all your customer interactions so that you can see past conversations, payment history, reviews, and feedback all in one place. This makes it easy to respond quickly and in context.

“We used to have Zendesk, and we had our call center guys going from Zendesk to Facebook Messenger to the reviews. Now that it’s just all on one system, it makes it a lot easier to manage and make sure that nothing gets forgotten.”

–Jenn Nicole, Marketing Coordinator at Tire Outlet

→Make the transaction seamless and secure with text-to-pay

Standing in a long checkout line or having to log in to a website to pay can be a hassle. And, in today’s pandemic-anxious world, having contactless ways to pay has become even more important to customers.

Not only is text a preferred channel for most customers, but it also makes it faster, easier, and safer for them to pay. With Podium, you can request payment via text, and you’ll see a much higher response rate than with traditional methods.

“Thanks to Podium Payments, our average time to payment this month is just 24 minutes! More importantly, it has helped the payment experience feel safe and effortless for our customers.”

–Justin Miller, Owner, Wow 1 Day Painting

Get everyone onboard

Customer experience is all-encompassing. To create a consistently great experience, you have to have all of your employees bought in. Here are a few tips to help:

Reward employees for positive mentions in reviews and feedback

This encourages employees to get on a first-name basis with customers, which helps to build even stronger relationships and garner more loyalty.

Incentivize employees to collect reviews and feedback

When there’s something “in it” for employees—whether a monetary bonus or a lunch at a nice restaurant—employees will be more proactive in asking customers to provide reviews or feedback. You can even make it a fun competition between employees to see who can collect the most reviews or feedback in a week or month.

Empower employees to please the customer

The more you empower your employees to solve issues in the moment and on their own, the faster you can resolve customer issues. At The Ritz-Carlton, they believe so strongly in empowering employees to improve the customer experience that they empower employees at all levels of the organization to spend up to $2,000 per guest, per incident, just to ensure the guest experience is always exceptional.

Discuss your customer experience goals with employees

Include your frontline employees in a discussion about what kind of impression you want your customers to have of your company or brand. Share NPS or CSAT scores and other customer feedback with them and get their input on ways to continue to improve. You’ll not only get more buy-in to achieve that experience, but you’ll also create a culture that values the importance of everyone participating in delivering a great customer experience.

Companies that Provide a Great Customer Experience

Now, let’s talk about a couple of companies who are doing it right.

Power Ford

Power Ford’s mission is to create an exceptional ownership experience. Here are some of their tips for creating a customer-centric brand:

Make it all about the customer from the very first interaction. Something as simple as offering a friendly smile or a branded water bottle when a customer enters the dealership goes a long way.
Create a brand reputation synonymous with a great experience. Power Ford did this by revamping their online reputation and creating customer-centric branded materials.
Make sure your online experience matches your in-store experience to create a cohesive customer journey.
Ask customers for feedback and act on it.

Woodstock Furniture & Mattress Outlet

Woodstock Furniture

Woodstock Furniture & Mattress Outlet uses Podium to streamline the customer journey. In the age of on-demand everything they knew they needed to take their business online and offer more convenience to their customers. Here’s what they did:

Started sending requests via text to grow their online presence.
Added Webchat to their website to make it easier for potential customers to contact them.
Incorporated Podium Payments for a seamless purchase experience.

What to Look for in a Customer Experience Management Software

The key to creating a modernized customer experience that keeps customers coming back for more is investing in the right tools to get the job done. Here are some features to look for as you search for the right solution for your business.

Convenient interaction. First and foremost, you need to choose a tool that adds convenience to your day-to-day. That’s the whole reason you’re in the marketing for a customer experience management software int he first place, right? Look for a tool that houses all interactions in one place so that your team can say goodbye to the days of hunting down old threads.
Real-time communication and feedback. What good is feedback if you’re not getting it immediately? If you get feedback from a customer, you want to be able to react in real time, before they have time to stew on the situation and potentially stray to your competitors.
Context for conversations. Context is everything. Try to choose a platform that gives you a holistic view of customer interactions over time. This will help you understand your customers and their frustrations so that you can get to a better solution more quickly.
Analytics. Data is power and having access to the right analytics can give your business a competitive edge. Make sure to look for a platform that allows you to track customer satisfaction trends and makes it easy to monitor the numbers that matter most.

Delight Your Customers at Every Touchpoint with Podium

Podium ties the customer experience together. It gives you the tools to gain feedback and insight into what your customers value in their interactions with your business and makes it easier to communicate and connect with customers throughout their customer journey.

Podium is the leading messaging platform that empowers your team to interact with customers the way your customers prefer—and makes those interactions easier for your customers. With Podium you can:

Resolve customer concerns faster
Gather feedback through text
Provide an unmatched experience

Start your free trial of Podium today.

The Local Business's Guide to Customer Experience