Importance of Customer Experience Analytics

Benefits of customer experience analytics

The Future of your Brand’s Success: Customer Experience Analytics 

Brands have more data at their fingertips than ever before, giving them insight to personalized every step of the customer journey.  Incorporating customer data touchpoints to improve their customer experience is essential in creating differentiation in today’s market. Even during a pandemic, consumer expectations are higher than ever: they expect to get what they want when they want it.

Brands need to be able to identify those critical moments within the customer journey to create a great experience in order to communicate effectively with consumers. This means that the marketing, analytics, UX/UI, and IT teams must be fully in sync to be able to utilize the data and data analytics tools. Being able to cultivate and identify the customer intent will amplify data and analytics strategies and drive new and better experiences for customer satisfaction.

For too long, brands have focused internally on their business functions—product, supply chain, customer service, and so on—to solve this problem.

Some organizations take a product focus and use customer experience data (like customer feedback) to generate value for themselves as airlines in developing loyalty programs and therefore improving customer retention. By leveraging customer analytics, airlines, and OTA (online travel agents) started to use data to drive dynamic pricing and reward their best customers with miles and points. Then if you look at the hospitality industry and their customer needs, they focus on extracting sustainable value using customer engagement and analytics to benefit guests. By surveying and tracking requests, they can anticipate the needs of guests for future stays at their properties – such as Marriott and Hilton.  

As you can see, customer experience (CX) and CX strategy isn’t about anyone’s individual business function. Thinking this way can lead to brands having no idea what type of experiences customers find valuable versus annoying. You may never uncover a potential customer struggle through the pipeline unless you take CX improvement seriously.

Instead, the root of customer experience understands how the customer relates to your entire brand. Gaining that understanding, and using it to shape great experiences, is all about harnessing the power of customer data and analytics.


What Are Customer Experience Analytics

Customer experience analytics is the discovery, collection, and analysis of customer data for purposes of making better decisions via actionable insight, to the benefit of your customers and your business. These digital analytics allow for a more tailored hyper personalized experience for each of your customers.

Notice the definition of a customer experience analytics solution goes beyond just talking about KPIs—like email open rate, customer acquisition cost (CAC), % in-stock, or call center hold times. If customer experience analytics were just about the KPIs, the concept would be purely academic. You’d have a whole lot of information but wouldn’t be able to do much with it.

But in order to compete and win in this data-driven economy, brands must access and act on all their customer data with maximum speed, agility, and intelligence. That’s why the definition of CX analytics is bigger than just the numbers. To achieve customer experience analytics that truly makes a difference, organizations must rely on these three foundational pillars:

  1. Unifying customer data — Unification is about bringing together and matching granular behaviors across online and offline channels in real time, creating a single customer view. There are two dimensions of unification and play here. The first is bringing together the fully granular customer behavior data from all the different places where your brand touches customers—from the website, app, and social media through to direct mail, call center, and point of sale. The second is identifying who each individual customer is, and aligning their unique behaviors across all those touchpoints to a single customer ID. So we know who they are, and we know the history of their interaction with our brand, whether they’re receiving an email, placing an e-commerce order, or at the register in-store.
  2. Activating data in the real world — With the ability to activate data, businesspeople can orchestrate, test and measure experiences across all customer touchpoints. Every newly designed customer experience should be looked at as a starting point. Typically, it takes 4-5 iterations on that starting point to achieve the full value of a new experience. That’s why analytics play a role all along the way, allowing you to deploy, measure, refine and redeploy until your customers—and your business—gain maximum benefit from the personalized experiences you’re crafting. 

Finding the Right CX Tools

Presented with the challenge of achieving the type of customer experience analytics described above, it’s tempting to go shopping for new technology as a solution. But the fact is, most organizations are already overloaded with tech tools. The average marketing department, for instance, has an astonishing 91 martech tools in use within their technology stack. According to Forrester, the average enterprise utilizes 5 different business intelligence (BI) tools (paywalled) alone.

The most challenging barrier to delivering on CX analytics that drives true customer-centricity is actually the need to integrate disparate systems. Integrating systems and data is a prerequisite to rendering the single customer view, along with analysis and activation capabilities needed to deliver great customer experiences. Getting it done—and orienting your technology around the customer as opposed to around your as-is operations—usually means a net reduction in tools as opposed to the addition of tools.

Achieving this goal to achieve your desired business outcome is all about re-evaluating your technology stack. While there’s no such thing as a perfect technology stack for everyone, there is certainly a tech stack that will be the best fit for enabling powerful customer experience analytics that put your customer at the center of everything you do.

As you plan your customer experience technology stack, be sure to prioritize the six core principles below to set yourself up for long-term success:

  1. Data democracy—It’s mentioned above and worth mentioning again. Businesspeople need firsthand access to the data required to make everyday decisions that improve customer experience and live up to the customer’s expectations.
  2. Self-service operations—Your customer experience teams will be far more productive and effective if they’re empowered with tools that let them own CX workflows from beginning to end.
  3. Full integration—You don’t want a marketer or business people spending cycles manually exporting, importing, or configuring data. Ensure your technologies include prebuilt data connectors—ideally real-time APIs—that make data ready for use at the moment it’s needed.
  4. Future longevity—A tech stack that won’t support your organization beyond three years from now is a short-lived analytics solution. Seek to implement technologies with features that fulfill today’s need as well as support tomorrow’s.
  5. Single customer view—To provide a seamless digital customer experience whenever (and wherever) a customer interacts, the organization needs a unified profile for each customer interaction
  6. Centralized decision brain—Your technology stack should have a centralized decision-making function that can help automate analytics-driven customer experiences based on recent interactions and full customer behavioral history to ultimately reduce customer churn and nurture current customers to create customer loyalty.

The Benefits of Customer Experience Analytics

Over the last 20 years, customer acquisition costs (CAC) have grown 25% per year. That is very rapid, and very expensive, growth. Simultaneously, the average lifetime value of acquired customers has been either flat or on the decline, resulting in a lower average customer lifetime value. A tipping point has been reached where the dynamics of acquisition and retention are no longer sustainable: for many businesses, the value of a customer isn’t justifying the costs to acquire them.

 A few key statistics illuminate why investing in CX analytics that drive better customer experiences is the answer to this challenge:

  • 84% of consumers say experiences are more important than a brand’s product or services
  • 66% of consumers prioritize experience over price
  • 73% of consumers say a single extraordinary experience raises their expectations for all the other brands they interact with
  • Brands who create the right types of experiences—those that are helpful and tailored to the individual—see a 20% lift in business impact

For companies who can meet and exceed expectations for customer experiences, the opportunity is massive. With proper customer experience management, the customer customer lifetime value will grow, freeing up financial resources to invest in customer acquisition. Simply put, this equates to growth and greater market share. What’s more, by investing in delighting customers, and creating frictionless, helpful experiences, companies can raise the bar in the minds of their customers, enabling them to pull away from the competition with a lasting market advantage.

Why Quantifying Customer Experience is Difficult

In order to quantify customer experience, you first need to create a single view of the customer as they interact with your brand across channels and over time. This is challenging for a variety of reasons. Three of the core challenges organizations face when trying to quantify the customer experience include:

  1. Siloed systems—Data reflecting the customer experience is spread across a multitude of systems and processes. These include e-commerce, fulfillment, point of sale, CRM, email, various social media platforms, 3rd party logistics, ship-from-vendor and so on. The data in each of these systems is organized for running its own operational processes efficiently. Pulling data from each system and using it to paint a total picture of the customer is extremely challenging.
  2.  Scale of data—Most existing systems designed to be used by business people in charge of the customer experience, such as marketing and CRM systems, don’t have the technical ability to ingest and analyze all the granular behavior data generated by the millions of unique customers served by a modern multichannel, multi-touchpoint enterprise. Big data requires a modern customer experience analytics tool to digest it down into actionable insights to improve the customer experience.
  3. Siloed organizations—Not only are systems siloed, but the departments who own those systems are siloed as well. In a typical multichannel retailer, for instance, the e-commerce team knows very little about what the customer experiences in the store, and vice versa. Neither’s processes depend on the other, and neither is incented to collaborate with the other. Even if siloed systems are bridged and all the data is there for analysis, that analysis can never be meaningful without every department aligned around the singular customer experience.

When it comes to quantifying the customer experience, a customer does not care that website KPIs are different from email KPIs, that online and offline divisions have separate P&Ls, or that content creators get their information from different sources than marketers.

With that in mind, it is imperative to establish a truly cross-functional and cross-system process to manage CX. This can be done through system integration, implementation of CDP technology, and a formal organizational structure or a well-represented CX committee. Members of this team or committee should ideally have access to centralized customer data and be able to measure the current state of customer experience.


Why Quantifying the Customer Experience is Important

Before digital, understanding the customer experience was pretty straightforward. Let’s take a look at the marketing aspects of CX, for instance. Marketers used customer profiles—derived from the transaction and demographic data—to segment and run campaigns across a limited number of channels (primarily direct mail and email). With a limited number of touchpoints and limited experience data to track, it was reasonably easy to get a handle on how customers were responding to various messages, and which experiences drove a deeper relationship with the brand.

But as consumers moved increasingly online and organizations updated their technology to track behaviors across the web, email, mobile apps, and more, the amount of behavioral data exploded. Brands sought to use this data for customer analytics and personalization, but the

scale and scope of the data went beyond the marketing team’s capabilities.

Marketers lost touch with customer experience and customers’ expectations. Were customers receiving an offer via direct mail for a product they’d already purchased or subscribed to online? Is a customer that seems disengaged simply interacting with me over a different channel where my dad is incomplete?

Without the data and KPIs that answer these questions, marketers don’t have the customer experience analytics and insights they need to fix the existing experience and design even better ones in the future. And—without the experience systematically quantified, it’s not possible to automate those personalized experiences at scale with the help of AI/Machine Learning and other advanced analytics and predictive analytics technologies. 


Ways Customer Journey Analytics Provides the Quantitative Information You Need to Improve Customer Experience

Good customer experience analysis includes the total of all customer interactions. And behind the scenes, it’s people, systems, technology, and processes that enable and power those experiences. Along your entire customer journey, from the prospective customer all the way through to longtime loyalists, it’s essential to measure and understand the entire experience so you can continuously improve it along the way.

CX measurement should include overarching KPIs, as the “North Star” for the entire organization to focus on. Many options, such as retention rate, NPS score, customer sentiment, customer engagement, and revenue per customer, exist depending on the type of business the company is in. However, it is also important to establish a link between function-specific KPIs (email engagement, frequency of visits to the store, time on site, etc.) that help every member of the organization to understand how the impact of their specific efforts.

With the entire journey measured, you’ll have the ability to:

  • Quantify what matters most to your customers
  • Identify and measure the impact of customer experience obstacles
  • Prioritize and act upon customer experience issues based on their revenue impact


Starting Your Customer-Centric Journey, And Pulling Away From the Competition

Putting your customer at the center of everything you do will establish a unique, lasting and loyal relationship between your brand and every one of your most valuable customers. Achieving this relationship and level of customer insight delivers a lasting competitive advantage that separates you from the competition.

If you’d like to learn more about how ActionIQ’s team and analytics platform technology can help turn this vision into reality for your brand, don’t hesitate to contact us today.

George Phipps
George Phipps
Director of Product Marketing
George is dedicated to educating enterprise businesses about the impact on customer experience and organizational performance enabled by centralizing customer data. He works closely with creative and prolific engineers, UX designers, marketers to help design and enhance technologies that improve access to customers' data.
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