What Is Customer Experience and Why Does It Matter for Your Business?

This is the first episode of Would Recommend, and Nikki is starting here on purpose: because customer experience is one of the most used and least understood terms in business, and getting it wrong is quietly costing founders more than they realize.

What you'll hear in this episode:

• Why customer experience and customer service are not the same thing, and why that confusion is where most founders start building defensively instead of intentionally.
• The three-part equation that runs every client relationship: brand promise, brand experience, and the one in the middle you can't actually control.
• Why CX runs on emotion and not logic, and the documented research that explains why a satisfied client is not the same as a loyal one.
• The three-level pyramid that separates businesses people retain from businesses people rave about, and which level most founder-led businesses are stuck on.
• The financial case for investing in client experience, with real numbers, because "it feels good to do things well" is not a business strategy.

If you've ever wondered why referrals aren't coming in the way you expected, this is where to start.

Resources & Research Referenced in This Episode

The Effortless Experience: Conquering the New Battleground for Customer Loyalty — Matthew Dixon, Nick Toman, and Rick DeLisi (Portfolio/Penguin, 2013)
https://www.amazon.com/dp/1591845815

The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World — Fred Reichheld and Rob Markey (Harvard Business Review Press, 2011)
https://www.bain.com/insights/the-ultimate-question-2/

Connect with Nikki on Instagram: instagram.com/iamnikkimck 

The Would Recommend Standard is a free guide to the five principles behind businesses people can't stop talking about. 

Grab it here: theopsshop.biz/wouldrecommend-standard 

A Spark Session is a 90-minute strategy session where you and Nikki dig into your client experience and figure out exactly where it's working and where it isn't. 

Book yours here: theopsshop.biz/sparksession 

Transcript

SPEAKER_00 0:01

This is the one I was telling you about. It is the You will not believe this play so that I just found literally obsessed. Their biggest one telling everybody about this. Tell them I sent you is my biggest. Y'all, welcome to Would Recommend. I'm Nikki McKnight, your customer experience and operations strategist and the person who is about to ruin the phrase customer service for you forever. This is the first episode of Would Recommend, and it's a Nikki Talks episode. Just me coming straight at you from my recording studio, my home office. Would recommend is designed to be the show about businesses that people can't stop talking about. I think there is something so special about someone referring someone to you. When someone is able to come to me and say, hey, so-and-so told me about you, and when I can say that about someone else. I think with the amount of things out there in the world, so many of us rely on reviews and referrals. And this is just me being able to go on little nerd safaris into what does it take to become a business that has what does it take to become a business that is referable? What does it take to be a business that someone cares enough about or had a good experience, good enough experience with that they told people about it? That takes something really unique. And I'm starting with this topic as today's first episode on purpose, because before we get into the stories, I want to make sure that we're working from the same definition. So buckle up. I'm gonna take you to school for a minute because customer experience is one of those terms that gets through thrown around a lot and understood almost never for what it really truly is and what it really truly has the power to do for your business. So today's episode is five things you actually need to know about customer experience. So let's do it. Number one, customer experience is not customer service, and that confusion is costing you. This is the one I really need you to land on because I hear it a lot. Someone says client experience, and what they mean is we're polite, we respond to people quickly, and we handle problems well, which is amazing. That is customer service, and it matters, and you absolutely need to be good at it, but it's not customer experience. Customer service is what happens when something goes wrong. It's the repair layer, it's the apology email, the refund, the so sorry for the confusion. Customer service by its very nature tends to be reactive and it's absolutely necessary, but it's not the whole picture. Client experience is the whole movie. To go with another metaphor, customer experience is not a lane, customer experience is the road. Now, going back to the movie metaphor, which if you know me, you know I love movies. Customer experience is not the scene where you fix the problem. It is the whole thing from the moment someone hears your name to the moment they decide, consciously or not, whether they're going to tell someone else about you. Customer experience is every touch point, every email, every invoice, the way your onboarding feels, the way that things end, the silence after the work is done, and you're just like patting each other on the back for a job well done. So if you're thinking of customer experience only being customer service, you're only really directing a scene in a Marvel-length feature film. The audience is watching the whole thing. And here's why this matters practically. When founders conflate the two, customer experience and customer service, they invest a lot of their time, energy, and attention into fixing things when they break. And conversely, almost none into designing what happens when everything goes right, which means that they're building defensively instead of building intentionally. You're going to be reacting instead of creating. And isn't it more fun to be in creation mode? So, customer service, damage control, customer experience, original design. Number two thing that you need to know about customer experience is the actual definition of the word and what is the equation that runs everything. Client experience is how your clients perceive their interactions with you at every moment, at every touch point across their entire journey. And when I say journey, I'm not just meaning when they pay you. It's every, it's before that. And in this concept, that word perceive is doing a lot of work, which I'm going to come back to in a minute. But there's a three-part equation, a Venn diagram, if you will, that I want you to imagine when it comes to what does customer experience mean? It's brand promise and brand experience. And in the middle of that, the center of the Venn diagram, if you will, is brand perception. So let's break this down a little bit. Circle number one in the Venn diagram is brand promise. Brand promise is the operational commitment you're making before anyone pays you. It's not a tagline, it's not a mission statement. It's the specific thing that you're saying people will get functionally and emotionally when they work with you. So every message you put out, every Instagram caption, the discovery calls is making a promise to that customer, to that client, to that consumer. And it's doing that whether you mean it to or not. The second part of this uh Venn diagram is experience. And it's everything that they see, touch, read, feel after they come into contact with you. It is the entire reality of what it feels like to be in your space. So now we're going back to that little middle part of the Venn diagram there, which is brand perception. And it is a combination of those two things. It's what your client actually believes about you. And here's the part that can be a little challenging to understand or to accept, I'll say. Uh, you have zero control over perception. You can really only control the brand promise, that operational commitment that you're making, and the experience. But that perception bit, that's what happens in your client's head when those two things meet. And when you can make those meet, the promise and the experience, that creates trust. When your experience exceeds the promise, that's going to create advocacy. That's that unprompted referral, the text message to a colleague that says, you have to work with this person. She's so awesome. And wouldn't it be great to have someone say that about you? But what happens when your experience doesn't match your promise? Silenced at best, a bad review at worst, and a gap you probably aren't able to see because you're standing right in front of it. And that gap between what you promised and what they experienced is where referrals go to die. It's really what is going to affect the sustainability of your business long term. The good news with all of this is this is entirely designable once you know that it's there. The number three thing you need to know about customer experience is that it runs on emotion, not logic, which is great for so many of us founder-led businesses who just love people and just want to serve people. This is documented. This is real research. This is not a feel-good business philosophy that if you create it and they will come. Emotions are what creates memories. And how do you get people to refer you to other people? They need to remember that you exist. So emotions create memories. Memories create perception. Perception drives behavior. This is like the customer experience chain, if you will. I'm going to say it again. Emotions create memories, memories create perception, perception drives behavior. And that is how customer experience actually works. And it's why you can have a technically flawless delivery, onboarding, et cetera, but still not get the referral. So here's it, here's a little bit of a number for you. 70% of buying experiences are based on how the client feels they're being treated. It's not about what they received, it's how they felt they were being treated. And that is not a small distinction when you think about it. That's the whole game. There are, to get a little nerdier here, too, there are four brain chemicals that are going to run the show in any client experience worth designing. Um, number one, dopamine. This is the reward hit for an ADHD person like myself. Dopamine is my favorite. It's the feeling of accomplishment, it's that small win. And it is why a well-designed onboarding that gives someone a quick win or an early result feels so good. The second hormone involved here is endorphins. And not to quote from my girly Elle Woods, but endorphins make you happy and happy people don't murder their husbands. Uh endorphins ease discomfort. Um, good humor does this, a candid update. Um, anytime you can actually explain what's happening instead of going quiet and hoping they don't notice, like endorphins kicking in are great things. Oxytocin, number three, is trust and human connection. It's what makes a client feel like you actually know them and you're not just a transaction, you're not just a product brief. It's the it's when you remember a detail. How is your anniversary? How is that book going? Is your kid still playing soccer? And lastly, of our little hormone quartet here is serotonin. And serotonin is the feeling of being valued, of feeling like you matter and of being treated like a person and not a ticket. Because here's the thing, y'all. You're not in the business of manufacturing brain chemicals. That would be weird. It sounds like a Batman villain. But you are in the business of creating conditions where those chemicals show up. And I love this word condition because oftentimes when I would describe my work, it's like, my job is not bring in more sales. My job is not to, you know, make sure your software works. My job is to create the conditions under which those things can happen. And then the people who are experts at that can go do their thing. So your job here is to create the condition that allows these hormones to be felt and understanding what triggers them is the difference between an experience, that's fine, and one that gets talked about. And that is what we are here for. How do you become the business that people would recommend? An example here that often gets brought up is the golden rule: treat others the way you want to be treated. Um, it's a good start, but it assumes that what you want and what your client wants are the same thing. Instead, we're going to talk about the platinum rule. Very fancy. It's treat people the way they want to be treated, which means, and this is a key here, you have to get outside your own experience. You have to stop asking, does this make sense to me? And start asking, what does it feel like to receive? Because I think a lot of us have felt this. You design a beautiful onboarding sequence or you create a system and the client doesn't follow it, and you're like, why didn't they just follow it? Why didn't they just do what the email said? Why didn't they read their emails? I think all of us have felt that one. But you need to get outside of your experience and literally put yourself in their shoes, in their seat, and figure out what would this feel like to receive? Because these are different, those are different questions that create completely different experiences. All right, number four, there are three levels to customer experience, and most founder-led businesses are stuck at the bottom one. So we're going to think of another diagram here, Venn diagrams, and now I'm talking pyramids. So three levels of the pyramid here when we talk about customer experience. At the base, effectiveness. And this is kind of like the first promise in being a good person, a good, you know, manufacturer, deliverer, service provider is that your client got what they paid for. That's it, right? It seems kind of obvious, and which is why it's the base of the pyramid. But this is the floor. This is the minimum viable experience. And when you can be effective, when you can make sure that the client gets what they paid for, you get retention. They're gonna stay, they're gonna come back. Now, let's go up a level to the middle of the pyramid. This is easy or ease. So when we talk about ease, what we're talking about is was the process clear? Was it uh consistent in terms of communication? The for you service-based businesses, it's you know, they didn't have to chase you down, they didn't have to repeat themselves or work hard to get what they needed. It was really easy to get in touch with you. Their effort to engage with you, the deliverable, the content, whatever it is, the effort was low. And if you can make something easy for a customer, client, consumer, what have you, the outcome here is organic growth. And basically, what this means is they're gonna buy other things you have. They're going to stick around. There are so many people that I admire in the world. And a few of them that as soon as they put out something, I'm immediately buying it. That's because they make it easy and they've they've already accomplished the first part of the pyramid, which is I got what I paid for. I got the value of it. But when it's easy, I already know that whatever they offer to me next is going to be just as easy. It's gonna be just as good. Um, you know, high vibe women, every time they put out an event, I will buy it as soon as I see it. Jonathan Goodman, even though I don't work in personal training anymore, as soon as I see that he's written something, I'm downloading it. And this is organic growth. So now we're at the top of the pyramid. And this is about enjoyable in enjoyment. Um, this is really where the hormone thing starts to come in here uh that feeds memory that creates memories. Because if something is enjoyable, it's memorable. And as we said, emotions create memories. If you can make your customers feel something specific and intentional, whether maybe it's being valued, seen, capable, excited, this is where advocacy comes into it. And advocacy is when this customer they become the person who mentions you at dinner parties, who sends you referrals without being asked, who leaves a testimonial or will talk you up in all places. But note, because it's the top of the pyramid, you can't get here unless the first two levels of the pyramid are solid. Your stuff is effective and it's easy to work with you. So most founder-led businesses are stuck at that level one, being effective and wondering why the referrals aren't coming in. So I want to be clear here. Getting to effective is genuinely hard. It's genuinely valuable because the floor matters. It's it's the floor on which everything else is built. But effective only gets you retention. The referral lives at enjoyable. And enjoyable doesn't mean that you have to have a massive budget or a team or something elaborate in terms of your onboarding your process. It just requires intention. It really requires you to ask what do I want my client to feel? And am I actually designing for that? Or are you just showing up doing the work and hoping that somebody notices? Because satisfied clients don't refer. People who had or feel remarkable do. There's a uh a finding, here we go on another nerd survive with Nikki from researcher Matt Dixon that I think about a lot. So his team studied 125,000 customer interactions and found there is no statistical relationship between satisfaction and loyalty, right? A client can be satisfied and still leave. They can still be satisfied and not refer you. What predicts loyalty and referrals is effort. High effort and low enjoyment means low loyalty, low referrals. Low effort and high enjoyment, that's where the sweet spot is. All right. And our last one, the number, the number five thing you need to know about customer experience is the financial side of it. Right? At the end of the day, if you want to invest time, money, energy, and resources into up-leveling your customer experience, there needs to be a financial ROI here because it feels good to do things well, is not necessarily a business strategy. And I know some of you need numbers. So here's what we're talking about: NPS leaders. NPS stands for net promoter score. And even if you don't know the term NPS, you probably know the NPS question, which is how likely are you to recommend us to a friend, family member, colleague, et cetera, right? That's NPS. It's on a scale of one to 10. So businesses that consistently earn high scores, like eight, nine, and 10 out of 10, on how likely are you to recommend us? They grow at 2.6 times the industry average. That's not slightly faster. That's that's over two and a half times faster. 83% of companies that improve their client experience see a direct improvement in repurchase behavior. Not just awareness, not just a follower on social media, repurchase. That's huge. And over a five-year window, customer experience leaders, meaning businesses that prioritize customer experience, return approximately 75% higher results than those lagging behind, compounding. And promoters, which on the NPS scale are those eight, nines, tens, you know, those high scores of people who actively recommend you, those guys are 81% more likely to repurchase, which means your best marketing channel is a client you already have. It's not a new ad campaign, it's not a new audience. The person who already paid you and had a great experience is your single best marketing and retention strategy. Because not only will they stay, they will bring their friends. But there is also a cost side of this equation, which I think needs to be talked about a little bit more. When a client has a bad experience, they don't just leave quietly. They're more expensive to serve while they're unhappy. It's more support interactions, more escalations, it's more of your time going through managing the relationship. There's also the mental toll of having to hold all of this in your brain. And all of your time, money, and energy is going into managing the person rather than the work. And when that client goes, the negative word of mouth they carry is worth way more in the negative than positive. Bad reviews travel faster than good ones. And that's not pessimism, that's just human psychology. But the flip side of this is that a client who feels genuinely well taken care of, those will bring you higher price premiums, higher share of wallet, they'll bring you adjacent purposes. This is your organic growth, like what else you got? They're going to bring referrals and they don't cost you as much to serve. So they stay longer, they refer more, and they're less likely to push back on you because they're not really comparing you to anyone else. You've become a class of one. So the ROI here on CX, like all of these, all of these letters and initials, the ROI of CX, it's not abstract. It is one of the most documented return on investment stories in research. And the problem is that most founder-led businesses never measure it because they never designed for it in the first place. You can't just start measuring it tomorrow if you haven't put in the foundation or the systems to help you do that. So let's recap these five things. Number one, CX is not customer service. It is the whole movie. Number two, customer experience is brand promise and brand experience equaling brand perception, and you only get to control two out of those three. Number three, customer experience runs on emotion and the platinum rule of designing how they want to feel, not how you think it needs to look from your end. Number four, uh, three levels of the pyramid. Most founders are at the bottom, uh, and satisfaction does not equal loyalty. And finally, this financial case, the financial reasons are not soft here. It is documented, they compound, and it starts with the clients you already have. So, five things. So here's what here's what I think you can do before the next episode. I want you to think about one stage, one point of your client journey. It could be the moment they say yes, it could be the way things end. And I want you to write down one word. What do you want them to feel there? Not what you want to deliver. I'm gonna send them an email, I'm gonna send them a PDF, they're gonna get access to this. What do you want them to feel? And then ask yourself honestly, are you designing for that? And if you find a stage where you where you don't have an answer for this, where you genuinely don't know what they feel because you've never really stopped to think about it or design for it, that's where you should start. Because that that's your gap. Right? And if you want to find that gap with someone who does this for a living, that's exactly what one of my Spark sessions is for. It's 90 minutes, no fluff. We're gonna find a gap together and figure out what to do about that. You can book one at the ops shop.biz slash spark session. I'm gonna link that for you in the show notes. Well, folks, that is the end of this Nikki Talk solo episode of Would recommend in our kickoff to the show. I'm so happy that y'all are here. And I promise you there's so much more interesting, useful, fun stuff coming down. If this episode was useful to you, the most useful thing you can do is to rate, review, and subscribe. Helps more people find the show, and tell a friend which of your friends needs to hear this. And if you would like a free framework for building a client experience worth talking about, you can grab the would recommend standard at theopshop.biz slash would recommend dash standard, linked in the show notes for you. It's free and it's where I would start. Thank you again so much for joining me here on. Would recommend. I'm Nikki McKnight, and we'll see you next time.