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Technology is fueling seismic changes in customer expectations. Research shows that customer expectations continue to rise year over year, while businesses continue to struggle to meet these ever-changing expectations. In response, many businesses are transforming how they understand and value the customer over every channel across the entire customer life cycle.

Customer experience and customer engagement are significant to a company’s overall success. But creating a positive customer experience and increasing customer engagement can seem like moving targets. Plus, confusion can arise as these terms are often used interchangeably. Understanding the difference is key to achieving both.

Customer experience (also known as CX) is how customers perceive their interactions with your company. The first half of the definition focuses on perception, where the experience is positive, useful, and enjoyable. The second half focuses on the exchange, the two-way interaction with the brand. CX is the customer’s emotional, physical, and psychological connection with your brand, stemming from a product, system, service and/or channel interactions. CX considers the context and empirical aspects of the interaction and the customer’s perceptions. Simply put, customer experience is about a moment in time and the memory of that moment.

Customer experience is one of the primary differentiators that businesses can exert control. By 2020, some analysts predict customer experience will overtake price and product as a key brand differentiator. It’s not easy, but CX should be measured against customer expectations across all touch points. Was the customer satisfied, frustrated, angered, or delighted? Did the interaction meet the customer’s expectations? When customers navigate to your website, contact your call center, visit a retail location, make a purchase, use your product, and reply to your emails, they’re making judgments about whether or not you satisfy their needs, are easy to do business with, and whether their experience is positive.

For the customer experience to be great, every interaction along the customer journey must be exceptional, which doesn’t start and end within one department. The entire organization needs to work together to deliver a positive customer experience. When marketing, sales, operations, finance, and customer service departments operate independently, and are measured by different key performance indicators (KPIs), delivering a consistent positive customer experience can be a significant challenge.

Customer engagement

Customer engagement differs from customer experience. Customer engagement is the ongoing, value-driven, emotional relationship between the customer and the business. It’s not the memory of one moment, but the sum of all moments—the customer’s overall emotional connection arising from the totality of experiences with the company. This includes direct, indirect, offline, and online interactions, as well as the actions that the customer might take—posting, emailing, tweeting, liking, recommending, buying and so on.

If you provide a positive customer experience, your customer should become more engaged. Highly engaged customers buy more and are advocates of your brand. They refer friends, write positive reviews, and are more loyal. However, all it takes is one negative experience to damage the memory of the entire customer experience and the association with a brand. This can ultimately lead to a disengaged customer, who can act on their dissatisfaction by purchasing from competitors and letting others know.

Understanding the difference between the customer experience and customer engagement is critical. Customer engagement goes beyond managing individual experiences from each touch point to include all of the ways companies motivate customers to invest in an ongoing relationship with a brand or product. More and more customer interactions spanning across more and more touch points are shaping the amount of engagement a customer has with your company. Knitting together each experience and focusing on the customer journey will generate greater engagement and a positive ROI.

Measuring customer experience

It’s clear that the customer experience is integral to customer engagement, as a better customer experience generates better customer engagement. But how does a company measure the customer experience to identify gaps? What are the areas that need improvement?

Get customer feedback. An overwhelming 90 percent of customers want to provide feedback about their experience with you and your product, while only 37 percent are occasionally given the opportunity to share. This frustration can be easily fixed through an automated email survey. Surveys can provide a wealth of information. However, surveys won’t help if you fail to analyze the responses.

Understand churn. Churn is natural in business, but understanding when churn happens can help you prevent churn in the future. Regularly analyze your churned customers so you know whether your churn rate is increasing or decreasing, and what action you can take in the future to prevent a similar customer from moving on.

Solicit ideas from comments on products and features. This is similar to customer feedback, but in a community forum where your customers can request new features, share new ideas about products or share problems they’re trying to resolve. Give customers the opportunity to proactively offer suggestions and actively monitor the forum and participate. If there are recurring topics, it may be a sign you may need to do additional research into product development.

Analyze support ticket trends. Review your customer or field service support tickets for recurring issues that are causing customer angst and/or are taking significant agent time to resolve. The solution could be as simple as an edit to a product manual, a new quick start guide or an update to an online FAQ.

Get the right tools.  It can be daunting to create positive customer experiences across all channels and touchpoints when customer data is fragmented into silos within a confusing landscape of independent applications and disparate departments. Most companies struggle to measure performance over time and across channels, and are unable to identify areas for growth and remove barriers to improving productivity. Without measurable insights into your customer experience, a lot of time and budget can be wasted pursuing unicorns. Instead get the right tool to unify and measure your data so you can easily glean valuable insights and take informed action to improve the customer experience, boost engagement, and strengthen loyalty.

Microsoft Dynamics 365 Customer Insights is an easy to implement and use application to help you personalize the customer experience by unifying data, presenting a 360-degree view of the customer, and helping you discover insights to further drive a positive customer experience. Using historical customer data and machine learning models, organizations can derive insights that empower employees across all lines of business to deliver the best message or service for every customer scenario. From marketing advertisements based on customer search histories to next-best-offer sales suggestions based on past purchases or interests, and proactive customer service support leveraging predictive analytics and anomaly detection. Dynamics 365 Customer Insights enables cross-department alignment on every interaction a customer has with your organization—from sales and marketing to finance and operations, and customer service—creating a seamless customer experience across the organization.

Remember, building positive customer experiences that increase customer engagement isn’t magic. It’s hard work, but it’s work that pays off with strengthened customer loyalty and increased revenue. Don’t forget that acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing customer. Focusing on the customer experience and deepening customer engagement is not only critical, it’s the most cost-effective strategy for long term success of your business. Companies that create positive customer experiences, and design and execute an effective customer engagement strategy will fast track forward, leaving the competition behind.

Learn more about Dynamics 365 Customer Insights today.