What Is Experience-Led Growth?

Make new customers but keep the old. One is silver and the other is gold.

The Girl Scouts song lyrics provide good advice for businesses as well as troops. Some companies focus primarily on acquiring new customers while failing to keep their existing ones happy in the everyday moments that matter. That can be a costly mistake. According to a PwC survey of 4,036 consumers in the U.S., 55% of respondents said they would stop buying from a company after several negative experiences—and 8% would leave after just one.

Businesses have to acquire three new customers to compensate for the value of one lost customer, falling into the trap of constantly needing to bring in more and more customers. Recognizing this, successful business leaders focus on experience-led growth: improving and providing consistent customer experiences to retain loyal customers, increasing customer lifetime value.

According to McKinsey, experience-led growth refers to a customer strategy that drives profitable growth:

“Providing a distinctive customer experience (CX), consistently and proactively, that entices existing customers who choose their brand. These customers change their behaviors, and such behavior changes can be measured by concrete financial metrics like share of wallet, repeat purchases, or net revenue retention (NRR).”

To succeed with experience-led growth, business leaders define their desired financial outcome, such as higher upsell rates or reduced churn, and then prioritize the CX improvements that will produce those results.

Why Does Experience-Led Growth Matter?

The world’s most successful growth companies generate the majority (80%) of their value by tapping into new revenue streams from their existing customer base. According to McKinsey, companies that are CX leaders achieved more than double the revenue growth of “CX laggards” between 2016 and 2021–and rebounded more quickly from the COVID-19 pandemic.

Successful experience-led growth strategies—those that increase customer satisfaction by 20% or more—have positive financial impacts, increasing:

• Cross-sell rates by 15 to 25%
• Share of wallet by 5 to 10%
• Customer satisfaction and engagement by 20 to 30%

3 Best Practices to Cultivate Customer Loyalty for Exponential Growth

According to Gartner, “Customer loyalty depends on how easy you make it for your customers to do business with you.” Almost all (96%) customers who have high effort experiences (e.g., must contact the business more than once to resolve a problem) reported being disloyal, compared to only 9% of customers who have low-effort experiences.

Creating simple, frictionless journeys is the key to an exceptional CX that differentiates your brand and increases revenue. Here’s how to make every interaction with your brand quick and easy.

1. Use a CX platform that combines journey analytics, a decisioning engine and digital communication to deliver the right messages at the right time, making it easy for customers to accomplish a task. For example, when the journey orchestration system detects that a telecom customer is approaching their contract renewal, the system identifies the best upgrade offer and communication channel to encourage the customer to upgrade their internet plan. The system sends the targeted upgrade offer, making it simple for the customer to achieve their objective (such as finding a higher-speed plan at a competitive rate), without needing to spend hours researching competitors’ plans.

2. Focus on “forgotten” journeys. Many companies focus on CX primarily at the point of sale, neglecting interactions that occur afterward. Experiences that occur at the other stages of the customer lifecycle are equally—if not more—important for customer satisfaction and loyalty:

• Onboarding (activating a device or account)
• Paying bills
• Scheduling service appointments
• Receiving outage notifications

For example, communicating consistently and proactively regarding service outages improves transparency, trust and loyalty. Proactive outage notifications prevent customers from taking steps like turning to social channels (such as NextDoor) to figure out what’s going on or calling your contact center. Use a journey orchestration system to send customers timely messages regarding outages and a link to digital channels for real-time status updates. Inform your customer service agents so they’re prepared to respond quickly to requests for information.

3. Improve digital communication. Personalize the customer experience by sending the right message at the right time via each customer’s preferred channel (e.g., voice, email, SMS).

For example, the journey orchestration system detects that a customer whose payments are regularly late is not responding to email payment reminders. Determining that the customer often responds to text messages, the system sends payment reminders via text instead of email. Or the decisioning engine anticipates, through predictive analytics, that the customer is more likely to make partial payments. With this information, you can offer a payment plan that meets the customer’s needs.

Take personalization a step further by using the right language or dialect, messaging and tone. Using an empathetic tone when communicating with a customer about late payment (“We noticed you haven’t paid your bill. We know times are difficult, so we’d like to help you set up a payment plan so you can avoid late fees and keep your service”) may be more effective than a hardline approach.

These actions improve the customer’s experience by preventing late fees or service disconnection. The company benefits through accelerated time to revenue and avoiding the expense of using a collections agency.