usertesting empathy experience index (exi) report: multi

The UserTesting Empathy Experience Index (EXi) Report:multichannel retail

The pandemic forced organizations to change the way they do business and deliverexperiences to their customers. During this time, customer loyalty has been impacteddramatically and organizations are now in the difficult position of needing to rebuild loyaltyamong their customer base. One of the most effective ways for companies to do this is throughthe creation and execution of empathy-driven experiences.

Why read this report

The UserTesting Empathy Experience Index (EXi), a proprietary methodology, launched amultichannel retail EXi survey to 4,500 individuals across 15 multichannel retail brands. In thisreport, we share the research findings and explain why empathy is the key to building loyaltyand its impact on the bottom line. We also examine what the top five multichannel retail brandsare doing to drive these empathy-driven experiences. Empathy should be a top-down initiativewithin organizations. Chief Executive Officers can use these findings to understand where theyshould prioritize their investments to achieve higher ROI. Chief Marketing Officers can use thisreport to understand how their brand scores on empathy across digital and non-digital channelsand touchpoints to make optimizations to outreach and engagement strategies. Chief ProductOfficers can better understand how they can build products and services that drive theseempathy-driven experiences to increase adoption and usage. Finally, Chief Experience Officerscan use these findings to understand which touchpoints to focus on to drive seamlessexperiences across all channels.

What’s inside● The evolution of CX● Key findings● Digital touchpoints need to be humanized● Look to existing customers for faster ROI● Customer empathy spans business units● What this means for multichannel retailers● Recommendations● About the authors

Offices in: Atlanta | Edinburgh | Oslo | San Francisco | Silicon Valley

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Part 1: The evolution of CX

Customer Experience (CX) isn't a new term. However, CX has changed a lot in recent years. Ifyou look back a decade or more, companies that emphasized delivering good experiences totheir customers were able to differentiate themselves and gain a competitive advantage. Then,fast forward a few years, and CX had become a focus for anyone trying to compete in theindustry, and eventually became something that all businesses began to implement.

This made CX the battleground where businesses tried to outperform one other. Unlessorganizations delivered exceptional experiences across all channels and touchpoints, it wasdifficult to gain any type of competitive advantage. And now we find the battleground hasevolved yet again, with empathy-driven CX leading the charge. Consumers became loyal tobrands they felt were genuinely concerned with their interests and goals. True human-centeredpractices and customer empathy led to deeper, more loyal relationships with customers.

UserTesting developed the EXi to examine how empathy drives loyalty within brands, helpingcompanies understand their empathy scores overall, within channels and touchpoints, andacross their industry.


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Part 2: Key findings

Among the 15 brands included in the multichannel retail EXi, the top five brands—all scoring inthe “Good” category, illustrated three key insights through their focus on customer empathy andloyalty.


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Digital touchpoints need to be humanizedThe top five brands in the multichannel retail EXi study had an EXi score 3.5 points higher thanthe bottom ten brands. These brands have been able to create empathy-driven experiences notjust across non-digital channels but also within digital channels better than the other brandswhich lead to higher loyalty. Brands in the top third of the EXi are able to retain their customers,get those customers to spend more with them, and have those customers advocate for themmore than the bottom two-thirds of brands. Brands that are able to build loyalty through difficulttimes will separate themselves from the pack when the pandemic is over.

Look to your existing customers for faster ROIStudies show that acquiring new customers costs five times what it costs to retain them, makingexisting customers a natural place to start when it comes to growing your bottom line. The topthird of multichannel retailers are able to gain 27% more current spend from customers than thebottom two-thirds. Additionally, the top brands are able to count on 29% more spend in thefuture than those in the bottom two-thirds.


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Customer empathy spans business unitsCreating empathy with customers needs to be done across the entire customer journey—frompre-touch to last-touch and in-touch. Not having a seamless empathy-driven experience is nolonger an option for organizations. Businesses still work in silos, but customers do not. Youneed to run your business how your customers see and work with you, not how you’vetraditionally structured and organized the business internally.

Part 3: Digital touchpoints need to be humanized

Since the onset of the pandemic, multichannel retail brands have had to invest money and timeinto making digital experiences exceptional. Many companies that had a strategy for digitaltransformation looking out to the next five to ten years were faced with the massive challenge ofdoing it in months. Brick and mortar stores shut down and these organizations had to delivertheir products and services digitally to survive.

The top five brands in the EXi were able to outperform the competition by almost 3.5 points indigital channels. Additionally, these brands were able to outperform the bottom two-thirds innon-digital empathy by 4.5 points. The human-to-human interaction that's present in non-digitaltouchpoints enables organizations to better understand customer needs, elicit positiveemotional experiences, and build experiences that work. These non-digital touchpointsempower organizations to see their customers walking in their own shoes. These types ofhuman-to-human interactions are not present in the digital space. The call to action fororganizations is to humanize the digital touchpoints.

Domino’s Pizza uses a chatbot named Dom to enable customers to order food without actuallytalking to a human. By humanizing this digital experience, Dominos was able to receive over500,000 orders through Dom in the initial rollout.


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https://digiday.com/marketing/dominos-now-e-commerce-company-sells-pizza/

https://digiday.com/marketing/dominos-now-e-commerce-company-sells-pizza/

Tommy Hilfiger was able to use conversational AI in their chatbot experience by listening forkeywords. The chatbot then contextualizes and personalizes the responses.

Other companies are meeting their customers where they are—on social media. Many retailersuse Facebook Messenger to deploy conversational AI for their chatbots. These chatbots are


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able to seem more human by speaking like a human. These chatbots provide customer service,notify customers about the latest product options (enrichment opportunities), help find items,send shipping information, find nearest stores, process orders, assist with in-store shopping,and provide product recommendations.

Some companies have humanized the digital experience by creating a human-to-humanconnection when a physical item reaches a customer. Zappos has been known to send physicalthank you cards to customers. Similarly, with Chewy, when a customer canceled anauto-shipment of dog food for a dog that passed away, they were surprised when the retailersent a bouquet of flowers to express their condolences. These humanizing touches help createempathy-driven experiences through digital channels.

Part 4: Look to existing customers for faster ROI

Companies that are able to create empathy-driven experiences across multiple touchpoints areable to gain more loyalty from their customers. When the pandemic first hit, many organizationslost loyal customers because they didn't shift their strategies fast enough to build experiencesthat worked for customers in changing times. As a result, customers sought out alternativeexperiences, and the companies that provided more empathy-driven experiences were able togain loyalty from these individuals. The top brands in the multichannel EXi had significantlyhigher loyalty scores than the others.

When looking at loyalty within organizations, it is important to think of it in three ways: advocacy,enrichment, and retention.

● Retention loyalty is an organization’s ability to keep its current customers.● Advocacy loyalty pertains to how likely your customers will be to recommend you to

others.● Enrichment loyalty is how much organizations are able to have their current customers

spend more with them on additional product and service offerings.

Most organizations look at metrics such as Net Promoter Score (NPS) or Customer Satisfaction(CSAT) to determine how loyal their customers are to the business. However, when weevaluated the retention and advocacy metrics, we found that although customers were likely torecommend others to the brand, they weren't as likely to keep their existing level of businesswith the brand. This means that organizations are going to have to spend a lot of money andtime to acquire new customers.


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https://www.usertesting.com/blog/nps-customer-experience

https://www.usertesting.com/blog/customer-experience-metrics

https://www.usertesting.com/blog/customer-experience-metrics

Studies have shown that acquisition costs are five times higher than the cost of retainingcustomers. Additionally, it's much easier to sell to existing customers compared to newcustomers. Organizations need to keep this in mind when building their loyalty programs.Although all three types of loyalty factored into EXi scores, Retention and Advocacy loyaltyproved to have the most impact on driving ROI.

Retention loyalty

When looking at brands that evangelize retention, you'll see that they create loyalty programsthat keep customers coming back. For example, Kohl's loyalty program empowers customers toenjoy loyalty benefits in various channels and touchpoints. This gives customers the flexibility touse rewards in-store or online, letting the customers choose how they'd like to interact with thebrand next. The program also includes special features—on top of basics like discount codesand alerting loyal customers of upcoming promotions—like connecting to a digital wallet to maketouchless transactions seamless, whether the customer is in-store or online.

Advocacy loyalty


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https://www.invespcro.com/blog/customer-acquisition-retention/

https://www.invespcro.com/blog/customer-acquisition-retention/

Advocacy loyalty is interesting, as it can be high, even if retention scores are low. One of themost common factors impacting consumers' advocacy loyalty is price. Some retailers might seethis and assume that simply decreasing prices would improve loyalty, however, that's notnecessarily the case. Many customers in the study said that they just wanted brands to betransparent about their pricing, noting that trust could easily be broken if they found the sameitem listed on the manufacturer's website for a lower price. Advocacy is driven by trust, so anyperception that brands might not be transparent about their prices could lead loyal customers tolook elsewhere.

Nordstrom, for example, does a great job of being transparent about its prices with itscustomers. If there is a lower price on the manufacturer’s website, the company will state that intheir app or on the website, then will automatically match the lowest price.


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The top third of multichannel retailers in the study are able to gain 27% more current spend fromcustomers than the bottom two-thirds. Additionally, the top brands are able to count on 29%more spend in the future than those in the bottom two-thirds. These headways giveempathy-driven brands a head start that can enrich existing loyalty to drive even faster ROI.

Part 5: Customer empathy spans business units

Terms like omnichannel and multichannel have become widely accepted over the last few yearsand many use these terms interchangeably. However, when we talk about multichannelexperiences, we mean how organizations are able to sell their products and services throughvarious channels (online vs brick and mortar).

In contrast, omnichannel looks at the experiences customers and prospects have at the varioustouchpoints across the journey and how the customer experience is delivered at each of thosetouchpoints. These two terms are used in most industries, but most customers and prospectshave no idea what they mean. The way these individuals view interacting with organizations isthrough one experience. That experience encompasses each and every touchpoint they comeacross. For this reason, we believe organizations should think about their experience strategyinstead of an omnichannel or multichannel strategy. Thinking about it in this way helps to breakdown those silos organizations have. Each employee tries to see where they fit within theexperience and how what they are working on impacts other parts of the experience. Thismindset creates a collaborative culture within organizations.

The key drivers of empathy that span the organization pertain to the product/service offering,customer service, pricing and packaging, security, and values. Many parts of the organizationtouch each of these driver categories.

When someone calls customer service, it's usually because there's some type of issue. In thebook, The Effortless Experience, the authors describe how NPS is a key metric looked at incustomer service channels. It's difficult to increase NPS when someone calls customer service.Instead, customer service representatives (CSRs) are charged with trying to limit the decreasein NPS. A key reason for this is that CSRs are scripted to handle issues that come up often.When CSRs are scripted, it can be difficult to empathize with customers. CSRs should beempowered to help customers not only achieve their goals but also to do it in a way that'sempathy-driven.


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Companies such as Cogito, help empower CSRs to be knowledgeable and empathize with theircustomers. Cogito is a call center software company that uses AI to empower employees tocreate empathy-driven connections with humans. The software will listen in on the calls CSRsare having with customers, and in real time, give feedback to the CSR.

Part 6: What this means for multichannel retailers

When looking at the top third of companies that were scored on the EXi, the averageperformance on the key drivers of empathy was 5 percentage points higher than the bottomtwo-thirds of brands. However, there is a lot of room for improvement. When we look atperformance, we want to see brands scoring in the mid to high eighties or low nineties on thesedrivers. The average performance score on these drivers for the top third of brands is only 61%while the average score for the bottom two-thirds is 56%. Here's what this means formultichannel retailers who are ready to make empathy a key driver in their CX strategies.

Building loyalty will be an uphill battleNot only are multichannel retailers competing with their industry and the ecommerce industry,they are also competing with the exceptional experiences customers are receiving from otherindustries. This means that loyalty is going to be more difficult to earn and keep moving forward.To give retailers the best chance of winning and keeping customers, they must show empathy


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across all channels and touchpoints. Organizational silos need to be broken down, and everyemployee should understand how they impact the customer journey.

Emotional empathy is the most important pillar of empathyWhen customers, prospects, and employees interact with a company, it is important to makethem have positive emotional experiences. Making customers feel trust and joy elicits thehighest empathy scores while customers who feel anger, disgust, and confusion have thebiggest negative impact on empathy. Map out the journey customers take when interacting withyour business to determine which emotional states occur at each touchpoint. From here,service-level blueprinting (mapping the internal people and processes aligned with eachtouchpoint) can occur to determine which internal, backstage initiatives need to be worked onmoving forward.

Creating human-to-human connections requires personalizationCreating a human-to-human connection needs personalization, but take care. When brands usepersonalized content, either digital or non-digital, it makes customers feel like they’re anindividual—the brand is taking the time to look at them as a real person. Use prior buyingbehavior to help with this personalization—but take care not to be so personal it’s intrusive.Speak with your customers to determine the amount of personalization they expect and howyou can deliver on those expectations.

Part 7: Recommendations

Bring what's working well in your non-digital channels into your digitalchannelsEmpathy is a lot easier to elicit in non-digital channels because you can more naturally createthat human-to-human connection. Now that more business is being done in digital channels,customers still want brands to empathize with them. Speak to your customers about what theyexpect from you in the digital channels they interact with. Determine what they love and whatthey hate. Use this to segment your customers and build empathy-driven experiences thatexceed their expectations.


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Build loyalty programs that center around retentionThe success rate of selling to a customer you already have is 60-70%, while the success rate ofselling to a new customer is only 5-20%. Determine how you can empathize with customersacross all touchpoints, and build loyalty programs that encompass that empathy. Focus onretention of customers and creating fans of the brand rather than trying to focus on advocacy.Coming out of the pandemic, brands are in a difficult but unique situation. Brands need to workharder to rebuild loyalty with their current customers, but brands also have the opportunity tocreate more loyal customers who are in search of those exceptional experiences.

Brands are competing with customers’ last exceptional experience—be thatbrandLook outside of your industry to determine what those best-in-class experiences are that yourcustomers are experiencing, and bring them into your business. Ensure that these experiencesare being co-created with these customers and align with your brand promise. Don't be afraid topotentially lose money in a specific channel because you're empathizing with customers. If youempathize with customers and create exceptional experiences, you'll gain higher loyalty,customer lifetime value, and share of wallet. Think of your empathy-driven experienceholistically, and determine how each channel and touchpoint works together to drive empathywith your customers.

Survey methodologyThe UserTesting Empathy Experience Index (EXi), a proprietary methodology, launched amultichannel retail EXi survey to 4,500 individuals across 15 multichannel retail brands. Eachbrand had a sample size of N=300. The survey was conducted between March 10th and 19th,2021. The data was balanced to represent the United States General Population based on ageand gender.

The top five brands captured in this study include Costco, Sam’s Club, Kroger, Kohl’s, andNordstrom.

The EXi scores range from 0-100. These scores are grouped into five different categories:

● Very poor (less than 25)● Poor (25-44)● Ok (45-64)● Good (65-84)● Excellent (85-100)


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https://www.outboundengine.com/blog/customer-retention-marketing-vs-customer-acquisition-marketing/#:~:text=Acquiring%20a%20new%20customer%20can,customer%20is%205%2D20%25.

Six brands scored in the "Good" category with the remaining nine brands scoring in the "Okay"category.

Empathy is based on three pillars: emotion, cognition, and compassion. If brands can make theinteractions individuals have with them positive (emotion), if they actually can understand theneeds of these individuals (cognition), and build experiences that work well for them(compassion), they would be able to deliver empathy. If brands are able to deliverempathy-driven experiences, they would also be able to gain loyalty.

Loyalty was based on three dimensions: the ability for brands to retain customers, make themspend more, and have them recommend others. The methodology looks at how empathystrengthens loyalty.

Part 8: About the authors


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