How to Fix Low Profitability By Improving the Customer Experience

Whether you’re building a startup in its earliest days or growing a well-established enterprise, it takes a delicate balance to scale sustainably:

• A unique product or service that solves a real challenge for a defined audience
• Marketing and customer acquisition strategies that attract and convert new customers
• The right talent in the right roles to guide strategy and streamline operations

Yet, even with these in place, a business may still struggle to grow. So, what’s missing?

A key factor for business success and profitability (where revenue outpaces costs) is the customer experience (CX). After all, everything that requires an investment of time, people, money, and additional resources requires a positive return on those investments.

Intentional CX is what sets the most successful, high-growth companies apart from the rest. Memorable, meaningful customer experiences turn typical transactions into impactful moments that build customer loyalty — and help you continually innovate and reach more people effectively.

Customer experience strategy is crucial to reach prospective customers effectively, retain those who convert, and enable an ongoing cycle of innovation that drives business growth. However, many business leaders think of CX as a cost center for their organizations. Let’s flip the script! There are several ways we can actually improve profitability with an intentional customer experience strategy.

Here’s how.

CX and Profitability: The Connection You Can’t Ignore

A strong customer experience strategy ties the right measurements, efforts, and outcomes with business success. Business leaders often define CX success as “making customers happy” or “improving Customer Satisfaction Scores,” but your customer experience strategy should more clearly define how CX generates real business value.

One key step in bridging the gap between CX and business revenue is to identify the most critical moments in the customer journey and eliminate friction. When customers enjoy seamless, personalized experiences, they are more likely to stay loyal. But when their journey feels difficult or impersonal, they look elsewhere — creating a business problem that’s hard to overcome.

The Cost of Ignoring Customer Experience Issues

Once someone chooses to be your customer, it’s in your best interest to keep them happy to stay and buy again. For the sake of this discussion, let’s assume the product or service delivers on its promise. Even when that’s the case, there are many ways customers might need support:

• Easy-to-navigate website and brand channels
• Seamless onboarding and product implementation
• Education on how to maximize the product’s value
• Effective, friendly customer service on multiple channels
• Self-service resources to answer common questions

Shortcomings in any of these areas can cause frustration, cancellations, refund requests, and lost revenue. Your team may be able to re-engage lost customers down the road, but it’s best to keep them happy from Day 1. (That’s where the Intentional CX Strategy comes in!)

Neglecting the customer experience and failing to address customer needs starts a downward cycle that creates persistent profitability issues:

• Marketing teams spend excess time and money to reach more potential customers
• A fraction of those leads will convert into paying customers
• Many of those new customers will leave due to poor experiences
• Mediocre customer reviews and negative word-of-mouth deter new customers
• The cost of acquiring customers outpaces revenue growth
• Product returns and non-renewals create expensive cycles
• Support costs continue to increase without stopping the cause of customer problems
• Unhappy customers request refunds or discounts, which cut into profits

On the flip side, great customer experiences proactively alleviate or avoid potential pains, cement customer loyalty, generate feedback that helps you hone your product offering, and drive repeat sales.

Related resource: Customer Experience ROI: Tying CX Investments to Business Success

Identifying Signs of a CX Problem

You can monitor several CX and operational metrics to understand if you have a CX problem. Watch for these warning signs:

• High customer turnover, especially early in the customer journey
• Low customer lifetime value or declining customer lifetime value
• A large or increasing volume of support requests
• Negative customer feedback or reviews

Each of these signs points to areas where customers are struggling, and they have a direct impact on your costs. Investigate these areas and create a plan to better address your customer expectations. Find where specific efforts around the customer experience will have the greatest impact for your organization.

For example:

• Churn spike after sign-up? If customers often cancel within two weeks of subscribing to your business software, review their onboarding feedback and cancellation surveys. Look at their usage and behavioral analytics. You may see many people say the implementation is too complicated, so you can create new onboarding guides, how-to documents, and instructional videos to guide customers through the process. Retaining these customers increases their lifetime value and reduces potential support costs to get them up and running.
• Acquisition declining? If past marketing channels are no longer attracting leads, survey customers to see what channels they use. You may find that people are using different social media channels and online communities that you were not aware of. This allows you to invest in the most effective channels, which avoids wasteful spend and maximizes your pool of potential customers.
• Low repeat purchases? Depending on the type of product, look for how to engage with customers past the initial purchase. If customers are satisfied with their first purchase but don’t return, create targeted emails that promote complementary products or add-on services. You may even consider an educational community or “how they use it” stories. Not only does this increase the customer lifetime value, it makes your brand connection stickier as customers start to love more products or services you offer, as well as more than your products.

There are many challenges with many solutions. This is only a glimpse of the remedies you may implement. The first step is to review your metrics and listen to customer feedback regularly. Through proactive monitoring, you can get ahead of potential customer issues before they impact your bottom line.

How to Operationalize CX for Business Growth

Every organization’s CX opportunities are unique and depend on how mature the CX function is today. Regardless of where you’re starting, there are a few foundational elements you can create or refresh to start turning CX into your competitive advantage:

• CX Mission Statement: Aligns your entire organization around the ideal experience customers will receive and what it takes to make this a reality.
• CX Success Strategy Statement: Defines what success looks like for your CX program with clear metrics, and how it will support the overarching business goals.
• Employee CX training and empowerment: Educates everyone on their role in shaping CX and empowers them to deliver on your CX Mission.

Each of these foundational elements also makes it much easier to connect the customer experience to clear business results, helping you prioritize efforts and celebrate your successes.

Want a step-by-step walkthrough to set your foundation and operationalize CX? Check out my article about customer experience strategy 101.

Finding a Customer Experience Business Partner to Accelerate Revenue

The right CX investments strengthen the business. An intentional customer experience strategy develops a deep customer understanding that helps you reach your unique audiences with the right messages on the channels they use most often. Great CX creates customer loyalty and offers unparalleled opportunities to hear directly about what they want next from your organization.

Leading an intentional customer experience strategy means defining success in business terms and then collaborating with customers to provide what they need to succeed.