Does improving customer experience actually turn into dollars, or is it just a passing hype?
Improve customer experience – Let’s say a customer buys a smoothie, loves it, and skips out the door smiling. Is that customer only worth the $4.50 that her smoothie cost? Or how about this: another customer calls a support line and is put on hold for 30 minutes, listening to dismal elevator music until he becomes irritated enough to finally hang up. Can you shrug off one unresolved customer issue?
Forrester Research conducted a study to determine the answer, and discovered that great CX does, in fact, drive higher revenue. Forrester first ran this study in 2015, then repeated it this year to check if the results were consistent. Guess what? They were.
Here’s what they did:
- Compared five pairs of publicly traded companies during the period of 2010-2015
- One company in each pair had a significantly higher score than the other in Forrester’s Customer Experience Index during the period of study
- Gathered financial data from company SEC filings
- Isolated revenue that could be traced directly to consumer behavior
- Calculated the compound annual growth rates (CAGR) based on that revenue
Here’s what they found:
CX leaders outperformed their laggard counterparts, experiencing 14% higher revenue growth.
In the cable and retail industries, the disparity was a whopping 24% and 26%, respectively. Ouch.
But, you may be asking, could these results just be coincidental? A correlation doesn’t completely confirm cause and effect. Well Forrester knew this, too. So they dug deeper.
Exploring their CX Index data, Forrester found proof: customers who have positive experiences with a company are less likely to stop doing business with them and more likely to recommend them–these factors bring in more customers and, subsequently, higher revenue. To tie it all together, the companies with the best CX also see increased growth in customers compared to the rest of their industry. Now that’s cause and effect.
What this means for your business:
The customer who bought the smoothie may have paid $4.50, but her loyalty means that’s the first of many $4.50s. The customer on the phone will turn to a company willing to address his concerns, and advise others to do the same. Neglecting one customer’s issue is like ignoring a hole in your wallet–just because you don’t care about a little tear doesn’t mean cash won’t start falling out.
Forrester’s findings illustrate the value of investing heavily in outstanding customer experience to drive revenue –this notion has been stated before, but now it has real numbers to back it up. To gain a competitive edge, you need to provide superior customer experience that distinguishes you within your industry. Of course, this isn’t an easy task. It requires consistent engagement, analysis, and operational development. But, as Forrester proved, it’s worth it.
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With BirdEye, it’s easier than ever to get new authentic customer reviews, building trust that leads to more sales. In today’s reputation economy, BirdEye can improve customer experience and provide the eyes, ears and algorithms necessary to create the five-star customer experiences that keep your business at the top.