Sorry, I could not help myself with the "alternative fact" reference in the title. Just seemed appropriate given the context for as hard as it may be to believe for some, when a brand improves its customer experience, its revenue can and will increase, oftentimes significantly.
That was the overall finding of a recently-released Forrester report entitled "Drive Revenue With Great Customer Experience, 2017" which reveals the connection between customer experience quality and revenue growth across 13 different industries. The problem, or challenge as spelled out in the report is "many customer experience (CX) pros find it hard to show the connection between improving CX and growing revenue."
As organizations have struggled to show a direct correlation between improving CX and growing revenue, the new research uses Forrester’s CX Index data to model how CX improvements drive revenue growth through increased loyalty. For example:
- The high per unit revenue from the sale of a vehicle gives mass market auto manufacturers the highest revenue potential: A one point improvement in a mass market auto manufacturer’s CX Index score could result in $ 873 million in increased revenue.
- Traditional retail banks and direct banks are the two industries where the revenue upside from improving customer experience gets progressively bigger with higher CX Index scores: For traditional retail banks, increasing an already excellent CX Index score by one point drives revenue potential four times as much as increasing a poor CX Index score by one point.
- While the credit card industry has the lowest revenue potential related to CX Index scores, its advocacy revenue potential is 10 times greater than other industries, accounting for 31% of credit cards’ total CX-driven revenue potential.
One of the paper's authors Maxie Schmidt, says there are two key reasons why so many brands have had problems showing the connection between improving CX and growing revenue.
- Data challenges: Brands don't have the data they need to do that, at the level of granularity they need. Good CX leads to revenue because customers don't churn, buy more or get other customers to buy. But most companies cannot measure those behaviors at the individual customer level. And even if they could, they'd still not know the quality of each customer's customer experience. And data isn't available in a format that allows firms to correlate both.
- Time lag: The revenue upside doesn't always materialize immediately. If a customer just bought a pair of shoes, it may take a while before the customer needs another pair of shoes and goes to buy at that store again. Depending on the love for shoes of that customer, of course 😉
As for mistakes she sees brands making when it comes to CX she says one is trying to force the customer into a process instead of building a process around the customer needs. "This happens often also because companies are overly focused on optimizing their internal processes while they don't understand the customer perspective and the customer's journey," she says.
Expectations Are Rising
As customer expectations continue to rise, businesses need to appoint a senior executive like the Chief Marketing Officer to deliver exceptional, end-to-end customer experiences. It’s a tall order, but if done right, enhanced customer experiences translate into not only increased revenue but loyalty and repeat business.
Download Should the Chief Marketing Officer Oversee the Whole Customer Experience? — written by Natalie L. Petouhoff, Vice President and Principal Analyst for Constellation Research and see for yourself how marketing leaders can create a basic blueprint to embark on a discussion about customer experience and how best to lead this key strategic initiative in their organization.
This post is based on a previously published post in Forbes.