In a white paper, "The Business Impact of Customer Experience 2011," Forrester showed the potential results of an improved customer experience in 11 industries.
The research was conducted among 7,728 US consumers about their interactions with brands in a range of different industries. The data was used to model the effect that providing an improved customer experience may have on companies in 11 industries.
Analysis showed a high positive correlation between customer experience and loyalty with people willing to buy from the company again (R2 = 0.66), likelihood to recommend the company (0.70) and likelihood to defect (-0.40).
The strong correlation between customer experience and loyalty means that companies with higher customer experience scores tend to have more customers who:
- Will buy from them again;
- Will not take their business elsewhere; and,
- Will recommend their products or services to a friend.
All of this generates more revenue. In fact, here is how much incremental revenue Forrester projects for each industry based on their projections:
- Wireless service providers = $1,574 million
- Hotels = $1,068 million
- Airlines = $784 million
- Insurance providers = $260 million
- Credit card providers = $245 million
- Banks = $217 million
- Investment firms = $149 million
- TV service providers = $81 million
- Health plans = $70 million
- Internet service providers = $70 million
- Retailers = $27 million
I worked on a customer satisfaction measurement and improvement program for a wireless service provider several years ago. By reducing churn by 29% we saved $16.2 million in potentially lost revenue.
Companies I've consulted with most recently, are more concerned with generating sales than increasing customer satisfaction, maintaining renewal rates and reducing churn.
They are adding to their sales team and doing nothing for their current customers.
While these companies are owned by private equity companies, your would think the private equity firms would see the value in having satisfied customers since they spend more, buy more frequently are are more likely to share their positive experience with family, friends and colleagues in person and with followers via social media.
Why do companies spend more money to generate new leads and customers than they do providing an outstanding customer experience and adopting a "customers for life" philosophy?
How much are you investing to provide a better customer experience?
How does the ROI of providing a better customer experience compare to the ROI of the rest of your marketing efforts?