In the industries we modeled, the revenue benefits of a better customer experience range from $31 million for retailers to around $1.3 billion for hotels and wireless service providers.
What’s behind these impressive numbers? It’s pretty simple, really.
Companies with better customer experience tend to have more loyal customers. We’ve shown through both mathematical correlations and actual company scores that when your customers like the experience you deliver, they’re more likely to consider you for another purchase and recommend you to others. They’re also less likely to switch their business away to a competitor. These improved loyalty scores translate into more actual repeat purchases, more prospects influenced to buy through positive word of mouth, and less revenue lost to churn.
We model the size of the potential benefit using data from real companies. In each industry, we create an archetypal “ACME Company” that scores below industry average in the Customer Experience Index (CXi). We then look at what would happen to ACME’s loyalty scores if it went from below average in the CXi to above average for its specific industry based on the actual scores for companies in that industry.
In our continuing research on the emerging role of the chief customer officer (CCO), we recently looked at the kinds of authority their firms vest in them to drive change across the organization. This authority can affect the activities they do, the composition of the teams that report into them, and the budgets they control. For firms considering putting this kind of senior customer experience leader in place, Forrester has identified three archetypal models that characterize the most typical modes in which CCOs operate.
Advisory CCOs Play A Coaching Role
Companies that are early in their customer experience transformations are often reluctant to commit too many resources or cede control of core company processes to a CCO. These firms tend to place CCOs in an advisory or coaching role for peers with operational responsibilities, particularly if the company has had past success with centralized teams to drive change management efforts. CCOs running these teams have little control over decision-making and execution and instead derive authority through their expertise and personal reputation within their companies. A mandate from senior leadership in a business unit, the executive management team, or the CEO bolsters these CCOs' ability to change behaviors in other departments. These CCOs:
Build core capabilities and spread awareness. Because they don't directly control operations, advisory CCOs and their teams focus on building core foundational customer experience capabilities and standards as would a center of excellence.
The Holy Grail of customer experience for many firms goes beyond useful and easy to interactions that create an emotional connection with the customer. That’s not easy to do, but step 1 is creating an experience that is at least enjoyable. Now, before you object . . . I’m not talking Disney-level enjoyable here — just generally pleasant and maybe even a little fun. Two brands that proved it’s possible with high scores on the CXi’s “enjoyable” criteria are:
My Twitter feed is going wild with #social, #mobile, #CX, and #bigdata hype. But Forrester clients want practical advice for today, in addition to spotting changes on the horizon.
One of the most common questions I get is: “What are the CRM pitfalls I need to watch out for?” I surveyed nearly 150 companies to find out the problems they faced with their CRM initiatives. Here is what you need to pay attention to:
Crafting a customer relationship management strategy. Eighteen percent of the problems at the companies I surveyed pertain to CRM strategy. Within the CRM strategy category, specific pitfalls identified include: inadequate deployment methodologies (40%), poorly defined business requirements (25%), and not achieving organizational alignment on objectives (18%).
“Reaching a consensus between IT’s objectives and those of the business unit was a problem.” (Marketing manager, manufacturing company)
“Internal disagreements on how to implement were the cause of our problems.” (Senior director, customer support, media, entertainment, and leisure company)
Rearchitecting critical customer-facing processes. CRM processes consist of the work practices associated with major customer-facing business functions within an organization. Twenty-seven percent of the problems reported center on difficulties with business process management. Within the business process category, specific pitfalls to watch out for include: technical/integration difficulties in supporting company processes (48%), poor business process design (31%), and the need to customize solutions to fit unique organizational requirements (21%).
Consumers across Asia Pacific are using multiple touchpoints to obtain and share information and purchase products and services. Organizations — both public and private — are struggling to support and enhance these new customer experiences across rapidly evolving channels like application marketplaces and mobile devices that are increasingly contributing to revenue growth.
Customer relationships will continue to change faster than CRM tools. Organizations are unable to cater to non-traditional touchpoints using their legacy systems. They are beginning to understand how these new touchpoints are impacting engagement at every phase of the customer lifecycle and across multiple channels and touchpoints. Organizations that truly value customers will invest in social tools (and platforms) in 2012 to better manage relationships.
Organizations will increasingly be forced to evolve from "transactional" customer interaction methods to customer "engagement." Organizations across multiple industries like FMCG (fast-moving consumer goods), retail, professional services, and media & entertainment in Asia Pacific are already thinking about the customer lifecycle beyond legacy CRM tools — which were typically designed to support organizational processes, not customer ones. Over 2012, we expect organizations across Asia Pacific to expand their use of social technologies, mobility solutions, and analytics to improve engagement.