In the age of the customer, you need to be obsessed with your customers. And that obsession can pay off big time — as we have shown over and over again: Years of Forrester data confirm the strong relationship between the quality of a firm's customer experience (CX) and customer loyalty.
And this means revenue growth! Find out how exactly we calculate the revenue upside in the report "The Business Impact Of Customer Experience, 2014." But here are the cliff notes: We built a model that shows how improving customer experience scores from below to above average affects loyalty, which in turn affects revenue in three categories:
Repurchase: incremental purchases from existing customers in the same year.
Switching: revenue saved by lower churn.
Recommendation: new sales driven by word of mouth.
When we looked at the data, this year, we found new and important developments that affect the revenue upside:
“Ok” is the new “poor.” Converging Customer Experience Index (CXi) scores mean that companies cannot rely on average customer experience to prevent churn and get people to buy more.
People talk. Consumers recommend companies more if they had a good experience, and they talk to more people about it — a multiplier in the effect of CX on word of mouth.
A lot of people have been talking about Facebook’s new Nearby Friends feature for their mobile app, which gives users the ability to see which friends are nearby. But less discussed, and perhaps just as significant, is another change — to a more contextually-relevant Facebook profile.
In the past, when you checked out other users’ profiles, you would see the same static information including their profile photo and links to their friends and “about” pages. There were two problems with this. First, the information is rarely updated, so it becomes stale. Second, if you don’t know the person, it takes a bit of digging through their pages to find out if you know them or have anything in common.
The Facebook iPhone app’s recent update addresses these concerns by taking a contextual approach. Specifically, it presents more personalized and dynamic information, such as whether you and this person share any mutual friends, whether you happen to live in the same city, and what the friend has been up to recently. The app also prioritizes this information, so it’s one of the first things you see after you click on a user’s profile.
In fact, we’ve seen this trend in mobile apps — the best apps are moving away from static web-like experiences and are delivering more personal, relevant content, fast. In my report, "The Best And Worst Of Mobile User Experience," I found that leading mobile user experiences share common attributes that separate them from the pack. These leading experiences:
It’s that great time of year when I finally get to talk publicly about Forrester's Forum For Customer Experience Professionals in New York at the end of June. If you’ve ever been to one of our events, you know that we always have a theme, and this year that theme is “Why Good Is Not Good Enough.”
We picked our theme because of the good news/bad news story told by our Customer Experience Index (CXi) results this year. First, here’s the good news: The number of brands in the “very poor” category of the CXi is down to one out of 175 brands we studied. What’s more, only a handful of brands — 10% — are in the “poor” category. Together, those findings show that as customer experience improvement efforts got traction over the past year, the number of truly awful experiences dropped like a rock.
Now for the bad news: Just 11% of brands in the CXi made it into the “excellent” category.
Taken together, those two pieces of news mean that most brands are bunched up in the middle of the curve — not awful in the eyes of their customers but not differentiated either. I think of this situation as “okay is the new poor” or, in my darker moments, “the year of ‘meh.’” Regardless, it adds up to the same thing: A merely good customer experience is no longer good enough if you want incremental sales, positive word of mouth, and better customer retention.
My latest report, 5 Steps To Create And Sustain Customer-Centric Culture, is now live on Forrester.com. The report answers the question I hear most often from clients: What are the steps in the process to actually transform organizational culture to be customer-centric? We interviewed companies that have successfully completed this transformation, and companies that are in the midst of that process right now. We learned that there are five steps companies must take to create and sustain customer-centric culture:
Step 1: Secure Executive Support (No, Really). We do not want to sugarcoat this step. Customer experience professionals who don't already have commitment from their executives need to either get it or give up their hopes of transforming their organization's culture. Every successful transformation we studied began with a customer experience epiphany by a CEO or COO. If that realization hasn’t happened yet, CX pros can help create the spark of inspiration with executives. For example, Brad Smith, the Chief Customer Officer at Sage North America, established a program where executives sign up to spend time in the call center or join sales teams on customer visits. And he created a new leadership routine of bringing customer stories to their monthly meetings. His goal was to get senior leaders to see the importance of customer focus.
Do you use your customer experience (CX) metrics to incentivize frontline employees in your company? Here is a cautionary tale I came across in my wireless provider’s store.
While I was chatting with the representative who took care of my problem, I overheard another representative ask a customer for a 9 or 10 on the satisfaction survey. Don’t stop reading — we all know this happens; this is not what this is about. Given that I am a CX analyst with a passion for CX measurement, I asked my service rep what this was all about. What he said about the employee perspective on this blew me away: He said that the company basically said, “Southwest [Airlines] gets nearly only 9’s and 10’s on the survey (meaning the NPS question) so we should be able to do that, too.”
Setting targets for CX metrics requires more than that — benchmarking is a part of it, but it also requires a solid baseline and a realistic stretch target, with realistic being the operative word here. It is probably no surprise to you that the experience those two companies provide is hardly comparable. If you look at Forrester’s 2014 Customer Experience Index (CXi), Southwest Airlines is the industry leader among airlines with a CXi score of 81. And its score is way ahead of the average score for wireless providers of 71 (and also way ahead of my wireless provider’s CXi score).
How mature is your company's voice of the customer (VoC) program? Compare yourself against the state of the art and find out:
How VoC programs affect customer experience and business results.
How companies integrate and analyze data from different sources.
How VoC program owners share customer insight.
How they drive action based on their insights.
Which vendors they use to support their VoC program.
We'd like to hear from practitioners that can speak about their company's VoC program. As a thank you for completing our 10-minute survey, you will receive the report resulting from this research, "State Of Voice Of Customer Programs, 2014." As additional thanks, you will receive the high-level results after the survey data has been processed.