In 2015, we explored whether customer experience really matters to business success or whether CX is just the latest hype. Our conclusion: superior CX drives superior revenue growth in industries where customers are free to switch business and competitors deliver a differentiated customer experience.
This year we repeated our study to see if the results held true across an additional year of data. To do that we compared five pairs of publicly traded companies where one company in each of the pairs had a significantly higher score than the other in Forrester’s Customer Experience Index during the period 2010 to 2015. Then we gathered financial data from company SEC filings like Forms 10-K and 10-Q.
The tough part was normalizing the results. We focused on isolating revenue that could be traced directly to consumer behavior; we also backed out revenue from mergers and acquisitions, revenue from sale of assets, and other windfalls.
Once we normalized the revenue data we used it to build models that calculated the compound annual growth rates (CAGR) for the ten companies from 2010 to 2015. We found that the CX leaders in all five pairs of companies outperformed their relative CX laggard counterparts.
In two industries, cable and retail, leaders outperformed laggards by 24 percentage and 26 percentage points, respectively. Even in the industry with the smallest spread, airlines, the CX leader enjoyed a healthy 5 percentage point advantage in global revenue. And when we compared the total growth rate of all CX leaders to that of all CX laggards we saw that the leaders collectively had a 14 percentage point advantage.
While much of the glitz and glam around customer experience has orbited around B2C organizations, Forrester believes that the imperative shift toward customer experience and subsequently, customer centricity, is creeping into the B2B space – sooner than we might expect.
Recognizably, there are inherent challenges in distributing through channel partners, not the least of which is a lack of direct contact with end customers and the complexity of trying to manage experiences that cannot ultimately be controlled. All of which pose sizable obstacles to CX professionals in such organizations. My most recent report describes six principles and examples that companies selling via channel partners should consider to better manage their prescribed end user experiences so as to align with the company’s CX strategy.
Here are several of the key collaborative principles that can help B2B companies foster better partner alignment:
· Apply B2C tools to understand your partners. More and more firms are creating B2B personas from stakeholder maps, co-creating customer journey and empathy maps with their channel partners, and implementing voice of the partner (VoP) programs to capture CX sentiment from their intermediaries.
CRM purchasing is undergoing a sea change. I see that companies are no longer purchase heavyweight, end-to-end CRM solutions that have had the reputation of being complex, expensive and hard to implement - even if they have great industry specific capabilities. They itend to mpede user productivity with a bloated set of capabilities that many users can't leverage. A number of dynamics driving this change in purchasing behavior:
CRM purchases are moving to the cloud. Companies are replacing legacy CRM with SaaS solutions at a higher rate than before. Cloud CRM has gained traction, as it provides lower upfront costs, better flexibility, and faster time-to-value compared with traditional on-premises applications. It also shifts the burden of software maintenance to the vendor.
Cloud CRM extends the life of legacy CRM. Modernizing legacy CRM to support omnichannel customer journeys is a critical priority. Companies are using cloud CRM to complement and extend on-premises implementations. Cloud CRM provides the systems of engagement while legacy CRM provides business process support and data management capabilities.
This is a guest post by Fraser Tibbetts, Researcher on the AD&D team covering sales force automation software.
Oracle’s first ever Modern CX Conference in Las Vegas last week, with roughly 3,000 attendees, focused on Oracle’s vision for the CX Cloud suite of products. Instead of the usual focus on technology, executives focused on products that recognize how the customer has more power than ever. This aligns with Forrester's age of the customer research. It is encouraging to hear that same message from Oracle’s CEO, Mark Hurd, and from the Oracle product team leads.
Every business must transform into a digital business. Digital businesses continuously exploit digital technologies to create new sources of value for their customers and increase their operational agility to serve those customers. In Asia Pacific, CIOs have had limited success in driving digital business transformation. Organizations taking an early lead in transforming their business include Commonwealth Bank of Australia, China’s Ping An Insurance Group, and DBS Bank in Singapore.
A true digital business needs to integrate two sides of a digital strategy: digital customer experience and digital operational excellence. My colleague Nigel Fenwick has written extensively on the topic; this infographic, for example, sums up our thinking. Becoming a truly digital business requires a radical overhaul of organizational structures, technologies, measurement frameworks, and operating models. And it’s ongoing.
The organizations coping best with digital disruption are creating:
A digital strategy as a defense mechanism against disruption. The pace of consumer change poses the biggest threat to any traditional businesses that have yet to experience the impact of digital disruption, regardless of whether they’re in the telecommunications, media and entertainment, transportation and travel, or other industry. For example, Australia Post has set up a A$2 billion kitty to aggressively pursue a digital strategy to tap into new revenue sources, including building a new center for the digital delivery of mobile and online products and services.
I attended an NG Telecom summit in Hong Kong recently; at the event, I chaired a discussion on how telcos need to improve the customer experience.
Consumers now have powerful mobile devices in their hands, speedy access to social platforms, and the ability to call up information on the go. More importantly, customers today can choose to easily switch to a competitor if they don’t like the customer experience they are receiving. As a result, telcos no longer “own” customers — it’s the other way around.
The discussion participants all agreed that telcos must do the following to meet customer-centric needs:
Simplify systems and processes. The debate on how to simplify complex telco business support systems (BSS) to make it easy for customers to consume services is an ongoing one. When BSS cannot provide a single, unified view of the customer, it’s difficult to provide a consistent customer experience. This happens with CRM systems: Call center agents struggle through five or six screens just to get a complete customer profile while irate customers spend time repeating their personal details or waiting for a resolution. Telcos must be like OTT players, which have very complicated businesses, systems, and processes on the back end but present a simple front-end interface to the customer.