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.
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:
Thanks for all your thoughtful responses to last week’s post about why companies fail to meet customer needs. Clearly there’s more work to be done in that department, but for now, I want to move on to the next Customer Experience Index (CXi) criteria: “easy.” Many firms claim to be easy to do business with, but which ones got the highest rating from customers?
This year, USAA (bank) and Kohl’s both earned a score of 92% in this category.
For USAA, there is definitely some overlap between its ability to identify latent customer needs and its level of easiness. For example, depositing a check via mobile phone makes the deposit process easier for everyone, not just the most geographically dispersed parts of the customer base. Strong customer understanding also led to creation of the Auto Circle experience, which is designed to make the entire car buying process easier for customers, not just the parts that a financial institution like USAA would typically have been involved in.
As I recently celebrated my fifth anniversary as a Forrester analyst, I reflected on how my coverage area has changed. For the past five years I've covered the web content management (WCM) market. This has been a healthy market, and I still get plenty of interest from my clients on this topic.
But the context of that interest has changed markedly, particularly over the past year. When clients used to ask about WCM, they wanted to know about WCM and WCM only. But these days, they ask about WCM in the context of other technologies supporting customer experience, such as commerce, CRM, and analytics. Our clients have reached a logical conclusion: WCM isn't the end-all-be-all for digital experiences but instead is one piece of the customer experience management (CXM) puzzle.
And the market will continue to evolve in 2012. In particular:
Watch for an avalanche of acquisitions, both big and small. Though larger vendors have multiple pieces of the CXM puzzle, no one has yet put together a complete portfolio. Vendors are still missing some critical pieces, such as rich media management (IBM), commerce (Adobe), and testing and optimization (Oracle, SDL). Watch for the CXM vendors to compete to fill these gaps. High-reaching best-of-breed WCMs such as Sitecore may not remain independent for long.
Contextualization will become the byword. Forget complicated business rules and template schemes. Technology to contextually adapt customer experiences based on user segment, browsing behavior, locale, and device will be high priority. Vendors will make strides so that customers can increasingly take an "automate + optimize" approach: automating contextualization for most experiences and manually optimizing it for a few high-profile experiences, such as home pages.
I scanned the list of industry high scores and wasn’t surprised to see names like USAA (banks, credit card providers, insurance providers), Apple (consumer electronics manufacturers), and Southwest Airlines. But there were names we don’t hear about as much in customer experience like Morgan Stanley Smith Barney (investment firms), Bright House Networks (ISPs), US Cellular (Wireless service providers), and Dish Network/EchoStar (TV service providers)*.
To me this says that brands trying to differentiate on the basis of customer experience need to look in a variety of places for possible competitive threats and standard-setters, not just the most obvious ones. History is full of examples of small firms that could transform more quickly than their larger competitors or introduce a disruptive innovation that no one saw coming. I expect both those scenarios to play out in customer experience over the next few years. The question is just where and when.
As part of our research in 2012 you can be sure we’re going to look into what these lesser talked about brands are doing to raise the bar in their industries, but in the meantime here are two of my favorite examples of CX innovations that came from places I would have never thought to look:
Hotcakes, you've got some competition: the phrase "selling like tablets" might soon enter the global lexicon. And it's not all hype — though there is a fair bit of that as well. Tablet users in the US are estimated to grow at a compound annual growth rate (CAGR) of 51% from 2010 to 2015. That’s a fast-growing market for firms of all stripes.
As such, the tablet as a touchpoint is becoming a critical consideration for eBusiness & Channel strategists. This is especially true for executives at banks, as financial transactions benefit from the immediacy of the mobile channel, but users often struggle to make these transactions on smaller smartphone screens.
In my new report, I outline the process Citibank went through in building its own tablet banking strategy, developing an iPad app, rolling it out to customers, and continually improving the service. We outline how Citi:
Since publishing our Customer Experience Index, 2012 last week, we've gotten a flood of questions about the research, methodology, and results. I'm putting the finishing touches on a full Forrester report that answers the ten most common questions but thought I'd give everyone a sneak preview with a blog post summarizing a few of the answers.
1. Who are the people rating the brands in Forrester's Customer Experience Index?
To produce the CXi each year, Forrester conducts an online survey of US individuals ages 18 to 88. This year, there were 7,638 such folks who answered the survey during October 2011. We weighted the data by age, gender, income, broadband adoption, and region to demographically represent the adult US online population. The sample was drawn from members of MarketTools' online panel, and respondents were motivated by receiving points that can be redeemed for a reward.
2. Which touchpoints are consumers rating when they answer the CXi questions?
The short answer to this question is "any touchpoints they used to interact with the brand." We don't direct consumers to think about any specific touchpoints as they rate their interactions. Instead, we want them to consider all of their interactions with that brand over the past 90 days, regardless of how they happened.
We live in a world of increasing complexity: an increasing number of communication channels, an explosion of social data, the intertwining of sales, marketing, and customer service activities, and a growing amount of information and data that customer service agents need to answer customer questions. These issues complicate the challenge of being able to provide customers the service that is in line with their expectations — service that keeps customers loyal to your brand yet that can be delivered at a cost that makes sense for your business.
Being able to deliver the right customer service involves:
We all know that the gap between a customer’s expectations and the service they receive is huge. Customers are increasingly knowledgeable about products and demand value-added, personalized service. Businesses struggle with understanding which initiatives will move the needle in a positive direction and are thus worth investing in. Here is the second tip in my 10-part blog series on how to master the service experience.
Step 2: Is your customer service aligned with your company brand?
Meeting the needs of your customers are important. However, it’s just as important to stay true to your brand and design a service experience that supports your value proposition. Customers need to know what your company represents — which is especially important in the message-cluttered social media world that we live in — and have this brand reinforced every time they interact with you during the sales process, and for every interaction after the initial sale.
These companies have aligned their service offering to help reinforce their brand with their customers:
Apple. Its products are high-style and priced at a premium. Apple’s customer service is very much in line with its brand. The firm delivers customer service on the customer’s terms — you can arrange a phone call with an Apple Expert who specializes in your exact question and can talk with them now or later at your convenience. They’ll even call you. You can email Apple or browse its extensive knowledge base.