Make the Business Case: Better Customer Experience Can Deliver More Than $1 Billion In Revenue Growth

Maxie Schmidt-Subramanian

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:

  1. “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.
  2. 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.
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Design A Best-In-Class Mobile Experience

Deanna Laufer

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:

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Ta Da! Announcing The Speakers At Forrester’s Forum For Customer Experience Professionals East, 2014 — June 24th and 25th in NYC

Harley Manning

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.

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5 Steps To Create And Sustain Customer-Centric Culture

Sam Stern

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.

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A Mistake To Avoid When Using CX Metrics For Employee Incentives

Maxie Schmidt-Subramanian

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).

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Benchmark Your Voice Of The Customer Program: Participate In Forrester’s Upcoming Research On The State Of VoC Programs, 2014

Maxie Schmidt-Subramanian

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.

Sign up for the survey here.

Customer Experience In Asia Pacific: More Advanced Than You Might Suspect

Harley Manning

For the past two weeks, I’ve been on the other side of the planet, spending a few days each in four very different cities: Sydney, Singapore, Beijing, and Shanghai. While Sydney was much like I remembered it — an exotic version of San Francisco but with better weather — the Singapore skyline had changed drastically and now appears to be a science-fiction version of the seaport I remembered. (If you think I’m kidding, just do a search on “Marina Bay Sands Hotel.”)

In contrast to Sydney and Singapore, I hadn’t been to either Beijing or Shanghai before. I was blown away by how vibrant those cities are and how much prosperity is on display: If the Chinese economy is truly slowing down, you wouldn’t know it from all the luxury cars on the road.

Despite all the diversity I saw on my trip, for me, there was one constant across all four cities: the high level of interest in customer experience.

In Sydney, I gave talks about customer experience to three different groups of 20 to 40 people each. Even though the attendees came from very diverse companies — like insurers, quick-serve restaurants, technology vendors, and giant professional services firms — all three groups asked questions that showed this wasn’t their first CX rodeo. 

I also gave a speech to the digital team at a major bank, and as a bonus, I got to see the company’s chief experience officer give a talk. Frankly, there are a lot of US and European banks that could learn from that large, enthusiastic, clued-in group.

My time in Singapore started out with a customer experience ecosystem mapping workshop for around 35 people. This was also a diverse group, with varying levels of customer experience expertise, even among attendees from the same company. They all picked up on the concepts, though, and generated an impressive amount of insight. 

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Retailers And Mutual Insurers Lead In The Customer Experience Index, France 2014

Joana van den Brink-Quintanilha

By now, you have probably seen the first in a series of reports we are publishing about the state of customer experience in Europe — "The Forrester Customer Experience Index, UK 2014." The second installment — "The Forrester Customer Experience Index, France 2014," paints a similar picture of how French companies are mostly disappointing their consumers. In both the UK and France, no brand was given an “excellent” score, and in France, the majority of consumers rate their experiences as “very poor,” “poor,” or “OK.”

By asking some 2,000 French consumers if their experiences with leading brands met their needs, were easy, and were enjoyable, we are able to provide a benchmark of the quality of customer experience for 38 French brands across eight industries — including airlines, banks, electronics manufacturers, hotels, retailers, TV service providers, wireless service providers, and insurers.

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More Than 6% Of S&P 500 Firms Have A Chief Customer Officer (CCO) Type Of Role

Paul Hagen

Every year, Forrester collects and analyzes data about "chief customer officers" (CCOs) to understand who they are, where they come from, and which companies appoint them. Whether they are called "chief customer officer" or have some other title, these leaders occupy positions of power in a diverse range of companies. Our data shows that CCOs exist at some of the world's biggest companies, including at more than 6% of the S&P 500. The role remains largely experimental at this point — the vast majority of the CCOs we researched hold the position for the first time at their companies and have no previous background in customer experience. However, as companies pivot to adapt to the age of the customer, Forrester believes CCOs have the potential to play a critical role as they have: 1) a deep understanding of changing customer needs and expectations; 2) strong professional brands required for leading change; and 3) experience breaking down operational silos across the CX ecosystem.

For more data about CCOs, check out my latest report, "Chief Customer Officer Snapshot, 2014."

Amazon Leads In Forrester's First UK Customer Experience Index

Jonathan Browne

I’m thrilled to announce the first report in a new stream of research — "The Customer Experience Index, UK 2014." This is the first in a series of reports about the state of CX in Europe.

Which brands did UK consumers rate as the best for customer experience? The highest score went to Amazon, with a Customer Experience Index (CXi) score of 81. Five more retailers — Marks & Spencer, John Lewis, Debenhams, Next, and Boots — scored 75 or more, which is Forrester’s threshold for a customer experience to be considered “good.” It's evident that retailers are doing a better job, on average, of meeting their customers' expectations than the other industries that online consumers rated in this study — airlines, banks, electronics manufacturers, hotels, retailers, and TV service providers.

Among bank brands, Halifax was the top performer with a CXi score of 70, fully 13 points ahead of the lowest bank in the index — Santander, with a score of just 57. Bringing up the rear in Forrester’s index were TV service providers and mobile telecommunications providers — Virgin Media, BT (TV Service), Vodafone, and Orange all had “very poor” CXi scores of less than 55.

If you’re familiar with the Customer Experience Index that Forrester has conducted annually in the US since 2007, you will know that this research provides allows us to compare the experience at leading companies — as rated by their customers. We achieve this by asking customers if their experiences with leading brands met their needs, were easy, and were enjoyable:

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