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Make the Business Case: Better Customer Experience Can Deliver More Than $1 Billion In Revenue Growth
Posted by Maxie Schmidt-Subramanian on April 23, 2014
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.
So who are the “winners”?
- Wireless providers and airlines have the most to gain — $ 1.6 billion and $1.4 billion, respectively.
- But retail and healthcare have the biggest year-over-year increase in growth potential - several hundred million dollars. Again, please see the report for more details.
You can use our model to calculate the business impact of CX for your company! Download the interactive versions (the excel spreadsheet behind Figure 2 in the report). Input your own assumptions, and model a range of benefit scenarios.
We’d love to hear how this ROI calculation works for you. Also, if you want to share your best practices or challenges in making the business case for customer experience, please be in touch.
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