The Customer Experience Index, 2013

Just moments ago we released the sixth annual Forrester Customer Experience Index (CXi), our yearly benchmark of customer experience quality as judged by the only people whose opinion matters — customers.

The 2013 CXi is based on research we did in Q4 2012. It reflects how consumers perceived their experiences with 154 brands across 14 industries. If you’re not familiar with the methodology, or just want a refresher, check out “Executive Q&A: Forrester’s Customer Experience Index, 2013.” We put all the nitty-gritty details in there.  

But what about the big picture? Of course, there are winners and losers (we name them in the report.) There is a tale of two banks — one whose score jumped up by 11 points versus last year, and another whose score plummeted by 24 points.

Through it all, though, one common theme leapt out: 

In 2013, it’s all about value.

Many of the top brands this year, including high-scorer Marshalls, deliver solid customer experience at a manageable price. We saw this dynamic in the hotel space, where Marriott’s Courtyard brand beat out all other hotel brands. And we saw it in the airline industry, where perennial favorites Southwest Airlines and JetBlue Airways once again swept the competition with their combination of great experience at a great price.

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It's Time To Exercise Your Customer Experience Muscles

I was talking to a client the other day who was very frustrated. She told me that her executives talk about customer experience all the time; they seem “bought in” to the idea that it matters. But when push comes to shove, none of them have done anything to drive real improvement.

She asked me . . . how can that be? If they get it, why don’t they do something?

I struggled with this question for a long time but finally came up with an analogy that made everything clear. It’s this: Customer experience is the “eat healthy and exercise” of the business world.

Think about it. We could say the following about both topics:

  • Everyone knows it’s important, and why.
  • When talking to others, we probably pretend we do it better than we actually do.
  • Deep down, we aren’t quite sure what we should do — it’s complicated and confusing.
  • The things we know we should do just aren’t that fun or exciting, so we often avoid them.
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Introducing The Experience-Driven Organization Playbook

If you are trolling around our website, you may have seen that we’ve introduced a new way to organize our research, something that we call playbooks.

We made this change because for years we’ve been producing reports that connect to each other in many ways. The connections are obvious to those of us who create the research, but until now, they may not have been as obvious to our many readers.

Playbooks make it easier for you to find the research we have about every one of your customer experience challenges. What’s more, playbooks suggest related research on topics that you might not have even thought to look for. For example, if you’re looking for best practices for how to improve your Customer Experience Index Score, you’ll also see advice on how to sustain continuous improvement once you take the first step.

The first playbook for customer experience professionals is called The Experience-Driven Organization Playbook. It lays out our vision for what it takes to deliver a consistently good customer experience. You can get an overview of all of the research in the playbook by reading “Transform To An Experience-Driven Organization” by my colleague, Harley Manning. Or dive right in with my report that sets the vision for what it takes to build a mature customer experience practice, “Customer Experience Maturity Defined.”  

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Customer Experience Programs Need To Move From Talk To Action

Last week, I released an update to a very popular report titled “The State Of Customer Experience, 2012.” The research is based on a survey of customer experience pros about their plans for this year. The data mirrored what we hear anecdotally when talking with clients every day and should help you answer the perennial question, "What's everyone else doing?" But beyond that, here are my big takeaways:

  • Everyone is talking about customer experience. Ninety-three percent of respondents said customer experience (CX) is on their company’s list of top strategic priorities. For 28%, it is the top priority. And when we asked CX pros how they plan to build customer-centric culture in 2012, about three-quarters said they expect to run training, education, and internal communication programs.
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Our Data Once Again Shows That Better Customer Experience Yields Millions In Revenue Benefit

I just published Forrester’s fourth annual report “The Business Impact Of Customer Experience, 2012” using updated data from the 2012 Customer Experience Index. Once again, the news is good for companies hoping to get a financial boost from their efforts to improve customer experience.

 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.
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Three Ways To Use CXi Data To Inform Customer Experience Improvement Efforts

In the two months since I published "The Customer Experience Index, 2012," the number of companies requesting a deeper look at the data has been quite high. Many have asked me to suggest ways to use the information that’s available, so I thought I’d share the analyses I've found most interesting so far:

  1. Compare Customer Experience Index (CXi) respondents to your company’s target customer profile. As part of the CXi survey, we collect a range of demographic data including age, gender, marital status, household income, employment status, parental status, and location. Clients find it helpful to see if differences between our scores and their internal data stem from the fact that we’re surveying different populations. They’re also using it to think through why scores on a given criteria are what they are — for example, if most respondents for a TV service provider have small kids, the firm’s parental controls may have a bigger impact on the “meets needs” score than they would if most respondents had grown children.
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Enjoyable Experiences Are The First Step To Creating Emotional Connections With Customers

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:

  • USAA (bank): 84%.
  • Courtyard by Marriott: 83%.
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It's Not Easy Being Easy

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.

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Customer Experience Leaders Obsess Over Customer Needs

Last week, I took you through the top scorers in this year’s Customer Experience Index by industry. But 13% of customer experience professionals said that they aim to differentiate across all industries. Which brands do they need to beat to reach that goal? Let’s start with the “meets needs” category (I’ll cover the other two in future posts). High scorers on this criteria in 2012 were:

  • USAA (bank): 92%
  • Amazon.com: 91%
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Watch Out…Customer Experience Innovations Can Come From Where You Least Expect Them

Last week I posted some of the most frequently asked questions we get about the Customer Experience Index, 2012. One question I didn’t include but should have is “Who got the highest score in my industry?”

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:

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