It’s pretty much a given that customers who have a good experience are less likely to churn, more likely to make more purchases and more likely to recommend a company to others. The hard part is quantifying the correlation between increments of improvement in experience with changes in those aspects of customer behaviour.
Research firm Forrester has tried to do just that, with some, perhaps surprising results. It found a strong correlation between improvement in experience, additional purchasing and willingness to recommend but only a moderate correlation between improvement in experience and reduced churn.
The bad news is that with almost every company being customer-experience obsessed today, it's getting harder to stand out from the crowd and something of an 'arms race' is underway as companies strive for differentiation through delighting customers.
"Laggard firms have a huge potential reward for improving their CX," Forrester says, but even CX leaders can’t afford to coast.
They’ll need to move up the path to customer experience maturity if they want to maintain a competitive edge in an era of rapidly improving experiences."And even for companies that remain ahead of the pack in delivering a good customer experience, the advantages have reduced. "The difference between the purchase intent of customers of companies with above-average CX scores and the purchase intent of customers for companies with below-average CX scores was not as great as in past years," Forrester said.
Given the increasing use of social media by consumers to communicate with friends and family about almost every aspect of life, it's perhaps not surprising that Forrester found recommendations on the rise. "Compared with 2013, the number of people who said that they recommended a company to at least one other person increased slightly in nearly every industry," it said. "Additionally, the number of other people whom each of those consumers made recommendations to grew considerably in every industry, creating a multiplier effect."
Forrester provided these views as adjuncts to a study in which attempts to model the financial impact of additional purchases, churn reduction and word of mouth recommendations across a range of industries. Given the size of the companies modelled the results are only of interest to Australian businesses as being generally indicative. For example Forrester estimates that a wireless service provider with 82 million customers could see an annual financial benefit of $US1.6b from additional purchases, churn reduction and word of mouth recommendations resulting from improved customer experience.