CX Leaders Are More Successful, Period.
There’s no question that there’s a fast-growing trend in the corporate world regarding the implementation of CEM approaches. The conversation regarding customer experience (CX) is that it’s guaranteed to drive growth in your company. Strong and consistent customer experiences will lead to increases in your marketing effectiveness, and decreases in your operational costs. How do we know this? Because loyalty economics says so, and the evidence is quite compelling.
If your company isn’t competing in CX right now, then you will be soon. It’s not just me telling you this, it’s the facts. As of 2017, 72% of companies are saying that improving the customer experience is the top priority of their organizations (Forrester, 2016). CX will outweigh price and features as the primary differentiators in a short time to come. According to research by Gartner Group, 89% of companies are expected to be competing in strategic marketing approaches using CX (Gartner, 2014). The point is to get in as fast as possible in order to stay ahead of the competition. If you haven't considered your company's customer experience strategy, now is the time.
The sooner you implement your CX approach, the faster you’ll be able to attain the disproportionate benefits ahead of your competitors in both value and key performance indicators. If you asked your organization to improve by .1% per day, what would happen? Over time, a consistently managed CX program drives continuous small improvements in the company. At first, the company sees about a 3% increase over the first month. Over three years, this could compound to an 82% increase. This is why company's really appreciate their customer experience initiatives and investments over a period of time.
Here’s the Empirical Evidence
The statistical significance between customer experience and likelihood of customers to repurchase is uncanny. A Temkin Group study reveals a correlation of r = .83 across 20 industries between consumers’ CX ratings and likelihood to make future purchases (Temkin Group, 2014). What this really means is that across these 20 industries, the trend was that overall superior customer experience maps to greater likeliness to buy more from the company. This is just one of the four major levers that drive loyalty economics. Research shows that customer experience directly correlates to all four of the following areas:
It’s Not Industry Specific
The level of efficiency provided from consistent and continuous CX is not just applicable to service related industries. The results are remarkable across the board as CX leadership is a compelling force across all industries.
According to Temkin’s 2016 Consumer Benchmark Study, industries with very low switching costs tend to be highly sensitive to improvements in customer experience. This is a relatively self-evident statement. Some of the most widely studied low switching cost industries include grocery chains, hotels, fast food restaurants, and car rental agencies.
What is more interesting is that even industries with high switching costs have comparable sensitivities to customer experience. It’s evident that customer experience is powerful enough to overcome the effect of switching costs when the company’s CX lags the industry, regardless of the customers’ costs to “churn”. These industries include software companies, health insurance companies, and banks. High switching cost industries measure churn over longer periods, thus, organizational strategies need to be relevant to the customers in order to remain competitive (Forbes, 2017).
Make Dust or Eat Dust
“ Goods and services are no longer enough.” (Pine & Gilmore, 1998).
Joseph Pine II and David Gilmore identified this fundamental economic market shift and have been following the evolution of the experience economy since 1998. Since then, customer experience has advanced as the “it” trend of strategic marketing. You must choose to invest or not.
If you choose not to invest in improving your customer experience, we wish you luck as you've made the choice to compete as a commodity or agrarian market leader.