How Delivering a Great Customer Experience Can Result In Significant ROI
A massive shift of power from corporations to consumers is taking place because of the onset of the digital age. Companies are starting to compete to provide the best customer experience instead of the never-ending battle of price advantage which has preceded this new era.
However, some companies continue to ignore these signals, disregarding their customers’ experience, persisting in focusing their energy and resources on improving products and lowering prices.
Enterprises that haven’t adapted to the customer-centric approach are getting outplayed by those who offer fantastic experience to differentiate their goods or services. According to the study performed by Oracle, around 86% of consumers are willing to pay more in order to receive a better customer experience.
Companies are taking advantage by investing more effort in enhancing the experience of their clients. They are showcasing their achievements in the CX field by competing in various competitions and award ceremonies.
Their financial contribution is just a gateway for future development. What companies also require is the right attitudes which support the customer-centric approach and drive improvement.
Performance of Companies Offering Great CX
Despite the popular belief that ROI for customer experience cannot be measured, there are various studies which claim to provide proof companies improving their performance after investing into CX.
American Express 2011 Customer Service Survey has shown that companies who possess exceptional customer service are more likely to receive customer loyalty than those who don’t. In fact, 70% of people are willing to spend up to 13% more money with companies who provide them with excellent customer experience.
Another study conducted by Harvard Business Review involved two businesses with different revenue models - transaction-based and relationship-based subscription company. By analysing these two billion-dollar companies, the researchers wanted to perceive the effect of positive customer experience on their future revenue. After conducting the research, they came to the conclusion that good customer experience, indeed, drives revenue.
In the case of the transaction-based business, customers who had the most positive experiences with the company were spending 140% more than those who had the poorest experiences.
The subscription-based business had also received phenomenal results. This business model was primarily concerned with the length of their customers’ loyalty with their company. HBR came to the following conclusion:
"A member who rates as having the poorest experience has only a 43% chance of being a member a year later. Compare this to a member who gives one of the top two experience scores — they would have a 74% chance of remaining a member for at least another year."
Good customer experience doesn’t only have an effect on the old customers, but the new ones as well. In fact, an average consumer who had a positive experience will supposedly refer that business to 9 people according to the previously mentioned survey performed by American Express. This fact proves the likelihood of a satisfied customer referring a business to their friends and family is surprisingly high.
How much will bad CX cost you?
Similar to how positive feedback can indirectly influence the increase of revenue, bad customer experience can easily damage company’s financial situation.
Businesses mistreating customers for an extended period risk damaging their brand name. They begin to repel their once loyal customers and stop bringing in the new ones.
RightNow’s 2010 Customer Experience Report states that 82% of customers have ended their relationships with companies because of their bad experience.
Even though good news spreads quickly, bad news spreads even faster. Unsatisfied customers tend to inform approximately 16 people in their surrounding about the poor experience they have had. That nearly doubles the extent of individuals influenced by positive experience.
How come number of enterprises remain intact despite their poor customer satisfaction?
The only companies with that luxury are monopolies which have no one to compete with within their market. For that reason, some of the largest brands often receive negative feedback from their customers but remain in business nevertheless.
Considering all the statistics, the majority of establishments could drastically increase their ROI by investing in their customer support, operations overhaul, employee engagement, and other sectors which influence customer satisfaction.