Companies Have Built Up CX Equity. Here’s How They Should Use It
THE VALUE of delivering a good customer experience is that it encourages customer loyalty—retention, increased spending, and increased advocacy—which grows revenue. The amount of goodwill that companies create with their customers through high-quality experiences is a business asset that we refer to as CX equity. This equity is more important now than ever before: The consumer spending slowdown brought about by the global coronavirus pandemic requires companies to consider how they’ll recapture their customer base once the crisis passes.
The 2020 U.S. CX Index—which measures the relationship between CX quality and customer loyalty—suggests that, prior to the COVID-19-imposed economic shutdown, many companies had built up a reservoir of CX equity that they will now need to win back their customers:
• Twenty-seven percent of companies saw their CX Index scores increase. The average score increase was 3.6 points, with eight firms increasing their scores by five or six points.
• The number of scores in the good category rose 3 percentage points. This was the largest shift in five years and was spearheaded by improvements among multichannel retailers, hotels, and multichannel banks.
• Nine industries saw statistically significant increases in their average scores. The catalyst for this increase was the scores for the companies at the bottom of these industries climbing toward respectability.
Like any asset, the CX equity companies built can be squandered through poor investments—failing to fix predictable problems, supporting experiences that don’t align to new customer behaviors, chasing customers whose needs don’t align with your value proposition, and more. The companies that will thrive post-pandemic will be those who grew their CX equity through wise investments.
So what is a wise investment? Smart CX professionals will help their businesses use their CX equity to get closer to their customers. Here are some ways to do so, as well as the benefits that accrue from them:
• Uncover what customers value. Because there are many facets of value, it is difficult for businesses to understand what their customers get out of a product or service. CX pros can leverage built-up goodwill with customers—and add to it—by inviting customers into the product or service design process so they can provide insight into their habits, needs, and goals. Soliciting this type of feedback should help position the company as one that cares about getting the experience right for the customer.
• Align the business’s value proposition to customers’ sense of value. The insights into what customers value should help CX pros inform leadership whether the business is meeting customer needs. If it does not, this might be an opportunity to look at changing the target customer or shifting the product-and-services portfolio to better help existing customers meet their goals.
• Run experiments to find new ways to deliver value. Consistently good customer experiences give companies the latitude to try new things with their customers. CX pros can help their businesses tune their value propositions and product portfolios for their desired customer bases through experimentation. These efforts should be targeted at delighting customers by setting new standards for different experiences.
The result of using CX equity to get closer to customers is to build a core group of customers devoted to the brand. Forrester’s CX Index data shows that these devotees are highly valuable customers—on average they generate more revenue per customer than any other customer type. And these customers show a willingness to forgive their favored brands, pay a premium for those companies’ services, and inconvenience themselves to receive those services. For companies looking to rebuild after the pandemic, creating these types of customers will be essential to returning to growth mode.
TJ Keitt is principal analyst at Forrester Research serving customer experience professionals. Keitt leads Forrester’s research on customer success management and helped create Forrester’s B2B Tech CX Index. His coverage of customer experience consultancies focuses on how these firms build practices to support CX transformations.