CX Investments Pay Off
Watermark Consulting’s latest customer experience ROI study shows that investing in CX results in significant business value for organizations.
Customer experience leaders significantly outperformed the broader market, generating a total return that was 108 points higher than the S&P 500 Index. CX laggards, by contrast, had a total return that was 110 points lower than the S&P 500 Index.
CX leaders also generated a total cumulative return that was 3.4 times greater than that of CX laggards.
“The results of the study indicate that, over the long term, a great customer experience helps build business value, while poor experience erodes it,” says Jon Picoult, Watermark’s principal and founder. “When a company consistently delivers an impressive experience to customers, it triggers behaviors that influence business financials in important ways.”
Companies that are considered leaders in delivering great customer experiences saw the following:
- Increased revenue. Happy, loyal customers as a result of positive CX are less price-sensitive and more willing to consider offers for additional products and services, resulting in increased revenue. These extremely satisfied customers are also more likely to give the company positive references, leading to new customers to further increase revenue.
- Decreased expenses. Customer referrals from happy, loyal customers enable companies to cut customer acquisition expenditures. Additionally, happy customers tend to complain less, meaning fewer communications with the contact center and agents, lowering the coinciding infrastructure cost.
Still, not all companies are on board just yet. In fact, many companies remain unsure about the actual ROI of customer experience, so they’re reluctant to invest in CX improvements, according to Picoult. “As a result, companies continue to subject their customers to complicated sales processes, cluttered websites, dizzying 800-line menus, long wait times, incompetent service, unintelligible correspondence, and products that are just plain difficult to use.”
The report offers the following best practices from CX leaders:
- Customer satisfaction isn’t enough. Simply satisfying a customer does little to enhance retention, as even satisfied customers can switch to competitors. Additionally, customers who are merely satisfied are less likely to provide the positive referrals that help attract additional customers, according to Picoult. “Maximizing the returns on CX investments requires more than satisfying customers; it requires impressing them.”
- Leave nothing to chance. CX leaders have a deep knowledge of the full array of live, print, and digital touchpoints that comprise the CX they offer, so they take great care to design each of these touchpoints so resulting interactions not only meet the basics of good CX but also deliver pleasant surprises for customers.
- Deliver memories, not simply experiences. How customers remember the experience is arguably more important that the experience itself. Memories ultimately result in customer retention, additional purchases, and referrals to other new customers, according to Picoult. “The leading companies recognize this, and they use cognitive science to engineer experiences that people enjoy not only in the moment but also in the future.”
- Experiences are infused with emotions. The emotional elements of experiences are essential because customer affinity toward a business is ultimately based on how they feel after interacting with it, its representatives, and/or its products. The leading CX firms understand this emotional connection and deliver experiences that go beyond focusing simply on rational requirements but also connect with customers’ emotional needs.
- CX and employee experience are both addressed. Happy, engaged employees are important to the development of happy, loyal customers, who in turn create more happy, engaged employees. “The value of this virtuous cycle cannot be overstated, and it’s why successful companies address both sides of this equation—obsessing not just over their customers but also over their employees who serve them,” Picoult says.
The report concludes: “A great customer experience and the internal ecosystem supporting it can deliver tremendous strategic and economic value to a business in a way that is difficult for competitors to replicate.”