Does customer experience really matter to business success – or is CX just the latest flavor of hype? Recently Forrester completed a six month research effort aimed at answering that question by examining the relationship between superior customer experience and superior revenue growth.
Why did we pick revenue growth as the measure of business success? Because it’s the number one priority of global business leaders recently surveyed by Forrester.
So with that in mind, here’s what we did: Aided by some long-suffering research associates,
some of our top industry experts and I picked pairs of competitors where one of each pair had significantly higher customer experience quality than the other (as rated by their own customers). We did this for five very different industries: cable, airlines, investments, retail, and health insurance. Then we built models that compared the compound annual growth rate in revenue of the CX leaders to the CX laggards between 2010 and 2014.
The results were intriguing. There was a clear correlation between superior customer experience and superior revenue growth for cable companies, airlines, full service investment firms, direct investment firms, and retailers. However, the magnitude of the difference varied widely by industry, with cable coming out on top: 35.4% for the CX leader versus 5.7% for the CX laggard. Even more interesting, the results were a virtual draw for health insurers – superior CX didn’t seem to matter much when it came to revenue growth.
Why doesn’t customer experience always correlate with revenue growth? And why does the correlation differ by industry? Let’s start with the fact that CX drives revenue by driving customer loyalty, something Forrester determined with our CX Index research. But CX-fueled customer loyalty only matters when customers have the freedom to switch their business among competing companies and some of those companies provide superior experiences – so customers can switch and there’s a rational reason for them to switch.Read More