Why is CX so important and what are the financial impacts on an organization?
- 93% of C-Level executives claim that improving their Customer’s Experience (CX) is one of the top 3 initiatives over the next two years.
The way I see it, CX represents an open hand with money moving in your direction, or a closed fist coming at you as a punch. That hand belonging to a customer, or prospective customer, is either going to give you money, or hurt you a lot. Every organization has a choice and an opportunity to provide exceptional customer experiences.
Let’s consider the financial impact of both poor and exceptional customer experience:
Making cents out of CX:
There is a high price to pay when a customer has an unfavorable customer experience. It is estimated that the annual revenue loss for businesses not offering a positive customer experience is 20%. Conversely, there is money to be made from consistently delivering exceptional customer experiences, because 86% of customers will pay more for a better experience. The challenge on both sides is that customer expectations have never been higher. Further, social media has given the individual consumer a tremendous amount of power. Essentially, it’s making that giving hand much kinder, or that punch more painful!
Social or Socially Awkward?
When brands engage and respond to customer requests over social media, those customers end up spending 20% more money with that brand. –Bain & Company
In 1876, as the story allegedly goes, Western Union sent out an internal memo that declared, “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.’”
Whether that story is true or not almost doesn’t matter; we can laugh at that those words as they appear on our smartphones 139 years later, just like we can recognize that it’s basically the same as those whom dismissed the importance of the personal computer, email and the Internet.
Social media is a critical part of delivering great customer experiences, but investing in social media is still a tough sell for many. Companies can’t afford to be left out of the conversations happening on social media. If brands can’t engage their audiences on their preferred channels, they are basically saying “I don’t want to talk to you, customer. Just give me your money.”
Investing in CX (the ROI):
Forrester calculates that just a 10% improvement in an enterprise company’s customer experience score can translate into more than $1 billion in increased revenue and other benefits. Just like personal relationships, keeping a customer relationship going for years takes a lot of effort, care, and investment.
Another recent Forrester study found that Customer Experience leading companies had a 22.5% stock market return over the last five years vs. a 46% loss for Customer Experience foot-draggers. Don’t drag your feet…it makes forward progress much more difficult.
One last consideration:
Customers want something more than just a product or service. They want to feel good when they interact with a product and company. They want experiences and relationships with an organization that affirm a partnership, one that feels personal, supportive, and mutually enriching. Exceptional interactions build the brand of an organization, generating positive buzz and tapping into a powerful word-of-mouth network. Great experiences make happy customers who talk about the products they love, a service that really helps them do their job, or a problem that was resolved with individual consideration and flexibility. In effect, these advocates become a virtual sales force for the companies they love.