Invest in Customer Experience to Boost Your Bottom Line

by Kim Campbell in Customer Experience, Kim Campbell, Lifetime Customer Value

Everyone believes that improving customer experience (CX) is good for business. And brands like Apple, Nordstroms, Starbucks, and Trader Joe’s attribute their phenomenal success to providing consistently superior customer experiences.  But evidence that customer service is worth investing in goes beyond anecdotes and marketing copy. There is solid research from many fronts that supports the claim that customer experience – whether the customer is reaching out for tech support, logistics support, sales support, or straight up customer service – it directly affects the bottom line. The American Marketing Association (AMA) identified a connection between customer satisfaction scores and stock price and net cash flow. Research published in the Harvard Business Review (HBR) came to the same conclusion. They found that customers with the best customer experiences spend 140% more than those with the worst. They even found that delivering superior customer experiences didn’t increase the cost of customer service, but actually lowered – by an astounding 33% in the case of US phone giant Sprint.

Watermark Consulting’s  Customer Experience Stock Performance Analysis found the same correlation. When they combined their research with Forrester’s annual Customer Experience Index, which ranks companies by the quality of their CX, they found that the companies with the best CX scores performed 128% better than those with the lowest.

 

Improving Customer Experiences Increases Net Promoter Score (NPS)

One great way to gauge the impact of your company’s CX is The Net Promoter Score (NPS). NPS basically measures customer loyalty. Ever since Fred Reichheld introduced the concept in The Harvard Business Review back in 2003, many people have claimed NPS is the single most important metric for predicting loyalty.

Calculating your NPS is deceptively simple. You ask customers one question: “On a scale of 0-10, 10 being the most and 0 being the least, how likely is it that you would recommend our company/product/service to a friend or colleague?” “Loyal enthusiasts” are those who answer with 9 or 10. Middle-of-the-road customers, called “Passives,” are those who reply with 7 or 8. And less than enthusiastic customers, called “Detractors,” answer with anything from 0 to 6.

The math is as simple as the question. Determine which percentage of your customers are “Loyal enthusiasts” (9s and 10s) and which percentage are “Detractors” (1s-6s), and subtract the percentage of detractors from the percentage of loyal enthusiasts. The “passives” are not part of the equation.

Your score can be anything from 100 to -100. If 100% of your customers are Loyal Enthusiasts, your NPS is 100 (100% loyal enthusiasts minus 0% detractors). If, however, 100% of your customers are detractors, your NPS is -100 (0% loyal enthusiasts minus 100% detractors). So a positive NPS is a good thing, and an NPS of 50 or higher is considered excellent.

It is not surprising that research done at Forrester has found a clear correlation between the quality of a company’s customer experience and its NPS score.

 

The Cost of Providing Superior Customer Experiences

So you are sold on the part that customer experience plays in shaping your bottom line. If you are like most people, your next two questions are:

• What can we do to improve customer experience?
• How much will it cost?

Before answering those questions, it is important to recognize that money spent on improving customer experience is an investment, not an expense. Customer experience guru Shep Hyken makes this point frequently. He also points out some of the ways companies can invest in their customer experience, including more rigorous recruitment, additional hard and soft skills training and a robust CRM solution.

 

Where to begin?

Customer experience is shaped by each and every customer touch point, especially the person-to-person touch points, such as interactions with your contact center. Whether the customer chooses, chat, social, media, email, or the good old telephone, the better your contact center solution is, the better the customer’s overall experience. That is why more and more businesses look for partners who are experts in delivering great customer experiences through world-class contact centers. And one of the chief benefits of using a contact center partner is that the continual investment needed to maintain and improve you customer experience – including things like recruitment, development, and coaching – comes out of their budget, not yours.

If you would like to explore how a customer support partnership can improve your customer experience and NPS scores, give us a call.

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