The financial benefits of Customer Experience Management

As has been discussed in many blogs and papers, measuring and understanding customer experience alone, does not necessarily result in an improved overall experience. A customer centric philosophy asks for a culture change. More often than not, the implementation of a customer experience program requires the reorganization of one or more departments. Employees should be given more responsibility to resolve customer issues, which then results in increased training requirements and different management structures. Reorganizations like this can take up a lot of time and investment, but what does it bring the organization? Are there any actual financial benefits to the implementation of a customer experience program?

More satisfied customers.

The extent to which your customers are satisfied is an indication of how they feel about the services or products that you deliver. Satisfied customers actually cost less than dissatisfied customers. They make less use of your service channels, don’t complain as often and are less likely to return a product. On top of that, satisfied customers will be more lenient towards your organization if things, for once, go wrong. A higher customer satisfaction will therefor result in a lower cost base.

More loyal customers.

More than one study has implied that there is a direct relation between a good customer experience and customer loyalty. Loyal customers bring more predictable income, are less inclined to move away to the competition, spend more money and cost less. As a general rule of thumb, it is said that in order to bring in a new customer, you need to spend five times more money than when keep an existing customer happy and loyal.

A satisfied customer can also be loyal, but that is not by definition the case: What is the difference between a loyal and a satisfied customer?

More ambassadors.

If you spend more time and money on satisfied, loyal customers, it is possible they become ambassadors of your brand. Ambassadors recommend your products and services to others and make potential customers enthusiastic for your brand. This results in more customers and thus higher turnover. More focus on these so called ‘promoters’ often generates more internal enthusiasm as well, as is described in the blog NPS: you have customers who are enthusiastic about you - talk to them. If your employees receive compliments from customers on a regular basis, they will automatically try to repeat the behavior or actions that caused these compliments. This way you improve the customer experience with hardly any investments.

A more positive online reputation

If you have more ambassadors because of a better experience, this might well result in a more positive online image. When your promoters leave positive comments on social media or review sites, your overall presence will increase, resulting in a better position in search results. More reviews will also make you more trustworthy in the eyes of other consumers. These days peer experiences tend to weigh much heavier in the decision making process than your own commercials and adverts. A continuous stream of positive reviews will almost certainly result in more customers.

Lower cost of failure.

If, as part of your customer experience program, you have a continuous feedback loop, you can react immediately to complaints. By quick ‘recovery actions’ it is often possible to bring unhappy customers back into the fold. On a more tactical level, the feedback allows you to fine-tune your processes and to facilitate customer centric behavior at those touchpoint where it matters most. Because you create an upward quality spiral, you should see your cost of failure go down at an equal rate.

How large the pay-back is on a good customer experience program will differ from company to company and from industry to industry. Research done by the Temkin Group shows that the returns are highest in hotels and (fast-food) restaurants. Supermarkets also show a high return on investment when it comes to the implementation of CX programs.

If you’re curious if your organization can benefit from the implementation of a customer experience program, feel free to download an E-book:

READ THE E-BOOK "MEASURE AND MANAGE CX"

 



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