Delivering great customer experiences seems like a worthy mantra for every brand. But how does customer experience translate to financial returns? A recent Harvard Business Review article addressed this essential question.
The study correlated customer feedback on experiences to actual per-customer revenue for two very different business models: transactional and subscription-based. Despite the dissimilar revenue generation practices, the findings were the same. Happier customers stay loyal and spend more money than their dissatisfied counterparts.
For transactional businesses, customers who had the best experiences spent 140% more than customers who had poor experiences. That means, more satisfied customers are more likely to make repeat purchases and spend more on each visit or transaction.
Similarly, customers of subscription-based businesses were far more likely to continue their engagement with a brand if they had positive experiences. Seventy-three percent of those who registered the highest customer experience scores were likely to renew their membership. By contrast, just 43% of those who recorded the poorest scores were likely to renew. Researchers extrapolated these findings to project that membership terms would be much longer for happier customers than for dissatisfied customers.
What does this mean for your business?
Knowing the big picture is important. A validated direct link between customer happiness and revenue can help you make the case for investing more in customer experience management.
One of the most important areas of focus is enhancing your customer survey program. Today, annual and post-interaction survey collection is widespread among brands. That is good news. However, merely collecting data and analyzing it on a periodic basis is not enough to make a difference.
Today you must accelerate your ability to respond to customer feedback. True service leaders can receive real-time alerts that let them keep an up-to-date pulse on customer sentiment. They have ability to identify when a customer left a poor or questionable survey response and which front-line representative delivered a sub par experience.
Moreover, they can view customer feedback results at every operational level: from branch to group to region—all the way to company-wide. That way, they can identify whether each sub par customer experience is an isolated incident or representative of a more widespread trend.
Armed with that information, brands can make smart, strategic decisions about how to handle a negative customer experience. They can take immediate steps to contact the customer and help alleviate his or her concerns. Also, companies can understand if individual front-line employees or teams need targeted training to deliver better, more brand-affirming customer experiences. Ultimately, companies that handle customer concerns effectively have an opportunity to turn customer dissatisfaction into loyalty.
Those angling to be leaders in their industries know customer experience excellence is a financial imperative, not just a feel-good concept that will fade away in a few years. Those brands who take a strategic approach—with the top-quality systems and processes—will emerge as the winners in today’s competitive, customer-driven environment.