For years I have talked to companies about the value of improving how they manage customer service. Back in the days when contact centres were just considered to be necessary cost, it became clear that agents could up-sell and cross-sell during service interactions. Suddenly the contact centre became more strategic and could generate revenue.
Now that customer interactions take place across many more channels and at many more places in the customer journey, there are far more opportunities to have a direct influence on revenue. I have often argued that customer service and marketing teams need to merge because the management of the customer relationship should be the number one priority of any executive.
But it’s not just me saying this – certainly not today at least. The analyst firm Ovum identified back in 2014 that managing the customer experience has become the single most important priority for executives today. That includes other more traditional priorities, such as reducing business costs.
But the really important drive has been to find hard evidence to support these views. We know that there is a positive customer reaction if their experience is better, but how much is that actually worth? How much can you afford to spend improving the customer experience?
New research from Forrester answers these questions and the headline is that if you improve the customer experience then your revenue will go up. The Forrester research analysed pairs of companies in the same industry – one of them scoring high on the Forrester Customer Experience Index and one with a much lower score. Then they gathered the financial data for these companies.
Across all industries the results are stark. The companies that focus on improving their customer experience enjoyed a Compounded Average Growth Rate (CAGR) of 17%. The ones with less of a CX focus grew 3%. In retail there was a 26% difference and cable companies saw a 24% difference.
Forrester admit that although there is a correlation between companies that are growing their revenue faster and investing in CX, they cannot really prove that it is the CX investment causing the high performance. However, explaining this Forrester analyst Harley Manning says: “Customers who have a better experience with a company say they’re less likely to stop doing business with the company and more likely to recommend it. Both of those factors should drive increased growth in customers and, in turn, increased growth of customer revenue.”
I think this Forrester research is an important contribution to the CX debate. Being able to use data to draw a line that shows how investment in CX creates improved revenue is powerful for any executive planning to launch an improvement in their CX – these are investments that can pay for themselves by growing the business.
Photo by Ken Teegardin licensed under Creative Commons.