Customer Experience Featured Article

Forrester Metrics Show Improving the Customer Experience Yields Results

February 26, 2015

Most organizations understand that the customer is always right, the customer comes first and customer experience needs to be a business priority. And yet often this isn’t the case for a variety of reasons and excuses. Sometimes an organization needs cold hard data to qualify making changes of any sort, and this seems to be the case when it comes to customer service policies.

Forrester (News - Alert) Research is working on those customer experience numbers, and the results are hardly surprising. The company has found a strong correlation between metrics like improvements in customer experience with additional customer purchasing as well as a willingness to recommend companies or products to others. However, there is only a moderate correlation between an improved customer experience and reduced churn. Are these observations enough to make organizations place more value on improving the customer experience?

"Laggard firms have a huge potential reward for improving their CX, but even CX leaders can’t afford to coast,” Forrester recently disclosed. “They’ll need to move up the path to customer experience maturity if they want to maintain a competitive edge in an era of rapidly improving experiences."

The findings are related to a Forrester study that examines the correlation between additional purchasing, churn reduction and word-of-mouth recommendations across a variety of industries. The research focused on Australian businesses and found that, as an example, a wireless service provider with 82 million customers could see as much as $1.6 billion in revenue from additional purchases as a result of improved customer experience. That same company would also experience churn reduction and an increase in word-of-mouth recommendations as a result.

How to be competitive in the customer experience game is another issue altogether. More and more organizations are jumping on the customer service bandwagon and coming up with innovative ways to make their customers happy, which makes it exceedingly difficult to stand out in the crowd.

Social media offers one avenue for differentiation, with increased use by consumers as a way to recommend companies and products to family and friends. In fact, recommendations are on the rise in general and that can largely be attributed to social media and the prevalence of online “ratings and review” opportunities.

Forrester observed that the number of people who have recommended a company to at least one other person has increased in nearly every industry since 2013. Those consumers went on to make even more recommendations, creating a multiplier effect. That’s the type of feedback metric that most organizations want to know about, and makes a pretty solid case for why improved customer experience should be a top priority for any company that wants to remain competitive.

Edited by Maurice Nagle

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