Digital transformation has been a major focus in the market for the past few years and was further fast tracked as a result of changing consumer behaviors brought on by the global pandemic. Companies across every industry have been focusing on leveraging digital technologies to transform their operations, processes, and customer experiences.
Yet in today’s competitive marketplace, digital transformation is simply not enough to truly differentiate and propel your business. Make no mistake, reimagining every aspect of your business through the lens of digital is essential to fundamentally changing how your business operates. But, with the majority of digital transformation budgets focused on maintenance and not innovation, alone it won’t produce real, sustainable business change without an effective customer experience strategy behind it.
And you only need to look as far as what current studies are telling us about where companies are prioritizing their business efforts and their spending to see the proof. For example, a recent Metrigy study found that a majority of companies now rate customer satisfaction as one of their top three business priorities—over revenue generation, over product or service quality, and even over security.
What’s more, the correlation between CX investment and performance is clear. In a related study, Metrigy shows that companies “with higher-than-average business success metrics resulting from the use of CX technologies are spending nearly $2,700 per employee annually on CX technologies, compared to only $1,400 for those showing below-average success metrics.”
There’s a business reason for those investments.
Measuring the Impact of a Great Experience
The experience your target audience has with your brand, products, tools or services is what customers remember at the end of the day. How well the experience you deliver matches their expectations — from the very first interaction with your brand all the way through to the use of your product or service — is what will bring them back for more.
And now there is quantifiable data that shows just how much positive customer experiences prompt us to return again and again, and how these efforts by businesses pay off. In late 2020, Forrester revealed a model for calculating how CX improvements drive business growth through increased customer loyalty.
The full study looks at 12 different industries, from retail to automotive, to banking, and shows that the benefits of improving CX index scores by just one point can be tremendous. In its example, Forrester calculates that for mass market auto manufacturing, improving CX by one point could equal more than $1 billion in additional revenue “because improving CX increases the chance that customers will buy their next car from the same brand and take the car to the brand’s dealership for service needs.”
It turns out you really can put a price on customer loyalty.
The Benefits of Prioritizing Customer Experience
When countless alternative options are just a click away, brand and business interactions need to be more than acceptable — they need to be remarkable. The customer-driven era is here, and if your business isn’t on board, you could be missing out on valuable revenue.
Investing in customer experience improvement pays off. Companies that prioritize customer experience and continuous improvement grow their revenue nearly 2x times faster on average than those that do not.
Additional benefits in today’s cut-throat business arena include:
- Higher customer lifetime value: It costs companies as much as five to 25 times more to attract a new customer than to retain one. Companies that recognize and capitalize on the importance of customer experience grow their customer lifetime value by 2.3 times on average.
- Boost in retention: Nearly 66% of businesses that prioritize customer experience see increased retention.
- Expanded customer networks: Customer experiences that exceed expectations inspire loyal customers to become brand ambassadors. Referral Rock research found that 72% of customers will share the story of a positive experience with an average of six people.
- Higher return on stock performance: Customer experience leaders see an astonishing 307% return on their stock performance.
The business benefits are clear and those companies who have started the journey are already ahead.
CX Leaders Outperform the Broader Market
In today’s competitive online market, CX leaders continue to shine and deliver impressive outcomes. A recent customer experience ROI study published these eye-opening findings:
- Companies that prioritized customer experience generated a total return 108 points higher than the S&P 500 Index.
- Companies that did not invest in customer experience lagged far behind, posting a total return nearly 110 points lower than the broader market.
- In the end, CX leaders generated a total cumulative return nearly 3.4 times greater than companies that did not incorporate customer experience into their business strategies.
While customer experience has garnered a lot of attention in recent years as focus has shifted to personalized connected experiences, many companies still resist investing in real CX transformation. They often view any benefits associated with CX as soft or uncertain. The statistics above squarely prove otherwise, showing that shortsighted strategies don’t pay off in the end and that CX transformation is a critical component for driving growth.
Actions for the Customer-Driven Era Begins with CX Strategy
Economic fluctuations can impact every aspect of a business, from staffing needs to both long-term and working capital. Preparing your company for changes that may be on the horizon involves investing in a customer experience that can withstand fluctuations that are often outside of your control.
That process of aligning your organization around a customer-centric journey cannot start soon enough. On average, it takes around 22 months before a company can see measurable results from a transformation effort, according to Forbes.
Where do you begin?
Successful businesses know that a journey-based strategy is extremely important to their overall success. In fact, one customer journey survey found that more than ⅔ of high performers have dedicated a role or team specifically to journey management. That’s compared to just 31% of under performers.
A Customer Journey Team can be developed in-house or with a dedicated partner who serves as an extension of your team and helps you create your specific CX strategy and corresponding initiatives. Conducting team workshops can help kick start this process.
Establishing a well-considered CX Transformation strategy can help your organization in the following ways:
- Providing focus and clarity on current customer journeys and the opportunities for improvement and optimization allowing for quicker returns before tackling any altogether new journeys or experiences.
- Prioritizing efforts on the most impactful customer touch points in order to yield higher returns.
- Transforming your organization into one that is customer-centric to help break down silos for a more cohesive workplace and approach to building customer loyalty.
While a Digital Transformation is an important part of driving fundamental change and redefining how your company operates, top organizations expand beyond digital transformation and create a foundation of Customer Experience Transformation to drive business success.
Looking to learn more about a tailored approach to enhancing customer experience and your bottom line? Reach out >