The story the graph tells is striking. While CX Leaders weren't immune in the recession, they clearly fared much better than others. Whereas the broader market and also the CX Laggards lost significant market value during the contraction, the CX Leaders actually notched positive returns. Exactly what does that inform us?
It certainly shows that the caliber of a company's customer experience does influence being able to weather a recession. CX Leaders are usually cushioned from the most severe impacts of a downturn, simply because they represent among the last places people reduce (or seek more affordable alternatives), as well as one of the first places that they return.
Of course, the protection a great customer experience affords during economic slowdowns isn't unqualified. There are lots of ways a business can sabotage its very own success, despite offering an attractive customer experience (see this story about the 2011 bankruptcy from the top-rated company in customer experience).
However, generally, companies offering a top-notch customer experience are far-better-positioned to withstand an economic downturn than those that don't. For business leaders, this means two things:
- First, when the economy is expanding or business is good, invest in the customer experience to further differentiate your company in the marketplace. This might sound obvious, but the truth is, when revenues are growing and also the future looks bright, many organizations de-prioritize CX investments, underneath the premise that, if clients are booming, customers must be happy and loyal.
- Second, when the economy sours or business slows, be especially judicious when it comes to expense cuts that may materially affect customer experience. Such actions might yield short-term gains, but they also introduce serious long-term risks. Furthermore, don't ignore possibilities to actually improve the customer experience while simultaneously lowering expenses (on that approach here).
Famed investor (and CEO of Berkshire Hathaway) Warren Buffett once commented that “You only discover who is swimming naked once the tide is out.” His point? Every business leader looks smart during economic booms; it's only when adversity strikes that you simply see who the real geniuses are.
With an economic slowdown looming, the tide will quickly venture out. What's going to it reveal about your business?
