Comparison is based on performance of equally weighted, annually readjusted stock portfolios of Customer Experience Leaders and Laggards relative to the S&P 500 Index.
Leaders outperformed the broader market, establishing a total return that was 35 points greater than the S&P 500 Index.
Laggards trailed far behind, posting an overall total return which was 45 points less than those of the broader market.
THE OPPORTUNITY
It's worth reiterating that this analysis reflects nearly a decade of performance results, spanning an entire economic cycle, from the pre-recession market peak in 2007 to the post-recession recovery that continues today.
It is, basically, an uplifting reminder of how a great customer experience is rewarded over the long term, by customers and investors alike.
The Leaders within this study are enjoying the many benefits accorded with a positive, memorable customer experience:
- Higher revenues – due to better retention, less price sensitivity, greater wallet share and positive person to person.
- Lower expenses – because of reduced acquisition costs, fewer complaints and also the lower service requirements of happy, loyal customers.
In contrast, the Laggards' performance has been overwhelmed by just the alternative – a poor experience that stokes customer frustration, increases attrition, generates negative word of mouth and drives up operating expenses.
The competitive opportunity implied by this study is compelling, because the reality today is that many causes of competitive differentiation can be fleeting. Product innovations could be mimicked, technology advances can be copied and price leadership is tough to attain let alone sustain.
But a great customer experience, and also the internal ecosystem supporting it, can deliver tremendous strategic and economic value to some business, in a way that's difficult for competitors to replicate.
LEARN In the LEADERS
How do these Customer Experience Leading firms create such positive, memorable impressions around the people they serve? It does not happen accidentally. They all embrace some basic tenets when shaping their brand experience – principles that may very likely be applied to your own organization:
- They aim for a lot more than customer satisfaction. Satisfied customers defect all the time. And customers who are merely satisfied are far less likely to drive business growth through referrals, repeat purchases and reduced price sensitivity. Maximizing the return on customer experience investments requires shaping interactions that cultivate loyalty, not only satisfaction.
- They nail the fundamentals, and then deliver pleasant surprises. To attain customer experience excellence, these businesses execute around the basics exceptionally well, minimizing common customer frustrations and annoyances. They then follow by using a focus on “nice to have” elements along with other pleasant surprises that further distinguish the knowledge.
- They realize that great experiences are intentional and emotional. The key companies leave nothing to chance. They do know the universe of touchpoints that compose their customer experience, plus they manage each of them very intentionally – choreographing the interaction so it not only addresses customers' rational expectations, but additionally stirs their emotions in a positive way.
- They shape customer impressions through cognitive science. The key companies manage both reality and the thought of their customer experience. They understand the way the human mind interprets experiences and forms memories, plus they use that knowledge of cognitive science to create better and loyalty-enhancing customer impressions.
- They recognize the link between the customer and employee experience. Happy, engaged employees help create happy, loyal customers (who, consequently, create more comfortable, engaged employees!). The need for this virtuous cycle can't be overstated, and it is why the most successful companies address both the customer and the employee sides of this equation.
