Revenue needs to be driven with great customer experience
29 MARCH 2017 – 12:23 PM LYNETTE DICEY
According to a recent Forrester Report, titled “Drive Revenue with Great Customer Experience, 2017” many customer experience (CX) professions are challenged when it comes to finding a connection between CX and growing revenue.
The report analysed revenue potential from improving CX in 13 industries that Forrester covers in its CX Index and provides data that CX professionals can use to build a case for investing in CX. In every industry analysed Forrester saw positive revenue potential from improving CX.
According to the report, there are four industry-specific factors that shape CX revenue models.
The first is to find out what the barriers are to switching from one service provider to another. For example, if customers are charged for switching, they’re unlikely to move, despite poor customer experience.
The second factor is relationship value. Forrester’s model looks at the size and frequency of transactions when calculating revenue potential. For example, though purchasing a car is a larger financial transaction than staying at a hotel, it’s likely that most individuals will stay in a hotel more often than they buy a new car.
Third is recommendation effectiveness and shows that not every recommendation will result in new customers. Forrester says that in the case of a brand with leading market share there is a reduced chance for a recommendation to reach a person who is not already a customer.
The final factor is enrichment opportunities. CX may drive incremental purchases, but sometimes these purchases are unlikely to take place despite good CX, simply because the customers have no need for a certain product – such as a second medical aid scheme when they’re happy with the first.
The report also found that while revenue potential always increases in cases when CX quality improves, this relationship can vary according to the type of loyalty.
Three patterns have emerged in the relationship between revenue potential and CX quality.
The first is that revenue potential and CX quality move together. Each one-point improvement in the CX Index score results in the same revenue gain, regardless of whether the move is from bad to good or from good to excellent.
The next pattern that emerged is that increases in revenue potential from better CX get progressively smaller. This means that in certain industries, the benefit is greater when improving CX from poor or mediocre to good than they would be from good to excellent.
The third pattern demonstrates that revenue potential from better CX gets progressively bigger. In certain industries, such as banking, improving already good CX scores will create higher levels of revenue potential.
The report shows that revenue potential increases that are due to better CX varies between industries and that the relationship between CX and revenue potential is just one piece of the puzzle.
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