There’s no doubt at this point that customer experience has a real, tangible impact on a corporation’s bottom line. If you’ve ever been responsible for predicting its impact on a project, or are currently trying to identify initiatives with the highest revenue potential, you already appreciate the artistic side of this endeavor.
Now, let’s talk about the scientific side. Some initial questions might come to mind.
- Is there a way to directly tie customer experience improvements to actual revenue?
- How much additional revenue should I expect in my industry?
- Is there a point where user experience improvements create exponential revenue potential, or a point when it flatlines?
- What user experience factors have the highest impact on revenue?
Forrester’s recent “Drive Revenue With Great Customer Experience” report attempts to answer those exact questions and is a great conversation-starter for thinking about the strategies that businesses must adopt to maintain a competitive advantage, reduce costs and improve customer satisfaction, all while generating additional revenue to recoup investments. But these strategies will vary depending on the industry. Let’s look at a couple of examples.
If you are a TV or internet service provider, big box retailer, or auto and home insurance provider, the report findings suggest the relationship between customer experience and revenue is linear. In other words, improving the user’s experience is likely to be followed by an increase in revenue. Therefore, companies in these industries should expect a solid business benefit from improving experiences at all levels. With such impressive revenue potential currently being untapped, companies (particularly those with large numbers of customers) which decide to focus on experience will certainly reap the rewards. Telephone, mobile and web are likely to be the channels with the largest potential for service providers, as businesses will be able to add revenue, increase containment, and reduce churn.
On the other hand, if you are a wireless service provider, credit card company or airline, the Forrester report uncovered that the relationship between customer experience and revenue follows a diminishing pattern. That means that the revenue potential increases sharply when poor experiences are improved. However, there’s a point in the curve where benefits taper off, and any additional improvements in experience don’t have much impact. With that in mind, these types of companies should focus on improving the worst experiences (for example, about one out of every three wireless provider customers say they have very poor experiences), as even small revenue increases when multiplied by the millions of customers they have, represent a very high revenue potential.
Here are five simple steps to get started and common pitfalls to avoid:
- Identify the specific CX-revenue pattern of your company (as it might be different from the overall industry one).
- Remember to design your experiences around customer needs (rather than forcing them into your business process and giving them what you think they need).
- Identify the emotions you currently evoke in your customers, decide which ones you want to evoke in the future and make sure your design includes them (journey mapping can be very helpful for this).
- Define key metrics and constantly monitor them to evaluate the impact of your customer experience improvements.
- Consider all the non-revenue benefits of improving your experience (cost reductions, call deflections, competitive advantage over competition) to strengthen your business case.