In this guest post, Mike Kourey (pictured below), the CFO of CX software firm Medallia, says customer experience is no longer just brand loyalty, it’s new frontier of innovation, differentiation, and opportunity for market leadership…
Customer engagement is no longer solely the realm of those on the front lines of your business. As avenues for customer interaction have grown, so too have opportunities for customers to share their experiences with a company and provide feedback.
Customer engagement is becoming the cornerstone of brand reputation, and savvy companies are looking for ways to transform their businesses by becoming obsessed with the customer. To ensure that your customer experience program excels and becomes a key priority for all levels of your company, start at the top. In fact, for more and more companies, customer experience is now a critical issue in the boardroom.
Companies win or lose based on customer experience
Curating your customer experience has grown to encompass much more than simply ensuring positive interactions with customers. With social networking enabling the democratisation of data, the consumer now drives brand reputation. As a result, brand image is now a community effort, and the direct result of the customers’ experience. In a world where the most customer-obsessed companies win, management teams and boards everywhere are realising that delighted customers can fuel growth and discouraged customers can drive market share loss and shrinking financial returns.
According to leading market research firm Gartner, 89 per cent of companies in the US reported that they expect to compete primarily based on customer experience by 2016, a number up significantly from 36 per cent just four years earlier. What these findings reveal is that companies are recognising customer experience as the new battlefield for competition. The proof of this is a marked shift in emphasis and spending; Gartner’s research even included predictions that 50 per cent of consumer product investments will be redirected to customer experience innovations.
Boards are demanding both financial and customer experience metrics
Whether it’s measured by NPS (net promoter score), a 5-scale rating, or through data quantification of complex multilingual text analytics, the requirement for customer experience data trends has become mission critical.
Forward-looking businesses are including customer feedback and operational data as some of the most important information in driving a company’s overall strategy. In addition to critical financial data, boards are beginning to ask about key customer experience metrics and trends as well. They understand the prognostic value of customer data.
Leaders in customer experience are leaders in revenue growth
One reason that customer experience data is so important is that success in customer experience leads to success in revenue. In fact, according to a study by Forrester, from 2011 to 2015 customer experience leaders outgrew revenue by a whopping 5:1 over those who fell behind in customer experience. Driven by faster growth, higher revenue, and stronger brand reputation, customer experience leaders typically have equity values that far outpace their competitors and other comparables.
Most notably, from a company management perspective, excellent customer experiences produce lower churn and increase up-sell and cross-sell opportunities. For example, a delighted credit card customer is far more likely to keep that card and, in fact, is more amenable to new banking services from the bank, including loans, money management, and other services. With the customer wired into the enterprise, CFOs and their boards can lead the charge in making these improvements to customer experience that show returns in revenue growth.