It's human nature for people to want to do business with companies that provide a good shopping experience. Over time, a consistently positive experience will lead some to become loyal customers. Loyal customers are much more valuable to the business because they advocate for you to their friends, they become less price sensitive, they require less service and support, they are easier to up-sell, and they are less likely to shop the competition. If this is easy to understand, the more difficult challenge is to accurately measure the economic impact a loyal customer provides versus a satisfied one or even a dissatisfied customer.
There have been several studies that have measured the economic impact of the customer experience. The economic impact of providing an outstanding customer experience is dramatic. Peter Kriss, a senior research scientist at Medallia and the director of research for vision prize published in the Harvard Business Review 8/1/2014 some interesting statistics based on two companies with different revenue models. One was transactional and the other was subscription-based. The transaction-based business is interested in how soon a customer returns. Customers In a transaction-based business who have the best experiences spend 140% more compared to those who have the poorest past experience. A subscription based business is interested in how long a customer remains loyal. Their findings showed that a member having the poorest experience only had a 43% chance of being a member the following year, compared to a member who gives one of the top two experience scores has a 74% chance of being a member the following year. Future membership length is also predictable based on customer experience. The customer with the lowest score is likely to remain a member for a little over a year while the member who gives the highest score is likely to remain a member for another six years.
The argument I often hear for not investing in measuring the customer experience is that they are busy with other priorities right now and measuring their experience is expensive. What asset has more value to your business than the customer? Consistently delivering great experiences to your customers, reduces the cost to serve customers from what it was previously. Also, reducing dissatisfaction significantly reduces your cost. It reduces returns, discounts, service requirements, and negative advertising in the marketplace. Sprint focused on improving their customer experience and reported a reduction in customer care costs by as much as 33%.
If you are not measuring your customer experience today, it's time to connect the right data to quantify the impact of the difference between delivering a great experience and delivering the poor one. It will show everyone how much of an impact it can have on the organization and their jobs.