Most of us intuitively recognize when we receive a great customer experience—or a poor one. But a recent Harvard Business Review (HBR) article tackled the question on every business leaders mind. How does the intangible feeling of customer experience affect revenue?
In the HBR-published study investigators analyzed data from transactional and subscription-based businesses. These two business models have different revenue-generation focuses. A transactional business relies on repeat customers, frequent returns, and amount spent per visit. By contrast, subscription-based businesses count on renewals, cross-selling and up-selling.
Despite their varied approaches to generating revenue, researchers found a direct link between past customer experience and future spend.
Clearly, delivering good customer experiences delivers measurable financial returns.
The Cost of Poor Customer Experience
In the past, some firms argued that customer experience management was an expensive proposition. After all, unhappy customers tend to require more support and return more goods then others. Untangling these difficult situations seems like a waste of energy.
However, dissatisfied customers can damage your ability to retain existing customers and attract new ones. According to the White House office of Consumer Affairs, a single unhappy customer tells an average of nine to 15 people about their poor experience. Also, 13% tell more than 20 people about their dissatisfaction.
Today, your customers are more likely to use the Internet to voice their concerns. According to analysis from Dimensional Research, 45% share negative experiences on social media and 35% post negative online reviews. Moreover, 86% of respondents in the same study said negative online feedback influenced their buying decisions.
The bottom line: a single unhappy customer can drive away tens to hundreds of prospective customers. Multiple that one dissatisfied customer by one hundred or one thousand. Think of all the potential lost revenue.
Do You Know Who Your Unhappy Customers Are?
One way to discern who has had poor customer experiences is to see which customers post negative thoughts on social media or leave bad reviews online. However, by then, the damage is done and salvaging the relationship may be difficult. And others’ impressions have likely been tainted by this negative sentiment.
There is a better way.
Implementing a post-interaction survey program is an imperative for today’s businesses. You can capture immediate feedback to learn if your front-line representative interacted effectively with your customer. If your customer registers a negative feedback score, you can take immediate corrective action. This can include reaching out to the affected customer and providing corrective training or feedback to the front-line employee who delivered the poor experience.
The key is moving from large-scale customer satisfaction trend analysis to real-time alerting of negative survey responses.
Moving from Data Collection to Action
A lot of companies are collecting customer survey data—including free-form text comments. However, many have work to do to move from collection to action.
According to Voice of the Customer (VoC) maturity analysis from the Temkin Group, 41% of surveyed companies merely collect data and 39% perform some analysis. Only 11% have achieved the highest two levels of VoC maturity—and those companies do more with their customer insights, have stronger executive support for customer experience programs, and achieve better business performance overall.
Those aiming to deliver best-in-class customer experiences need to focus on robust, real-time survey analytics.
Putting it All Together
Dated thinking that limited spending on customer experience management is shifting. Now, business leaders know they need systems and processes to help them deliver the levels of service excellence customers expect.
Those that make smart moves sooner—by taking prompt, strategic action to address customer feedback—have an unprecedented opportunity to get ahead of the competition. The rewards will be tangible and financial.
It’s a proven fact: Happier customers = loyal customers = more revenue.
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