It is no secret. Attracting and retaining the brand loyalty of consumers today is difficult. It is, perhaps, more difficult than it has ever been. Due to advances in digital technology, changes in consumer behaviors, and the extreme proliferation of product choice, brands and marketers are forced to find new customer engagement tactics.
For this very reason, a growing philosophy that highlights the importance of customer experience has continued to rise to prominence. A focus on customer experience requires building meaningful, relevant, and personalized relationships to create an authentic bond between brand and customers.
It is a solid concept. But ideas alone are not generally enough to persuade most companies to throw precious marketing funds toward unproven CX initiatives.
There is now, however, a growing body of research to support the value and long-term benefits that customer experience marketing really does offer.
The latest report from Temkin Group, a leading customer experience research and consulting firm, includes findings collected from 10,000 U.S. consumers and 293 companies across 20 industry verticals. The report titled, “ROI of Customer Experience 2015,” found a strong connection between an improved customer experience and greater customer loyalty.
Perhaps the most significant aspect of the report was that it actually demonstrated a quantifiable connection between customer experience and revenue. Specifically, Temkin Group found that, in just three years of making basic enhancements to customer experience initiatives, a $1 billion dollar company could earn $824 million in additional revenue.
What’s more, the report showed that brands across 20 other industries could also acquire significant revenue gains in this same time frame.
By making modest customer experience increases, hotel brands could typically expect to see an additional ROI of $824 million, rental car agencies could see an additional ROI of $755 million, and fast food chains could see an additional ROI of $737 million.
“Customer experience isn’t just a nice thing to provide; it’s a critical component for improving the bottom line,” said Bruce Temkin, Managing Partner of Temkin Group. “Creating a positive emotional connection with customers is the secret sauce for building loyalty.”
Other key findings of the report showed that the correlation coefficient between customer experience ratings and the likelihood to repurchase is very high.
A high emotional rating was also very important. Brands that we able to connect emotionally with consumers increased spending and trust among this group. These same consumers were also more willing to try new product sand forgive a company if it made a mistake.