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Customer experience (CX) is a hot topic, and according to a recently published study by Forrester Research, there's good reason for that.
In analysing five pairs of publicly traded companies in which one of the companies in each pair had a significantly higher score than the other according to Forrester's Customer Experience Index, Forrester found that CX leaders exhibited significantly higher revenue growth between 2010 and 2015.
Forrester's methodology attempted to isolate revenue growth that was derived from customer behavior, and excluded revenue from events such as M&A activity and windfalls.
After taking these into account, Forrester found that every CX leader it compared to a CX laggard outperformed. Overall, CX leaders delivered compound annual revenue growth rates (CAGR) of 17% over the five year period compared to just 3% for CX laggards.
The difference between CX leaders and laggards was most pronounced in the cable and retail markets, where CX leaders outperformed their laggard competitors by well over 20%.
The difference was least pronounced in the airline industry, where CX laggards outperformed by just 5%, but in that highly consolidated market, 5% is still arguably a meaningful difference.
According to Forrester's Harley Manning, "Now, we realize that correlation is not causality – there could be something going on here other than CX driving the revenue growth."
"But we do know from our analysis of CX Index data that customers who have a better experience with a company say they’re less likely to stop doing business with the company and more likely to recommend it.
"Both of those factors should drive increased growth in customers and, in turn, increased growth of customer revenue."
Marketers ill-equipped to deliver on CX opportunity
Unfortunately for companies, even if there's good reason to believe that CX can indeed provide a real advantage, many don't have the skills to capitalize on the opportunity.
A study by Forbes Insights indicates that just 29% of executives believe their company's use of data analytics has significantly shifted their ability to deliver a superior customer experience. Another 35% believe their companies have seen shifts in many areas. In the next 20 years, 42% believe they'll see significant shifts.
That's still well under half, and echoes the findings of a study conducted by Forrester for Accenture Interactive. As summarized by eMarketer, that study revealed that "less than 50% of respondents said their organizations had all the necessary skills related to customer experience disciplines such as project management and data analytics."
The news isn't all bad. A majority of companies are improving their digital channels, but less than half are working to improve their traditional channels, use of analytics, and content creation capabilities.
Even fewer are creating dedicated CX groups, mobilising employees as advocates, or empowering sales agents, which is somewhat surprising given that the virtues of these have been discussed for years.
That will almost certainly change in the coming years, but the challenges in developing CX skills means that the companies that are focused on and excelling at CX will likely have advantages over companies that are lagging for the foreseeable future.
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