A High-Level View of the Benefits of Excellent Customer Experience

By Roy Barnes, Bob Kelleher

In 2011, Forrester Research built a model that predicted what would happen if a company improved its customer experience from below average to above average. Incredibly, this model revealed that in certain industries, a better customer experience could result in $1.3 billion in additional annual revenue. More than a billion dollars! Annually!

In 2013, Watermark Consulting took Forrester’s research a step further. It studied the total returns for two model stock portfolios composed of the top ten customer experience companies. Here’s what it found:

For the 6-year period from 2007–2012, the Customer Experience Leaders outperformed the broader market, generating a total return that was three times higher on average than the S&P 500 Index. Furthermore, while the (top ten) Customer Experience Leaders handily beat the S&P 500, the (bottom ten) Laggards trailed it by a wide margin.

According to Jon Picoult, Watermark’s founder, leaders in customer experience had better retention rates, greater wallet share, and all-around more cost-efficient processes and services. Imagine the poor results for those companies at the opposite end of the spectrum!

Along similar lines, the Temkin Group also performed a large-scale study pertaining to customer experience — in this case, proving the high correlation between customer experience and loyalty. The Temkin team found that customer experience leaders enjoy a 15 percent advantage over customer experience laggards in consumers’ willingness to purchase, their stickiness (that is, their reluctance to switch to a competitor), and their likelihood to recommend your offerings to others.