Last week at Forrester's CXNYC Manning offered some proof points for how customer loyalty and advocacy lead to revenue growth. He presented a snapshot of the findings from his report, "Customer Experience Drives Revenue Growth," where he and his co-author examined five industries to explore whether customer experience really matters to businesses. They found that superior CX drives superior revenue growth in industries where customers are free to switch business and competitors deliver a differentiated customer experience. In the report, they elected pairs of publicly traded companies that compete directly for the same types of customers, where one of the competitors was an industry leader in Forrester's Customer Experience Index (CX IndexTM) and the other lagged behind during the period of 2010 to 2015.
From their research, they determined that companies with customers who have many equally convenient and strongly differentiated choices -- like online retailers and investment firms -- see major revenue upside from superior CX. Companies with trapped customers, like health insurers, or little CX differentiation from direct competitors, like traditional retailers, will see less impact on their revenue growth. They also found that the customer experience leaders share these three common attributes:
- A CEO mandate for CX
- A competitive context
- An Innovation mindset
"There is a CX transformation imperative and it's called survival. But instead of taking the short view, you have to play the long game. We found a number of things it takes to win," Manning said.
AT&T, for example, showed superior revenue growth in Forrester's Customer Experience Index, with a revenue growth of more than 29 percent. Manning attributed the company's CX success partly to AT&T's CEO who gave a mandate to connect disparate services into a seamless offering. "They're not only doing this for their existing customers, they're doing this for new service so they can become a disruptor," Manning said. "[Randall] Stephenson authorized a billion dollars to make it happen."
Ingredion, a company that processes potatoes and other raw materials for the food and beverage industry, is a company that is surprisingly focused on CX and grounded in competitive context. Manning asked Ingredion's CEO how he expects to win in the gluten-free and organic marketplace and how CX will help its chances. He responded that he expects to receive a higher level of retention, margin enhancement, growth, and improvement in processes that will drive out costs. "My hope for all of you is to do this for your comlpany and CX transformation effort," Manning told the audience.
Finally, an innovation mindset is essential in this digital age. Vanguard, an investment management company, has been rolling out innovative digital products in an effort to disrupt its industry. Receiving financial advice is expensive, so Vanguard innovated. The company created vanguard personal advisor services. Now when customers talk to an advisor they get equipped with digital interaction tools. The result is a service that has a great price, low minimum, and collaboration tools. "It's so successful that so far it has attracted more than $37 billion in assets," Manning claimed.
Customer experience involves many factors. Selection, convenience, and a differentiated experience are other essential attributes that comprise a successful customer strategy. Following the examples of these three companies and adopting at least one of the three qualities should help to right the course for CX laggards as well as help clear a path for a bright future. Manning said, "It's not whether to transform customer experience, it's when and how."