The Link between Customer Experience and Revenue
Delivering a great customer experience sounds like a great idea. But exactly how does customer experience affect the bottom line?
If you’ve ever asked that essential question, you’ll be happy to know the Harvard Business Review (HBR) has the answer.
In a recent HBR article, researchers revealed that customer experience does have a direct, quantifiable relationship to financial returns. The study reviewed customer feedback and financial metrics for two distinct business models: subscription-based and transactional businesses. Although their revenue generation practices differ, the link between customer and experience and revenue was clear.
The takeaway: happier customers remain loyal longer and spend more than their less happy counterparts.
Here are key facts for each business model:
Subscription-based businesses: These organizations depend on member renewals, along with cross-selling and up-selling to sustain revenue growth. The study revealed that nearly three-quarters of those who reported positive experiences were likely to renew their memberships. However, just 43% of dissatisfied members expected to renew. Ultimately, researchers projected that satisfied customers would remain loyal members longer—and spend more over the course of their membership term.
Transactional businesses: These types of businesses want customers to make return visits and spend more per visit. The HBR article noted that those who reported the best experiences spend 140% more than customers who said they had poor experiences.
So now that you know that improving customer experiences can grow revenues what should you do about it?
Securing customer feedback is one vital step. You need to have tools to help you collect, analyze, manage, and act on customer input.
You can apply these proven best practices to secure actionable customer insights:
Upgrade Your Customer Survey Practices: If you are still relying on periodic customer satisfaction surveys and management reviews, you are moving too slowly. You need to deliver post-interaction surveys to collect fresh insights from customers. Plus, you must assess surveys in real-time at multiple-levels—from individual service reps, to branches, regions, and all the way to company-wide.
Implement Real-Time Alerting: If a customer leaves a poor post-interaction survey response you need to know—right away. Real-time alerts can notify as soon as a customer registers poor feedback. You can assess the situation and follow-up—with high-touch outreach, a special offer, or other resolution tactic. That way you can quickly address the customer’s negative sentiment before he or she has a chance to post a scathing social media content or online review about your brand. Another potential benefit: consumer research has proven that brands who effectively resolve customer complaints can turn dissatisfied customers into brand advocates.
Focus on Continuous Performance Improvement: With real-time alerting, you can identify which team members deliver sub-par interactions—and promptly remedy the situation. You can deliver immediate coaching to individual reps or to teams, which may need additional guidance. Plus, you can identify top-performers and spread their experiential customer service know-how throughout your organization.
The key to emerging victorious in the era of the empowered customer is acting on customer insights. Collecting customer feedback and storing it away for future review is just not enough today. If you know what your customers are saying and thinking, you can use these insights to shape your strategies and offerings. This can bolster their satisfaction and spend—and make your brand a potent force in your industry.
Connie Harrington is a marketing and communications strategist with 10+ years of international experience across five continents. Her focus areas include: customer experience management, customer contact management, communications planning, content marketing, email marketing, and internal communications. She has been a featured speaker at...