Customer engagement is no longer solely the realm of those on the front lines of your business. As avenues for customer interaction have grown, so too have opportunities for customers to share their experiences with a company and provide feedback.
Customer engagement is becoming the cornerstone of brand reputation, and savvy companies are looking for ways to transform their businesses by becoming obsessed with the customer. To ensure that your customer experience program excels and becomes a key priority for all levels of your company, start at the top. In fact, for more and more companies, customer experience is now a critical issue in the boardroom.
Companies win or lose based on customer experience
Curating your customer experience has grown to encompass much more than simply ensuring positive interactions with customers. With social networking enabling the democratisation of data, the consumer now drives brand reputation. As a result, brand image is now a community effort, and the direct result of the customers' experience. In a world where the most customer-obsessed companies win, management teams and boards everywhere are realizing that delighted customers can fuel growth and discouraged customers can drive market share loss and shrinking financial returns.
According to Gartner*, a leading market research firm, 89% of companies reported that they expect to compete primarily based on customer experience by 2016, a number up significantly from 36% just four years earlier. What these findings reveal is that companies are recognizing customer experience as the new battlefield for competition. The proof of this is a marked shift in emphasis and spending; Gartner’s research even included predictions that 50% of consumer product investments will be redirected to customer experience innovations.
Boards are demanding both financial and customer experience metrics
For the CFO, board, regulators, and investors, transparent reporting under IFRS or GAAP standards is required. The financial statements, accompanying disclosures, and risk factors provide the foundation of understanding the state of the business. However, this data alone does not necessarily capture the promise of the business, its trajectory, or the affinity of its customers, prospects, and partners.
Whether it’s measured by NPS® (net promoter score), a 5-scale rating, or through data quantification of complex multilingual text analytics, the requirement for customer experience data trends has become mission critical.
Forward-looking businesses are including customer feedback and operational data as some of the most important information in driving a company’s overall strategy. In addition to critical financial data, boards are beginning to ask about key customer experience metrics and trends as well. They understand the prognostic value of customer data.
Leaders in customer experience are leaders in revenue growth
One reason that customer experience data is so important is that success in customer experience leads to success in revenue. In fact, according to a study performed by leading market research firm Forrester**, from 2011 to 2015 customer experience leaders outgrew revenue by a whopping 5:1 over those who fell behind in customer experience. Driven by faster growth, higher revenue, and stronger brand reputation, customer experience leaders typically have equity values that far outpace their competitors and other comparables.
Most notably, from a company management perspective, excellent customer experiences produce lower churn and increase up-sell and cross-sell opportunities. For example, a delighted credit card customer is far more likely to keep that card and, in fact, is more amenable to new banking services from the bank, including loans, money management, and other services. With the customer wired into the enterprise, CFOs and their boards can lead the charge in making these improvements to customer experience that show returns in revenue growth.
Customer experience is more than just a five-star rating. It is the new frontier of innovation, differentiation, and opportunity for market leadership. Producing a font of indispensable and actionable insights, operationalized customer data can transform a company into an industry leader. CFOs are increasingly looked to as the CEO’s partner to drive this integration of the customer into the business. With boards also becoming increasingly focused on customer experience metrics, management teams are adopting a customer experience management platform to inform their strategy, transform their business, and produce industry-leading results.
Note: Medallia®, the Medallia logo, and the names and marks associated with Medallia’s products are trademarks of Medallia. Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc. All other trademarks are the property of their respective owners.
Mike Kourey is Chief Financial Officer at Medallia