There are significant pay-offs – as well as penalties – associated with Customer Experience quality in today’s marketplace, with widely loved brands with strong consumer feedback ratings enjoying an average shareholder return that was nearly 110 points higher than the market index, while widely loathed ones lagged by an almost identical margin.
The research from Watermark Consulting found that firms which lead in Customer Experience tend to outperform those that lag by a more than 3-to-1 margin in shareholder return.
The study analyzed shareholder returns for companies that inspire customer “raves versus rage”. The findings revealed something that Main Street and Wall Street can at least agree on: “A great customer experience helps build business value, while a poor one erodes it.”
“The performance chasm between companies that lead and lag in customer experience continues to widen,” explained Jon Picoult, founder of Watermark Consulting. “Over the long-term, beloved businesses are seeing returns that average 3.4 times greater than their less customer-centric competitors.”
The study vividly illustrates the vital role customer experience plays in business success. “Many companies excel in frustrating their customers, whether it’s from a complicated purchase process, unintelligible assembly instructions, difficult-to-use products, hidden fees, long lines, or just plain poor service,” Picoult noted. “Our study reveals that businesses eventually pay a price for subjecting consumers to such indignities.”
Conversely, companies that consistently impress customers reap rewards – through increased loyalty, greater wallet share, stronger word-of-mouth, and a more competitive cost structure. Picoult stressed that customer loyalty doesn’t arise by accident: “The businesses that do this well do it with great intentionality – relying on proven techniques to infuse their customer experience with simplicity, advocacy, emotional resonance, and other appealing qualities.”
Many organizations are reluctant to invest in a better customer experience, questioning its ROI. Picoult views this study as a much-needed wake-up call: “The payoff from a great customer experience is far from intangible. It’s material and real. And if companies should be struggling with any question, it’s not ‘What’s the case for customer experience?’ but rather, ‘What’s the cost if we do nothing?'”
