Business Brains

Yes, there is a revenue impact tied to customer experience

Posting in Healthcare

Updated metrics from Forrester Research underscore the correlation between positive customer experience and its affect on incremental sales and customer churn.

If your company still has doubts about how its contact center, customer service forums and other methods of customer touch affect the bottom line, your team should take a moment to consider some updated performance indicators from Forrester Research.

The company's ongoing research on customer experience and its correlation with loyalty and revenue suggests again that there is a demonstrable correlation between a person's customer experience with a given company and his or her willingness to spend more money with that company. Or frankly, his or her willingness to keep spending money with that company.

How much impact this year?

Obviously, it varies by industry, but two industries in particular should be paying closer attention to this.

Forrester found that the impact of customer experience on hotels and wireless service carriers was more than $1 billion for each industry. For hotels, the potential impact is $1.36 billion, while for carriers it is $1.3 billion.

For hotels, approximately $825 million of that extra revenue came in the form of churn reduction (people not going elsewhere); for wireless carriers $788 million came in potential new revenue.

The data is part of Forrester's report, "The Business Impact of Customer Experience, 2012." The statistics in the latest report are part of Forrester's North American Technographics Customer Experience Online Survey from the fourth quarter of 2011. The main finding, as it has been for the past several years, is that companies with higher customer experience scores tend to demonstrate and drive higher customer loyalty. They are also more likely to win recommendations from those customers, which translates into incremental revenue, the report suggested.

The lowest potential revenue impact came for retailers. That doesn't necessarily mean that customers don't care about their experience, it just suggests that consumers weight other factors either higher or equally with how they are treated.

Another number that intrigued me was for the one for healthcare providers, until I remembered that most people are pretty much held hostage in their plans. They really can't switch even if they do have a bad experience. At least for a year. Interestingly, good world of mouth does have a positive impact -- to the tune of $66 million per year in the companies that Forrester studied.

If you are Forrester client, your company can apparently download an interactive spreadsheet that will let you run some metrics for your own company.

This discussion is particularly relevant as more businesses study how to use social networks and communities to supplement, amplify or (in some cases) replace their customer support and outreach. As companies struggle to justify those investments, these metrics may be one place to look.

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Heather Clancy

Section Editor

Heather Clancy has written for United Press International, ZDNet, Entrepreneur, Fortune Small Business, the International Herald Tribune and the New York Times. She holds a degree from McGill University. She is based in New Jersey. Follow her on Twitter. Disclosure