Today, business leaders who want to grow revenue need to embrace customer experience (CX) fully in order to drive results. As the correlation between success in CX and revenue growth is proven, there really is no excuse to lag behind.
CX and business growth: what the research says
Forrester reports that overall CX leaders grow revenue faster (17 per cent) than their so-called "laggard" counterparts (3 per cent). They state that: “customers who have a better experience with a company say they’re less likely to stop doing business with the company and more likely to recommend it. Both of those factors should drive increased growth in customers and, in turn, increased growth of customer revenue."
Similarly, evidence from The Economist Intelligence Unit shows that companies that provide a superior CX have increased customer growth.
CX is also a driving force behind brand equity. In a Harvard Business Review survey, marketers stated that raising customer loyalty and better brand perception are the top two benefits of an improved (more personalised, efficient and consistent) CX.
Does the strength of the link vary between industries?
According to the Forrester report, better CX correlates with higher revenue growth in most industries. Their four-year study found a clear correlation between superior CX and superior revenue growth across the evaluated industries of cable, retail, airlines, wealth management, and healthcare.
However, as with every rule, there is an exception: wide differences in revenue growth aren't true for every industry. Health insurers, for example, had results that were a virtual draw. A superior CX didn’t seem to matter much when it came to revenue growth.
For CX to correlate to revenue growth, a certain degree of customer freedom is needed. Forrester’s study shows that customers must be free to switch providers within the industry, and the providers must offer differentiated CX.
Not only is CX linked to revenue growth but customers who had a good experience, but those customers also spend more. The Harvard Business Review study found that customers who had the best past experiences with companies spend 140 per cent more compared to those who had the poorest past experience. This was clear after controlling for other factors that drive repeat purchases in the transaction-based business (for example, how often the customer needs the type of goods and services that the company sells).
Learn more about customer experience strategies for businesses wanting to be customer-led and grow their revenue, get our CEO Guide here: