Category: ROI of Customer Experience

The Ultimate Customer Experience Infographic, 2016

The (Large) Connection Between Emotion And Loyalty

In case you missed it, we labeled 2016 as The Year of Emotion in our annual listing of CX trends. To help organizations better understand customer emotions, we created the Intensify Emotion Movement. Why did we put so much of a focus on emotion? Because it drives loyalty.

We tapped into our recent consumer benchmark study to examine the connection between how consumers rate the emotional component of their interactions and their loyalty across 20 industries. [Note: The emotional data is from the emotion component of the Temkin Experience Ratings]

In the graphic below, we examined the average across all 20 industries. Compared with consumers who had negative emotional experience, consumers who had positive emotional experiences are:

  • 15.1 times more likely to recommend the company
  • 8.4 times more likely to trust the company
  • 7.8 times more likely to try new products and services
  • 7.1 times more likely to purchase more from company
  • 6.6 times more likely to forgive company after a mistake

1608_EmotionAndLoyalty

If you’d like to see this data for each of the 20 industries, you can purchase and download the dataset for $195. To see what you’ll be purchasing, download this sample spreadsheet.

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The bottom line: Want loyal customers? Provide positive emotional experiences.

Report: Economics of Net Promoter Score, 2016

1606_EconomicsofNetPromoter_COVERWe just published a Temkin Group report, Economics of Net Promoter, 2016. Here’s the executive summary:

Net Promoter® Score (NPS®) is a popular metric that companies use to analyze their customer experience efforts, but how does it actually relate to loyalty? We asked thousands of consumers to give an NPS to 294 companies across 20 industries, and then we examined the connection between NPS and four key areas of loyalty. We found that compared to detractors, promoters are more than five times as likely to repurchase from companies, more than seven times as likely to forgive companies if they make a mistake, and almost nine times as likely to try new offerings from companies. Our research also shows that promoters recommend a company to an average of 3.5 people. The following analysis provides detailed loyalty data of promoters, passives, and detractors across 20 industries: airlines, auto dealers, banks, computer and tablet makers, credit card issuers, fast food chains, health plans, hotel chains, insurance carriers, Internet service providers, investment firms, major appliance makers, parcel delivery services, rental car agencies, retailers, software firms, supermarkets, TV service providers, utilities, and wireless carriers. Ultimately, if a company wants to benefit from using NPS as a key metric, it must focus on improving customer experience, not obsessing over the metric itself.

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Here’s one of the 12 graphics in the report, which shows the average loyalty differences for promoters, passives, and detractors across all industries:NPSEconomicsOverview

The report provides this loyalty data for promoters, passives, and detractors for 20 industries: airlines, auto dealers, banks, computer and tablet makers, credit card issuers, fast food chains, health plans, hotel chains, insurance carriers, Internet service providers, investment firms, major appliance makers, parcel delivery services, rental car agencies, retailers, software firms, supermarket chains, TV service providers, utilities, and wireless carriers.

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See our VoC/NPS resource page, which includes great resources for creating a successful NPS program. You mat also want to see our latest NPS Benchmark Report with NPS data on 291 companies.

The bottom line: Promoters are much more valuable than detractors.

Net Promoter Score, Net Promoter, and NPS are registered trademarks of Bain & Company, Satmetrix Systems, and Fred Reichheld.

Customer Experience: The Path From Fluff to Tough (Infographic)

ROI of Customer Experience (Infographic)

Why CX Does Not Always Drive Loyalty

We recently published the Temkin Loyalty Index (TLi), which examines five areas of loyalty for 293 companies. So I looked at how that data related to the Temkin Experience Ratings (TxR) for those same companies. To normalize the data across industries, we compared company scores to the averages for their industries. As you can see below, there’s a very high correlation between the two.

1512_LoyaltyIndexTxR2

For most companies, their CX is fairly predictive of their loyalty. But this connection is not equally strong for all companies. We took a look at the outliers, the companies that have loyalty levels that are much stronger or much weaker than their CX would suggest.

1512_CXLoyaltyOutliers

Why is it that some companies have a much higher or lower loyalty than their CX would suggest? Here are some reasons:

  • Brand halo: Sometimes consumers’ view of a brand is stronger or weaker than would be supported by their experiences with the company. For some reason, there are emotional drivers that make consumers love or hate the company.
  • Loyalty latency. When consumers have an experience that is not reflective of their expectations for a company, they often treat it as an exception. So it can take time for consumers to recognize that a company’s CX has improved or declined, and to adjust their loyalty accordingly.
  • Switching costs. The harder it is for a consumer to move from one provider to another, the less effect bad CX will have on loyalty.
  • Perceived alternatives. The fewer direct replacements that a consumer thinks he/she has for a company’s product or service, the less effect bad CX will have on loyalty.

The bottom line: CX has a strong, but not complete effect on loyalty

Report: ROI of Customer Experience, 2015

1510_RoIofCX_COVERWe published a Temkin Group report, ROI of Customer Experience, 2015. This research shows that CX is highly correlated to loyalty across 20 industries. Here’s the executive summary:

To understand the connection between customer experience (CX) and loyalty, we examined feedback from 10,000 U.S. consumers that describes both their experiences with and their loyalty to 293 companies across 20 industries. Our analysis shows a strong correlation between customer experience and loyalty factors such as repurchasing, trying new offerings, forgiving mistakes, and recommending the company to friends and colleagues. While all three components of customer experience—success, effort, and emotion—have a strong effect on loyalty, our research shows that emotion is the most important element. When we compared the consumers who gave companies a very good customer experience rating to those who gave companies a very bad customer experience rating, we found that at companies with high customer experience ratings, the percentage of customers who plan on purchasing more is 18 points higher, the percentage who will forgive the company if it makes a mistakes is 12 points higher, the percentage who will try a new offering is 10 points higher, and the percentage who trust the company is 19 points higher. Additionally, companies with very good CX ratings have an average Net Promoter® Score that is 24 points higher than the scores of companies with poor CX. We built a model to evaluate how, over a three-year period, customer experience impacts the revenue of a $1 billion business within each of the 20 industries. This model shows that CX has the largest impact on the revenue of hotels ($823 million) and rental cars ($755 million) over three years. This report also includes a five-step approach for building a model that estimates the value of CX for your organization.

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This is the first figure in the report, and it shows the high correlation between Temkin Experience Ratings (customer experience) and purchase intentions for 293 companies across 20 industries:
1510_CXvsRepurchase

Here’s an excerpt from the graphic showing the three year impact on revenues for a $1 billion company in 20 different industries:

1510_ROIRevenues

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To see the customer experience levels of all 293 companies, download to the free 2015 Temkin Experience Ratings report.

P.S. Net Promoter Score, Net Promoter, and NPS are registered trademarks of Bain & Company, Satmetrix Systems, and Fred Reichheld.