Report: ROI of Customer Experience, 2014

1409_RoIofCX_COVERWe just published a Temkin Group report, ROI of Customer Experience, 2014. The research shows the connection between customer experience, loyalty, and revenue growth for 19 industries. Here’s the executive summary:

To understand how customer experience corresponds to loyalty, we examined feedback from 10,000 U.S. consumers describing their experiences with and their loyalty to 268 companies. 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. We compared the consumers who gave companies a very good customer experience rating to those who gave companies a very bad customer experience rating, and we found that the percentage of customers who plan on repurchasing products is 18 percentage-points higher at organizations with excellent CX ratings. Additionally, the Net Promoter Scores of companies with very good CX ratings average 22 points higher than the scores of companies with poor CX. We built a model to evaluate how customer experience impacts a $1 billion business’s revenue over three years in each of the 19 industries, and this model shows that CX has the largest impact on hotels ($461 million), fast food chains ($437 million), and retailers ($428 million). 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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The report has 29 charts, which includes specific details on the connection between customer experience, loyalty, and increased revenues for each of the 19 industries in the study: airlines, appliance makers, auto dealers, banks, car rental agencies, computer makers, credit card issuers, fast food chains, grocery chains, health plans, hotel chains, insurance carriers, Internet service providers, investment firms, parcel delivery services, retailers, software firms, TV service providers, and wireless carriers.

Here’s the first figure in the report:

CXLoyaltyCorrelation

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The bottom line: Customer experience is highly correlated with loyalty.

Report: The Economics of Net Promoter

EconomicsOfNPS_COVER

We just published a Temkin Group report, The Economics of Net Promoter, which examines the link between NPS and loyalty across 19 industries. Here’s the executive summary:

Net Promoter Score (NPS) is a popular metric, but how does it relate to loyalty? We analyzed responses from thousands of consumers and examined the connection between NPS and three areas of loyalty: likelihood to repurchase, likelihood to forgive, and the actual number of times they recommend a company. Compared to detractors, promoters are almost six times as likely to forgive, are more than five times as likely to repurchase, and are more than twice as likely as detractors to actually recommend a company. Examining the data, we also found that consumers who gave a score between 0 and 4 have particularly low levels of loyalty. The analysis examines 19 industries: airlines, appliance makers, auto dealers, banks, car rental agencies, computer makers, credit card issuers, fast food chains, grocery chains, health plans, hotel chains, insurance carriers, Internet service providers, investment firms, parcel delivery services, retailers, software firms, TV service providers, and wireless carriers. Promoters who are likely to repurchase range from 87% for grocery chains to 73% for TV service providers, those who are likely to forgive range from 72% for rental car agencies to 59% for TV service providers, and those who actually recommended a company range from 80% for retailers to 47% for parcel delivery services.

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Here’s the first figure from the report. It has a total of 43 figures that include specific graphics for each of the 19 industries in the study.

NPSeconomics

Here’s an excerpt from the first section that examines the data across all industries:

To understand how NPS relates to customer loyalty, we examined NPS scores for companies across 19 industries based on feedback from 10,000 U.S. consumers. The analysis covers more than 95,000 pieces of feedback from consumers about those companies. Examining three areas of loyalty across industries, looking at promoters versus detractors, we found that:

  • Promoters are almost six times as likely to forgive. We asked consumers about their likelihood to forgive a company if it delivered a bad experience and found that 64% of promoters are likely to forgive compared with 11% of detractors.
  • Promoters are more than five times as likely to repurchase. We asked consumers about their likelihood to make additional purchases from a company and found that 81% of promoters are likely to repurchase compared with 16% of detractors.
  • Promoters are more than twice as likely as detractors to actually recommend. In a separate study of 5,000 U.S. consumers, we asked consumers how many times they actually recommended each company. It turns out that 64% of promoters have recommended the company compared with 24% of detractors.

We also examined the level of loyalty across each response on the NPS scale between 0 and 10. This analysis shows that:

  • Super detractors are much less loyal. Forgiveness and repurchase loyalty stay at a consistent low level between 0 and 4 on the scale. Actual recommendations begin to increase after 5.
  • Midpoint attracts low recommenders. When we examine the actual quantity of recommendations across the NPS scale it turns out that there’s significant drop in recommendations at the midpoint of the scale, when 5 is selected.
  • Text anchors attract responses. We analyzed the volume of responses across the 11 point scale. Consumers appear to select the three responses with text anchors at a disproportionately high rate: “0,” “5,” and “10.”

Download report for $295 (includes Excel dataset)BuyDownload3The Excel file provides all of the data from the 43 figures. Note: See our report, Net Promoter Score Benchmark Study, 2012 and the post 9 Recommendations For Net Promoter Score along with all of my other resources for NPS programs.

The bottom line: Promoters are more loyal than detractors.

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

Report: The ROI of Customer Experience

We just published a new Temkin Group report, The ROI of Customer Experience. The report provides groundbreaking analysis of 10,000 US consumers and 3,000 UK consumers, identifying the financial benefit of improving customer experience. Here is the executive summary:

An analysis of US and UK consumers shows that customer experience is highly correlated to loyalty. Customer experience leaders have more than a 16 percentage point advantage over customer experience laggards in consumers’ willingness to buy more, their reluctance to switch business away, and their likelihood to recommend. A modest increase in customer experience can result in a gain over three years of up to $382 million for US companies and up to £263 million for UK firms, depending on the industry. While the case for loyalty is compelling, companies should determine the business impact that customer experience has on their specific business by following our five step process. To achieve these results, however, companies must create customer experience metrics programs that embed these measurments into how they run their business.

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I put together this infographic which captures some of the high-level findings from the report:

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The bottom line: Customer experience correlates to loyalty.