With the battle for customer attention and loyalty continue to rise, the ability to deliver innovative and valuable customer experiences becomes a crucial differentiator for success. A study by Forrester, commissioned by Capgemini Invent, found that although 86%1 of customers are willing to pay more for brands and services that understand them and provide personalized experiences, but many organizations have not made the right investments to deliver valuable experiences to their customers.
The primary disconnect is that customer engagement transformation is still seen as an aspiration. It’s difficult to measure both the impact of customer experiences against the brand promise, and the impact of these experiences on increased revenue. All of this prevents CXOs from approving the required investments. In this Forrester study, about 73% of CX managers said they found it extremely difficult to get a buy-in and support from top management.
So, what can motivate top management to realize the importance and get on the CX bandwagon?
Cost of bad CX – a catalyst for change
Forrester’s Customer Experience Index (CX Index™) methodology measures how well a brand’s customer experience strengthens customer loyalty. According to findings from this methodology, CX leaders are able to grow revenue faster than CX stragglers, drive higher brand preference, and charge more for their products. In addition, a drop of Forrester’s CX IndexTM score of just one point, as a result of bad CX, could result in millions of dollars of potential annual revenue loss as seen in this table, categorized by industry:
Nothing shakes top management up more than the possibility of a downward curve on sales and revenue charts. Research proves that stakeholders will sit up and take notice when the cost of unhappy customers is higher than the cost of keeping them engaged.3 Damage to brand image/perception, not meeting customer expectations, and reduced lifetime loyalty collectively contribute to falling sales and reduced share of wallet.
CX leaders using the cost of delivering bad CX (i.e., fear of loss) metrics will capture the attention of executives. Then, by showcasing the benefits (e.g., exceeding KPIs) of improving CX, they will get more executive support.
CXOs are typically willing to test the waters, invest a small part of their budget, and wait to see the ROI before investing more. However, this partial buy-in by top management doesn’t support CX transformation. Though seemingly logical, partial buy-in doesn’t maximize value.
To deliver excellent and consistent customer experiences, organizations need to assess and invest in:
- Clear research and strategy – to gain customer and employee insights and devise, deliver, and monitor experiences to the numerous customer touchpoints
- Customer-obsessed organizational and operational changes – to lead organizational restructuring in order to deliver great CX
- Integrated technology and data – to provide a 360-degree view of the customer and deliver consistent experiences across physical, digital, and mobile channels.
Capgemini Invent is a marketing and technology partner to industry-leading organizations, helping assess CX shortfalls, and then strategize, devise, and transform customer engagement. Connect with Suzanne Lentz to learn more.
(In the next post, Suzanne will discuss how to get full executive support to measure your CX.)
1All statistics are derived from the Capgemini Invent–Forrester thought-leadership paper, The Cost of Bad CX.
2 Forrester report “Improving CX Through Business Discipline Drives Growth.”
3Loss aversion refers to people’s tendency to prefer avoiding losses over acquiring equivalent gains. Loss aversion was first demonstrated by Daniel Kahneman and Amos Tversky. Source: D. Kahneman and A. Tversky, “Choices, Values, and Frames,” American Psychologist. 39 (4): 341–350. doi:10.1037/0003-066x.39.4.341, 1984.