Research Shows Significant Correlation Between Customer Experience, Customer Loyalty and Increased Revenue Across 20 Industries
WABAN, Mass., Oct. 20, 2015 /PRNewswire/ — A new research report published by Temkin Group, ROI of Customer Experience, 2015, finds a strong connection between improved customer experience and increased consumer loyalty—leading to increased company revenue. The research is based on a study of 10,000 U.S. consumers and 293 companies across 20 industries.
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The research shows that a modest increase in customer experience at a typical $1 billion company can earn up to $824 million in additional revenues over three years.
The research examined the connection between loyalty and all three elements of customer experience —success, effort, and emotion—and found that emotion has the largest impact.
According to Bruce Temkin, Managing Partner of Temkin Group, "Customer experience isn't just a nice thing to provide; it's a critical component for improving the bottom line. Creating a positive emotional connection with customers is the secret sauce for building loyalty."
Temkin Group found that a modest increase in customer experience can generate between $472 million and $824 million in additional revenues over three years for every $1 billion in annual revenue. Here are the additional revenues generated for a typical company in each of the 20 industries in the study:
- Hotels: $824M
- Rental car agencies: $755M
- Airlines: $755M
- Fast food chains: $737M
- Insurance carriers: $691M
- Investment firms: $684M
- Supermarkets: $657M
- TV service providers: $650M
- Appliances: $618M
- Software companies: $618M
- Credit card issuers: $613M
- Retailers:$609M
- Auto dealers: $608M
- Health plans: $587M
- Parcel delivery services:$584M
- Banks: $580M
- Computer makers: $544M
- Wireless carriers: $543M
- Internet service providers: $539M
- Utilities: $472M
Additional findings in the report include:
- The Pearson correlation coefficient between customer experience ratings and the likelihood to repurchase is very high (0.84).
- Customers who give companies a high emotion rating are significantly more likely to purchase more, forgive the company if it makes a mistake, try new offerings, and trust the company.
- Net Promoter® Scores of from customers who had very good customer experience average 24 points higher than the scores of consumers who received poor customer experience.
- With a modest improvement in customer experience, insurers retain the most business from existing customers ($392 million), hotels generate the most new business ($324 million), and fast food chains generate the most from word of mouth ($158 million).
This research report can be accessed from the blog, Customer Experience Matters, at ExperienceMatters.wordpress.com or at the Temkin Group's website, www.TemkinGroup.com.
For more information about Temkin Group, visit www.TemkinGroup.com.
About Temkin Group: Temkin Group is widely recognized as a leading customer experience research and consulting firm. Many of the world's largest brands rely on its insights and advice to steer their transformational journeys. Temkin Group combines customer experience thought leadership with a deep understanding of the dynamics of organizations to help accelerate results. Rather than layering on cosmetic changes, Temkin Group helps companies embed practices within their culture by building four critical competencies: Purposeful Leadership, Employee Engagement, Compelling Brand Values, and Customer Connectedness. The firm's ongoing research identifies leading and emerging best practices across a wide range of activities for engaging the hearts and minds of customers, employees, and partners. For more information, contact Bruce Temkin at 617-916-2075 or send an email.
About Bruce Temkin: Bruce is widely recognized as a customer experience visionary and is a CX Transformist and Managing Partner of Temkin Group. He is also the author of a very popular blog, Customer Experience Matters (ExperienceMatters.wordpress.com). Prior to forming Temkin Group, he was a VP at Forrester Research for 12 years, where he led their CX practice and was the most-read analyst for 13 consecutive quarters. Bruce is a highly demanded speaker and regularly quoted in the press. He is also the co-founder of the Customer Experience Professionals Association.
Net Promoter Score, Net Promoter, and NPS are registered trademarks of Bain & Company, Satmetrix Systems, and Fred Reichheld.
Customer Experience Matters is a registered trademark of Temkin Group.