Customer Experience is the perception a customer has of your brand. This perception is based on three elements: (1) Success: Are customers able to do the things they want to do?, (2) Effort: How easy or hard is it to do the thing they want to do?, and (3) Emotion: How do they feel about the first two elements. There is an intuitive understanding that when clients have good experiences they generate more money for companies. But what is the real impact of customer experience on the bottom line? Multiple studies have quantified the increase in revenue and savings that come from good to very good customer experiences and the results are staggering.
Customer Experience Drives Loyalty, Loyalty drives Revenue
A multi-industry study evaluating the impact of customer experience improvement over a three-year period for companies with $1 billion in annual revenue shows how customer experience generates specific loyalty behaviors such as how likely clients are to:
- Recommend a company,
- Repurchase from a company,
- Trust company,
- Forgive a company
- Try a new offering right away
These behaviors, in turn, increase company revenue by retaining existing business, selling additional products, saving business after bad experiences, and selling more through word of mouth over a three year period. On average, companies can gain an additional $775 million in revenue by improving the experience they deliver to customers. That’s almost a 78% increase!
Even if you are not a billion-dollar company, you can increase your revenue based on improved customer experience. You will rarely have the lowest price or even the best product. But as a company, your customer experience can be your unique differentiator and will influence customers to choose you over your competitors. Keep reading to learn specific, research-based ways in which customer experience grows revenue.
Retain existing business and sell additional products
Providing positive experiences to current customers has a direct impact on the bottom line. Customers that experience speed, convenience, consistency, friendliness and actual human touch in their interaction with brands are willing to pay a 13% price premium for products and services. Additionally, customers of transaction-based businesses who had the best past experiences spend 140% more compared to those who had the poorest past experience.
Word of Mouth Marketing
Word of Mouth (WOM) is one of the most effective marketing methods. 91% of 18-34-year-olds consumers trust online reviews just as much as a personal recommendation. Reviews and social media are the new WOM. You can turn loyal customers into online advocates by inviting them to write reviews - all you have to do is ask! 68% of consumers will leave a review if asked. Customers that have good experiences with your brand will help you grow your business by sharing their experiences with others. 72% of customers say they share positive experiences with others. This positive WOM can generate 17% more new customers in a three year period!
For many companies, customers become more profitable as time goes by. Retaining customers long enough so they can mature into their most profitable stage is essential for growth. When companies create positive experiences in onboarding processes and throughout the customer journey, they are more likely to retain that customer for longer periods of time. Subscription-based businesses that have high customer experience scores report a 5X Customer Lifetime Value (CLV) Increase, from 1 year to 6 years on average.
If you consider that investing in a new customer is between 5-25 times more expensive than retaining an existing one, and by increasing customer retention by just 5%, profits could increase by 25% to 95%. Reducing churn is money in the bank. Customers that have had a very good customer experience are also 4X more likely to forgive a company after it’s made a mistake. Customer forgiveness alone can translate into a 4.2% revenue increase in a three year period.
Customer Service Cost Reduction
While growing Share of Wallet and finding new business is an exciting way to grow revenue, becoming more effective and reducing costs is another significant way to positively impact the bottom line. Customer service is an essential part of customer experience and a great tool to grow CLV. According to customers, live chat is the most efficient way to resolve issues, even when compared to other digital channels. The customer satisfaction rating for live chat experiences is 73% compared to 61% for email users, 53% of App interactions and 44% of phone users.
Live Chat and two-way text can reduce customer service costs by 50%. Live chat and two-way text require fewer agents than voice-based services to handle the same volume of contacts because agents can manage multiple concurrent sessions by switching between customers. On average, 2.5 to 3 sessions can be maintained at a time while still keeping a high level of quality service. Webchat and two-way text allow an easy transition to automated self-help options that decrease session times, making agents even more efficient.
Providing the best experience for your prospects and customers at each touchpoint of the customer experience journey will generate loyalty, grow your brands’ revenue by reducing churn and customer service costs, and help you acquire new customers and build longer, more meaningful relationships with your existing customers.
If you want to learn more about Nuvi’s solutions and how we can help you improve your customer experience journey, call our solution experts at 1-801-753-0926 or email us at firstname.lastname@example.org