Dive Brief:
- Businesses that provide best-in-class customer experience outperform the stock market, according to a Watermark Consulting study released last week. The study examined how the top 10 CX leaders and bottom 10 CX laggards, as determined by Qualtrics XM Institute’s customer ratings, fare producing shareholder value.
- Brands that earned the best consumer feedback posted an average shareholder return 260 points above the S&P 500 Index, while those that received the most negative consumer feedback posted an average return 175 points lower.
- “One of the biggest challenges is getting boards of directors, executives and top leaders to buy into the idea that it's worth investing in customer experience and that the return on those investments isn't soft and intangible, but real and bankable,” Jon Picoult, founder and principal of Watermark Consulting, told CX Dive.
Dive Insight:
CX leaders are often called to demonstrate the return on investment of customer experience initiatives to get the budget they need. To Picoult, the best way to convince business leaders is speaking their language.
“When I first developed the study, the idea was to try to communicate and persuade business leaders in the universal language that they all understand, which is shareholder value,” Picoult said. “[ROI] sometimes can be harder to show, but it's there and it's huge.”
The study found that the top CX leaders generated 5.4 times the shareholder return as laggards — a gap that has widened over the past 16 years.
“These are companies that actually do put the customer first in their thinking and their decision making,” Picoult said.
Qualtrics determined the top 10 CX leaders based on 10,000 consumer responses about how successful a company is at helping customers accomplish their goals, how much effort customers had to expend to reach that goal, and how customers felt about their interactions with the company.
Good experiences can also boost retention and drive down customer acquisition costs.
The top companies “really understand the economic calculus around customer experience — meaning they get the idea that a great customer experience doesn't just help to boost revenues, but it also helps you to control if not reduce your expenses and, as a result, improve profitability,” Picoult said
