Saturday 21 February 2009

It's all in the numbers

There are generally only two ways of increasing customer value - get them to spend more while a customer and get them to stay with you longer.

There is however a third way and that is to reduce the cost to serve and this typically means making cuts in customer experience. Given that there's been a few surveys recently on customer experience I thought it good to just present the headline numbers – hopefully the line of influence is clear to see.

The Expectation
0.70 (Very High) = Correlation between good customer experience and a consumers willingness to repurchase, reluctance to switch and likelihood to recommend (Forrester)

The Reality
77% = Number of companies who don’t track and measure the volume and nature of customer feedback via email (CMO Council)
71% = Number of company executives who don’t rate highly their ability to handle and resolve customer problems or complaints (CMO Council)
58% = Number of companies which do not compensate employees or executives based on customer loyalty or satisfaction improvement (CMO Council)

The Results
$4000 = Average amount of business taken by a customer switching (Accenture)
74% = Number of US customers who have switched due to poor customer experience (Accenture)
40% = Number of customers who will defect where they are disappointed with their complaint resolution (Complaint Management: The Heart of CRM)
20% = Number of customers that would immediately leave a company because of a poor service experience (Accenture)

47% = The number of US customers who have switched due to lower prices (Accenture)
13% = Increase in customers intention to switch due to poor experience from the previous year! (Accenture)

Customer experience may be difficult to monetise in the short term but do you still think a drop in price financed by slashing your customer experience programmes and customer service departments is worth while?

...and a final thought - if you're one of the 77% of companies that doesn't track and measure the volume and nature of email feedback, you may not want to read my previous post on Twitter.


@heatherrast said...

This was a great post--I really like your technique of pulling the data together to tell the story, leading the reader down the path to the obvious conclusion: The cost of under-serving existing customers outweighs any corner-cutting spawned by the recession. The possible (likely) results include a change in sentiment, negative word-of-mouth, and defection.

I'm also a firm believer in cultivating a rewarding customer experience and recently wrote about serious gaps in the way Wells Fargo deals with customers. You might find it amusing, or fodder for yourself...Thank you for a great read! Heather

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