Report Excerpt
Forrester’s previous research has shown a high correlation between customer experience and three key elements of loyal behavior: willingness to buy more, reluctance to switch, and likelihood to recommend.

But how does that affect a company’s bottom line? To answer that question, we looked at the percentage of loyal customers within the customer bases of more than 100 companies. It turns out that customer experience leaders have an advantage of more than 14% over customer experience laggards across all three areas of loyalty. The annual revenue gains from a modest difference in customer experience can total $311 million for a large hotel. Banks and hotels garner the largest gains from their current customers, while airlines get the most from an increase in positive word of mouth. Customer experience professionals should use this information to build customized business plans.

As part of an online survey in Q4 2008, Forrester asked 4,564 US consumers about their relationships with airlines, banks, cell phone service providers, credit card providers, hotels, insurance firms, Internet service providers, investment firms, medical insurance companies, PC manufacturers, retailers, and TV service providers.

Customer Experience Differences Create A Loyalty Gap
Forrester’s Customer Experience Index (CxPi) ranked the customer experience of 113 organizations. But why would any firm care where it ended up on the list? Because customer experience correlates to loyalty.

To understand this phenomenon, we separated the firms into four quartiles based on how their CxPi score compared with the average CxPi for their industry. When we compared consumer loyalty between the top and bottom quartiles, we found these differences:

• More customers willing to purchase: 14.4%.
• More customers reluctant to switch: 15.8%.
• More customers likely to recommend: 16.6%.

Build Your Own Customer Experience Business Case
While Forrester’s projections estimate the economic impact of customer experience across 12 industries, companies need to develop their own models that more closely reflect their own businesses. To improve the chance of success for these efforts, make sure to focus on the content, organization, and style of the business case.

Forrester’s “Customer Experience Boosts Revenue” continues with more examples of increased loyalty corresponding to positive customer experience. In addition, there are detailed figures, guidelines for modeling, and a list of supplemental material. To request the complete report, register here.