March 24, 2008

The Business Impact Of Customer Experience

Poor Experiences Can Cost Large Firms More Than $180 Million Per Year

This is the fourth document in the "Value Of Customer Relationships" series.

by Bruce D. Temkin

with Harley Manning, Olga Melnikova, Steven Geller

Executive Summary (This is a document excerpt)

Executives know that customer experience is important, but they can't always tie it directly to business results. So we examined the correlation between the customer experiences delivered by 112 US firms (as defined by Forrester's Customer Experience Index) and the loyalty of their customers. Our analysis shows that good customer experience correlates highly to loyalty — especially when it comes to consumers' plans for making additional purchases. When we examined how this might affect the annual revenue of individual companies, we found that customer experience quality could cause a swing of $242 million for a large bank and $184 million for a large retailer. Customer experience quality was most highly connected to the purchase plans of Fifth Third's customers and the intentions to switch of Cablevision and Nextel customers.

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