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Customer Experience Leaders Crush Laggards On Revenue Growth
July 15, 2015


Over an eight-year period from 2007 to 2014, the total stock returns of CX leaders outperformed both a portfolio of CX laggards and the S&P 500. Seems like a clear sign that CX performance is a key driver for business success. But when you crack open these portfolios, you find exceptions — like Borders and Comcast.

Borders ranked No. 2 in Forrester's 2007 Customer Experience Index, yet its stock returned -50% for the year. Comcast on the other hand, famously known for bad CX, had a 60% return in 2013. These findings led Forrester to ask: Does customer experience really matter to business success?

To find out, Forrester conducted a four-year analysis across five industries on the No. 1 priority for global business leaders: revenue growth. The result: CX leaders invariably crush CX laggards across the evaluated industries (cable, retail, airlines, wealth management, and healthcare), confirming that customer experience correlates to revenue growth. However, there is an exception: wide differences in revenue growth aren't true for every industry (like healthcare). For CX to correlate to revenue growth, customers must be free to switch providers within the industry, and the providers must offer differentiated CX.

Here are a couple examples of revenue growth in industries where customers can freely switch providers:

  • Cable. CX leader AT&T U-Verse saw a 35% compound annual growth rate (CAGR) from 2010 to 2014, compared to Comcast's 6%. The reason: AT&T saw double-digit growth among its Internet and video subscribers, while Comcast saw single-digit and negative growth, respectively.
  • Retail. Most direct competitors in retail have undifferentiated customer experience, yet online-only retailers far outpace traditional retailers when it comes to CX. As proxies for online CX versus offline CX, Forrester evaluated the leading online-only retailer, Amazon, with the largest traditional retailer, Wal-Mart. Amazon's four-year US-revenue CAGR was 16 times that of Wal-Mart's (31% to 2%). And perhaps more telling: Wal-Mart's global online revenue for this same period grew 31%, while its brick-and-mortar sales remained flat.

 

Visit the Customer Experience blog to learn more.


About Forrester Research

Forrester Research (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We work with business and technology leaders to develop customer-obsessed strategies that drive growth. Forrester’s unique insights are grounded in annual surveys of more than 500,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of our most innovative clients. Through proprietary research, data, custom consulting, exclusive executive peer groups, and events, the Forrester experience is about a singular and powerful purpose: to challenge the thinking of our clients to help them lead change in their organizations.


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