Improving CX By 1 Point Can Drive More Than 1 Billion Dollars In Revenue (2022)
Our New Report, How Customer Experience Drives Business Growth, 2022, Puts A $-Value On Improving CX By 1 Point.
Many customer experience (CX) leaders find it hard to make the case for investing in CX. That’s why Forrester built industry-specific models that demonstrate how CX improvements drive business growth through increased customer loyalty.
Read our report, How Customer Experience Drives Business Growth, 2022, for more detailed analysis. It includes the dollar upside of improving CX Index by 1 point for 12 industries: airlines, luxury auto manufacturers, mass market auto manufacturers, auto/home insurers, multichannel banks, direct banks, credit card issuers, health insurers, midscale hotels, upscale hotels, investment firms, and retailers.
Below, find a sneak peek into the results and our recommendations on how to calculate the upside of improving CX by 1 point, as well as a list of resources to help you make the case for CX and create ROI models.
A Sneak Peek Into The Results
Our data shows the following:
- The benefits of improving CX can be massive. For example, for mass market auto manufacturers, improving CX by 1 point can lead to more than $1 billion in additional revenue. That’s because improving CX increases the chance that customers will buy their next car from the same brand and take the car to the brand’s dealership for service needs.
- Many industries see higher growth by making happy customers even happier than by placating unhappy customers. That’s because the growth benefits of improving CX increase exponentially when going from “good” to “excellent” for those industries, which include some financial services industries. CX pros in firms where this relationship holds true must focus on identifying CX drivers that move customers from “OK” and “good” CX scores to “excellent” scores.
- The effect of recommendations on the business upside of CX is small. For each of the industries in our analysis, acquiring new customers via recommendations accounts for less than 7% of the overall business benefit from improved CX.
Calculate These Numbers For Your Own Firm
Should you just use our numbers for your firm? Yes and no. You can use them to get initial buy-in on the fact that CX drives business results. But don’t just assume that your numbers will look the same. Instead, calculate the business upside of CX for your own firm.
Below, you’ll find how we calculated the business impact of improving the Customer Experience Index (CX Index™) score by 1 point and the data we used. We hope you will find this useful as you run this analysis for your firm.
- Calculate the business impact of each customer’s (dis-)loyalty. Our CX Index survey measures not only the quality of customers’ experiences but also customers’ loyalty (i.e., intentions to stay with a brand, buy more from a brand, and recommend a brand). We supplement this data with data from other CX Index survey questions about the customer’s purchasing behavior and information from other Forrester data and secondary research. With this data, we calculate the impact on business metrics of each customer’s loyalty level. How we do this calculation differs based on how companies in various industries make money.
- Build industry-specific models that show how CX drives growth. Our analysis focuses on the largest brands in the CX Index in each industry because a few big brands dominate each industry we looked at. Since we are calculating both the CX Index score and the potential business impact for each customer, we can model the relationship between both. We derived two crucial insights into each industry: how large the effect of CX changes on business outcomes is and whether the size of that effect is consistent or whether that effect changes depending on the range of the CX Index score (which ranges from 0–100).
- Apply the models to calculate the upside of improving CX by 1 point. We used the insights from the model to predict the impact for the average customer of improving the industry’s CX Index score by 1 point. We then multiplied that per-customer upside by the average number of customers that a big brand in the industry typically has.
Check Out More Resources On Making The Case For CX At Your Firm
If you want to know more, here’s some publicly available resources and some available only to Forrester clients:
- Capturing The ROI Of CX: a complimentary step-by-step guide and ROI calculator (FREE)
- How To Prove The ROI Of CX (Video): a video that demonstrates how a solid CX business case leads to meaningful and measurable business results (FREE)
- The CX Business Case Builder: a report that shows CX transformation leaders how to build an ROI model that can power a business case, including where to look for benefits, how to quantify them, and how to estimate CX transformation costs (Forrester clients only)
- The NPS Financial Impact Scenario Modeler: a tool that lets CX leaders model the financial impact of different scenarios of changes in Net Promoter Score℠ (NPS) that they may encounter (Forrester clients only)
- Why CX: Proof That Investing In Experience Improves Revenue, Cost, And Resilience: a report with real-life examples of the impact that improving CX has on three key business levers: revenue, cost, and resilience (Forrester clients only)
- CX Leaders: Get Funding Or Get Fired!: a report that can help CX pros create a business case that will resonate with executives — even those who have previously passed on CX because they see it only as a “nice to have” (Forrester clients only)
- Top Tactics For Making A More Successful CX Business Case: a report that lists and describes 14 tactics that galvanize decision-makers into action and help CX professionals overcome common hurdles when gathering and analyzing data to link CX improvements to business results (Forrester clients only)
- The ROI Of CX Transformation: a report that shows CX transformation leaders how to build an ROI model that can power a business case, including where to look for benefits, how to quantify them, and how to estimate CX transformation costs (Forrester clients only)
Thank you for your major contributions to this research, James Williams, Sam Karpinski, Niraj Patel, and Michelle Yaiser!