Decoding CX – can you measure it in Euros?
During the last years, when working on our consulting projects, we gradually learned that many companies really struggle to quantify Customer Experience (CX) as there are no sufficient measurement instruments available as of today. At the same time, Customer Experience is a very multifaceted and rather abstract concept. Hence, for many Customer Experience initiatives the impact can hardly be quantified, tracked or benchmarked (no, the NPS is not the silver bullet to capture the much more complex concept of Customer Experience). In turn, this makes it difficult to gain support from top management for new Customer Experience initiatives. Often, we were discussing with our clients, which factors are actually impacting the experience of customers, and more importantly how much Customer Experience is in the end contributing to business success.
To unravel this mystery, we have analysed over 6000 customer evaluations
In order to shed more light on this hazy topic and ultimately untangle the mystery of Customer Experience, we formed a dedicated research team last year to dive deep into academic research, fieldwork and sophisticated data-analytics. In an extensive online study, we collected over 6000 multidimensional in-depth customer evaluations for different companies.
Overall, more than 150 brands across 10 different industries were put to the ultimate Customer Experience acid test. Over the course of this research, which is very dear to our heart as everlasting advocates of Customer Centricity, we developed a brand-new measurement tool for Customer Experience and quantified its impact on various business success measures.
The collected data allowed us to identify and extract four pillars of Customer Experience – ‘Brand Positioning’, ‘Proposition & Usability’, ‘Customer-centric Innovation’ as well as ‘Touchpoint Experience’. These four dimensions themselves are again composed of 14 tangible and actionable sub-dimensions, which can be applied to any market situation in the form of specific items. Based on the sub-dimensions a straightforward CX-score (scale with seven stages) can be computed, measuring the current Customer Experience performance. As a result, the whole model is giving us a comprehensive and more importantly fine-grained and discriminable picture of Customer Experience. It allows us to directly quantify the various drivers of Customer Experience and to connect it to actual customer behaviour. Thus, the impact on revenue, profit and growth can be estimated respectively.
What is it worth to improve Customer Experience by one point? 75 Million Euros
For example, if a German electricity company manages to increase its tracked Customer Experience measure by one point (on the 7-staged scale) it can expect an increase in revenue of at least €75 million – only from existing customers changing their loyalty behaviour.(1)
The model is setting a clear bar for the financial potentials of Customer Experience initiatives and respective budget allocation. In addition, and more importantly, our Customer Experience model allows us to identify which aspects of the experience have the highest potential for leveraging the company’s performance. In practice, this means the most promising areas of the Customer Experience can be directly identified. Prototypes for new initiatives in these areas can then be tested and benchmarked in simple A/B testing for its impact on the customer experience score – to name just one possibility.
Get ready to be excited about the results of our study
Our model has the potential to dramatically increase your financial efficiency of Customer Experience efforts by discovering new growth potentials or prevent overspending.
We are excited to share more interesting insights, which will be compiled in our upcoming 2020 savvy CX study. Stay tuned and sign up to our newsletter to get priority access to the release of our full study.
(1) Assuming status quo revenue of € 500 mil. for the electricity company