Customer Experience Management Studies

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Findings from recent studies of customer experience management.

Percent of companies:
  • 90% say customer experience is very important or critical to their firm's strategy in 2010.
  • 80% want to use customer experience as a form of differentiation.
  • 11% have a "very disciplined" approach to customer experience.
  • 62% have some form of voice-of-customer program.
  • 49% have a senior executive in charge of customer experience efforts.
  • Less than one-third believe their company exhibits these CEM competencies:
        ♦  Quality of interactions with target customers is closely monitored.
        ♦  Employees across the company are recognized and rewarded for improving the experience.
        ♦  Decision-making processes systematically incorporate the needs of target customers.
        ♦  Employees across the company share a consistent and vivid image of target customers.
  • CEM competencies with most improvement since last year: employees fully understand the key attributes of our brand; our company's brand drives how we design customer experiences; the attributes of our company's brand are well-defined.
  • Number one obstacle in 2010 is lack of customer experience strategy; in 2009 it was lack of budget, which has dropped significantly as an issue.
      - 2010 State of Customer Experience, Forrester Research; survey of 141 executives from large North American firms.

  • 68% say business partners are essential to their go-to-market processes, customer experience and competitive position.
  • 51% say integration of partner networks with the customer is important to delivering enhanced support.
  • 42% rely heavily on suppliers and outsourced services to meet customer needs.
  • Nearly 40% say their customers are demanding greater visibility into both their supply and distribution chains.
  • Direct benefits to customer experience: faster time to product resolution (55%), reduced cost of customer support (42%), better innovation around products and services (45%).
  • 8% believe their company is highly effective in the way they integrate and optimize partner networks.
  • 73% are investing in programs and systems to optimize the way they collaborate with partners.
      - 2009 Greater Innovation Through Closer Collaboration, CMO Council and BPM Forum, Sterling Commerce and AT&T; survey of over 400 executives and managers across a wide range of industries.

Percent of best-in-class adopters of customer experience management:
  • 75% have increased customer loyalty as a result of CEM initiatives, versus 53% of average adopters of CEM.
  • 76% say tracking and reporting customer-facing metrics is integral to their success.
  • 70% use customer feedback to influence strategic decisions, compared to half of industry-average orgnizations and 29% of laggards.
  • 96% of all companies see value in formalizing a CEM strategy.
  • 37% of all companies currently have a formal program in place to identify and encourage customer advocacy; over the next 12 months, more than ¾ of all organizations will either have in place, or be in the process of pursuing, a formalized program to promote customer advocacy.
  • Top reasons why businesses are implementing CEM: 42% to improve customer retention, 32% to improve customer satisfaction, 33% to increase cross-selling and up-selling.
      - 2009 Customer Experience Management: Engaging Loyal Customers to Evangelize Your Brand, Aberdeen Group.

Percentage of companies rating themselves as good or excellent in practicing these best methods:
  • 54%: using customer satisfaction or other measures of customer affinity as key performance indicators and in measuring and reporting customer attitudes and perceptions.
  • 26%: creating a complete and integrated view of each customer across multiple products and channels, or at making a current view of necessary customer information available to all customer touchpoints.
  • 30%: creating and making easily accessible a complete and integrated view of customers' contact history (inbound and outbound).
  • 39%: anticipating customers' purchase behaviors (e.g. calculating the probability to buy or defect to a competitor).
  • 24%: estimating a customer's likelihood to purchase or engage by channel.
  • 49%: segmenting customers based on demographics.
  • 40%: calculating the profitability of individual customers.
  • 35%: using profitability and potential lifetime value to segment.
  • 29%: employing lifestyle and attitudes as a basis for segmentation.
  • 25%: using mathematical programs to maximize the profitability of ROI of marketing campaigns.
  • 18%: creating and managing individual treatment tracks across products and channels to improve the customer experience.
  • 19%: predicting best outcomes during real-time customer sessions.
  • 22%: creating a systematic response based upon the identification of a significant change in a customer's behavior.
  • 34%: using customer insight to guide inbound customer interactions.
  • 23%: training their employees to use customer insight during inbound interactions.
  • 28%: coordinating and managing outbound customer contacts at the organizational level (versus in isolated silos) across products and channels.
  • 30%: using customer metrics (e.g. profitability, campaign response) to evaluate individual performance.
  • 43%: using customer metrics to evaluate organizational performance.
  • 31%: aligning incentive compensation to customer metrics.
  • 31%: capturing the expressed needs of customers during live interactions.
  • 28%: updating customer profiles to reflect customer activity (e.g. purchases) as well as outbound (e.g. campaigns) and inbound (e.g. call center) contact.
  • 21%: changing individual customer interactions based upon changes in a customer's profile.
  • 76% of companies agree that customer trust is tied to the financial success of the business; 60% consider how a proposed action increases or decreases customer trust when making decisions.
  • 76% of companies motivate employees to treat customers fairly; 62% provide the right tools and training to earn customers' trust.
  • 42% of companies agree that they can do what is right, despite the pressure to make current-period financial numbers.
  • 60% of companies treat different customers differently, based on an understanding of individual needs.
  • 81% of companies with strong capabilities and competencies for delivering customer experience excellence are outperforming their competition.
      - 2009 Customer Experience Maturity Monitor, Peppers & Rogers Group, SAS Institute, Jubelirer; telephone and online survey in summer 2008 of 227 managers and vice presidents in companies with 2007 revenue of at least US$100M.

Percent of companies:
  • 80% say customer experience strategies are a more important part of their organization's agenda than in the past three years.
  • 27% invest at least 10% of revenues in customer experience efforts; 13% invest 8-10%; 21% invest 3-5%; 21% invest 1-2%; 20% invest less than 1% of revenue in customer experience efforts.
  • 48% have increased investments in customer experience over the past 3 years by 10% or more; 17% are increasing investment by 20% or more.
  • 51% that are investing at least 10% in customer experience efforts are reaping referral rates of 10% or more.
  • 22% that are investing less than 1% in customer experience efforts are reaping referral rates of 10% or more.
  • 43% that are investing at least 10% in customer experience efforts are receiving customer satisfaction ratings of 81% or higher.
  • 17% that are investing less than 1% in customer experience efforts are receiving customer satisfaction ratings of 81% or higher.
  • Companies that have increased their customer experience investment in the past 3 years, compared to those that have decreased their investment, report satisfaction scores that are 60% higher, and are 30% more likely to have attrition rates of 5% or less.
      - 2009 Customer Experience Management Benchmark Study, Strativity Group; online survey in spring 2009 of 869 corporate executives in the Americas, Europe, Asia and Africa.

  • 83% say customer experience is "essential" or "increasingly important" in driving brand advocacy and business performance.
  • 84% say positive customer experiences and word-of-mouth have helped their brands and businesses grow.
  • 44% admit high-profile negative customer experiences had at some time compromised their brands.
  • 31% have high commitment to customer listening; nearly two-thirds of companies do not have a formal voice-of-customer program in place.
  • 13% have deployed real-time systems to collect, analyze and distribute customer feedback.
  • 74% receive customer feedback via email; 23% track and measure the volume and nature of these messages.
  • 34% have made no changes to the way they track and analyze customer experience in recent years.
  • 45% have taken steps to better integrate and analyze customer data.
  • 39% have increased personalization and intimacy in their customer communications.
  • 12% are using a word-of-mouth marketing platform to drive online customer advocacy.
  • 20% have embraced intelligent Internet analytics.
  • 18% are capturing real-time information at the "point of pain".
  • 58% do not compensate any employees or executives based on customer loyalty, satisfaction improvements or analytics.
  • 38% have no programs in place to track or propagate positive word-of-mouth among customers.
  • 29% have high ability to handle and resolve customer problems or complaints.
  • 38% gather customer insight from customer engagement situations.
  • 32% look for ways to turn problems into new sales opportunities.
  • 15% introduce new products or services to further monetize the relationship.
  • 17% use the opportunity to identify and cultivate potential customer champions and advocates.
      - 2009 Giving Customer Voice More Volume, CMO Council and Satmetrix; online survey of 480 executives.

  • 63% are seeing higher rates of customer churn and attrition; the biggest contributors to customer defection are competitive offerings, pricing or fee structures, and inadequate custoemr service; this is further accenting the need for more adept customer data integration and analytics, better listening, feedback and engagement systems, as well as closer collaboration between IT and marketing groups.
  • 84% said the cost of acquiring and sustaining customer relationships is increasing.
  • The biggest sources of customer pain are unmet needs and expectations (59%), followed by product/service usability and complexity (43%), billing errors (40%), and quality or relevancy of service or product offerings (32%).
  • Expectations for always-on access to content on every device and more personalized on-demand services and experiences are forcing service providers to re-think their operational structures, product portfolios, customer handling systems, and strategic partnerships and investments.
      - 2009 Service Invention to Increase Retention, CMO Council and Customer Experience Board; online survey of 140 marketers in telco, wireless, cable, satellite, broadcast and Internet service provider sectors.

  • 76% believe they are not realizing full potential of their current customers.
  • 46% have good insights into retention rates, customer profitability and lifetime value.
  • 60% are introducing better segmentation, profiling and targeting strategies as the primary way they're trying to better engage core audiences.
  • 49% are adding or improving database marketing systems.
  • 30% are acquiring new customer and market analytics capabilities.
  • 30% are personalizing multi-channel communications and customer touch points.
  • 26% are individualizing print, email, text messaging, call center or web interactions.
  • 26% are building online customer communities.
  • 25% are capturing more customer information via the web and at point-of-sale.
  • 31% are evaluating marketing spend to increase yield and accountability in driving adoption and use of CRM and sales automation applications.
      - 2008 Routes to Revenue, CMO Council and Ricoh/IBM InfoPrint; international audit of 480 senior marketers.

  • 81% understand that the quality of the customer experience impacts customer loyalty; 81%: impacts customer advocacy of the brand; 73% impacts customer spending behaviors.
      - 2008 Beyond Satisfaction: Measuring & Managing the Customer Experience, Verint Systems.

  • 26% store profitability in their customer database.
  • 24% store lifetime value in their customer database.
      - 2008 Creating a Multi-Channel View of Your Customer, Forrester Research.

  • 34% rate themselves as good or outstanding in the management of customer data.
      - 2008 Customer Analytics Best Practices Adoption, Forrester Research.

  • 20% try to know the state of their customer experience success by measuring it holistically across all channels.
  • 61% find it difficult to monetize the value of investments for customer experience improvement.
      - 2007 Customer Experience Quality Framework, Forrester Research.

  • 47% lack a customer experience management process (2008).
  • 46% have implemented a corporate-wide program focused on improving the multi-channel experience (2007).
      - Obstacles to Customer Experience Success, Forrester Research.

  • 69% have not provided customer-facing personnel with customer insights.
      - 2007 Operationalizing Customer Intelligence in the Contact Center, Business Communications Review.

  • Customer retention increased by 15% year-over-year for best-in-class CEM practitioners; by 1% for industry-average CEM practitioners; by 0% for laggards.
  • Customer satisfaction increased 19% year-over-year for best-in-class CEM practitioners; by 8% for industry-average; by 3% for laggards.
  • Profit increased 8% year-over-year for best-in-class CEM practitioners; increased 6% for industry-average; decreased 8% for laggards.
Percent of best-in-class adopters of customer experience management:
  • 53% regularly review business processes from outside-in customer-facing perspective.
  • 42% use a dashboard of commonly-agreed-to metrics that define success.
  • 24% created a multi-year set of agreed-to-metrics to assist executives in measuring & monitoring customer satisfaction, retention and profitability; 67% plan to have such a set in the next 24 months.
  • 42% want to adopt integrated analytics platforms; 48% are examining predictive analytics tools; 24% have social media/Web2.0 tools in place; 30% are planning to implement tools for collaborative interactions
  • 66% have centralized sales and customer data.
  • 53% have repositories of insights gleaned from customer interactions.
  • 75% have a formal CEM program in place, 25% plan to implement one.
  • 42% have managed CEM >2 years, 18% 1-2 years, 15% 1 year, 29% none, but plan to.
  • Top pressures driving adoption of CEM: 58% to increase customer satisfaction, 39% to increase acquisition of profitable customers, 36% to increase retention of profitable customers, 24% to increase brand loyalty.
  • 76% view CEM program as a critical priority, 24% very important priority.
  • 20% have rolled out their CEM program to all business units, 40% to most, 20% to some, 16% to a few business units.
  • 53% have centralized customer information; 44% in-planning.
  • 65% have a CEM champion; 29% in-planning.
  • 61% onboard all employees in the CEM program; 29% in-planning.
  • 56% have centralized sales and marketing information; 41% in-planning.
  • 53% glean insights from centralized sales and marketing information; 41% in-planning.
  • 53% review customer-facing data; 44% in-planning.
  • 39% use an integrated analytics platform across channels or an integrated dashboard; 55% in-planning.
  • 23% use predictive analytics tools partly to mine past interactions to predict future customer behavior; 43% in-planning.
  • 14% use personalization engines for consistent cross-channel customer management; 30% in-planning.
  • 24% are using social media: wikis 50%, blogs 63%, social networking sites 38% (P&G, Frito-Lay, USAA re-purposed internal customer service sites as external-facing online communities).
  • 9% are using speech recognition; 24% in-planning.
  • Key CEM challenges are functional alignment of business processes, executive sponsorship, measurement agreement issues, and execution.
  • Similar to ERP in 1990s and CRM in 2000s, for CEM success, it is essential to identify before starting: champion, process, metrics, ROI, patience.
  • Goals for 2009: 55% superior customer experience across channels, 52% organization-wide focus on customer service differentiation, 28% MBOs, 27% 360-degree view of the customer.
  • Enablers for these goals include: executive champion, onboarding and training of all employees, dashboard, survey tools, Web content management, enterprise content management, integrated CRM, integrated analytics, personalization, and cross-channel consistency.
Comparison of best-in-class versus industry-average versus laggards:
  • 53/46/22 regularly review business processes that touch customers.
  • 42/34/19 use a customer dashboard with common metrics.
  • 65/53/44 empower executives to drive CEM changes through a multi-year plan.
  • 45/36/24 have customer-centric MBOs.
  • 61/38/24 have formalized CEM onboarding and training programs for all employees.
  • 66/51/48 have a central repository of customer information.
  • 56/44/30 have a central repository of sales and marketing information.
  • 53/41/27 have a repository of insights gleaned from customer interactions.
  • 38/22/15 measure commonly defined metrics across multiple years.
  • 67/61/57 use survey tools.
  • 47/38/34 use multi-mode CRM.
  • 42/23/21 have an integrated analytics platform across sales, marketing, customer service and contact center.
  • 37/35/30 use internal search tools.
  • 24/12/7 use social media and Web 2.0 for CEM.
  • 27/14/11 use an integrated customer-specific personalization platform.
      - 2008 Customer Experience Management, Aberdeen Group, Aspect, Infor and SAP; international survey of 190 companies, all sizes, industries, functional areas; aggregate year-to-year changes in customer retention, satisfaction and profit were categorized as best-in-class for top 20%, industry-average for middle 50%, and laggards for bottom 30%.

Benchmarking Report

B2B Research with IT Customers
  • 56% of vendors perceive themselves as being extremely customer-centric, but only 12% of customers agree.
  • 85% of vendors are convinced that they are getting better at responding to customer needs, but 45% of customers disagree.
  • More than half of customers surveyed described their relationships with vendors as "dependent and captive", "struggling for common ground", or "combative and adversarial"; 45% of customers evaluated their channel relationships similarly.
  • More than 30% of customers said they would terminate relationships with companies that fail to gain their trust; 62% would scale back existing engagements, while 7% would no longer consider the vendor for future business.
  • Nearly 60% of customers say co-innovation is extremely or very important, with another 30% agreeing that it is at least somewhat important. Customers say that collaborative, two-way conversations, followed by continuous improvement, build customer affinity.
      - 2007 Customer Affinity: The New Measure of Marketing, CMO Council; survey of 477 B2B end-users, rating 75 technology vendors.

B2C Research with Consumers
Percent of additional consumers, for companies in top quartile of Customer Experience Index, compared to lowest quartile:
  • 14% willing to buy another product from the company.
  • 16% reluctant to switch brands.
  • 17% likely to recommend the brand.
Additional revenue, for every $10B in industry revenue: a 10-point increase in a firm's Customer Experience Index results in:
  • $65M additional purchases
  • $116M reduction in churn
  • $103M word-of-mouth
      - 2009 Customer Experience Boosts Revenue, Forrester Research; analysis of 12 industries from the 2008 Customer Experience Index.

Index based on meeting consumer needs, being easy to work with, and enjoyability of interactions; >90% Excellent, >80% Good; >70% Okay; >60% Poor; <60% Very Poor:
  • 82% retailers
    (range: 73% - 91%)
    78% in 2007
    Excellent: Barnes & Noble, Amazon, Kohl's, JC Penney, Macy's, BJ's Wholesale Club, Costco
    Good: eBay, Target, Lowe's, Borders, Sam's Club, Walgreens, Best Buy, Home Depot, CVS, Sears, Toys R Us, Old Navy, Kmart, Wal-Mart, Apple iTunes, Staples.
  • 80% hotels
    (range: 69% - 90%)
    Excellent: Marriott, Hampton Inn, Holiday Inn, Comfort Inn, Hilton.
  • 78% parcel delivery / shipping firms
    (range: 78% - 80%)
    Good: FedEx, UPS, USPS.
  • 73% investment firms
    (range: 68% - 83%)
    Good: Vanguard, ING, Charles Schwab.
  • 72% insurance providers
    (range: 63% - 82%)
    Good: USAA, Liberty Mutual, Progressive, The Hartford.
  • 68% airlines
    (range: 50% - 80%)
    Good: Southwest, JetBlue.
  • 66% banks
    (range: 51% - 85%)
    SunTrust, Fifth Third, U.S. Bancorp.
  • 66% PC manufacturers
    (range: 61% - 78%)
    Good: Apple.
  • 65% credit card providers
    (range: 46% - 78%)
    Good: American Express.
  • 65% wireless service providers
    (range: 60% - 67%).
  • 63% utility providers
    (range: 57% - 69%).
  • 57% internet service providers
    (range: 29% - 68%)
    62% in 2007.
  • 57% TV service providers
    (range: 38% - 66%)
    52% in 2008.
  • 51% health insurance plans
    (range: 41% - 67%).
      - 2010 Customer Experience Index, Forrester Research; North American Technographics online survey of 4,600 U.S. consumers about their interactions with companies in 14 industries; percentage of top-two boxes (very positive and positive experience) minus bottom-two boxes (very negative and negative experience).

    Percent of consumers:
  • 86% quit doing business with a company due to a bad customer experience, up 27% from 4 years ago.
  • 20% reacted to bad experiences by swearing; 14% by shouting. (In 2006: 29% swearing, 21% shouting; others reported headache, chest tightening, or crying; in 2007, 12% of consumers acknowledged they have dreamed of picketing and/or defacing a company's headquarters.)
  • 82% that had a bad experience told others about it, up from 67% in 2006.
  • 60% will always or often pay more for a better experience, up from 58% in 2008.
  • 53% will recommend a company to someone else because they provide outstanding service; 50% because of low prices; 41% because of top quality products.
  • 58% who are online: if they complain on a social networking site about a bad experience with a company, they would like the company to reach out directly and respond to their comment.
  • 73% who can't find what they need online prefer to speak directly to a live customer service agent; 66% prefer email.
  • 62% who are having a product/service problem or are researching a product/service online usually call the company; 49% prefer email; 18% prefer online chat with a live agent.
      - 2009 Customer Experience Impact Report, RightNow Technologies and Harris Interactive; online survey in September 2009 of 2,295 adults living in the U.S.

  • 48% of highly loyal consumers in 2007 remained highly loyal in 2008.
  • 33% of highly loyal consumers completely stopped buying the brand even while they continued to make purchases in the same product category.
  • Highly loyal consumers = shoppers who made 70% of their category purchases with a single brand during a 12-month period.
      - 2009 Losing Loyalty: The Consumer Defection Dilemma, CMO Council and Pointer Media Network; study of 34 million U.S. shoppers' purchasing patterns for 2 years across 685 leading consumer packaged goods brands and 24,000 retail stores.

  • $2B is spent annually in growing and running loyalty and rewards programs.
  • The average U.S. household is enrolled in 14 loyalty and rewards programs, but is only active in 6 of them.
  • Membership among 1.8B loyalty members in the U.S.: financial services 422M, airline 277M, specialty retail 191M, hotel 162M, grocery 153M, mass merchants 125M, casino/gaming 106M, department stores 93M, drug stores 74M, fuel/convenience 51M, restaurant 14M, car rental and cruise lines 11M, other 128M.
      - 2009 Loyalty Census, Colloquy

Percent of consumers:
  • 79% say they are satisfied with their loyalty and rewards program experiences.
  • 70% want to see more discounts and savings; 52% more compelling personal deals and offers; 58% more compelling personal benefits and services, as well as more relevant offers or individualized deals.
  • 65% acquired information about the programs in retail environments; 4% in social media networks; 3% in blogs; 11% in online advertising.
  • 44% cite too much spam and junk email as a negative associated with loyalty and rewards program membership; 38% too many conditions and restrictions; 37% rewards lack real value.
  • 22% say the economic climate had raised their interest in loyalty programs; 41% say there was no impact from economic climate.
  • 52% are influenced in their buying decisions by club membership.
  • 20% of club members say they are big brand boosters; 50% sometimes talk-up the product or service.
  • 54% would give up their loyalty or rewards club membership if they had a poor product or service with a brand.
Percent of marketers:
  • 61% believe loyalty program participants are the best and most profitable customers.
  • 65% view customer loyalty program investments as a very essential, or a quite valuable part of the marketing mix.
  • 13% believe they have been highly effective in leveraging loyalty and brand preference among club members; 20% do not have a strategy for this; 25% have not mobilized brand loyalists to become active advocacy agents.
  • 39% view discounts and savings as the key member benefits.
  • 34% view free products and premiums as essential incentives.
  • 33% offer points for merchandise redemption.
  • 80% are committed to maintaining or further funding loyalty programs as customer retention and relationship-building vehicles; 34% are significantly increasing commitments, 46% are maintaining current commitments, and 4% are discontinuing their programs.
  • 30% say some customers see little or no added value to becoming a loyalty member; 24% indicate rewards lack substance, or they don't get enough personalized attention; 21% have problems with receiving too much spam email and junk mail.
  • 60% plan to make better use of the Web and new community and networking tools to grow and develop loyalty programs.
  • 73% collect basic demographics; 68% track location of members; 14% track advocacy rates, 27% brand loyalty and attachment, 31% personal preferences, 33% satisfaction levels, 38% product preferences.
      - 2010 Loyalty Leaders: Feeling the Love from the Loyalty Club, CMO Council and InfoPrint; online surveys of more than 600 marketers and 700 consumers in the last half of 2009.

Employee Engagement Research
  • 2.6 times more growth in earnings per share for companies with 4:1 ratio of engaged to actively disengaged employees.
  • Earnings per share for top-quartile engagement organizations outpaced bottom-quartile by 18%.
  • Top quartile business units boast 12% higher customer advocacy, 18% higher productivity, and 12% higher profitability.
  • Bottom quartile business units have 51% more inventory shrinkage, 31% to 51% more employee turnover, and 62% more accidents.
  • In a 10,000-person company, disengagement represents 5,000 days of absence, equaling $600,000 in lost salary alone.
      - 2009 Building Engagement in This Economic Crisis, Gallup.

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