In support of this perspective, here are some interesting statistics that can help quantify the value of allocating time and resources to the customer experience and to effective customer service:
- 80-90 percent of service problems are leadership related (Deming, Juran, and Crosby)
- Fewer than half of US executives know who their most loyal customers are (Acxiom & Loyalty 360)
- A 5% increase in customer retention increases a company’s profits by 25% to 95%, and a 10% increase in customer retention levels result in a 30% increase in the value of the company. (Bain & Co)
- Consumers who have stated that they have a strong relationship with a single brand, over 64% said it was because they had a “shared value” with the brand in question (Harvard Business Review)
- 70% of buying experiences are based on how the customer feels they are being treated.(McKinsey)
- It is 6-7 times more costly to attract a new customer than it is to retain an existing customer. (White House Office of Consumer Affairs)
- 55% of customers would pay extra to guarantee better service (Defaqto research)
- A 2% increase in customer retention has the same effect as decreasing costs by 10% (Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy)
- 96% of unhappy customers don’t complain, however 91% of those will simply leave and never come back (1Financial Training services)
- 83% of consumers require some degree of customer support while making an online purchase. (eConsultancy)
- 45% of US consumers will abandon an online transaction if their questions or concerns are not addressed quickly. (Forrester)
Beware… while many have recognized the above-listed realities, they have also failed to make effective transitions that truly improve the customer experience or retention levels.
According to a recent McKinsey article, some of the most common pitfalls associated with ineffective customer experience transformations are:
- Lack of vision. “Many managers enter a transformation with no real vision for the organization’s future state,” the article explains. “Instead, they have a general desire to improve the customer experience and rush into action very quickly, before defining a more specific vision. Targets are often vague, devoid of aspiration, and lacking in specificity…”
- No top-level commitment. If the transformation effort doesn’t become a top priority for the CEO and the executive team, it will likely lose momentum or stall completely as other “priorities” arise, or when various stakeholders resist the “extra work,” or when general apathy materializes.
- Failure to quantify potential gains. Without a clear expectation of the anticipated return-on-investment, it can be difficult to secure sufficient resources or the necessary budget.
- Misaligned goals. Referenced as “heedlessness” by McKinsey, launching a customer-experience transformations based on assumptions about what matters most to customers can result in little-or-no gain and lots of frustration. “Some organizations set out to boil the ocean,” the article states. Similarly, and despite good intentions, trying to transform all parts of the business at once will seldom result in success.