Wall Street Rewards Customer Experience Leaders

Why invest resources in customer experience strategy?

By Jeofrey Bean

What is the value of customer experience? Why invest resources in customer experience strategy? Because Wall Street rewards customer experience leaders.

You may recall from reading the book The Customer Experience Revolution – How Companies like Apple, Amazon, and Starbucks Have Changed Business Forever, that one of the pioneers in answering those questions is John Picoult, Founder & Principal and Watermark Consulting. And if you do not recall, that is fine too. Here’s a quick introduction.

In 2007 Picoult created a Customer Experience Return on Investment Study that produces a “CX ROI” index. The index is made by comparing the stock market values of customer experience leaders with those of customer experience laggards.

Picoult describes the foundation of the index “We accomplished this by studying the cumulative total stock returns for two model portfolios – comprised of the Top 10 Leaders and Bottom 10 Laggards of publicly traded companies in Forrester Research’s annual Customer Experience Index rankings.

This Customer Experience ROI Study has been updated every year since its inception in 2007. Now the bottom line is stronger than ever – Wall Street rewards customer experience leaders.
Whether your company is publicly traded or not, small or large, the results are still very important.

Two outstanding insights are consistent “leaders outperformed the broader stock market, generating a total return that was 26 points higher than the S&P 500 Index” according to Picoult. He also points out that “Laggards trailed far behind, actually posting a negative return during a period when the broader market rose sharply.”

The CX ROI study sites the hallmarks of the leaders “as having higher revenues from better retention, less price sensitivity, greater share of customer spend and positive word-of-mouth.” The experience maker companies have lower expenses compared with laggards. This includes reduced acquisition costs, fewer complaints, and reduced demands for service since the customers are happy and more likely to advocate for the company. Combine this with higher stock valuations on Wall Street and it’s easier to understand the value of customer experience and why investing in a customer experience strategy makes sense and money in the long run.

I’ll meet you right here next month in Fleet Management Weekly with additional insights to help you create The Fleet Customer Experience Revolution!

Reference Links:

Jeof’s web site and e-mail address
http://ift.tt/1mV1ntx
jbean@delmarresearch.com

Jeofrey Bean keynote speaker highlights (3 minute video)
https://www.youtube.com/watch?v=znpNuczexiA

Jeofrey Bean’s Amazon author page
http://ift.tt/1IYac2s

The 2014 Customer Experience ROI Study by John Picoult, Founder & Principal and Watermark Consulting
http://ift.tt/1EeQz2V

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