At Medallia, we help create companies that are loved by customers. This is a noble goal in itself, but at some point, we inevitably get asked: “How does CX affect my bottom line? Is this really worth investing in?”
Many leaders continue to struggle when making the business case for customer experience in their own organizations. According to our research, the financial impact of a great customer experience can show up in a surprising number of places. The best CX programs have a crystal-clear understanding of which customer outcomes and behaviors drive the greatest value for their business. Some enhance CX to improve the revenue side of a company’s profit equation, and others to improve costs.
We recently examined how 15 companies across nine industries measure and track the impact of their customer experience initiatives. Based on these examples, we have created an organizing framework that other CX leaders can use to demonstrate economic value in their companies.
For example, Farmers Insurance, led by the newly appointed CEO Jeff Dailey, recognized how vital customer retention was to the company’s financial performance. Dailey asked his team to dig deep to understand what customers valued about their insurance experience and what Farmers could do to make it better. He believed that improving key interaction points for customers, as well as their overall experience, would help Farmers boost retention and increase profitability.
Thanks to these initiatives, Farmers’ Net Promoter Scores rose steadily, and customer retention increased by three percentage points over the following three years. The impact on retention equated to an additional $500 million in annual revenue, according to Dailey. By understanding which customer behaviors had the greatest impact on financial performance, Dailey turned the ship around and kept the company on course.
Read more in the whitepaper here.