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How Black Friday Could Hurt Your Business: The Economics of CX

Black Friday, Cyber Monday, and now… Turkey Thursday. Retailers increasingly look to the holiday shopping season (and the frenzied discount days) to account to boost annual sales. But, is there a cost? Yes: potentially billions in revenue.

Many retailers see their NPS–the likelihood to recommend a company, product, or service-significantly drop during November and December. A decrease in NPS–a metric for customer satisfaction–can negatively impact revenue, especially if the drop in NPS lingers further throughout the next calendar year.

Detractors of a company spend less than passives and promoters. If passives spend 50% more and promoters spend twice as much as detractors (the actual differences will of course vary by industry and brand), then if a company with an NPS of 30 were to experience a 6-point drop, it would be looking at a potential loss of revenue of around 1.8%. Let’s put that number into perspective: Wal-Mart had $447 billion in revenue in 2011. A 1.8% loss would be over $8 billion. In short: a significant drop in NPS could clearly have a grave impact on revenue, but it also shows that even smaller drops in NPS could still have dramatic effects on a business.

Want to learn more about quantifying the value customer experiences? Download this webinar to hear our Senior Research Scientist discuss his groundbreaking research on the financial impact of customer experience, recently published in the Harvard Business Review.