Public companies ranked poorly by customers also saw their stock market values decline over the past seven years while leaders in customer experience soared past the S&P 500, a consulting firm reported last week.
Updating an analysis launched five years ago, Watermark Consulting tracked the total returns of the Top 10 (“leaders”) and Bottom 10 (“laggards”) ranked public companies in Forrester Research’s annual Customer Experience Index study.
While the S&P 500 index rose 51.5 percent from 2007 to 2013, the customer experience leaders saw stock values soar 77.7 percent.
For the customer experience laggards, stock market returns fell 2.5 percent.
“Many business leaders pay lip service to the concept of customer experience—publicly affirming its importance by privately skeptical of its value,” says Jon Picoult, founder and principal of Watermark.
The message of the analysis: companies that deliver a great customer experience are rewarded over the long-term—by Main Street and Wall Street, Watermark says.
Whether it’s a complicated purchase process, a difficult-to-use product, confusing correspondence, or just poor service, Picoult says many companies excel in frustrating their customers. “Eventually, they pay the price for that,” he added.
In the prior study, laggards underperformed the S&P 500 index by a wide margin. But this year’s result is even more compelling.
The fact that customer experience laggards actually posted a negative return during a period when the broader market rose sharply is “a sober reminder of the cost of customer dissatisfaction,” Picoult says.
In a report on the findings, Watermark not only makes note of the problems that turn off customers—including dizzying 800-line menus to complicated sales processes. It also gives a five-step guide outlining what the leaders do right.
Topping the list: they aim for more than customer satisfaction. Recognizing that customers who are “merely satisfied are far less likely to drive business growth,” they aim higher, the report says.
A full copy of the report—The 2014 Customer Experience ROI Study—is available at http://bit.ly/CX-ROI