It’s easy to see CX (Customer Experience) initiatives as a drain on customer resources. By the end of 2022, global CX technology spending is set to reach a value of 1 billion, with organizations investing in everything from CRM tools, to cloud-based contact centres and AI.
If your budget is limited, you might assume allocating funds to things like product development, advertising campaigns, and sales strategies is far more lucrative than doubling down on “CX”. However, the statistics show a different story.
Even in a world where brands can easily spend a significant portion of their budget on outsourced talent, enhanced analytics technology, and omnichannel services, the return on investment for CX is impossible to ignore. Around 87% of business leaders say customer experience is their biggest growth engine, delivering more revenue, customers, and results than any other strategy.
The ROI of Great Customer Experiences
In virtually every industry, the research shows that investing in great customer experience pays dividends. Customer service is no longer a “money sink” for major brands, but a valuable investment, capable of boosting loyalty, retention, and even customer spending habits.
Gladly’s “Customer Expectations” report for 2022 found 72% of consumers are willing to spend more on a brand that guarantees a good customer experience. The research found “customer loyalty” and satisfaction levels are the most significant indicator of whether a business will thrive or not.
Gladly’s research isn’t the only report to highlight the financial value of good CX either. Studies have found investing in CX can boost your revenue streams by:
- Increasing customer loyalty: Happy customers are more likely to stay with your brand, and continue purchasing from your company. Alternatively, 83% of customers will leave a brand based on a bad service experience alone. Studies by Bain & Company found using good customer service to increase retention by 5% can be enough to increase profit by 25%. That’s because repeat customers spend up to 300% more than new clients.
- Enhancing average order value: 66% of customers say they prefer brands that can make personal recommendations based on their previous purchases. What’s more, 1 in 4 customers actively purchase products recommended by service agents. Investing in good customer service gives your business more opportunities to increase average order value through cross-selling and upselling opportunities.
- Improving sales numbers: When it comes to generating new sales, your chance of selling to an existing, satisfied customer is 14 times higher than your chances of selling to a new customer. What’s more, 72% of customers say they’ll share a positive experience with 6 or more people. Investing in customer satisfaction can help you expand the reach of your brand, and attract new potential clients.
- Reducing customer churn: All companies lose customers, but you’re far more likely to miss out on long-term, loyal clients if you don’t have the right customer service strategy. 42% of customers say they would stop buying from a company all together after just 2 bad experiences. What’s more, 55% of customers intending to make a purchase from a brand say they backed out because of poor service.
- Boosting brand reputation: A strong brand reputation instantly equals better profits. When customers know they can rely on your business to deliver excellent experiences, they’re more likely to purchase something from you. Having a good reputation for good service can also significantly reduce your “customer acquisition cost”. Studies show companies with great reputations can spend less on marketing and promotion to lure new customers.
Customer Experience is the Best Investment for Your Brand
For years, the “customer experience” strategy has been overlooked by brands. While it’s true investing in outsourced professionals, and tools for excellent customer service can incur a cost initially, the value you earn in return is well worth the initial spend.
In fact, 83% of companies who believe in the importance of great customer satisfaction say they also experience rapidly growing revenue. Plus, brands with superior customer experience generate up to 5.7 times more revenue than their competitors.
Customer experience has now emerged as the ultimate differentiating factor for any brand. Invest in customer experience, and your clients will reward you with their loyalty, their money, and even by advocating your business to other prospects. Underestimate the value CX can offer, and you risk losing money, customers, and opportunities.