How the Revenue Upside of Improving CX Varies by Industry
The relationship between CX and revenue potential is one piece of the puzzle. The other is the distribution of CX Index scores by industry. Taken together, they offer valuable insights into where companies in an industry should focus their CX efforts. In its recent report, Drive Revenue with Great Customer Experience, 2017, Forrester offers insight into the upside of improving CX in various industries.
Highlights of the report’s findings include:
- Auto manufacturers: Mass-market auto manufacturers have the highest revenue potential. The high per-unit revenue from the sale of each vehicle makes winning additional customers very attractive to automakers. While the revenue from servicing a vehicle is far lower on a per-transaction basis, it is still significant because it occurs far more frequently.
- Wireless Service Providers: Wireless service providers gain most by improving poor experiences. Wireless service providers have the third-highest CX-driven revenue potential among the industries Forrester analyzed. Even though the per-customer revenue potential of CX is moderate, the big players each have tens of millions of customers. With revenue potential tapering off at high levels of CX, wireless service providers should improve the worst experiences instead of refining good experiences. This should be a great incentive for most large wireless service providers, which each have about a third of their customers who say they have very poor experiences.
- Airlines: Airlines gain more by avoiding defection than from delighting happy customers. Poor airline experiences can drive unhappy customers to alternative airlines that deliver better experiences — like JetBlue. And there’s no lack of unhappy airline customers. On average, more than 50 percent of the customers of the biggest airlines say they have poor or very poor experiences. Improving CX for the unhappiest customers can help airlines stop customers from abandoning them and retain that revenue.
- Retail and Banks: Retail and direct banks should maximize CX Index scores — the sky’s the limit. For traditional retail banks, increasing an already excellent CX Index score by one point drives revenue potential four times as much as increasing a poor CX Index score by one point. For direct banks, the impact of improving an excellent CX Index score is three times higher than the impact of improving a poor score.
- Credit Card Providers: Credit card providers shouldn’t bet on CX for large revenue gains. As credit card providers improve CX, they might see financial benefits like lower service costs and lower pressure from regulators, but the revenue impact from improving CX is low. That’s because there is no evidence that customers spend more on a credit card just because their experience with the credit card brand is good. And not many customers opt to get a second credit card from the same brand. But credit card providers’ advocacy revenue potential is 10 times greater than for other industries, accounting for 31 percent of the industry’s total CX-driven revenue potential.
- TV and Cable Providers: TV service providers stand to gain on both ends of the spectrum. CX scores and revenue potential for TV service providers move in lockstep.19 They can thus expect a solid upside from improving experiences at all levels of CX. Most large providers’ poor CX performance today leaves a large revenue potential untapped. But even for higher-scoring firms, investing in CX can pay off because it can reduce the risk of cord cutting, which erodes subscription revenue. Customers who had excellent experiences were 30 percent less likely to cut the cord than customers who had poor experiences.
How can your organization benefit from improvements in CX? Read the full report to learn more.
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