Customer Experience Statistics that Show the CX Impact to Revenues, Profits and ROI

Highlights

  • Customer experience (CX) statistics can be used to improve planning, accelerate progress, reduce risk and forecast performance results.
  • Customer experience statistics can be used to show what works, what doesn't and how business leaders can leverage market data for their CX program success.
  • In this post, we share the stats that show how CX impacts company revenue growth, profit growth and ROI.
Johnny Grow Revenue Growth Consulting

If you are building the business case for a customer experience program, or you just want to know how CX impacts revenues, profits and ROI, here are the stats that can help.

How CX Impacts Revenues

There are a variety of data points that collectively demonstrate how CX impacts revenue growth.

  • Forrester shares that the brands that deliver the best CXs report 7 times more revenue than their competitors that lag in such efforts.
  • Bain & Company did analysis that found CX leaders grew revenues 4 to 8% above their markets. The data found that differentiated CXs resulted in customers that buy more, stay longer and make recommendations to their friends.
  • Dimension Data's Global Customer Experience Benchmarking Report found that companies with improved CXs reported 84% revenue uplift, 92% higher customer loyalty and 79% cost savings.
  • A Forrester report titled,¬†Customer Experience Drives Revenue Growth,found that CX leaders achieved compound¬†average revenue growth of 17% while CX laggards achieved just 3% growth during the same period.
  • Research survey results published in Forbes advised that 25% of customers are willing to pay up to 10% more in almost every industry if they receive excellent customer service.
  • Research from Redpoint Global shows that 70% of customers say they will shop exclusively with companies that personally understand them.
  • According to Accenture, 75% of customers are more likely to purchase from a company that knows their name, their purchase history, and recommends items based on their purchase history.
  • A white paper produced by Forrester, titled The Business Impact of Investing in Experience, reported that companies who delivered superior CXs grew revenue 1.7 times faster and increased customer lifetime value 2.3 times more than other companies in the past year.

How CX Drives Profits

Increasing revenues is only one side of the profit equation. Reducing costs is the other. Every dollar a CX program saves the company flows right to the bottom line. Here are some stats that reinforce the CX effect on cost savings.

  • Research performed by Salesforce found that 80% of customers now consider the experience a company provides to be as important as its products and services. But just being important doesn't make it profitable. Fortunately, there are stats that make this connection.
  • Research by Deloitte found that customer-centric companies were 60% more profitable compared to companies not focused on the customer.
  • A research advisory published at Harvard Business Review found effective customer experience management can lower the cost of serving customers by up to 33%.
  • Lowering the cost of sale delivers a big bottom-line financial impact. According to a Forbes publication, it can be five times more expensive to find a new customer than to keep a current one. That's supported by Marketing Metrics who advise the success rate of selling to an existing customer is 60-70%, while the success rate of selling to a new customer is 5-20%.
  • Or put another way, Harvard Business Review advises it's between 5 times and 25 times more expensive to acquire a new customer than to retain and satisfy an existing customer.
  • On average, companies lose about 10% of their customer base each year. So, for many companies, customer retention is the new business growth strategy. Research by Frederick Reichheld of Bain & Company finds that increasing customer retention rates by 5% increases profits by 25% to 95%.
  • And according to customer retention stats shared at Destination CRM, a 2% increase in customer retention has the same effect on profits as cutting the costs by 10%.

The Customer Experience ROI

Without a demonstratable ROI, CX programs can find themselves on the chopping block when budgets get tight. Fortunately, several research studies and surveys demonstrate measurable ROI.

  • Customer experience research shows that the median Customer Experience ROI is 356%. That means for every dollar invested into a CX program, the company earned $3.56 in additional revenue.
Customer Experience ROI
Customer Experience ROI | source: Customer Experience Research Report

See the customer experience research that shows for every dollar invested into a CX program, the company earns $3.56 in additional revenue.

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  • Research performed by Accenture's Avanade found similar results. Their data showed that for every dollar of CX investment the company nets back $3.
  • A Forbes article advises that CX drives ROI in largest part because loyal customers make far more purchases. In fact, for most companies, about 20% of the customer base will drive about 80% of the company revenues. These customers are also 50% more likely to try new products.
  • But it is important to recognize that CX driven profits vary by industry. The below graphs show how customer experiences impact revenue and profit growth for different types of industries.
Customer Experience Investment and Profit Relationship
Customer Experience Investment and Profit Relationship

The differences are due primarily to the effort of switching suppliers. Industries with low switching barriers will incur larger profits from their CX investments while industries with higher switching barriers will not realize the same payoffs.

And another a word of caution. Customer experience trends show that delivering experiences beyond expectations doesn't always produce a profitable outcome or positive payback. A KPMG report, titled How much is customer experience worth?, shares that failing to meet customer expectations has been shown to have twice the negative impact as delighting customers has a positive impact. It also advises that delighting customers reaches a point of diminishing returns quickly. Measurement is needed to know how much to invest before investments result in losses.

Customer Experience Economic Value
Customer Experience Economic Value and Diminishing Return | Source: KPMG