Does improving every interaction with customers have a big effect on the bottom line? I think we could all agree that it does but what industries could benefit the most? Great to know as you visit your clients and talk about Customer Experience (CX)...
"Customer experience (CX) is now seen as vital to differentiate and future-proof businesses in sectors from retail to hospitality.
But recent Forrester research shows that CX investments don’t always have a linear relationship with company growth. In fact, the ROI of CX initiatives is highly industry-specific, with many brands still struggling to fully glean and respond to customer insights.
Let’s look at banks. Financial services is an industry that intimidates and frustrates many customers, with information that overwhelms and service that underwhelms.
But examining true consumer insights can reveal many opportunities to improve CX in the category, like humanizing finances with in-branch workshops or offering chatbots that help customers track spending.
More important, understanding consumers and implementing CX initiatives pays off exponentially in this industry -- meaning that the revenue potential is significantly (three to four times) higher when improving CX beyond an “excellent” level than when boosting poor experiences.
Airlines and wireless service providers have the opposite CX revenue potential, meaning that these companies will gain most by improving poor experiences rather than refining good experiences.
This threshold makes sense. As a customer, you want to feel in control, and constant dropped calls and delayed flights interfere with that feeling. They are much more frustrating than a blip in an otherwise perfect connection or a disappointing meal on a long-haul journey.
Similarly, the gap between “poor” and “good” customer service has a bigger effect on a customer’s impression of a company than the gap between “good” and “excellent” when it comes to resolving technical or travel issues. Issue remediation should clearly be a top priority for these industries, according to Forrester. Despite eventually diminishing returns, investing in meaningful CX that responds to what consumers really want from companies in these categories is still the way forward.
Some industries, like health insurance and big box retail, can increase ROI by solving for both ends of the spectrum, whether fixing broken experiences or enhancing good ones. Because of this linear relationship, brands in these categories should focus on providing top-notch customer service while investing in innovation.
The ROI of CX also has an additional barrier in industries like food service that operate with a low-profit-margin, high-product-volume business model. CX initiatives in this industry do not necessarily result in higher ROI and are not proven to drive loyalty and retention versus sticking to the status quo. Meanwhile, every CX investment eats into the already small margin on each item and to maintain profitability the company may need to raise prices, risking angering or losing existing customers.
So what can all industries do to deliver on increasing customer expectations, regardless of revenue potential from CX improvements?
“Solving” CX is not about racing to the latest cutting-edge technology gimmicks. Instead, companies should see meeting customer expectations as just the beginning. To differentiate in a way that delivers ROI and future-proofing, companies need to re-center on understanding real human truths: observing customers, unlocking insights from behavioral data, and prioritizing opportunities to meet people’s needs.
These efforts require commitment and investment, no matter the industry, but it’s the only way to reimagine how to create powerful experiences that meet rational and emotional needs. It’s at the intersection of truth and beauty -- where real value is created for both people and businesses.