Exceptional customer experience (CX) has many benefits. According to Forrester, CX leaders grow revenue faster than CX laggards, drive higher brand preference, and can charge more for their products.
Good CX also correlates to better stock performance … sort of, noted Forrester Principal Analyst Rick Parrish.
CX Leaders and Stock Prices
Last October, Forrester released the latest version of its Customer Experience Index, which reveals the connection between customer experience and revenue growth across 17 industries. Parrish, Forrester Customer Experience Researcher Dylan Czarnecki and five other Forrester analysts decided to dig deeper to determine if CX quality correlates to stock performance.
“Our analysis found CX leaders outperformed CX laggards on both stock price growth and total returns,” Parrish wrote in a Feb. 28 blog post.
On the surface, at least, the results were impressive. Between Oct. 3, 2016, and Oct. 2, 2017, the price of the portfolio of CX leading publicly traded brands in the CX Index grew 32 percent, compared to 3 percent for the portfolio of CX lagging brands. During this same period, the S&P 500 Index grew 17 percent.
“When we looked at total returns over this same period, the findings were similar,” Parrish wrote.
Higher Returns, But …
The CX leaders generated a total return of 34 percent versus just 5 percent for the portfolio of CX laggards. Once again, the portfolio of CX leaders outperformed the S&P 500 Index, which returned 20 percent.
“But CX professionals shouldn’t bet their careers on these findings by using them as the sole justification for funding a CX transformation. That’s because many factors affect the price of an equity, from broad market conditions to the latest earnings report,” Parrish noted.
A deeper look at the data shows:
We’re comparing apples to oranges: The leader category contains different industries than the laggard category. “This means that our categories, of necessity, track different sets of industries as well as different levels of CX quality,” Parrish wrote.
Within a single industry, leaders don’t always outperform laggards: Even though a portfolio of CX leaders from across industries beats a portfolio of laggards from across industries, individual CX leaders don’t always beat individual laggards within the same industry.
“Out of the 15 industries with more than one publicly-traded brand, seven had CX laggards that outperformed the CX leader on total returns,” Parrish noted.
Strike the Right CX Balance
Confused? Don’t be. There may be some correlation between customer experience and stock performance. But it’s not the single most important factor when it comes to mastering the economics of the CX journey.
As KPMG, a global audit, tax and advisory firm, suggests:
“CX Journey Economics is about striking the right balance between what customers expect and what financially makes sense for your company to deliver.” Organizations that master the economics of customer experience can optimize spend while delivering winning CX.
To invest wisely and execute effectively, companies should think broadly and boldly about everyone who interacts with your company. That includes your customers, as well as your employees, partners, distributors, vendors, and all other stakeholders.
At Arke, this holistic approach is the foundation of brand experience excellence. By replacing the word “customer” with “brand,” we can expand the considerations as you design buyer, client, and employee journeys.
CX Leaders Embrace Brand Experience
Brand experience is a way of expressing commitment to the best possible experience for everyone connected to your company.
It is supported by stakeholder journeys, physical and digital channels, and strategically important technology. And it encourages a big-picture lens to evaluate experience in all of its contexts.
Rather than focus on isolated touchpoints or interactions, brand experience prioritizes the end-to-end journey. It encourages companies to think strategically and align their CX investments to their desired outcomes. It also encourages them to manage their CX investments by metrics, and prioritize journey mapping to deliver the best experiences.
The key is to deliver the right experiences — not every experience possible. You need a plan, and you need to execute against that plan.
By acting strategically, with focus, and with purpose, companies can deliver exceptional experiences, said Arke CMTO Chris Spears. You don’t have to be all things to all people. You just have to be the best you can be to the people that matter to your company.
Arke CX Summit
Spears and other members of the Arke leadership team will show organizations how they take their CX to the next level at Arke’s 3rd Annual CX Summit.
The exclusive, invitation-only event for clients and partners will be held April 18 at The Buckhead Club in Atlanta. Like last year, the event — Leading the Experience — is expected to attract dozens of industry professionals in search of strategic insight and actionable ideas about the rapidly evolving CX arena.
This year’s CX Summit will feature a series of high impact sessions and roundtable discussions, as well as notable speakers, including Michael Lage, senior manager of digital experience at Chick-fil-A.
Other speakers include Mo Bunnell, president of the Bunnell Idea Group; Matt Guffey, vice president of global industry segments, UPS; Bryan Hardman, director of marketing technology, Herschend Family Entertainment; Ryan Kramer, global brand and web marketing, Secureworks; Jamie Miller, digital marketing manager of operations, D.R. Horton; and Sabrina Sexton, director of digital marketing at Stanley Black & Decker.
Adobe, Coveo, Digizuite, Sitecore, and Windham Brannon are sponsors of the event.