Wootric

Wootric (now InMoment) uses CX metrics—Net Promoter Score, Customer Satisfaction and Customer Effort Score—to monitor customer experience for high-growth companies. We take a customer-centric approach to survey design. For example, our modern 2-question Net Promoter Score survey invites customers to elaborate freely on the reason for their score. We deliver millions of surveys that achieve response rates of 30-40%, generating thousands of pieces of unstructured customer survey feedback each week.

Why Is Survey Feedback Important?

Because when you communicate directly with your customers, they can identify exactly what works, what doesn’t work, and where the pain points are that may be detracting from their experience. Honest feedback gives you the insights you need to make improved business decisions and optimize the customer experience. As such, the right customer survey can play a significant role in increasing customer retention and helping your organization reach its goals.

Customer feedback comments are a treasure trove of information that can help a company shape their product and service for success. Until now it has been difficult for a Customer Insights Manager or customer experience management (CXM) teams to mine and aggregate qualitative data for insights that can guide business decisions.  

Auto-Tagging with Sentiment Analysis

We recently announced early access to a new product feature: auto-tagging. For auto-tagging, we use our homegrown machine learning system along with Google Cloud Natural Language API to automatically categorize open-ended customer-survey feedback that our customers get as part of their NPS, CSAT and CES programs. The goal is to help companies put some structure to all of this qualitative data. We have a long list of customers eagerly waiting to get their hands on this feature. It’s a good problem to have.

In addition, we are developing the ability to identify the sentiment of the feedback. The goal is to determine not only what the customer was talking about, but to say whether the feedback is positive, neutral or negative. It is particularly complex to decipher multiple “sentiments” within a single comment.  

Here is an example feedback comment that we received in response to a Net Promoter Score survey on our own production application (we practice what we preach):

“Setup guide for customizing social sharing on iOS SDK was confusing. Diego reached out with sample code which helped a lot.”

Wootric (now InMoment) is a SaaS product, so our auto-tagger uses a SaaS data training model and applies three tags to this survey response (Documentation, SDK, People), and assigns a NEUTRAL sentiment for the feedback as a whole. This obviously is pretty good, but we want to do more.

Wouldn’t it be nice if we could dig deeper into survey feedback and apply sentiment for each tag as well? In the above example, the customer was not happy with the SDK Set-up Guide, but was pleased with Diego’s assistance.  This nuance is buried under the overall NEUTRAL sentiment. Ideally, the Documentation and SDK tags would be identified as having negative sentiment, while the People tag would be positive.  

We Can Identify Sentiment Associated with People, Team, Organization or Location

Buried survey feedback is not a trivial problem to solve. However, using Google Cloud Natural Language API’s latest feature called “entity sentiment analysis” we have made progress. We can already get sentiment for entities referenced in feedback where an entity is defined as People, Team, Organization and Location. In this case, Diego is an entity of type People and positive sentiment is correctly attached to it.

Example of Auto-tagging an InMoment NPS Survey Response

A Business Use Case

Our customers often trigger a CSAT survey using our incoming webhooks and workflows when a support case is closed in their CRM system like Salesforce or Zendesk.

We notice that survey-feedback responses often reference a team or specific person that the customer has engaged with. Auto-tagging this feedback as “People” with applicable sentiment will provide these companies with an easy way to measure and track how customers are feeling about the people aspect of a company’s Customer Success or Support program.

Net Promoter Score is the go-to CX metric for companies that want to measure and improve customer loyalty, a harbinger of growth. Thousands of companies use NPS, from the start-ups of  Silicon Valley to the Fortune 500.  One reason for this popularity is that Net Promoter Score programs have evolved in response to technology and the changing landscape of customer expectations. 

The core tenets of Net Promoter Score have stayed the same since NPS was created in 2003 by Bain & Company. “How likely are you to recommend this product or service to colleagues?” is the NPS survey question, and it is followed by an ask for open-ended feedback. Customers respond on a scale of 0-10 and are bucketed into promoters, passives and detractors based on their response. The formula for calculating the NPS metric is straightforward.

However, the world of customer experience management, or CXM, has changed dramatically. A few macro things have happened.

1. Social media has empowered our customers with a voice — the conversation is no longer expected to be only one way, and negative word of mouth can be amplified quickly. Every voice counts.

2. We as businesses have to work harder than ever to retain customers — customer experience is increasingly a differentiator and a battleground with more competition and low switching costs.

3. Companies have many more touchpoints to engage with customers than it did back in 2003.We now have sophisticated mobile devices, web platforms, customer facing point of sale systems. Meanwhile, our customer’s email boxes are overstressed with newsletters and promotions all vying for their attention.

When I ran NPS campaigns back in 2003, I was sending long form surveys to my customers in quarterly batches. Emails with links to long form surveys were considered the ‘innovative’ way to get feedback. Response rates were dismal. Sadly, I still receive some of those today!

This, of course, still is a valid way to collect NPS feedback — you will get some of your customers to go through the effort — but it doesn’t take advantage of any of the macro trends I mentioned above. And honestly, customers are getting smarter and less patient with spammy surveys.

How Net Promoter Score has evolved

Modern NPS leverages technology, closes the loop with customers and engages the whole company.  Here is what you should expect:

• Timely, ongoing feedback. You can keep a real-time pulse on your business. This alone is magical. Reading, sharing and responding to customer feedback as it happens — talk about raising the profile of the customer’s voice inside a company!
• Modern NPS survey is short and to the point — just the NPS rating and open-ended feedback. A 10 or even 5 question survey? No way.  Survey fatigue is a real issue. Keep it short and you will get many more customers to tell you what’s most important to them.
  
• Reaching customers where they want to give feedback, in a low-friction and lightweight way. For example, in-app surveys that take seconds to complete may a better experience for SaaS customers than dealing with another email survey in a crowded in-box. E-commerce companies may use a combination of in-app, email, or SMS to reach their customers depending on where they are in their journey.

• High response rates — your expectations should jump up from single digits to 30-40%. Customers are willing to give you feedback cycle after cycle because it’s easy. 

• Leverages intelligent NPS software. Software that is designed to get your business to action faster. It’s giving you analytics. It’s helping you comb through open-ended text and sentiment. And it’s making the process of closing the loop with customers easy and turnkey.

• Customer feedback is shared internally. It doesn’t get buried in spreadsheets and left unaddressed. It is shared in Slack, it is routed automatically to departments to take action in their systems of record such as Intercom, ZenDesk or Salesforce.

Net Promoter Score has come a long way, and the end result is better outcomes for companies and their customers.

Most customer success articles you’ll read talk about helping customers reach their ideal outcomes – ideal outcomes are the most important thing, the very job description of customer success. But there’s another job that comes before ideal outcomes, one which, if done poorly, will result in churn even if ideal outcomes are achieved.

Setting expectations.

Let’s begin with a cautionary tale – a true story – of a SaaS app that failed to set expectations that matched what the app did.

It’s a fitness app which shall remain nameless, but it’s much like its primary competitor, MyFitnessPal. Unlike MyFitnessPal, it offered a sleek, integrated user interface that seamlessly brought together exercise tracking via pedometer and nutrition tracking, but it also offered something more: A personal fitness coach. (I should also mention that this particular fitness app is one of the most expensive currently on the market – but for such personal attention? Totally worth it.)

Except.

While on the website copy and in the app itself, this company promised a customized approach to getting fit, complete with a personal wellness coach who would be accessible via private chat to offer encouragement at times of crisis and temptation, it didn’t deliver as described.

Within a few days, it became apparent that the “personal coach” is really only accessible via group chat. In fact, if you try to contact the coach via the in-app private chat box (which even has the coach’s picture on it), the coach will never actually see your message – you’ll get an automated reply from a bot.

When all of this was revealed – in the group chat room – every participant was taken aback, and several initiated their free trial cancellations within days.

Even though they liked the app.

Even though they were already seeing the results they’d hoped for.

Yes, even when customers were achieving their ideal outcomes, because of the mismatch between their expectations and the services delivered, they left.

But not before sending feedback – which went unanswered.

It was a customer success failure of a magnitude we don’t, frankly, see very often. And it’s almost painful when you realize that nearly all of their churn was completely, 100% avoidable.

If only they had matched customer expectations to what they were actually prepared to deliver.

What it felt like was a bait and switch.

Setting expectations is a foundational element of customer success

“There are three key tasks that challenge every Customer Success team in its initial phase of development. The first is to appropriately set and manage perceptions and expectations, both of the customers and of the rest of the company. The second is to establish a clear and necessary connection to significant revenue streams and profitability. The third is to gather, analyze and use the right data to fulfill the group’s mission.” – Mikael Blaisdell ED, Customer Success Association

The fitness app example above is a classic case of sales and marketing not being aligned with product development, customer service, and customer success. Clearly, none of these departments were speaking with each other, or customer service could have told marketing that customers were complaining about being misled. Or marketing could have spoken with produce development to see how they could better deliver on the promise that was bringing people in the doors.

None of these things happened, but an empowered customer success team could have bridged these gaps.

Customer success, of any department, has the power to bring people together. Because, at the end of the day, we’re all working for the customers’ success. We’re all trying to create a product and experience that works.

If you find yourself spending time trying to “adjust” customer expectations, check in with sales. Check with marketing. Check with customer service. See where the disconnects are, and what you can do to address them and bridge those gaps.

7 Rules to Set Customers up for Success with Expectation Management

Rule #1: Communicate

The key to setting expectations – and setting customers up for a successful experience – is really communication. Not only do you have to communicate clearly and accurately with the customers themselves, you also have to keep lines of communication open with all of the other departments who have a hand in creating the customer experience.

Rule #2: Don’t overpromise (and under-deliver)

That fitness app made promises it clearly never intended to keep – maybe that was intentional (a real bait and switch!), or maybe it was the unhappy result of teams failing to communicate what was possible to deliver. Either way, they committed the cardinal sin of expectation management – they created a high expectation and failed to reach it.

Rule #3: Know what you can and can’t do

To avoid overpromising, you have to know what you can afford to do for customers. Often, this isn’t easy because management and customers expect that you can do more than is realistically possible, which means you have to manage expectations on both sides. If it’s a time issue, start tracking how much time it takes you to do certain tasks, or to serve each customer. If it’s a funding issue, keep tabs on what it costs to deliver everything that is expected. Then you can build a case for getting more funding, or pairing down services.

Rule #4: Talk through obstacles

When working with customers to define their ideal outcomes and success benchmarks, discuss potential obstacles from the start. Discussing potential issues before they arise prevents  customers from getting nasty surprises, and prepares them to work with you to overcome these roadblocks.

Rule #5: Value your customers’ trust

Nothing upsets customers more than feeling like they’ve been duped – that you’ve violated their trust. Trust is easy to lose, and nearly impossible to win back. And once a customer stops trusting you, they stop being customers and become detractors, telling everyone who will listen their story about how you let them down. Customer loyalty, lifetime value and retention are rooted in trust. And without them, your SaaS business can’t survive.

Rule #6: Track user behavior & sentiment

It sounds like SaaS 101, but clearly not all SaaS companies are tracking when and why users are bailing out of the onboarding process. If you don’t have a system in place to send “red flag” notifications when users are exhibiting signs of distress, you’re losing customers and probably don’t even know why. It’s well worth the investment to purchase a good user survey system to keep your finger on the pulse of CX metrics like Net Promoter Score (NPS) for customer loyalty, or Customer Effort Score (CES) to keep tabs on how onboarding is going. 

Rule #7: Let them know when you’ve exceeded expectations

Okay, now for the fun one: When you’ve exceeded expectations (or when they’ve reached a milestone faster than expected), make sure they KNOW it! Celebrate with them. Point out their successes and you’ll help to reaffirm their high opinion of you.

Customer success teams are uniquely positioned to understand the whys behind the whats of user behavior. But if you keep all of your insights to yourself, without sharing them with other departments, you’ll continue having to “manage” mis-aligned expectations. Set yourself up for success (and your customers too), by addressing expectations early.

The challenge of open-ended feedback

Qualitative feedback in survey responses: Marketing, Product, Customer Insights, and Customer Success teams love it! There is nothing quite like hearing authentic, open-ended comments about your product or service directly from customers in their own words. Nothing is more powerful than hearing from the customer first hand: It drives action.

Individual anecdotes tell a story that can provide color and context to business metrics like Net Promoter Score, but how do you make it actionable? How do you aggregate qualitative data to see trends and get insights that can drive business decisions?  To a certain extent, this has always been an issue for voice of the customer feedback programs. However, two broad trends are driving an increase in qualitative data and creating more urgency. As a result, the problem of “metricizing” open-ended feedback is now more acute.

Customer experience survey trends that are driving the need for NLP

First trend: The shift to customer-centric surveys.

It has become more and more difficult to persuade customers to respond to traditional company-centric surveys — the multi-question monstrosities that ask customers to rate attribute after attribute on a 5 or 7 point scale.  Long, boring, tedious — and frustrating. Response rates in the single digits are common.

I recently visited the website of a major department store and was prompted to fill out a pop-up survey with over 30 (!) questions. I thought I’d get an opportunity to tell the retailer what was important to me — how much I loved their shoe selection and that I’d had a disappointing experience in one of their stores. I didn’t finish the survey.

In an effort to improve response rates, many companies are now thinking about the survey experience from the customer’s perspective. A Net Promoter Score survey that asks one question and lets a customer provide open-ended feedback is a better user experience — and customers are more likely to respond.

Wootric is modern customer feedback management software that allows businesses to gauge and quantify customer loyalty through proven feedback metrics such as Net Promoter Score (NPS), Customer Satisfaction (CSAT) and Customer Effort Score (CES). We are firm believers in the customer centric approach.

For example, here’s an NPS survey that Wootric presents in-app (we also support mobile, email and SMS) that usually takes a user less than 30 seconds to complete.

Second trend: Hearing from as many customers as possible.

Traditionally, customer research efforts were satisfied with feedback from a statistically significant sample of customers. Now that any customer has the potential to influence the trajectory of a business — whether taking their complaints public on Twitter or writing a glowing review on Yelp or G2Crowd — more companies are proactively asking all customers for feedback. This instantly opens a direct communication channel, and gives companies the opportunity to build, monitor and leverage  relationships with any and every customer.

These trends put the onus on companies to make sense of a firehose of open-ended feedback, and that is tough to do.  Dedicating resources to tagging and sorting hundreds, even thousands, of comments is expensive and just doesn’t scale.

Natural Language Processing to the rescue

Natural Language Processing (NLP) is a type of machine learning that enables computers to understand human language. You can read how Wootric applies NLP to customer feedback like NPS and CSAT survey responses in this article.  And here are three familiar examples of NLP at work:

• Machine translation like Google Translate.
• Sentiment analysis — sifting through all those Twitter posts to analyze how people feel about the latest iPhone, for example.
• Chatbots — the customer support “agents” that have become the first line of interaction when you reach out for tech support online.

Unlocking the power of open-ended feedback

NLP is solving the unique challenges in the field of customer feedback management using text and sentiment analysis. Being on the forefront of this innovation means Wootric customers are seeing those benefits now. We work to free our customers from the time and expense required to manage this data. We use text and sentiment analysis to surface and aggregate insights for our customers, helping them to prioritize resources and route responses for follow up action. Read more about what we are up to here on the Google Cloud Platform blog.

Customer success teams measure and track many key metrics. From SaaS platform usage to NPS, they are always analyzing data to maintain a pulse of customer health and happiness. Many of these stats will also go into an overall account metric known as Customer Health Score.

Wootric recently hosted the San Francisco Customer Success Meetup and the focus of the evening was Customer Health Score (CHS). Three experts shared their techniques for constructing and measuring this metric.  Loni Brown from Entelo, Jeff Johnson from Splunk, and Jon Turri from Raise.me offered several tips and insights to setting up a Customer Health Score program and the intricacies involved.

What is Customer Health Score (CHS)?

Customer Health Score is a metric designed to predict a customer’s likelihood to stay a customer  – or churn. Loni started by providing her explanation of what CHS is, “a metric that provides insight into what is happening in your customer accounts early enough that you can be proactive.” Formulations of CHS can be simple, but are often complex.

That description works well, but there isn’t an industry standard for Customer Health Score, which may be confusing and overwhelming for some customer success teams. The panel agreed that variables and the weighting formula for CHS vary based on the company and industry. It depends on what is indicative of success for your customers.

What Goes Into a Customer Health Score?

Each of the panelists has had to identify and gather the metrics available to them, then single out the most indicative numbers to create a formula for their score. This means the first iterations are often messy and need regular adjustment until the method produces results that are consistent with how CSMs see their accounts.

When creating your score, it’s good to isolate 4-6 indicators for CHS. Loni mentioned that the Entelo CHS score card includes eight different numbers, though she allowed that her formula is very comprehensive. Among other things, the Entelo CHS includes Net Promoter Score (NPS), the number of support tickets per user, usage of the tools on her platform, and success milestones. Entelo is a recruiting platform so in their case, success milestones include personnel hires their clients have been with the help of Entelo.

Jeff added, “Support cases are important, but they don’t always mean something is wrong” so you’ll want to keep that in mind if you add them to your formula.

The panelists discussed the subjective components of their CSH formula, suggesting that only 1-2 of your included metrics should be subjective, but that they can be quite important. For instance, Jon adds “Relationship strength is the highest weighted metric for us.”

After initially setting up your Customer Health Score formula, it’s important to give it 6-10 months without changes, or you won’t be able to track it accurately over time.

Tracking Customer Health Scores

A favorite tool for tracking CHS is Gainsight, used by 2 of the panelists. It imports metrics you’ve indicated as important and allows you to weight each parameter, culminating in a unique formula for your each customer’s CHS.

In Gainsight, you’ll see accounts that are Green, indicating good health. They could be an opportunity for an upsell or additional revenue. Yellow, which are accounts that might be experiencing a problem. Red accounts are in poor health and are at risk of churning.

Loni uses Wootric to track Net Promoter Score. She imports this NPS data into Gainsight via Salesforce for the benefit of her success team and her CHS calculation. (Having her NPS data in Salesforce benefits the sales team, too. For instance, if a client could be a potential advocate, exporting that to account and contact records in Salesforce makes it easily accessible to the client’s sales manager.)

A good indicator that your formula is working is to check positive and negative accounts and be sure the metric matches what is happening with the client. For instance, if a customer hasn’t taken training, submits multiple support tickets, and hasn’t been successful with your product it makes sense they would be in poor standing.

Optimizing your CHS can be great for revenue opportunities. Loni stated “Sales can come to me and say ‘we are trying to make quota, do you have any accounts for us?’ and I can print out of a list of green accounts and hand them over knowing they are good prospects for upsells.”

When our host was asked by an audience member what impact panelists had seen on churn and expansion revenue, Jeff answered, “You’ll see an immediate impact when taking immediate action.”

Set Up Customer Health Alerts

Once you’ve chosen the metrics for your score, you’ll want to add alerts to your system that notify you if and when something happens. Jeff says “If anything should be a fire alarm, build it into your logic in Gainsight. Think about what those fire alarms are.”

Jon cautioned, “The CHS Scorecard won’t give you everything….you have to have an escalation process in place.”

For example, if your NPS for a particular account goes from promoter to detractor you’ll want to have a CSM address the account. This means the overall scorecard could be showing a positive account when there is a problem, so it’s still important to look at every metric on a client’s card to make sure it is in good standing.

Taking Action on Customer Health Scores

The next step after setting up your CHS alerts is to create playbooks to work from when there is an alert or an account drops from green to yellow or red. This gives CSMs valuable information to work through any problems and put the account in good standing when possible.

Jeff suggested that you focus efforts on getting yellow accounts to green. A healthy account is six times more likely to rebuy or upsell than one that is “okay, ” he says. The effort you put into getting an unhealthy red account to an “okay” yellow account may not be worth it.

As the company grows, your CHS program should as well. At Raise.me there are thousands of customers/students who use the program. Because of this Jon has learned to use segmentation. He tracks a CHS for new customers going through onboarding and a CHS for long term customers.

In one last bit of advice, Loni’s recommends to “Make sure the team and company are bought into the score or people won’t act on behalf of it.”

Thanks to our panelists, it’s clear how valuable and productive Customer Health Score can be for Customer Success teams. It can take effort to determine the right metric for your company, but the result can be an excellent program that decreases churn.

Wootric, the Net Promoter Score platform for boosting customer happiness, has launched the Wootric Net Promoter Customer Feedback survey application on the Salesforce AppExchange. Designed to bring the full power of Net Promoter Score (NPS) data to Salesforce users, the integration was created with input from Salesforce customers and NPS power-users like Zoom.us, Entelo and Percolate.  

Download the Wootric-Salesforce integration from the listing on the AppExchange.

With the Wootric-Salesforce integration, day-to-day users of Salesforce —  customer success, sales, marketing and service/support — can improve retention, upsells and customer experience from within Salesforce. The application enriches contact and account records with the Net Promoter Score (NPS) metric and Voice of the Customer (VOC) feedback comments in any language. Surveys can also be triggered from within Salesforce.

Highlights of the Wootric Net Promoter Score integration on the AppExchange

Features of the integration today include:

• Net Promoter Scores and feedback in Contact Records
• Account level Net Promoter Score and feedback roll-up
• Seven (7) Net Promoter Score Reports that auto-populate the Wootric Dashboard in Salesforce
• Ability to trigger NPS surveys from within Salesforce using workflows
• Direct install that takes minimal developer resources to configure.

Future plans include a similar integration for Wootric’s new Customer Satisfaction (CSAT) and Customer Effort Score (CES) surveys.

See more Screenshots on Wootric’s AppExchange listing.

Easy Installation, the Right Features

“As I spoke with customers about the features they wanted in a Wootric-Salesforce application, I quickly learned that it is a challenge for Salesforce users to find a customer feedback app that is genuinely easy to install and use,“ said Jessica Pfeifer, Chief Customer Officer at Wootric. “So we took time to build an integration that is both useful and painless to install.”

Wootric customers are already benefiting from sharing Wootric NPS data across the company through Salesforce. “The Wootric integration came with out-of-the-box reports that are great. Because the fields exist within Salesforce objects, we were able to setup automated alerts to account owners for easy follow-up. We’re able to view average scores at any scale: across company, industry, account size, etc,” said Caitlyn McCormick, Marketing Manager at Percolate. “If you’re looking for scalable NPS reporting and transparency across your organization, I recommend Wootric’s Salesforce integration.”

The real impact of customer feedback in Salesforce

When critical Voice of the Customer data collected by Wootric is accessible in Salesforce, it can align teams around boosting customer happiness.

Customer-centricity improves when customer experience data is available to Salesforce users

This year, 89% of marketers expect customer experience to be their primary differentiator. Now that CMOs are spending as much money on technology as CIOs, companies that use Salesforce are looking for the technology stack that will help them win on the customer experience battlefield.

Wootric’s sophisticated yet light-weight approach to customer experience feedback management is the choice of companies in over 70 countries around the globe. Now, by integrating Wootric with Salesforce, marketers can share customer insights and feedback across functions to improve CX.

An easy win for Sales & Success teams: Knowing exactly what the customer is thinking today

With the Wootric-Salesforce integration, Net Promoter Score data sits at the end-user record, buyer record and account level, so it is visible to sales and success teams that are having onboarding, upsell and renewal conversations. Did a user just rave about your new product, or are they disgruntled? How has account NPS been trending since the last call with the buyer? Business intelligence transforms the sales conversation.

Improve customer service and onboarding with triggered surveys

Asking for feedback after a support interaction or at a key journey point is now possible by triggering Wootric surveys based on events in Salesforce. This enables Customer Support or CX teams to assess and improve interactions with people and product.

Zapier vs. Salesforce Integration

Some Wootric customers currently utilize Zapier to move NPS data into Salesforce.  The advantages of using Wootric’s Salesforce integration instead of Zapier include: out of box VisualForce pages for Contacts and Accounts, Account level roll up of NPS, out of box reports and dashboard, workflow and survey triggers, and  historical data migration (which can be costly and difficult with Zapier.)  Using Zapier will continue to be a cost-effective option for companies that do not need these features.

For a more information and a free trial of the Salesforce integration, please contact sales to learn more

“Our conclusion: superior CX drives superior revenue growth.”
– Harley Manning, Forrester

“Customers who had the best past experiences spend 140% more compared to those who had the poorest past experiences”
– Peter Kriss, Harvard Business Review

There is a lot of chatter happening in business circles about customer experience (CX) as a growth engine. It’s almost intuitive – you and I both understand how having a great experience affects us as customers. We all have businesses we love, products we’ll follow to the ends of the earth (in hopes they’ll finally go on sale), and websites we follow with almost religious fervor.

As CMO, VP of Success, or Head of Customer Support, you are constantly advocating for customer experience within your company. After all, from the very first moment the second blacksmith’s shop appeared in the village, creating competition for the first blacksmith’s shop, customer experience has been a deciding vote for who gets the business – just as much as price and quality. But as a business owner, or a professional marketer, you can’t afford to go with your gut. To win resources you need data to back up your argument that CX is the future (you know it is).

There is a correlation between CX and revenue growth, and we’ve compiled the research to back it up.

Why the effects of CX have been tricky to track

Customer experience has been treated as a ‘soft’ discipline, and I have a theory as to why. 

We’ve grown up with it. Whether watching Santa send Macy’s store shoppers to competitors in Miracle on 34th Street, or walking into Nordstrom’s shoe department to be followed around by suited young men carrying piles of boxes to the nearest padded chair. We recognize great CX when we experience it ourselves.

However, it’s inherently subjective. Subjective issues – anything based on opinion or emotion – tend to be hard to track. One person’s “helpful” is another person’s “pushy.” Your “attentive,” might be my “stalker.”

Modern tools now quantify CX

But online buyers’ journeys are different than the sales experiences most of us grew up with. With modern tracking and customer surveys, you can tell (often in real-time) whether your efforts are coming off as too much, or too little. You can identify problems and preferences, which allows you to fine tune the end experience for your target customer.

Most importantly, for the first time in human history, we have the tools to track the actual, absolute effect that positive customer experience has on a business’s bottom line. This is transforming the discipline of customer service into the science of CX.

It’s no longer just “the right thing to do,” it’s an engine for measurable growth.

“CX is no longer just a discipline; it is the basic ingredient for growth”
– Winning on the Battleground of CX, Forrester

Data that ties CX to Revenue

Transaction-based v. Subscription-based CX

“What we found: not only is it possible to quantify the impact of customer experience – but the effects are huge.” – “The Value of Customer Experience, Quantified,” Harvard Business Review

Harvard Business Review looked at the revenue data from two global $1B+ businesses – one was a transaction-based business, the other was a relationship-based subscription business.

“We looked at two companies with different revenue models — one transactional, the other subscription-based — using two common elements that are relevant to all industries: customer feedback, and future spending by individual customers. To see the effect of experience on future spending, we looked at experience data from individual customers at a point in time, and then looked at those individual customers’ spending behaviors over the subsequent year.”

Transactional business models rely on frequency of customer return and how much they spend per visit. Modcloth would be a good example – they want you to come back every day and buy (or at least Save to Wishlist), and come up with ingenious ways to incentivize that behavior.

Subscription-based businesses include Software-as-a-Service (SaaS), or even those recipe kits from Blue Apron. No matter what they’re selling, the model is the same. It relies on retention, cross-sells and upsells.

The results?

After controlling for other factors that drive repeat purchases…

• Transaction-based: Customers with the best past experiences spend140% more than those with the poorest past experiences.

• Subscription-based: Customers with the best past experiences have a 74% chance of remaining a member for at least another year; customers with the worst experiences have a 43% chance of being a member one year later. In fact, those who gave the highest CX scores were likely to remain members for another six years.

CX Effects Across Multiple Industries

On Harley Manning’s Blog at Forrester, Manning (Forrester VP and research director) discusses two studies, conducted one year apart, that compared five pairs of publicly traded companies “where one company in each of the pairs had a significantly higher score than the other in Forrester’s Customer Experience Index during the period 2010 to 2015.”

The Customer Experience Index measures each brand on a scale from “Very Poor” to “Excellent” in these six categories:

• Effectiveness
• Ease of use
• Emotion
• Retention
• Enrichment
• Advocacy

Then, Forrester looked at the businesses’ revenue data and built models to calculate the compound annual growth rates for each of the ten companies over those five years.

The results:

The publicly traded companies studied ran the gamut of industry types, from cable to retail to airlines. But in terms of the CX effect, industry didn’t seem to matter as much as the reported CX scores each company received.

“In two industries, cable and retail, leaders outperformed laggards by 24 percentage and 26 percentage points, respectively. Even in the industry with the smallest spread, airlines, the CX leader enjoyed a healthy 5 percentage point advantage in global revenue. And when we compared the total growth rate of all CX leaders to that of all CX laggards we saw that the leaders collectively had a 14 percentage point advantage.” – Harley Manning, Forrester

Unlike the Harvard Business Review’s study, Forrester did not control for outside influences that could have driven revenue growth. But, they did conclusively determine that “customers who have a better experience with a company say they’re less likely to stop doing business with the company and more likely to recommend it.” They also observed that companies with superior CX saw increased growth in customers.

And, as Harley Manning points out, “Both of those factors should drive increased growth in customers and, in turn, increased growth of customer revenue.”

Essentially, as CX rises, so does revenue growth.

But there’s another interesting correlation that Forrester’s Customer Experience Index research uncovered. The top performing brands, including USAA, Barnes & Noble, Etsy, QVC and Zappos.com, “achieved a 17% compound average growth between 2010 and 2015 – which is no small feat with many of them already in the top revenue percentiles in their respective industries.” (Salemove.com)

Compared with the brands at the bottom, who only saw a compound average growth of 3%, that is a very wide gap.

To put a possible dollar amount on this, consider: “a one-point score improvement in the CX Index can lead to an increase of $65 million in revenue in the upscale hotel industry,” according to Forrester’s Harley Manning.  

CX spending is on the rise

You may think companies still seem to feel more comfortable spending money on things that do not have a direct impact on customer experience, or that Support and Customer Success teams can still be the last area to receive investment. Think again. Per Forrester research, 71% of business and technology decision-makers reported that improving CX will be a high priority for spending in the next year.

Ready to join the CX revolution?

Now with modern survey platforms, companies of all sizes can measure and improve customer experience at scale.  Forrester’s CX Index measured six attributes of experience and probably took months to collect, analyze and report. However, a lightweight approach to CX improvement using metrics such as Net Promoter Score (NPS) can get you 90% of the way there and not break the bank. 

The key is to start small. Determine your “north star” metric. Get customer feedback, take action, repeat.  Consistently repeat this process. As your company’s customer experience improves, so will your bottomline.