Temkin Group Insight Report

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Temkin Group Insight Report
ROI of Customer Experience, 2014 CX Highly Correlates to Loyalty Across 19 Industries, Delivers Up To $460M Over 3 Years By Bruce Temkin
Customer Experience Transformist & Managing Partner Temkin Group September 2014
Temkin Group info@temkingroup.com (617) 916-‐2075 www.temkingroup.com Temkin Group Insight Report www.temkingroup.com Executive Summary To understand how customer experience corresponds to loyalty, we examined feedback from 10,000 U.S. consumers describing their experiences with and their loyalty to 268 companies. Our analysis shows a strong correlation between customer experience and loyalty factors such as repurchasing, trying new offerings, forgiving mistakes, and recommending the company to friends and colleagues. We compared the consumers who gave companies a very good customer experience rating to those who gave companies a very bad customer experience rating, and we found that the percentage of customers who plan on repurchasing products is 18 percentage-‐points higher at organizations with excellent CX ratings. Additionally, the Net Promoter Scores of companies with very good CX ratings average 22 points higher than the scores of companies with poor CX. We built a model to evaluate how customer experience impacts a $1 billion business’s revenue over three years in each of the 19 industries, and this model shows that CX has the largest impact on hotels ($461 million), fast food chains ($437 million), and retailers ($428 million). This report also includes a five-‐step approach for building a model that estimates the value of CX for your organization. Customer Experience Is Highly Correlated With Loyalty In a recent Temkin Group study, nearly six out of ten large companies reported having the ambition to provide the best customer experience (CX) in their industry.1 Why do so many companies aspire to deliver first-‐class customer experience? Beyond simply being a “good” service to provide, many CEOs likely emphasize the importance of delivering excellent CX because they recognize the clear link between CX and loyalty. To determine how customer experience affects loyalty, we asked 10,000 U.S. consumers about their experiences with and their loyalty to 268 U.S. companies and then analyzed their responses2 The results show that CX: !
Correlates with repurchasing. We looked at how likely consumers are to repurchase products from each of the 268 U.S. companies and then compared those numbers to each firm’s 2014 Temkin Experience Ratings score. We found a strong connection between the two datasets, with a correlation coefficient of .83 (see Figure 1).3 !
Affects many aspects of loyalty. We split the companies into quintiles based on where their Temkin Experience Ratings scores landed them in relation to their industry averages (see Figure 2). When we compared the companies with the highest CX rating to the 1 See the Temkin Group report The State of CX Management, 2014 (April 2014). 2 For the CX ratings we used the 2014 Temkin Experience Ratings, which evaluates three areas of experiences: functional, accessible, and emotional. We compared the Temkin Experience Ratings and loyalty data with industry averages for all of the companies. See the Temkin Group report Temkin Experience Ratings, 2014 (March 2014). 3 For the repurchase data, we looked at consumers’ responses to the question: How likely are you to consider purchasing more products or services from these companies in the future? We included the percentage of consumers who selected either 6 or 7 on a scale from 1 (extremely unlikely) to 7 (extremely likely). Copyright ©2014 Temkin Group. All rights reserved. Page 2 Temkin Group Insight Report www.temkingroup.com companies with the lowest CX ratings, we found an 18.1 point difference in the percentage of consumers who are likely to repurchase, a 13.3 point difference in the percentage of consumers who are likely to forgive a company if it makes a mistake, and an 8.1 point difference in the percentage of consumers who are likely to immediately try a new offering from the company. !
Also links to word of mouth. We also found that CX strongly correlates to Net Promoter® Score (NPS®) (see Figure 3).4 The average NPS for companies with the highest CX ratings is 11 points above their industry NPS, while the average NPS for those with the poorest CX ratings falls 11.5 points below their industry average. !
Plays an important role across many industries. In addition to comparing general CX with general loyalty, we also broke both of these areas down into their component parts and examined how they correlated on a more specific level (see Figure 4). We evaluated the connection between the three elements of the Temkin Experience Ratings—functional, accessible, and emotional—and the two areas of loyalty—the likelihood to recommend and the likelihood to purchase more—for companies across the 19 industries. We found a strong correlation between every combination we examined for every industry.5 Intriguingly, the emotional element of experience has the highest correlation to loyalty in almost every industry. CX Improvement Results: Up to $461M In Revenue Over Three Years To help translate the connection between CX and loyalty into tangible bottom line numbers, we built a model that identifies how a modest increase in CX will result in additional revenues for each of the 19 industries over a three-‐year period (see Figure 5).6 Our analysis evaluates how loyalty differs between the consumers who gave companies a “modest” CX rating and those who gave companies a “good” CX rating (see Figure 6). The results show that (see Figures 7 and 8): !
Revenues increase the most for hotels, the least for health pans. Hotels have the most to gain from improving CX ($460.7 million), while health plans gain the least ($271.8 million). !
Auto dealers have the most revenue to retain. Auto dealers retain the most business from existing customers ($183.5 million), whereas investment firms retain the least business ($93.7 million). !
Hotels have the most additional purchases to gain. The amount of new business from existing customers ranges from $193.5 million at the top for hotels down to $55.5 million at the bottom for health plans. 4 See the Temkin Group report Net Promoter Score Benchmark Study, 2013 (November 2013). Net Promoter Score, Net Promoter, and NPS are registered trademarks of Bain & Company, Satmetrix Systems, and Fred Reichheld. 5 Correlations are usually considered strong if they are above 0.5 and very strong if they are above 0.7. 6 In order to show a high-‐level analysis of revenue impact, we make many assumptions at an industry-‐level. We highly recommend that companies use the raw data to better understand how CX improvements will affect their specific business. The model assumes a company size of $1 billion and adds the additional revenue gains over three years. Copyright ©2014 Temkin Group. All rights reserved. Page 3 Temkin Group Insight Report !
www.temkingroup.com Word of mouth most affects supermarkets. Supermarkets see the highest impact of good and bad comments on their volume of business ($107.8 million), while comments affect auto dealers the least ($73.5 million). CX and Loyalty Across 19 Industries As part of our analysis, we examined the how loyal consumers felt to companies in 19 industries based on how they rated their experiences with those companies (see Figures 9 through 28). When we looked at the averages across all of the industries, we discovered that CX influences the customer’s: !
Likelihood to repurchase. While 92% of the consumers who gave a company a very good CX rating report being very likely to repurchase from that company, only 9% of those who gave a company a very poor CX rating say the same. !
Likelihood to recommend company. The percentage of consumers who are very likely to recommend a company to their friends or colleagues ranges from a high of 88% of consumers who rate a company’s CX as very good, down to a low of 4% of those who give a company a very poor CX rating.7 !
Likelihood to forgive a company if it makes a mistake. Sixty-‐seven percent of consumers are very likely to forgive a company for a mistake if they think it has very good CX, whereas only 9% of consumers are very likely to forgive a company with very poor CX.8 !
Likelihood to try a new offering right away. Of the consumers who gave a company a very good CX rating, 57% of them report being very likely to try that company’s new product or service immediately after it’s introduced. Meanwhile, only 6% of consumers who gave a company a very poor CX rating report the same.9 Build Your Own CX ROI Model Remember, as with all industry-‐wide research, any single company’s results may vary considerably from these results. As such, we recommend that companies build their own models for tying loyalty (and revenues) to customer experience measures (see Figure 29). Here’s some advice to consider as you undertake this effort: !
Enlist your CFO. Even if you have the brightest business analysts in the world on your team, if you do not involve the CFO’s team, the finance leader will always question your financial models and assumptions. 7 We looked at consumers’ responses to the question: How likely are you to recommend the company to a friend or colleague? We included the percentage of consumers who selected either 9 or 10 on a scale from 0 (very unlikely) to 10 (very likely). 8 We looked at consumers’ responses to the question: How likely are forgive these companies if they deliver a bad experience? We included the percentage of consumers who selected either 6 or 7 on a scale from 1 (extremely unlikely) to 7 (extremely likely). 9 We looked at consumers’ responses to the question: If these companies announced a new product or service, how likely would you be try it right away? We included the percentage of consumers who selected either 6 or 7 on a scale from 1 (extremely unlikely) to 7 (extremely likely). Copyright ©2014 Temkin Group. All rights reserved. Page 4 Temkin Group Insight Report www.temkingroup.com !
Use existing metrics. Try to make your case based on the business metrics that your company already uses—it will make it easier for people to understand and will help you earn their buy-‐in. !
Be conservative. Resist the temptation to use the high end of estimates for potential benefits. While the results may seem more compelling, they will also be harder to defend. !
Create a simple story. People tend to remember very simple story lines, so make sure that you organize your results in a way that is easy for people to understand. Copyright ©2014 Temkin Group. All rights reserved. Page 5 Temkin Group Insight Report www.temkingroup.com Temkin Experience Ratings Correlates To
Future Purchase Intentions
268 Organizations Across 19 Industries
25.0
Consumers who are very
likely to repurchase minus
industry average
(%-points)
15.0
2014 Temkin
Experience Ratings
minus industry
average
(%-points)
5.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
-5.0
-15.0
Pearson correlation
coefficient (R) = .83
-25.0
-35.0
Base:
Source:
10,000 U.S. consumers
Temkin Group Q1 2014 Consumer Benchmark Study
Copyright ©2014 Temkin Group. All rights reserved.
Figure 1
Copyright ©2014 Temkin Group. All rights reserved. Page 6 Temkin Group Insight Report www.temkingroup.com Companies With Higher Temkin Experience Ratings Have
More Loyal Customers
Percentage of customers (above and below industry average) who are loyal in
three areas (%-points). Companies are sorted based on how their 2014 Temkin
Experience Ratings score compares with their industry averages
Very likely to
purchase more
from company
Very likely to try a new
product or service
immediately after it
has been announced
Very likely to
forgive company if
it makes a mistake
7.4
6.9
5.0
2.2
1.6
0.5 0.8
-0.1
-0.5
-2.2
-3.1
-3.6
-3.8
-6.4
-10.7
Bottom Quintile
4th Quintile
3rd Quintile
2nd Quintile
Top Quintile
2014 Temkin Experience Ratings of companies compared with
their industry averages
Base:
Source:
Figure 2
Copyright ©2014 Temkin Group. All rights reserved. Page 7 Temkin Group Insight Report www.temkingroup.com Temkin Experience Ratings Correlates To
Net Promoter® Scores (NPS®)
268 Organizations Across 19 Industries
40.0
Company NPS minus
industry average NPS
(%-points)
30.0
2014 Temkin Experience
Ratings minus industry
average
(%-points)
20.0
10.0
0.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
-10.0
-20.0
Pearson correlation
coefficient (R) = .77
-30.0
-40.0
NPS Versus Industry Average Based on Temkin Experience Ratings
11.0
Difference between company NPS
and industry average NPS
3.3
-0.2
Bottom Quintile
4th Quintile
-6.2
-11.5
Base:
Source:
3rd Quintile
2nd Quintile
Top Quintile
2014 Temkin Experience Ratings
compared with their industry averages
Figure 3
Copyright ©2014 Temkin Group. All rights reserved. Page 8 Temkin Group Insight Report www.temkingroup.com Correlations Between Loyalty and Three Components of
Customer Experience for 19 Industries
Pearson correlations between loyalty and CX area
Loyalty:
Likely to Recommend
Likely to Buy More
CX area: Functional Accessible Emotional Functional Accessible Emotional
Airlines
0.58
0.64
0.72
0.59
0.64
0.65
Auto Dealers
0.60
0.64
0.71
0.57
0.60
0.65
Banks
0.56
0.61
0.69
0.54
0.59
0.62
Computers
0.58
0.64
0.68
0.55
0.60
0.63
Credit Card Issuers
0.52
0.56
0.67
0.50
0.54
0.61
Fast Food Chains
0.51
0.53
0.66
0.56
0.56
0.58
Grocery Chains
0.51
0.56
0.66
0.55
0.59
0.56
Health Plans
0.55
0.62
0.69
0.52
0.56
0.59
Hotel Chains
0.60
0.61
0.70
0.59
0.59
0.64
Insurance Carriers
0.60
0.63
0.69
0.58
0.59
0.63
Internet Service
Providers
0.58
0.66
0.75
0.56
0.63
0.69
Investment Firms
0.60
0.63
0.70
0.58
0.61
0.63
Major Applicances
0.59
0.63
0.70
0.54
0.57
0.64
Parcel Delivey
Services
0.55
0.60
0.70
0.57
0.58
0.61
Rental Car
Agencies
0.59
0.68
0.76
0.61
0.66
0.71
Retailers
0.53
0.57
0.66
0.56
0.60
0.60
Software Firms
0.58
0.64
0.71
0.57
0.61
0.64
TV Service
providers
0.60
0.67
0.75
0.58
0.63
0.67
Wireless Carriers
0.56
0.61
0.70
0.54
0.55
0.62
Average across all
industries
0.57
0.62
0.70
0.56
0.60
0.63
Bold numbers are above cross-industry averages
Base:
Source:
Figure 4
Copyright ©2014 Temkin Group. All rights reserved. Page 9 Temkin Group Insight Report www.temkingroup.com Elements Used in Model to Derive Revenue Impact Based on
Improvement in Customer Experience
Basic assumptions in model:
•  Companies have $1 billion in annual revenues
•  Examines revenue impact over three years
•  Revenue impact will differ across industries for each year based on factors
such as ease of switching providers
•  Inputs to model include data from Temkin Group’s Q3 2013 and Q1 2014
Consumer Benchmark Studies (10,000 U.S. consumers in each) along with
estimates based on Temkin Group's judgment
Areas of Revenue that Increase Due to Improvement in CX
Revenue Area Description
Retain existing
business
The amount of existing business that customers will continue to do
with company. Influenced industry-level data on consumers’
likelihood to repurchase.
Business that companies are able to save after delivering a bad
Save business experience. Influenced by industry-level data on percentage of
after a very bad consumers that experience a very bad experience, the willingness of
experience
consumers to forgive companies after a bad experience, and their
change in spending after those experiences.
Sell additional
products and
services
Additional purchases that consumers will make above their basic
relationships. Influenced by industry-level data on consumers’
likelihood to repurchase and estimate of how much add-on business
is typical across industries.
Sell new
offerings
Purchases that consumers make of new products and services
offered by companies. Influenced by industry-level data on
consumers’ likelihood to try new offerings from companies and
estimate of how much business comes form new business that is
typical across industries.
Word of mouth
Purchases that result from consumers telling other people about their
experiences. Combines additional purchases from positive word of
mouth along with lost purchases from negative word of mouth.
Influenced by industry-level data on consumers’ likelihood to
recommend and estimates of how many people they tell about the
experience and the influence that those comments have on decisions
of other consumers.
Figure 5
Copyright ©2014 Temkin Group. All rights reserved. Page 10 Temkin Group Insight Report www.temkingroup.com Improvements in Customer Loyalty From Modest
Improvements in Customer Experience
Difference in loyalty between customers who rate a company as
delivering “good” customer experience and those who rate a company
as delivering “mediocre” customer experience (%-points)
Industries
Repurchase
Recommend
Forgive
Try
Airlines
48
44
30
29
Auto Dealers
44
40
28
29
Banks
48
37
25
15
Computer Makers
45
46
32
27
Credit Card Issuers
43
39
27
21
Fast Food Chains
50
36
26
20
Grocery Chains
48
40
31
26
Health Plans
44
43
30
29
Hotel Chains
54
46
24
29
Insurance Carriers
48
46
29
27
Internet Service Providers
43
40
25
21
Investment Firms
51
50
32
28
Major Appliances
42
48
36
36
Parcel Delivery Services
46
42
24
15
Rental Car Agencies
47
43
36
31
Retailers
48
42
28
26
Software Companies
51
48
41
36
TV Service Providers
47
39
27
18
Wireless Carriers
48
44
30
29
Highest loyalty difference
•  Repurchase: Customers who are likely to buy from company again in the future
•  Recommend: Customers who are likely to recommend company to a friend or a
colleague
•  Forgive: Customers who are likely to forgive company if it makes a mistake
•  Try: Customers who are likely to try a new product or service from a company
immediately after it is announced
Base:
Source:
Figure 6
Copyright ©2014 Temkin Group. All rights reserved. Page 11 Temkin Group Insight Report www.temkingroup.com Revenue Increases From Moderate Improvement in CX for
Companies With Annual Revenues of $1 Billion
Additional revenues over 3 years ($ million)
Retaining existing business
Additional purchases
Hotels
$164.2
Fast food chains
$160.6
Retailers
$155.1
New business from word of mouth
$193.5
$102.9
$172.5
$104.4
$171.9
$101.2
Supermarkets
$143.3
Airlines
$149.1
$177.5
$95.1
Rental car agencies
$147.2
$175.6
$97.5
Software companies
$183.9
Computer makers
$142.9
Credit card issuers
$148.3
Banks
$148.3
Major appliances
Parcel delivery services
TV service providers
Auto dealers
Investment firms
Internet service
providers
Insurance carriers
Base:
Source:
$174.3
$111.5
$87.7
$125.4
$97.1
$137.7
$83.3
$106.9
$89.8
$152.5
$125.9
$103.2
$142.8
$183.5
$92.3
$77.6
$82.5
$73.5
$147.0
$112.5
$121.1
$153.0
Wireless carriers
$140.1
Health plans
$142.3
$98.6
$159.6
$166.5
$100.7
$107.8
$68.2
$72.4
$55.5
$91.0
$79.1
$81.9
$76.0
$74.0
Figure 7
Copyright ©2014 Temkin Group. All rights reserved. Page 12 Temkin Group Insight Report www.temkingroup.com Revenue Increases From Moderate Improvement in CX for
Companies With Annual Revenues of $1 Billion
Additional revenues over 3 years ($ million)
Industries
Save
Sell
Retain
business additional
Sell new
after a
products
existing
offerings
business very bad
and
experience services
Word of
mouth
Total
Hotels
$141.2
$23.0
$161.4
$32.2
$102.9
$460.7
Fast food chains
$131.8
$28.8
$150.6
$22.0
$104.4
$437.5
Retailers
$125.2
$29.9
$143.1
$28.8
$101.2
$428.1
Supermarkets
$127.0
$16.3
$145.1
$29.1
$107.8
$425.5
Airlines
$127.2
$22.0
$145.3
$32.2
$95.1
$421.8
$122.9
$24.2
$140.5
$35.1
$97.5
$420.3
$152.9
$31.1
$49.7
$61.8
$98.6
$394.0
Computer makers
Credit card
issuers
Banks
$100.1
$42.7
$108.5
$51.1
$87.7
$390.1
$97.7
$50.7
$105.8
$19.5
$97.1
$370.8
$107.2
$41.0
$116.2
$21.5
$83.3
$369.2
Major appliances
$150.4
$16.1
$50.1
$56.7
$89.8
$363.2
$85.9
$14.8
$137.5
$15.0
$103.2
$356.4
$70.3
$55.6
$114.2
$28.6
$77.6
$346.3
Auto dealers
$156.9
$26.7
$52.3
$30.3
$73.5
$339.6
Investment firms
$76.8
$15.6
$124.7
$22.3
$91.0
$330.3
Internet service
providers
$64.5
$47.9
$104.8
$16.3
$79.1
$312.6
Insurance carriers
$116.3
$36.7
$47.2
$20.9
$81.9
$303.0
Wireless carriers
$101.6
$38.5
$41.3
$31.1
$76.0
$288.5
Health plans
$119.5
$22.8
$21.6
$33.9
$74.0
$271.8
Rental car
agencies
Software
companies
Parcel delivery
services
TV service
providers
Base:
Source:
Figure 8
Copyright ©2014 Temkin Group. All rights reserved. Page 13 Temkin Group Insight Report www.temkingroup.com Consumers Are More Loyal To Companies That Provide a
Better Customer Experience (Average Across 19 Industries)
Percentage of consumers who say they are very likely to demonstrate
loyal behaviors towards an organization based on the Temkin
Experience Rating that they gave the organization
92%
76%
56%
Very likely to purchase more from
company
30%
13%
9%
86%
54%
Very likely to recommend company
to a friend or colleague
27%
12%
6%
4%
Temkin
Experience
Ratings
Very good
67%
46%
Very likely to forgive company if it
makes a mistake
30%
Good
Okay
Mediocre
17%
9%
9%
Poor
Very poor
57%
Very likely to try a new product or
service immediately after it's been
announced
Base:
Source:
40%
29%
16%
8%
6%
Figure 9
Copyright ©2014 Temkin Group. All rights reserved. Page 14 Temkin Group Insight Report www.temkingroup.com Airlines: Consumer Loyalty Based on Level of Temkin
Experience Ratings
94%
82%
61%
Very likely to purchase more
from company
34%
14%
10%
88%
Very likely to recommend
company to a friend or
colleague
56%
32%
12%
7%
3%
Temkin
Experience
Ratings
69%
50%
Very likely to forgive company
if it makes a mistake
Very good
Good
Okay
35%
20%
10%
9%
Mediocre
Poor
Very poor
65%
Very likely to try a new product
or service immediately after it's
been announced
Base:
Source:
49%
37%
20%
11%
9%
Figure 10
Copyright ©2014 Temkin Group. All rights reserved. Page 15 Temkin Group Insight Report www.temkingroup.com Auto Dealers: Consumer Loyalty Based on Level of Temkin
Experience Ratings
94%
76%
59%
from company
33%
16%
9%
92%
colleague
59%
37%
19%
11%
8%
Temkin
Experience
Ratings
72%
51%
Good
Okay
35%
Very good
23%
Mediocre
10%
11%
Poor
Very poor
64%
been announced
Base:
Source:
52%
37%
23%
11%
7%
Figure 11
Copyright ©2014 Temkin Group. All rights reserved. Page 16 Temkin Group Insight Report www.temkingroup.com Banks: Consumer Loyalty Based on Level of Temkin
Experience Ratings
88%
68%
44%
from company
21%
8%
5%
83%
colleague
46%
18%
9%
5%
2%
Temkin
Experience
Ratings
66%
39%
Good
Okay
20%
14%
Very good
Mediocre
6%
6%
Poor
Very poor
44%
been announced
Base:
Source:
26%
13%
10%
2%
2%
Figure 12
Copyright ©2014 Temkin Group. All rights reserved. Page 17 Temkin Group Insight Report www.temkingroup.com Computer Makers: Consumer Loyalty Based on Level of
Temkin Experience Ratings
92%
79%
61%
from company
34%
14%
11%
89%
colleague
62%
35%
16%
Temkin
Experience
Ratings
8%
6%
71%
51%
Very good
Good
Okay
33%
19%
13%
12%
Mediocre
Poor
Very poor
64%
been announced
Base:
Source:
45%
35%
18%
11%
8%
Figure 13
Copyright ©2014 Temkin Group. All rights reserved. Page 18 Temkin Group Insight Report www.temkingroup.com Credit Card Issuers: Consumer Loyalty Based on Level of
87%
68%
49%
from company
24%
9%
3%
82%
colleague
49%
23%
10%
3%
4%
Temkin
Experience
Ratings
63%
40%
Very good
Good
Okay
27%
13%
7%
8%
Mediocre
Poor
Very poor
50%
been announced
Base:
Source:
34%
23%
13%
7%
4%
Figure 14
Copyright ©2014 Temkin Group. All rights reserved. Page 19 Temkin Group Insight Report www.temkingroup.com Fast Food Chains: Consumer Loyalty Based on Level of
95%
79%
58%
from company
29%
14%
18%
83%
colleague
45%
19%
9%
5%
5%
Temkin
Experience
Ratings
64%
39%
Very good
Good
Okay
25%
14%
8%
16%
Mediocre
Poor
Very poor
57%
been announced
36%
25%
16%
7%
16%
Base:
Source:
Figure 15
Copyright ©2014 Temkin Group. All rights reserved. Page 20 Temkin Group Insight Report www.temkingroup.com Grocery Chains: Consumer Loyalty Based on Level of
96%
83%
65%
from company
35%
17%
12%
86%
colleague
51%
22%
11%
6%
0%
Temkin
Experience
Ratings
69%
47%
Good
Okay
28%
Very good
16%
Mediocre
7%
Poor
17%
Very poor
60%
been announced
Base:
Source:
38%
25%
12%
8%
10%
Figure 16
Copyright ©2014 Temkin Group. All rights reserved. Page 21 Temkin Group Insight Report www.temkingroup.com Health Plans: Consumer Loyalty Based on Level of Temkin
Experience Ratings
90%
75%
56%
from company
31%
15%
13%
85%
colleague
56%
30%
13%
6%
3%
Temkin
Experience
Ratings
67%
48%
Very good
Good
Okay
37%
18%
8%
10%
Mediocre
Poor
Very poor
58%
been announced
Base:
Source:
43%
28%
14%
6%
7%
Figure 17
Copyright ©2014 Temkin Group. All rights reserved. Page 22 Temkin Group Insight Report www.temkingroup.com Hotel Chains: Consumer Loyalty Based on Level of Temkin
Experience Ratings
95%
81%
57%
from company
27%
14%
18%
89%
colleague
61%
30%
16%
Temkin
Experience
Ratings
6%
7%
68%
51%
Good
Okay
32%
27%
Very good
Mediocre
11%
8%
Poor
Very poor
66%
been announced
Base:
Source:
52%
39%
23%
10%
5%
Figure 18
Copyright ©2014 Temkin Group. All rights reserved. Page 23 Temkin Group Insight Report www.temkingroup.com Insurance Carriers: Consumer Loyalty Based on Level of
91%
77%
54%
from company
29%
10%
6%
89%
colleague
57%
29%
11%
6%
2%
Temkin
Experience
Ratings
70%
46%
Good
Okay
31%
Very good
17%
Mediocre
6%
8%
Poor
Very poor
55%
been announced
Base:
Source:
37%
29%
11%
7%
8%
Figure 19
Copyright ©2014 Temkin Group. All rights reserved. Page 24 Temkin Group Insight Report www.temkingroup.com Internet Service Providers: Consumer Loyalty Based on
Level of Temkin Experience Ratings
88%
67%
46%
from company
24%
6%
6%
83%
colleague
49%
22%
9%
3%
3%
Temkin
Experience
Ratings
63%
38%
Very good
Good
Okay
26%
13%
7%
6%
Mediocre
Poor
Very poor
53%
been announced
Base:
Source:
32%
23%
12%
5%
3%
Figure 20
Copyright ©2014 Temkin Group. All rights reserved. Page 25 Temkin Group Insight Report www.temkingroup.com Investment Firms: Consumer Loyalty Based on Level of
92%
83%
56%
from company
32%
13%
4%
89%
colleague
62%
30%
12%
Temkin
Experience
Ratings
4%
2%
67%
51%
Very good
Good
Okay
29%
19%
12%
5%
Mediocre
Poor
Very poor
56%
been announced
Base:
Source:
45%
34%
17%
8%
3%
Figure 21
Copyright ©2014 Temkin Group. All rights reserved. Page 26 Temkin Group Insight Report www.temkingroup.com Major Appliances: Consumer Loyalty Based on Level of
93%
75%
55%
from company
33%
17%
17%
91%
colleague
65%
35%
17%
Temkin
Experience
Ratings
8%
7%
71%
58%
Very good
Good
Okay
37%
22%
14%
11%
Mediocre
Poor
Very poor
74%
been announced
Base:
Source:
59%
44%
23%
12%
12%
Figure 22
Copyright ©2014 Temkin Group. All rights reserved. Page 27 Temkin Group Insight Report www.temkingroup.com Parcel Delivery Services: Consumer Loyalty Based on Level
of Temkin Experience Ratings
93%
78%
60%
from company
32%
17%
8%
85%
colleague
49%
23%
7%
5%
0%
Temkin
Experience
Ratings
68%
41%
Good
Okay
25%
17%
Very good
Mediocre
9%
13%
Poor
Very poor
49%
been announced
Base:
Source:
26%
17%
11%
5%
6%
Figure 23
Copyright ©2014 Temkin Group. All rights reserved. Page 28 Temkin Group Insight Report www.temkingroup.com Rental Car Agencies: Consumer Loyalty Based on Level of
95%
79%
49%
from company
32%
13%
8%
90%
colleague
61%
30%
18%
Temkin
Experience
Ratings
6%
2%
70%
56%
Very good
Good
Okay
40%
20%
12%
7%
Mediocre
Poor
Very poor
69%
been announced
Base:
Source:
58%
41%
27%
14%
8%
Figure 24
Copyright ©2014 Temkin Group. All rights reserved. Page 29 Temkin Group Insight Report www.temkingroup.com Retailers: Consumer Loyalty Based on Level of Temkin
Experience Ratings
95%
82%
61%
from company
34%
18%
15%
87%
colleague
54%
28%
12%
7%
7%
Temkin
Experience
Ratings
69%
47%
Very good
Good
Okay
31%
18%
10%
14%
Mediocre
Poor
Very poor
58%
been announced
Base:
Source:
42%
29%
17%
7%
9%
Figure 25
Copyright ©2014 Temkin Group. All rights reserved. Page 30 Temkin Group Insight Report www.temkingroup.com Software Companies: Consumer Loyalty Based on Level of
93%
79%
56%
from company
28%
14%
16%
90%
colleague
62%
32%
14%
8%
10%
Temkin
Experience
Ratings
72%
56%
Very good
Good
Okay
38%
15%
10%
16%
Mediocre
Poor
Very poor
72%
been announced
Base:
Source:
56%
38%
20%
10%
14%
Figure 26
Copyright ©2014 Temkin Group. All rights reserved. Page 31 Temkin Group Insight Report www.temkingroup.com TV Service Providers: Consumer Loyalty Based on Level of
87%
67%
46%
from company
20%
9%
4%
83%
colleague
48%
24%
9%
3%
1%
Temkin
Experience
Ratings
62%
39%
Very good
Good
Okay
26%
12%
6%
6%
Mediocre
Poor
Very poor
51%
been announced
Base:
Source:
30%
22%
11%
6%
2%
Figure 27
Copyright ©2014 Temkin Group. All rights reserved. Page 32 Temkin Group Insight Report www.temkingroup.com Wireless Carriers: Consumer Loyalty Based on Level of
89%
71%
52%
from company
29%
15%
9%
84%
colleague
50%
25%
11%
6%
4%
Temkin
Experience
Ratings
64%
39%
Very good
Good
Okay
26%
11%
12%
8%
Mediocre
Poor
Very poor
53%
been announced
Base:
Source:
32%
23%
12%
8%
6%
Figure 28
Copyright ©2014 Temkin Group. All rights reserved. Page 33 Temkin Group Insight Report www.temkingroup.com Steps for Calculating the Value Of Customer Experience
You should be able to communicate something like this: “A “W%” change in <CX
Metric> for this customer group will result in a “X%” change in <Loyalty Metric>, which
will drive an increase of “$Y” in revenues and/or a reduction of “$Z” in costs.”
1"
Establish core
customer
experience
(CX) metric(s)
2"
Establish
loyalty
objectives
3"
Group
customers
based on their
CX metrics
•  Establish groupings, from low to high, of customers based on their
CX scores.
•  Separate results for key customer segments.
4a"
Analyze
relationship
between CX
and loyalty
(option 1)
•  Calculate average loyalty levels for each CX level.
•  This will show how much increased loyalty you can get from each
group if you move their CX ratings
4b"
Analyze
relationship
between CX
and loyalty
(option 2)
•  Run regression analysis to see how the CX metric correlates to the
loyalty metrics.
•  Use results to decide on the CX metric you want to use and to see
the impact that the CX metrics has on loyalty metrics
5"
Calculate
value of
loyalty change
•  For each customer segment, translate a 1% increase in CX metric
to some resulting change in the loyalty metric(s)
•  Calculate the dollar value for a 1% change in CX metrics by
translating the change in loyalty metrics into a dollar value
•  Agree on one or more metrics (which can be single metrics like Net
Promoter Score or satisfaction or a blended index) that is
representative of customer experience
•  Make sure you can measure it by customer
•  Agree on the things that represent loyal behavior and have a
financial impact on your business. For example: Additional
purchases, churn rate, share of wallet, making recommendations
to friends, etc.
•  Make sure you can measure it by customer
Figure 29
Copyright ©2014 Temkin Group. All rights reserved. Page 34 Temkin Group Insight Report www.temkingroup.com About the Author, Bruce Temkin Bruce Temkin is a Customer Experience Transformist & the Managing Partner of Temkin Group. He is also the co-‐founder and Chair of the Customer Experience Professionals Association (cxpa.org). Bruce is widely viewed as a leading expert in how organizations can distinguish themselves by providing outstanding customer experience. He has honed this expertise by working with hundreds of large organizations on the strategies, operational processes, organizational structures, leadership qualities, and culture environment required to sustain superior customer relationships. Bruce’s research focuses on identifying current and emerging best practices. He has published several seminal reports, including The ROI of Customer Experience, The Future of Customer Experience, and The Four Customer Experience Core Competencies. He uses insights from his pioneering research to advise companies on their customer experience journeys, identifying opportunities for a sustainable breakthrough performance. Bruce is the author of the popular blog Customer Experience Matters®, where he regularly shares his insights on topics like customer experience, branding, leadership, and employee engagement. His eBook—Six Laws of Customer Experience—has been downloaded by tens of thousands of people around the world and is available for free on his blog.10 Prior to forming Temkin Group, Bruce served as Vice President & Principal Analyst at Forrester Research. During his 12 years with Forrester, he led the company's business-‐to-‐business, financial services, e-‐business, and customer experience practices. Bruce was Forrester’s most-‐read analyst for 13 consecutive quarters and remains one of the most respected analysts in the industry. Bruce authored several of Forrester’s most popular research reports, including Experience-Based Differentiation, The Customer Experience Journey, and Voice Of The Customer: The Next Generation. Additionally, he created Forrester’s Customer Experience Index and Voice of the Customer Award, and he spearheaded the creation and expansion of many of Forrester’s experience evaluation methodologies and training workshops. Before joining Forrester, Bruce co-‐founded and led several Internet start-‐ups. He also held management positions with GE, Stratus Computers, and Fidelity Investments. Bruce has been widely quoted in the press, including such esteemed media outlets as The New York Times, Wall Street Journal, and Business Week. Bruce is also a highly in-‐demand public speaker, combining his deep area expertise with an engaging, entertaining style. He has delivered keynote speeches at hundreds of industry and corporate events and often attains recognition as one of the top speakers. Bruce holds a master’s degree from the MIT Sloan School of Management, where he concentrated in business strategy and operations. He also holds an undergraduate degree in mechanical engineering from Union College. 10 Customer Experience Matters is a registered trademark of Temkin Group. Copyright ©2014 Temkin Group. All rights reserved. Page 35 TEMKIN GROUP OVERVIEW
5&.,/
( 3 0 6 1
8IFOFYQFSJFODFNBUUFST
Temkin Group is a leading
customer experience (CX)
research and consulting firm.
We help many of the world’s
largest brands lead their
transformational journeys
towards customer-centricity
and build loyalty by engaging the hearts and minds of
their customers, employees,
and partners.
TEMKIN GROUP IS BASED ON FOUR CORE BELIEFS:
CX drives loyalty. Our research and work with clients demonstrates that interactions with
customers influence both how much business they’ll do with you in the future and how often
they recommend you to others.
CX is a journey, not a project. Building the capabilities to consistently delight customers
doesn’t happen overnight. Companies need to plan for a multi-year change program.
Improvement requires systemic change. Companies can improve isolated customer
interactions, but they can’t gain a competitive advantage until customer experience is embedded
into their operational processes and culture.
We can help you make a difference. Transformation isn’t easy, but becoming more
customer-centric is worth the effort. We help our clients accelerate their results and avoid many
of the stumbling blocks along the way.
HOW WE ARE DIFFERENT:
Temkin Group combines thought leadership and benchmark data with a deep understanding of
the dynamics of organizations, which enables us to accelerate customer experience results and
help companies build the four competencies that are required to sustain long-term success.
Purposeful Leadership
Do your leaders consistently
operate with a clear,
well-articulated
set of values?
Customer Connectedness
Is customer feedback and
insight deeply integrated
throughout your internal
processes?
CX CORE
COMPETENCIES
Compelling Brand Values
Are your brand attributes
driving decisions about how
you treat customers
and other stakeholders?
Employee Engagement
Are employees fully
committed to the goals
of your organization?
HOW WE CAN HELP:
Temkin Group provides a number of different services including:
Research and Advisory Subscriptions. Access to all of our research on trends, best practices, and
benchmark data as well as the option to ask questions or seek feedback on your efforts.
48 White Oak Road
Waban, MA 02468
617/916-2075 tel
617/663-6124 fax
www.temkingroup.com
CX Planning and Innovating. We’ll examine your organization’s goals and make sure that
you have the right plans and priorities for CX, whether you’re just starting the journey or looking
to take your CX efforts to a much higher level.
Engaging Workshops and Training. We deliver interactive workshops to help your organization
understand the importance of CX and what it takes to achieve long-term success. We run workshops
for executive teams, extended leadership groups, CX organizations, and broader sets of employees.
Compelling Speeches. If you’re planning a meeting or an offsite event, we’ll infuse compelling
CX content into the event. We can engage your audience on a wide range of topics related to
customer experience, focusing on elements of our four customer experience competencies.

Temkin Group Insight Report

Transcription

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