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10 Surprising Customer Experience Stats

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Customer experience is no longer a nice-to-have.

Products and services are quickly commodifying in terms of features and price, and the cost of switching has never been lower. Which means more and more people are making their choices about what to buy and whether stay loyal based on their overall experience of being your customer.

Which is challenging for brands, since features and price are easier to quantifiably, objectively measure and improve than something as amorphous and subjective as customer experience.

Gartner defines “customer experience management” as

Designing and reacting to customer interactions to meet or exceed customer expectations to increase satisfaction, loyalty and advocacy. Customer experience is the sum of all branded interactions, pre- and post-sale.

It encompasses:

  • Customer service
  • Onboarding
  • User interface design
  • User testing
  • Content
  • Brand perception
  • And more

You might have heard that today’s companies differentiate themselves less on their products than in times past and more on ease-of-use, ease of adoption, and customer support. But I’d argue that there’s a better way to look at it.

Today, customer experience is an essential feature of your product or service.

How do we know? Evidence abounds. Here are some surprising customer experience stats:

  1. When Gartner looked at the research, it found that most studies showed a positive relationship between customer experience and repeat business, along with other positive outcomes.
  1. Disloyalty is common and costly. The average company loses 10% to 30% of its customers on an annual basis, according to McKinsey. While Bain & Co. estimates that acquiring a new customer costs six to seven times more to than retaining an existing one.

According to Marketing Metrics: The Definitive Guide for Measuring Marketing Performance, it’s three to 14 times easier to sell to an existing customer than to acquire a new one, because you’ve got a 60% to 70% chance of selling to an existing customer, but your likelihood of selling to a new prospect averages 5% to 20%.

  1. There’s evidence that at least half of customers are willing to pay a modest premium for a better customer experience, and customers who report a positive experience are twice as likely to stay loyal than those who rate their experience as poor. One study by Medallia found that even after controlling for other factors, customers who rated their experiences mostly highly spend 140% more than those who rate them mostly poorly.
  1. This data is becoming more widely known and may be part of why substantially more CEOs mentioned “customer” as one of their top business priorities for 2016 in Gartner’s CEO survey than did so in 2015.
  1. In 2016 there were more than 900 chief customer officers and more than 3,000 heads or directors of customer experience worldwide, according to Gartner research.
  1. Half of these people report directly to the operating committee or CEO. While marketing is increasingly seen as where customer experience lives, only one in ten customer experience leaders report to the CMO.
  1. More than 80% of chief customer officers and directors of customer experience convene a customer council for consensus-driven coordination. After all, every department has a role to play in customer experience, including:
  • Marketing
  • Customer service/success
  • Sales
  • Operations
  • HR
  • Supply chain
  • Finance
  • Manufacturing
  • IT
  1. IT plays a much smaller role in customer success than generally believed. When asked, most people estimated that IT plays a large or central role in 80% of customer experience initiatives. But, in reality, IT plays a large or central role in less than half. According to Gartner, this is because only half of customer success initiatives involve the use of technology. But that seems very low to me.
  1. By 2020, a fifth of consumer sales with originate with word-of-mouth marketing. Unsurprisingly, customers who are both loyal to your brand and advocate on behalf of it, termed “loyads” by Gartner analysts, have higher LTV and AOV. But more importantly, they bring you new customers. ID your loyal customers early so you can try to lure them into graduating into loyad status.

When it comes to where to spend money to improve the customer experience, start with loyal customers. They’re going to have the highest ROI. Are you doing anything to incentivize loyal customers to refer their friends? If not, consider starting a referral program. One of the largest loyalty studies to date showed that customers who come from a referral had 16% higher LTV and 20% lower churn compared to customers who found you through other channels.

  1. As obvious as it might be that customer experience matters, the measurement problem persists. According to the State of Customer Experience Innovation, 2016 only one-tenth of people responsible for customer experience can put a dollar value on their customer experience investments’ ROI. Three-tenths of customer experience decision makers rely on anecdotal evidence for estimating ROI. Four-tenths don’t measure ROI at all. D:

When measuring ROI, include the cost of retaining your customers as opposed to acquiring new ones. Estimates by Emmet Murphy and Mark Murphy in “Leading on the Edge of Chaos” show that increasing your customer retention rate by just 2% impacts your business the same as decreasing your costs by 10%.

And don’t overlook the cost of unhappy customers. Ticked off users return more products, create more customer support tickets, and complain more to their friends about your brand.

Conclusion

What does the future hold for customer experience? I predict it’ll become even more important. One more stat for you: by 2020 automated smart agents and virtual personal assistants will impact a quarter of customer purchases.

The other thing you need besides training, buy-in, and best practices to deliver top-notch experiences for your customers is high-quality software. Whether it’s marketing automation software, customer service software, crm software, business intelligence software, human resources software, supply chain management software, accounting software, or ITSM software, Capterra has you covered with tons of choices and the ability to narrow down your options according to your needs.

Looking for Customer Service software? Check out Capterra's list of the best Customer Service software solutions.

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About the Author

Cathy Reisenwitz

Cathy Reisenwitz helps B2B software companies with their sales and marketing at Capterra. Her writing has appeared in The Week, Forbes, the Chicago Tribune, The Daily Beast, VICE Motherboard, Reason magazine, Talking Points Memo and other publications. She has been quoted by the New York Times Magazine and has been a columnist at Bitcoin Magazine. Her media appearances include Fox News and Al Jazeera America. If you're a B2B software company looking for more exposure, email Cathy at cathy@capterra.com . To read more of her thoughts, follow her on Twitter.

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