How Employees Can Increase Your Profits
It’s a no-brainer that in today’s hyper-competitive, instantly-digitally-connected world of commerce, companies that invest more time and money into customer satisfaction will reap huge returns as the hopefully happy customers “take to the airwaves” (old terminology) and blog (new terminology) kudos throughout the social universe.
You only need to think about your last great interaction with a customer service representative and how it made you feel to intuitively know that a happy employee will deliver happy customers and therefore ultimately a better bottom line. But that’s not good enough for us. We of course, need some empirical stats to back this up, and we’ve got ‘em.
Here’s how research can help you grow profit.
The cautious and careful leader should always look for data to back-up even what seems to be the obvious (that’s our credo). Thanks to The Temkin Group, a company designed to help companies build a customer-focused culture, we have it.
A recent, extensive study by Temkin of 10,000 U.S. consumers and 294 companies not only shows how much customer focus (what they market as Customer Experience, or CX) increases customer loyalty but also quantifies that loyalty to ROI for 20 major industries.
(Spoiler alert: it’s a lot).
First of all, in the Loyalty metric, Temkin found that, when compared with companies with very poor CX (Customer Experience; i.e., customer focus), companies with very good CX have a 16.7 percentage-point advantage in customers who are willing to purchase more from them, 16.7 percentage-point advantage in customers who trust them, 10.3 percentage-point advantage in customers willing to forgive them if they make a mistake.
“But wait, don’t order yet. There’s more…!” Temkin goes further to quantify the results, finding that a moderate increase in CX generates an average revenue increase of $823 million over three years for a company with $1 billion in annual revenues. Rental car agencies have the most to gain from improving CX ($967 million), while utilities have the least to gain ($645 million).
While all three components of customer experience—success, effort, and emotion—have a strong effect on loyalty, their research shows that emotion is the most important element, and 7.1 percentage-point advantage in customers who are willing to try their new products. And that’s new sales.