Return-on-Analytics in companies - No more just data-starved but more behaviour-starved!
What does it take to be a customer-centric company?

What is the value of customer experience?

While companies and marketers understand the importance & appreciate the value of customer experience, I have often found there are very little studies that quantify the value of the same. Often, there is more intent and less action, as it is difficult to justify the customer experience investments as these don't reflect the benefits in the short term. Hence, there is always initial excitement and very little consistent follow thro' over years.

I have always wondered if companies can start to put  ROCE( Return on Customer Experience) in their balance sheets and quarterly earnings as an important ratio. This way there will be a method to view & factor long-term value that companies are building on their customer experience investments. This can then be factored into shareholder value creation and stock prices.

Harvard Business Review has come-up with an interesting view point on the same in a recent article - The value of customer experience, quantified.  They have clearly found customer experience is a key driver of future revenue.

In this study, they have looked at businesses as two types - transactional business and subscription businesses. In transactional businesses, like retail or financial services - frequency of visit and spend per visit are key according to this study. If the customer experience in the store or bank is not good, then there is an implication of future revenue increase from customers. In membership businesses like timeshare, hotels, airlines,gym/club memberships, may be even life insurance( my view) etc. retention and renewal is key and ongoing customer experience play a pivotal role.

I do feel there is a thin line differentiating businesses as transactional and memberships - there is increasingly convergence between the two. However, I strongly feel great customer experience must also be correlated with value received/delivered by customers, as it does have a major impact on customer behaviour attributes for businesses. I see a need to study this more in this context.

However, ROCE( Return on Customer Experience) is a metric that must become mandatory for companies to report at the board level and its value must be tracked over the year to get due attention and appropriate investments year after year.