How Customer Experience Leaders Differ From Laggards

May 7, 2014

HBR-Customer-Experience-Leaders-Laggards-May2014Companies taking forward-looking approaches to customer experience management (“leading-edge companies”) are using analytics more effectively and seeing more promise in new technologies than companies who aren’t taking such a forward-looking approach (“lagging companies”), according to a recent report [download page] from Harvard Business Review Analytic Services sponsored by SAS. With their significant investments in customer experience, it’s not too surprising to see them also reporting significantly better business outcomes.

For example, 58% believe their customer retention rates are very successful (top-3 box score on a 10-point scale), versus just 20% of lagging companies who concur.

According to the study, “leading-edge companies” are those who gave their organization a top-3 box rating (on a 10-point scale) when asked how forward-looking their organization is in its approach to customer experience management. “Lagging companies” are those who gave their organization a bottom-4 box rating on the same scale.

There are various ways in which their approaches to customer experience differ.

Not surprisingly, those on the leading edge are three times more likely than laggards to feel that their customer experience programs are adequately funded (64% vs. 22%); they’re also 6 times more likely to report having customer experience processes in place (73% vs. 12%).

Beyond those sources of support, leading-edge companies report being able to extract more value from analytics. Compared to laggards, they’re:

  • Three times more likely to very effectively (top-2 box score on a 10-point scale) compare differences in experience quality among segments (48% vs. 17%);
  • More than 4 times as likely to be very effective at analyzing cross-organizational customer insights (51% vs. 12); and
  • Almost three times as likely to report being very effective at creating organization-wide customer experience standards (55% vs. 20%).

Moreover, about half are very effective at mapping customer interactions within their organization, while not a single laggard shared that sentiment.

Given their dedication to analytics, it’s to be expected that they’re more enthusiastic than laggards about emerging tools, such as customer experience/online behavior analytics, real-time decision-making, social media analytics and location-based applications.

Some significant discrepancies arise when looking at how both groups of companies measure success, too. For the most forward-looking of companies, metrics such as upsell/cross-sell rate (49% using, versus 26% of laggards), brand mentions (49% vs. 22%) and customer lifetime value (44% vs. 12%) are far more widely utilized.

Other interesting findings from the report:

  • Some 43% of respondents overall find customer data integration/lack of standardization to be challenging (top-3 box score on a 10-point scale);
  • On the customer experience management front, key challenges include maximizing customer experience ROI (52%), achieving a “single view” of the customer (51%), building new customer experiences (51%) and cultivating a customer-focused culture across the organization (50%);
  • Systems integration is the biggest obstacle to consistent customer experience, followed by multichannel complexity;
  • Despite being the least-used customer experience practice (by 27% of respondents), those who connect corporate rewards to customer experience metrics find it to be the most effective practice, with 53% rating it “extremely effective.” Leading-edge companies are 33% more likely than average to be using this practice.

Earlier this year, a survey from Econsultancy found customer experience to be marketers’ single most exciting opportunity of the year.

About the Data: Harvard Business Review Analytic Services received a total of 403 survey responses from 308 members of the Harvard Business Review Advisory Council, supplemented with 95 Harvard Business Review e-newsletter subscribers.

All respondents are full-time employees from companies with revenues of $150 million or more. Forty percent are in companies with revenues of $5 billion or more; 22% have between $1 billion and $5 billion.

One-third (33%) of respondents are from North America, and about one-quarter are from Asia (25%) and Europe (26%). Sixteen percent are from the rest of the world.

More methodological details can be found in the report.

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