Last week the Wall Street Journal reported on its front page that “hiding behind the profit gains of America’s biggest companies is a worrying slowdown in sales growth. U.S. companies…have missed revenue forecasts, hurt by…sluggish consumer spending. With earnings reports in from more than half the companies in the S&P 500-stock index, first-quarter revenue for the group is expected to shrink 0.3% from a year earlier, according to Thomson Reuters…The sales figures are a troubling sign that business and consumer demand remain weak nearly four years after the recession. They are also evidence that a soft patch is developing in the U.S economy.”
Benjamin Franklin in Poor Richard’s Almanac wrote that “a penny saved is a penny earned.” West Monroe Partners believes that this aphorism also applies to customers – that truly “a customer saved is a customer earned.” Customer loyalty is essential to any organization seeking to maintain existing revenue or trying to create revenue growth. Holding onto existing customers can dramatically reduce the amount of time, effort and money required to grow the organization.
Lower customer retention rates are problematic because they are expensive and inefficient to counteract, requiring a very high investment in sales and marketing programs to drive new customer acquisition. Forbes magazine recently reported that it is 7 times less expensive to keep a customer than to acquire one. (“Warning: Is Your New Customer Coming Back?”, February 4, 2013). Thus, higher customer retention rates can dramatically lower these costs and can enable a company’s growth to far outpace its rivals at much lower cost.
Firms poised for growth place their customers at the center of their strategy—using customer insights to develop targeted capabilities that build, cultivate, and sustain key relationships. Delivering an effortless customer experience not only can maintain and increase your customer base and revenue; it also builds the loyalty among the right customers.
The financial benefit of customer experience has been validated by a West Monroe Partners analysis in a recent whitepaper comparing Forrester’s annual Customer Experience Index (CxPi) with growth. We have determined that the correlation between the 2011 CxPi and 2010 to 2011 revenue growth for these firms can be statistically significant (0.47). Thus, expertise at customer experience can be correlated to better top line financial results and revenue growth.
West Monroe Partners helps firms build loyalty, promote advocacy, and increase cross-sell capabilities by delivering that effortless customer experience—starting with a true understanding of what it’s like for customers to interact with your organization. This analysis measures critical components of your current customer experience and compares them against industry benchmarks to identify those things your organization does well and those on which it can improve. We also help determine via advanced analytics those customers – especially high value customers – that are most ‘at-risk’. Then, we help firms develop and implement sound customer strategies to retain high value customers and build a loyal and more profitable customer base.
We cultivate customer loyalty with ideas you can do, insights you can use, and impact you can see —all for the customers you want to keep. The result:
- A deep, clear understanding of behavioral patterns and the things that matter most to your most profitable customers
- Increased customer retention
- Lower sales and overhead costs
- Improved cross-selling capability of additional products and services
- Greater customer loyalty and lifetime value
How can you achieve and leverage improved customer retention to increase revenue in this times of sluggish consumer demand?
Customer Experience: Inspired thinking. Purposeful execution. Loyalty that lasts.