Does Customer Experience really Matter?

As consumers we all can recall the experiences that have left us feeling abused and mistreated by companies we have selected to give our money to. In some instances I promised to myself never to come back for more and kept my promise – I would rather go back to dial-up ISP than deal with Comcast.

According to the research of Bruce Temkin, former Forrester analyst and an authority on Customer Experience management,

In Forrester’s 2010 Customer Experience Ranking of 133 companies, Comcast came in 126th for it’s Internet business and 125th for its TV service. It also came in 105th/109th out of 114 companies in the 2008 rankings and 95th/101st out of 112 firms in the 2007 rankings.

The point of this writing is not to bash Comcast, even though it definitely deserves bashing, but to ask an important question: Does the Customer Experience (or Customer Satisfaction) really matter if in spite of its miserable scores a company like Comcast can produce healthy profits?

These financial statements show steady growth in revenues and profits over the same periods, and the numbers do not provide any evidence to support the belief that mistreatment of the customers is a good business practice.

I have posed this question to Bruce and his response

“@piplzchoice Good question. Cust exp is a long-term asset. Comcast (and others in the industry) are squandering it. It will catch up to them.”

This response is encouraging, but not entirely satisfying because it appeals to emotional belief (faith). I would prefer some empiric evidence of correlation between profitability and customer experience ratings or reputation.

I have heard about Claes Fornell of CFI Group who has done very interesting work in that field, but yet to learn more about that methodology.

To be fair, one example, particularly of a company that operates in rapidly growing market with very few competitors, does not offer any meaningful insight and I would love to find some other, more representative examples.

Woody Allen once said – “I would gladly accept existence of God if he would give me some evidence of his existence, like transferring $5M to my Swiss bank account”. Please let me know if you are aware of any definitive studies and/or methodologies that quantify and/or predict financial performance based on the Customer Experience – I am still faithful, but yearn for evidence.

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6 Responses to Does Customer Experience really Matter?

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  2. Tim Mathis says:

    I think the real reason companies like Comcast score so poorly on customer service yet have a good balance sheet is due to a lack of choice. In many town, you only have one real choice for cable. In my town it’s Time Warner. Am I happy with them, absolutely not. And my choices? Slapping an ugly dish onto my 250 year old historic house. Not going to happen. So companies like Comcast and Time Warner operate in a fairly closed market when it comes to consumers and their dislike for that provider.

  3. Gregory says:

    Tim, it is a very good point. I would really like to know how wide spread it is. The companies protected from competitive pressures, like power or sanitation companies, do not even pretend to care.

  4. Carol says:

    There will always be people to whom the customer experience will matter,as opposed to those who will buy whatever is more convenient and less expensive regardless of the experience.
    We are in a time of “lowered expectations” as consumers with Costcos and the like. When I get good or excellent customer service anymore, I am surprized and delighted.
    In the case of Comcast, just google “Comcast Sucks” and you will get an idea of their reputation.
    But they are the biggest game in town they get the lion’s share of bussiness. We dropped them because they kept raising the prices and had frequent outages.
    How much weight one gives to the customer experience will vary with other factors, most of us would accept lesser service or even a little abuse for a significantly lower price. Ideally, I like to reward those companies who provide superior service and customer experience with repeat bussiness. I do not economically, always have that luxury.

  5. Gregory says:

    This comment for the post was filed on by Rob Mawhinney

    Rob Mawhinney • Wide open subject, of course, and intuitively (outside monopoly situations) customer experience does matter: in the modern globalising economy competing on incumbent status, product innovation or price alone is insufficient for success – customer experience and its ability to develop (or destroy) loyalty is THE battleground.

    However, where, conventionally, the has seen companies developing ‘customer satisfaction programs’ and preaching ‘customer delight’, the Corporate Executive Board produced a great piece of research into contact centre activity to identify Key Satisfaction & Loyalty drivers. From a survey of some 18 thousand respondents across 12 industry sectors globally, they came up with the (somewhat surprisingly to traditionalists) following results (please read carefully):

    20% of satisfied customers will not repurchase
    28% of dissatisfied customers will repurchase
    45% of satisfied customers will not spend more
    11% of dissatisfied customers will spend more

    Further analyses identified ease of doing business, or (minimised) “customer effort” was a much better predictor of loyalty and increased spend than ‘overall customer satisfaction (CSAT) and Net Promoter Score (NPS): some 94% of the customers reporting a low effort expressed an intention to repurchase, and 88% said they would increase their spending.

    I have successfully used this analyses to re-focus contact centre behaviour and KPIs to ensure reps anticipate and avoid the need for follow-up calls, minimise shunting the customer around (departments/channels), and home in on problem solving (“live resolution”) rather than average handling time (important as a bundle of KPIs but too often given highest priority).

    (The summary paper was published in the HBR, and the link to CEB is – I do not work for these guys, but the findings and their support was crucial to my own success).

  6. Gregory says:

    Another comment came from LinkedIn
    Alan Woollam • We now live in an experience economy, so yes customer experience matters big time. A lot of smart organisations have embraced this thinking. They have taken a strategic decision to differentiate their brand in a crowded market place by offering a memorable end-to-end customer experience. As far as broadband, cable TV and cell phone providers this is particularly true. In the UK Virgin media significantly improved their customer experience, having started from a poor position following the integration of three companies with some poor customer satisfaction ratings. The CEO made the customer experience a key priority. One of the success factors was improving the Net Promoter Score across the total customer Experience from point of sale to billing. In a subscription business the customer experience matters as at the end of the contract the customer can walk. I suspect in the case of the Comcast experience you highlight, customers could be hostages. Either thee is no better choice of provider or they are waiting to defect!
    A paper lot of my clients like is the London School of Economics
    Advocacy Drives Growth by Dr. Paul Marsden.

    Alan Woollam
    Xperience Associates

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