We British look at the world as if the glass is half empty. By contrast, Americans look at the world as if the glass is half full. So, when I share some statistics I read regarding customer satisfaction and leveraging behavioral economics, some of which I felt very glass-half-empty about, I hope a few of you, with your half-glass-full dispositions, will help me see the bright side.
Let's begin with an area of game-changing opportunity:
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Statistic #1:
Gallup Analytics says companies that apply the principles of behavioral economics can outperform their competition by 85% in sales growth and more than 25% in gross margins.
I agree with this one, and it's an area I have discussed before. However, I have never heard it come from a source like Gallup. Plus, those are some compelling numbers.
However, my half-empty thinking leads me to conclude that too many firms aren't doing this and using behavioral economics in their experience designs. It is a shame because behavioral economics is about understanding your customers better.
Statistic #2:
Gallup also says that 70% of economic decision-making is made with emotional factors.
In the human brain, as I understand it, the emotional system provides triggers or thresholds that say, "Okay, you've thought about this enough. Now, make a choice." It's as if the emotional trigger is built into our brains to move us forward, even if the decision itself is not emotional.
Gallup does not specify the emotional factors, but it feels right, nonetheless. Of course, this concept is another thing I always say, so that it feels right to me isn't too surprising.
Statistic #3:
Forrester says 41% of customer-obsessed companies achieved at least a 10% revenue growth, compared to 10% of less matured companies.
Forrester has a customer experience maturity index, which increases to being customer-obsessed. I'm unsure if I like the word "obsessed," but that's a different kettle of fish. I disapprove of stalking customers or looking through their windows at night while they sleep.
Semantics aside, this stat indicates that life is good by focusing on improving Customer Experience, behavioral economics, and emotions. I don't disagree or have any negative feelings about this one. I must be feeling a bit American right now.
Statistic #4:
The American Customer Satisfaction Index (ACSI) says from 2010 to 2019, about 70% of the companies tracked by ACSI had declined or flat customer satisfaction scores.
What is worse is that since then, American customer satisfaction declined more. This issue is critical and brings out my pessimistic side. Luckily, my optimistic side points out that reframing this statistic could indicate that 30 percent of companies are improving.
Why customer satisfaction is not improving on a large scale is complex and nuanced. It may result from rising customer expectations. It could be a side effect of generalized anxiety and discomfort inspired by political and economic instability, which could lead to a general feeling of dissatisfaction.
However, it could also be that even as companies have implemented policies and systems that support improving experiences, if they do it wrong or unenthusiastically, it won't matter. I suspect many of these companies went through the motions to tell their stakeholders they did their due diligence in customer areas. Nonetheless, their hearts weren't in it; the numbers reflect that.
The headline here is that too many organizations jumped on a trend and didn't understand what they were trying to do. Also, too many professionals took on responsibility without authority and couldn't make the changes that they needed to make. Plus, they haven't equated an improvement in customer satisfaction to a revenue benefit, which doesn't do experience improvement any favors when it's time to budget resources.
Statistic #5:
Bain says increasing retention by as little as 5% can boost profits by as much as 95%.
Frederick Reichheld, a recent guest on the podcast, came up with this one. My optimistic side was encouraged by this stat. I have long been an advocate of focusing on customer retention over acquisition.
However, my pessimistic side is still surprised that few organizations focus on customer retention. It cripples their customer-driven growth.
For example, all the new incentives are for new customers. Meanwhile, your loyal customer for ten years gets the same high price. Who would stick around after being treated like that?
Statistic #6:
The ACSI is at its lowest point since 2006.
This statistic is disappointing considering the resources spent on all the experience programs. If I were the CEO of an organization looking to cut costs because of potential recessions and everything else, I know where I would cut.
Statistic #7:
It costs five times as much to attract a new customer than to keep an existing one.
This one is also from Bain. A cognitive bias in favor of filling the funnel instead of fixing the leaks in the funnel must exist. When you group statistics 6 and 7, it's clear that we favor getting new people over keeping the ones we have.
Growth can come from your current customer base if they're more satisfied. So, why would you not have a target for the retention of customers?
Statistic #8:
Invesp says 44% of companies have a greater focus on customer acquisition, and only 18% have that focus on retention.