A Measure of Customer Experience

Peter Kriss is a senior research scientist at Medallia and the Director of Research for Vision Prize has recorded some quantifiable evidence that the customer experience provides significant performance improvements for companies. He focused the research on two different companies with different revenue models.  One company was involved in a transactional-based business while the other was a subscription-based business.

The transactional-based business was focused primarily on how frequently the customers returned and how much was spent each time the customer returned. On the other hand, the subscription-based business focused on retention.  In his research his team controlled for other factors that might affect repeat purchasers to remove any bias by those factors.

His results were truly amazing as noted below:

1.    For the transaction-based business, customers who had the best past experiences spent 140% more than those who had the poorest past experience

2.    For the subscription-based business, members who gave one of the top two experience scores had a 74% chance of remaining a member for at least another year, whereas those who had the poorest experience had only 43% chance of being a member a year later.  The real difference was that members who gave the lowest scores were likely to remain a member for a little over year, compared to the members who gave the highest scores who were likely to remain a member for another six years.

 The bottom line is obvious because the numbers tell the story. Customers that rated their experience high were much more profitable and loyal.  While these two companies provide only anecdotal experiences, each presents a great case for considering the metric of customer experience as a way of measuring customer loyalty while providing increased profit.