Irrefutable Evidence: Great CX Brands Outperform Competitors & Stock Market Significantly, in Any Economy
How do companies outperform competitors and the stock market by significant margins, in any economy? By being customer experience leaders in their industries. Make no mistake about it, there is a direct correlation between love, loyalty, and profitability. According to Bain & Co., companies achieving the highest Net Promotor Scores (NPS) in their industry consistently beat the stock market over the past decade, with annual returns of 26%+. 
Reichheld, Fred. Winning on Purpose Harvard Business Review Press
Superior Customer Experience Creates Strong Emotional Connection for Customers AND Employees
When brands decide to make the experience they deliver their single biggest competitive advantage, the results speak for themselves. Stronger revenue growth naturally follows. Sales, profit, brand loyalty, customer referrals, and employee morale all increase, while advertising expenses and employee turnover decrease. This approach is a proven relationship builder.
*Related – How Important is CX to the Success of your Business
Look at the following chart that shows the direct correlation of NPS, which gauges customer satisfaction, and the stock market values of automakers. The higher the NPS scores, the higher the value of the automaker.
In his book, Winning on Purpose, author Fred Reichheld shared an incredible comparison of two groups of companies. The first group was comprised of the eleven organizations Jim Collins focused on in his groundbreaking book, Good to Great, whom he identified as “great” based on financial criteria as the only competitive differentiator. They were compared to the NPS leaders featured around the same time in Reichheld’s earlier book The Ultimate Question 2.0.
Bain teams examined the total shareholder return (TSR) of the 11 “Great” companies featured in Good to Great for a decade following that book’s publication. Bain then performed the same analysis for the NPS leader companies from The Ultimate Question 2.0 for the decade after that book’s release. Then, they compared both sets of companies to the median stock market return in the decade following each book’s publication.
As you can see, the Good to Great companies delivered only 40 percent of the median market performance, while The Ultimate Question 2.0 NPS exemplars delivered 510 percent of the median return. In other words, the firms appearing great through the lens of financial performance only made their investors very unhappy over the decade, while investors in companies that focused on delighting their customer also delighted their investors in the next decade.
*Related – Have You Recession Proofed Your Business?
When Profits Become Purpose for Businesses, All Are Shortchanged
So how did the companies who were labeled “Great” in Jim Collins’ book not maintain that level? Reichheld explains it this way, “Those firms (like most companies today) gauged their success using the metrics of financial capitalism—primarily profits. When profits become purpose, it becomes too easy for large and powerful firms to boost their financial performance by shortchanging both their customer base, and their employees.” The focus is no longer on engaged employees creating positive experiences for loyal customers, or even new ones. It’s an approach which can affect the entire customer journey. This business model merely extracts value rather than creating it. It does nothing to improve relationships with customers, much less exceed customer expectations. We know that even one bad experience can lead to negative customer feedback. When bad customer experiences occur over a period of time ranging from months to years, the company’s investors can be the last to know.
CX Plays a Major Role in How Brands Weather an Economic Downturn
No better point can be made than the following graph from Watermark Consulting’s Customer Experience (CX) ROI Study. The study analyzes the stock market performance of the top-rated companies in customer experience versus the bottom-rated during the period of the last U.S. recession, 2007-2009. The worst CX companies delivering poor customer experience had a negative 57% ROI; many of them didn’t survive. The stock market struggled at a negative 16% while the best CX companies providing customer experience excellence posted a positive 6%. In today’s competitive market it’s clear that when considering market share and revenue goals for their companies, business leaders must include customer service training among their top investments, as an essential facet of their overarching customer service mission.
“The companies that don’t invest in customer experience are the ones that their
leaders don’t understand the financial impact CX can have.”
*Register for our New Customer Experience Executive Academy Class starting this fall
DAN THURMON PRESENTING AT THE 2022 CUSTOMER SERVICE REVOLUTION CONFERENCE
We are so thrilled to announce that Dan Thurmon will be presenting at this year’s Customer Service Revolution. Dan Thurmon is one of the highest-rated speakers the Customer Service Revolution has ever had, and he is back. Dan Thurmon is the founder and President of Motivation Works, Inc, a company that helps leaders and their organizations move confidently through change and transformation, so they become, achieve, and contribute MORE.
His clients include Bank of America, Coca-Cola, Delta Airlines, Honeywell, Johnson & Johnson, Kraft, Marriott, Microsoft, Procter& Gamble, Prudential, State Farm, and Walmart. Dan is an expert speaker and performer. He’s delivered thousands of presentations across six continents for audiences including world leaders, Fortune 500 companies, entrepreneurs, educators, and even troops on the front lines of battle in Iraq and Afghanistan.
Check out Dan Thurmon’s sizzle reel:
EPISODE 090 of the CSRevolution Podcast: Episode 090: CX Focus Fuels Extreme Growth
The DiJulius Group’s Vice President of Consulting, Dave Murray speaks with Jay Juffre, the Executive Vice President of ImageFIRST, about how an obsession on customer experience fuels extreme growth.
QUOTE OF THE WEEK
“If you are not constantly innovating the experience you deliver,
your brand will become stale and eventually irrelevant.”
Register to join me for my Webinar on How to Become a Successful Business Coach in 3 Steps on Thursday, July 7th.
- What it takes to become a successful coach and business owner
- How to find your first clients
- The formula to follow to ensure your success
- The benefit a community plays when you’re a solopreneur
- How to earn six figures in your first year
- Who should apply to become a CX Coach
REGISTER FOR THE 2022 CUSTOMER SERVICE REVOLUTION CONFERENCE
Check out the full details about each speaker and the Customer Service Revolution here.
Register now for the 2022 Customer Service Revolution!
