The revenues of CX leaders also rebounded from the COVID-19 pandemic more quickly than those of other companies (Exhibit 1). In the United States, for example, McKinsey analysis shows that companies that are leaders of CX achieved more than double the revenue growth of “CX laggards” between 20. That’s why there is such a strong correlation between companies’ CX ratings and their revenue growth. Our research shows that strategies focused on delighting customers allow companies to earn greater value from their current customer base-which results in concrete financial outcomes. 2 Over a ten-year period, more value defined as xTRS (excess total return to shareholders above peers), data 2005–2019, N>5,000. But those that get growth right deliver 30 percent higher TRS and nearly double the shareholder value than their industry peers, on average. Growth is always hard to achieve, especially for incumbents. This story is a classic case of experience-led growth. As the CEO said: “It’s amazing the things you can do when you shut up and listen to your customers.” Over a three-year period, the company’s revenues nearly doubled-outstripping its key competitors’ revenue growth threefold. The results were dramatic: as customer satisfaction ratings jumped from worst to first in the industry, customer churn rates were cut by 75 percent. In parallel, the company reinvented its approach to service. The company eliminated contracts and allowed anytime upgrades, made every new customer offer available to existing customers, and improved its network. Their frustration shocked him-and spurred a turnaround that saw his team line up and tackle pain point after pain point. The CEO had a wake-up call on his morning commute when he listened in to customers’ calls to the telco’s call centers. The company tried to counter its competitors’ aggressive acquisition tactics with its own eye-catching offers to new customers-but excluded existing customers, compounding dissatisfaction. Attempts to use contracts to lock in customers backfired, creating resentment that caused many to defect anyway. Shut up and listen to your customersĪ mobile telecom operator faced an existential crisis: its customers were deserting it as competitors promised better network coverage and enticed switchers with cut-price offers. Sometimes they must reexamine and redefine their very reason for being. They have the boldness to rethink their corporate culture and operating models, to ramp up innovation and technology adoption, and to build new CX measurement and analytics capabilities. We call this strategy “experience-led growth.” To succeed with it, companies start by defining their desired financial outcome and then prioritize the CX improvements that will deliver that outcome. 1 McKinsey defines net revenue retention as the percentage of recurring revenue retained from existing customers over a given time period. These customers change their behaviors, and such behavior changes can be measured by concrete financial metrics like share of wallet, repeat purchases, or net revenue retention (NRR). These companies have honed a powerful strategy for driving profitable growth that their most nimble and disruptive competitors cannot emulate: providing a distinctive customer experience (CX), consistently and proactively, that entices existing customers who choose their brand. On the upside, 80 percent of the value creation achieved by the world’s most successful growth companies comes from their core business-principally, unlocking new revenues from existing customers. On the downside, compensating for the value of one lost customer can require the acquisition of three new customers. Two key numbers from McKinsey’s work underscore the case for a shift in focus. But as they obsess about new customer acquisition, many incumbents are neglecting their most powerful competitive advantage: their vast existing customer bases. Alongside mounting competition from their peers, they face disruption from nimble digital-native firms that are targeting their customers with innovative, convenient, and often personalized offers.įrequently, their response is to take on the attackers at their own game-that of acquiring customers as aggressively as possible. Airlines, insurers, telcos, utilities, and other major incumbents are all struggling to achieve sustainable, profitable growth in a world in which their offerings are increasingly commoditized. The world’s largest companies have a thorny problem in common.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |