The value of great customer data
As we’ve seen in previous videos, obviously, customer experience and the revenue from customers is what excites your stakeholders. You could see the telco CEOs want insights on their customers. About 83% of them thought that was their biggest priority.
In this lesson, I want to walk you through how that customer experience correlates with revenues in your organisation. In later courses we’ll teach you how to actually go and translate the NPS scores that you might have in your business, which is customer satisfaction scores, turn them into a dollar number, which you can use to justify improvements in customer data.
So what does the research tell us about the benefits of enhancing experience? Well, organisations that achieve this get a whopping:
- 84% uplift in their corporate revenue
- 400% increase in customer retention
- 1400% boost in customer lifetime value
They can unlock this when they turn a detractor into a promoter and we’ll talk about what that means later on. Great stuff! But how do you measure customer experience?
Measuring customer experience
Bain Consulting introduced a concept called Net Promoter Score. And in that, you ask a simple question of “Would you recommend our company to a friend or a colleague?” You then look at the results on a score from 0 to 10.
If that score is up to 6, that’s a detractor. They wouldn’t recommend your company or they may even go around telling you, telling people not to use your services.
If they got 7 or 8, they’re passive, you’re not too bothered one way or another, they’re certainly not going to go shouting from the rooftops that it’s a great company, but you won’t tell people to avoid it either.
If they’re a 9 or 10, then they become a promoter for the organisation, which means that they’re a real ambassador and an enthusiast about the products and services that are offered by the organisation.
To work out what the net promoter score is, we:
- Balance the number of promoters with the number of detractors
- Then look at the net promoter score simply the percentage of promoters, minus the percentage of detractors
- So you can have a maximum score of +100 – Hooray!
- And a minimum score of -100, if all your customers hate you – hopefully this course can help change that..
Turning NPS into a number your executives will care about
Now that’s all well and good. But how can you go and turn that into a dollar number that executives are going to care about?
You need to create a correlation between the experience metrics and company revenue. Luckily, there’s a lot of research out there that does that.
- If you can reduce the number of detractors by 10%, then your revenue will go up by 4.14%
- If you can increase the number of promoters by 10%, then you can drive up your corporate revenue by 1.42%
Think about how that will look for your CEO or Head of Sales. All you need to do is demonstrate customer experience problems that are a result of your data issues, find out corporate revenue, and then make a projection for how much you can improve experience by weeding out the errors.
So there it is – a correlation between the experience that your customers have working with your business and the revenues that your organisation can bring in. And clearly, if you can improve the data, if you can make it more seamless and deliver the right data to the right customer or the right internal stakeholder at the right time, you can make it much better for an organisation or a company or an individual to come and work with your business. They will become a promoter for you. You will see your revenues rise and you can go and try and push this to your executives that customer data needs to be preserved and treated with the utmost respect.