Nailing down a concrete blueprint for your CX strategy is no easy feat. Differing industries and businesses experience a variety of CX and revenue potential relationships, and as Forrester found in their report, “Drive Revenue with Customer Experience, 2017,”[1] these relationships tend to take on three main shapes: linear, diminishing returns and exponential.

In a Linear Relationship, Forrester states that: “CX and revenue move in lockstep. Whether you improve a poor experience, a mediocre experience, or a good experience, the impact on revenue will be the same.”

In a Diminishing Returns Relationship, revenue tends to flatten out with higher levels of CX, but will increase “sharply when poor experiences are improved.”

An Exponential Relationship is almost opposite to a diminishing returns relationship, in that when brands improve poor experiences, revenue potential tapers off. But when they focus on “making good experiences great, [this] will lead to larger revenue gains than making poor experiences OK.”

[2] Recreated from Drive Revenue with Customer Experience, 2017, January 18, 2017 by Forrester Research Inc., Copyright © Forrester Research Inc.

What does this mean for your organisation? It means, depending on which kind of relationship you have, your investments in CX programmes will need to focus on the areas that impact revenue the most. So, for example, frequently in the banking and mass auto manufacturing industries, creating a plan to make happy customers even happier, results in greater returns. In fact, these returns can be “four times as much as increasing a poor CX score.”

Whereas in the wireless service and credit card industries, improving very poor experiences results in greater returns.“This should be a great incentive for most large wireless service providers, which each have about a third of their customers who say they have very poor experiences,” Forrester adds.

While every brand wants to eliminate as many bad experiences as possible, we all know that this is akin to biting off more than one can chew. So, these three models offer a new way to create strategies that are more tangible and actionable in terms of creating ROI. “Many companies focus on eliminating bad CX wherever possible. However, for brands with an exponential relationship between CX and revenue, it can be more valuable to provide as many exceptional experiences as possible, even for customers who are already pretty happy,” says Forrester. Conversely, for those businesses with diminishing relationships, it might be more valuable to focus on fixing the worst experiences first. And let’s not forget those who can benefit from consistency. In particular, businesses in the TV and internet service industry will find that by “improving the experiences influencing the largest number of customers,” they’ll see better revenue gains.

Clearly, your industry greatly affects the relationship model that you experience. This also plays into why different industries see a wide range of ROI with their CX initiatives (see more on CX ROI industry averages in our previous article here). For instance, a one-point increase on Forrester’s CX index is estimated to result in a strong $5M gain for credit card providers and a whopping $873M gain for mass-market auto manufacturers (based on the average number of customers per company).

Of course, there are many ifs, ands or buts when developing a revenue strategy for your company and this revenue-relationship model is only one aspect of the larger picture. However, it does provide a great starting point for learning more about the different types of experiences your customers have (poor, great, so-so) and how they impact your business specifically. Sometimes a call-back program to save at-risk customers is the best idea for saving your company millions of dollars, but other times rewarding and incentivizing happy, loyal customers is what brings in the cash.

To learn more about the various kinds of CX programmes available, check out our case studies.

[1] Source: Drive Revenue with Customer Experience, 2017, January 18, 2017 by Forrester Research Inc., Copyright © Forrester Research Inc.

[2] Source: Drive Revenue with Customer Experience, 2017, January 18, 2017 by Forrester Research Inc., Copyright © Forrester Research Inc.