Better Customer Experience Could Generate Vast New Additional Revenue – Temkin Group

Temkin Group research found a significant correlation between customer experience, customer loyalty and increased revenue for all industries studied, including insurance.

Even a modest increase in customer experience at a typical $1 billion company could generate an additional $272 to $462 million in revenue over three years, according to ROI of Customer Experience, 2014, a new study by Temkin Group (Waban, Mass.).

“Great customer experience isn’t just a nice thing to provide for customers,” comments Bruce Temkin, managing partner, Temkin Group. “It’s a critical component for improving the bottom line by increasing customer loyalty.”

While the study found that hotels, fast-food chains and retailers had the most to gain, a good custome

Bruce Temkin, Managing Partner, Temkin Group.

Bruce Temkin, Managing Partner, Temkin Group.

r experience will increase the loyalty of customers of companies all 19 industries included in the study: insurance carriers, airlines, appliance makers, auto dealers, banks, car rental agencies, computer makers, credit card issuers, fast food chains, grocery chains, health plans, hotel chains, Internet service providers, investment firms, parcel delivery services, retailers, software firms, TV service providers, and wireless carriers.

Based on a survey of 10,000 U.S. consumers, the report also found that:

  • Examining the loyalty and repurchase plans for customers of 268 companies reveals a very high Pearson Correlation coefficient of .83.
  • Net Promoter Scores of companies with very good customer experience ratings average 22 points higher than the scores of companies with poor customer experience, with a very high Pearson Correlation coefficient of .77.
  • Across all 19 industries, loyalty is highly correlated to the three components of the Temkin Experience Ratings: functional, accessible, and emotional. In almost all cases, the emotional element of experience has the highest correlation.
  • Auto dealers retain the most business from existing customers ($184 million over three years) when they improve customer experience, whereas investment firms retain the least business ($94 million over three years).
  • In three industries, typical companies generate more than $100 million of additional revenues over three years from word of mouth by improving customer experience: supermarkets, fast food chains, hotels, and retailers.

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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