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A Measure of Customer Experience

By: Bill Bleuel

 

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Peter Kriss is a senior research scientist at Medallia and the Director of Research for Vision Prize has recorded some quantifiable evidence that the customer experience provides significant performance improvements for companies. He focused the research on two different companies with different revenue models. One company was involved in a transactional-based business while the other was a subscription-based business.

 
The transactional-based business was focused primarily on how frequently the customers returned and how much was spent each time the customer returned. On the other hand, the subscription-based business focused on retention. In his research his team controlled for other factors that might affect repeat purchasers to remove any bias by those factors.
 
His results were truly amazing as noted below:
 
For the transaction-based business, customers who had the best past experiences spent 140% more than those who had the poorest past experience
 
 
For the subscription-based business, members who gave one of the top two experience scores had a 74% chance of remaining a member for at least another year, whereas those who had the poorest experience had only 43% chance of being a member a year later. The real difference was that members who gave the lowest scores were likely to remain a member for a little over year, compared to the members who gave the highest scores who were likely to remain a member for another six years.
 
The bottom line is obvious because the numbers tell the story. Customers that rated their experience high were much more profitable and loyal. While these two companies provide only anecdotal experiences, each presents a great case for considering the metric of customer experience as a way of measuring customer loyalty while providing increased profit.
 
This article was originally published by The Customer Institute
Published: April 27, 2015
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Bill Bleuel

Dr. Bill Bleuel is an award-winning Professor of Decision Sciences at Pepperdine University’s Graziadio School of Business and Management. Dr. Bleuel’s expertise lies in the quantitative aspects of business. He specializes in the measurement and analysis of operations, customer satisfaction, customer loyalty and customer retention. He has held senior positions in engineering, marketing and service management at Xerox, Taylor Instrument Company and Barber Colman Company. Dr. Bleuel has also experience as general manager in two start-up companies that he co-founded.

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