Customer experience now more important for loyalty: Forrester

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A new report from Forrester Research shows that customer experience is closely tied to customer loyalty, and that the correlation between the two has increased since last year.

The report measures loyalty by a customer's willingness to repurchase from a company, reluctance to switch and likelihood to recommend. Customer experience is measured by whether the company meets a customer's needs, whether the company is easy to work with, and the enjoyability of a consumer's interactions with the company.

“It's a no-brainer,” said Bruce Temkin, VP and principal analyst, customer experience at Forrester, and author of the report. “Customers will do more business with companies that serve them best, and a good portion of what they evaluate is the experience.”

He added, “The big takeaway is that customer experience is the loyalty magic bullet if there is one. Marketers need to make sure they are building loyalty the old-fashioned way, one interaction at a time. If you aren't delivering good interaction and meeting needs and being easy to work with, then customers will leave you.”

TV service providers as an industry saw the highest correlations between experiences and loyalty across all 3 measures, but the companies whose customer experiences were most linked to loyalty were Office Depot, which lead in willingness to repurchase, US Airways for switching, and Charter Communications in recommending.

Between September 2007 and October 2008, the link between customer experience and loyalty has gotten even stronger across all industries included in the studies. The correlation between experience and repurchasing grew the most for TV service providers and investment firms, while the relationship between reluctance to switch and experience grew the most for investment firms and medical insurers.

Temkin said he was surprised to see the correlation between experience and loyalty increase across the board, but he takes it as a sign that customer experience has only become more important in this economy.

“The fact that it went up in all industries was a sign that in down times, customers become even more alert to the way they're being treated and get even more sensitive to the experiences they have, so that was the big ‘A-ha!' from the research this year,” Temkin said.

“When times are good, consumers just continue on their merry way, but in this economic environment, every purchase they make, every service interaction they have is a large portion of what they care about,” he continued. “They're more emotional about everything and, therefore, a bad experience resonates even more negatively.”

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