How does customer experience correlate to stock price? Let’s find out.
Over the past few months, talking with friends and colleagues here in Colorado, where Frontier Airlines has a prominent presence, the story is the same: “I used to love Frontier Airlines, but now I just feel screwed when I fly them.” Much of this has occurred after the airline announced price restructuring. By itself, there’s no reason why a company can’t change how it prices things. But when your customers feel you’re lying to them about how great a deal it’ll be for everyone, that’s a problem. JetBlue has suffered similarly after announcing it would diminish its customer experience by cutting costs, a result of investor pressure.
Many of us are investors, saving for retirement or a child’s college education. Of course we all want to maximize the return on our investment. The problem with Wall Street dictating the approach to running a company is that it’s a one-sided, often short-term conversation, and a singularly-focused one, at that.
But what if there was a better, more holistic approach?
For years, Forrester Research has created and curated the Customer Experience Index (CXi) and releases annual reports of companies across various sectors, their CXi, and core business metrics. The one thing that may surprise traditional investors? CXi, a measure of how well a company designs meaningful experiences for its customers, correlates strongly with business performance and stock price. Consider this excerpt:
A stock portfolio of Forrester’s Customer Experience Index (CXi) leaders had a cumulative 43% gain in performance over a six-year period (2007 to 2012), compared with a 14.5% increase for the S&P 500 Index and a 33.9% decrease for a portfolio of customer experience laggards.
So the obvious answer for investors is to become shareholders in companies that care about people (both employees and customers), further exemplified in Outside In, (a must-read for any customer experience professional). You’re not just investing, you’re investing with purpose. And as research has proven, the ROI among purpose-driven and customer experience focused firms is among the best there is.
If you’re a CX professional (and every CEO should be), consider this when you think about the future of your company. What will compel investors to pick you? I know what my choice would be…