Brands are not successfully differentiating themselves with experience, finds Forrester research
Customer experience leaders grow revenue faster, drive higher brand preference, and can charge more for their products by forging an emotional connection with consumers, a new Forrester CX report said.
Despite marketers knowing all this, as yet no clear CX leaders have emerged in Australia, meaning brands are not successfully differentiating themselves with experience.
According to The Australia Customer Experience Index 2019, released by Forrester, overall CX in Australia improved from 2018, but two-thirds of the brands are still clustered in the middle, delivering just 'OK' experiences. No real CX leaders have emerged, with no brand rising to the 'excellent' category, demonstrating Australian brands are unable to differentiate with customer experience.
The report said elite brands build loyalty by making customers feel confident, happy and valued; CX laggards foster resentment by making customers feel annoyed, disappointed and frustrated.
Australian brands improved CX between 2018 and 2019. Of the 31 brands, five had a statistically significant increase in their scores: Commonwealth Bank, JB Hi Fi, Officeworks, IKEA and Big W. Fewer brands had OK scores and more had good scores. However, with 18 brands clustered within just five points of each other in ‘OK’, firms have a significant opportunity to gain a competitive advantage by moving up to the 'good' and 'excellent' categories. Government customer experience remains weak compared to the private sector.
Those brands in the ‘good’ CX category, in order, are: ING Direct, Bendigo Bank, JB Hi Fi and Officeworks. The worst scoring brand was Centrelink.
The report stated of this year’s four highest-scoring brands, only two have shown a statistically significant score increase: JB Hi-Fi gained more than seven points to jump from sixth to third place overall; and Officeworks gained more than two points to inch up from fifth to fourth place overall. Two multichannel banks, Bendigo Bank and ING Direct, have been among the top two brands for the past four years, but both stagnated this year.
“Brands that want to break away from the pack should focus on emotion: How an experience makes customers feel has a bigger influence on their loyalty to a brand than effectiveness or ease in every industry,” the report stated.
“Elite brands provided an average of 12 emotionally positive experiences for each negative experience. The lowest-performing brands provided less than one emotionally positive experience for each negative experience. Customers who feel confident, happy, and valued are the most loyal."
Contrary to conventional wisdom, making customers happy is not the single best way to achieve loyalty, according to Forrester. The analyst firm advocated brands addressing a wider spectrum of emotion.
"Unfortunately, companies fail to reap the benefits of these emotions: Only once does one of these emotions appear among those most frequently felt by customers, in any industry. Annoyance, disappointment, and frustration always drive customers away," the report stated.
"Angering customers isn’t as harmful to their loyalty as making them feel annoyed, disappointed or frustrated. That’s bad news for brands, as these three emotions are those most frequently felt by customers across all industries.”
Based on a survey of more than 8000 Australian adult customers in 2019, Forrester’s CX Index methodology measures how well a brand’s customer experience strengthens the loyalty of its customers and benchmarked the CX quality of 31 Australian brands in three industries and the federal government sector.
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