The research is in: companies that get top marks in customer experience generate more revenue than their underperforming peers.
It seems like a no-brainer—just look at Amazon’s upward-trending share price and eye-popping earnings to understand how the company that strives to be the most customer-centric business out there makes the connection between contented customers and plump profits.
KPMG’s 2018 U.S. Customer Experience Excellent Analysis examined a cross-section of industries to pinpoint standouts fostering the greatest goodwill and loyalty among consumers, rating 100 companies overall. American sportswear leader Calvin Klein (No. 5) and perennial customer-centric retailer Amazon (No. 10) were the only apparel players to make an appearance in the top 10, which was led by Navy Federal Credit Union—a new arrival to the list.
Also earning positive scores were Tommy Hilfiger (No. 14) and L.L. Bean (No. 15), trailed by Amazon-owned Zappos, which is well known for its customer-friendly reputation. In the middle of the pack were teen brand Hollister (No. 38), Polo Ralph Lauren (No. 41), department store leader Nordstrom (No. 44) and denim icon Levi Strauss (No. 45).
Despite its current store-closing struggles, Foot Locker earned the No. 49 spot, followed closely by high-end department store chain Bloomingdales at No. 50. Rounding out the list were Under Armour at No. 58—just ahead of Apple stores—Banana Republic (No. 71), Ann Taylor (No. 82) and Kohl’s coming in at No. 88.
Retail (excluding grocery) as a sector ranked third among all industries in customer excellence, the report found. KPMG said its financial analysis revealed that the top-ranked companies achieve revenue growth 50 percent greater than the bottom 50, and generate $25 billion more in revenue. What’s more, their EBITDA growth is 3.3 times greater than their lower-ranked peers.
That strong correlation between customer experience and the bottom line should be enough to compel the merely mediocre to prioritize customers at every touchpoint and interaction.
Top performers in customer excellence typically maintain positive workforce cultures as well. “The employee experience precedes the customer experience; the top companies all have leading people policies and are listed as a great place to work,” the report noted.
Customer excellence achievers go beyond personalizing the experience to truly individualizing it based on prior knowledge of and interaction with a specific consumer. KPMG homed in on what it calls the “paradox of personalization.”
Data is at the heart of personalization, so to hand over personal and sometimes sensitive information, consumers must be willing to trust that the brand will act responsibly with those details. In a best-scenario, a satisfied customer enters into what KPMG calls the “virtuous cycle” of trusting the business, sharing more data and finally doing more business with that company over time. The reverse is true for consumers who end up in the “vicious cycle,” where their distrust of the brand leads to withholding data and shirking away from buying from that company.
”In 2018, the concept of individuality and the unique sense of self remain equally relevant—however, now companies must not only show that they know their customers’ names but that they know them as a person,” Julio J. Hernandez, KPMG’s global Customer Center of Excellence and U.S. Customer Advisory lead, said in a statement, adding that “consumers want to feel valued and recognized” for their individual identities.
“In a world where consumers realize that their personal data has value, firms need to understand what information customers want to share and how they want to be engaged,” Hernandez said.