The following is an excerpt from The Customer Relationship: Your Last Competitive Advantage.
Although there are exceptions, the main reason companies are democratizing their business is because it is good business. Companies are involving customers in decision making to help create shareholder value and to help ensure the future of the business.
IBM's 2013 study, The Customer-activated Enterprise, highlighted the impact of involving customers to the organization's bottom line. Findings of the report included: Outperforming organizations are much more likely than underperforming ones to be collaborating with customers.
"Outperforming organizations are more likely to collaborate with customers." (CLICK TO TWEET)
Similarly, a 2013 study of 629 companies by the Aberdeen Group contrasted the performance of companies that used enterprise social collaboration with those that did not. Aberdeen found the collaborators had:
- 30% higher customer retention
- 55% increase in revenue
- 96% improvement in response time to customer inquiries
According to Forrester's Customer Experience Index (CXi), CX leaders had a cumulative 43% gain in stock 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.
A great example is USAA, a provider of loans for car purchases. After launching a seamless customer experience for researching, financing, and insuring vehicle purchases, USAA experienced a 77% year-over-year increase in visitors to its car-buying site, a 15% increase in completed auto loans, and a 23% increase in vehicles sold.
Customer collaboration is increasingly important to CEOs. According to a 2014 IBM Global C-Cuite study, customers exert more influence on business strategy than all but C-Suite itself:
A 2013 MIT study found that fostering customer participation can be highly profitable. "High participation/high word-of-mouth customers were the most loyal and attached to the brand, followed by high participation/low word-of-mouth. Customers who did not participate tended to be the least profitable, the least loyal and the least attached to the organization, regardless of whether they spread positive word of mouth."
"Customers are more engaged when they perceive that the company values their feedback." (CLICK TO TWEET)
"We found that companies that are receptive to customer input and customer participation tend to have longer and more profitable relationships with their customers than companies that keep customers at arm's length. Why? Because customers are more engaged when they perceive that the company values their feedback. This doesn't mean that companies are obliged to implement every customer suggestion. The very act of encouraging and listening to feedback makes customers feel more appreciated and part of the value creation process."
In the age of the empowered customer, competitive advantage doesn't begin with products, logistics or technology. Today, your last competitive advantage is your relationship with customers. The need to build closer, more meaningful customer relationships has never been more critical. Download The Customer Relationship: Your Last Competitive Advantage to learn more.