A study by analyst firm Forrester Research found a correlation between good and poor customer experience and good and poor loyalty:
Forrester surveyed 4,500 U.S. consumers and asked them about their interactions with more than 100 brand-name firms.
It found a good experience correlates with a willingness to repurchase a product or service, a reluctance to switch and a likelihood to spread a positive word-of-mouth endorsement.
Among the companies surveyed, Office Depot and SunTrust Bank showed the highest correlation between customer experience and customers’ repurchase plans. Merrill Lynch, Hampton Inn/Suites, Sears and RadioShack followed.
Source: Customer Experience Drives Loyalty
Frank Spillers' Comment:
This research is particularly interesting on two fronts:
1) Poor customer experience can impact loyalty and thus user adoption, as the research from our infographic The Importance of User Experience showed:
- "We discovered that visitors will return to websites to which they have no loyalty simply because they're familiar with the interface. As soon as someone directs the individual to a competitor's website and the individual determines the competitor's website is less painful to navigate, they're gone". Usability Studies 101: Brand Loyalty by Joseph Carrabis
- "Research findings point out that it takes more effort to develop new markets than to keep existing customers, and that existing customers tend to spend more money than new customers do. Repeat purchase behaviors occur after products are used. Hence, how to manage customer loyalty by means of product design becomes a critical issue to product designers and a key for company prosperity".A Preliminary Research on Product Design Strategies for Managing Customer Loyalty (PDF) Dr. Ding-Bang Luh, National Cheng Kung University, Taiwan
Users will migrate or defect to a competitor's product, or simply stop using your product with enough bad experiences. The technical term is user adoption. Recent news about the erosion of loyalty by 1.7 million Facebook users who do not like the new Facebook design highlights this issue. Cnet called it a fiasco of user experience. More on the Demystifying Usability blog on user adoption and learning from Facebook next month.
2) Maintaining a high level of customer experience can keep customers happy, while they feel the crunch of the global recession.
“Since new customers are harder to come by in an economic downturn, firms need to pay even more attention to building loyalty with their most important customers,” wrote Bruce Temkin, author of Customer Experience Correlates to Loyalty. “If firms lose pace with competitors’ customer experience, they may end up attenuating the negative impact of the economic downturn.
This is especially true as consumers and businesses alike look for added value, decreased cost and improved ROI as budgets tighten.