Forrester Customer Experience Index & Stock Performance
Posted by Jeffrey Henning on Mon, Feb 08, 2010
Last June, I recommended that organizations consider incorporating the Forrester CxPi (Customer Experience Index) into their CEM programs. The CxPi makes an outstanding experience metric, with a strong positive correlation to loyalty. Depending on industry, Forrester reports a very high correlation to willingness to repurchase, a high correlation to likelihood to recommend, and a medium correlation to reluctance to switch. Now Jon Picoult, founder of Watermark Consulting, a customer experience consultancy, has shown a potential correlation to the performance of company stocks as well.
Jon conducted an analysis contrasting a portfolio of the top 10 loyalty leaders, as identified by their 2007 Forrester CxPi scores, against the bottom 10 performers ("Laggards") and against the S&P 500 index. Jon found that the top 10 leaders generated "cumulative total returns that were 41% better than the S&P 500 Index and 145% better than the customer experience Laggard portfolio."
Check out "Yes, Virginia, There Is A Return On Customer Experience Investments" for full details of the analysis, including important caveats and cautions.
No, this analysis is not as convincing as that which has been done for the ACSI Score, which predicts stock market performance for indices as well as individual stocks and even correlates to CEO bonuses. Nor has the CxPi yet been validated by academic research, as the ACSI model has.
But this analysis does point to the promising potential of the CxPi. If you haven't considered testing it with your customers to see what insights it provides, I encourage you to incorporate it into one of your customer satisfaction surveys on a trial basis. Your investors may thank you.