Dive Brief:
- Brands that improve their customer experience are 2.5 times more likely to grow market share, according to a report released Wednesday by global branding agency JKR and marketing data and analytics firm Kantar.
- Customer experience is the foundation of brand equity: 71% of brand equity is built by direct and indirect experiences, according to the report. Marketing plays a smaller role. Only 28% of brand equity comes from paid media and paid touch points.
- “What these stats really demonstrate is something that beloved brands have long understood: You can’t advertise your way to a great customer experience,” Jon Picoult, founder of Watermark Consulting, told CX Dive.
Dive Insight:
This report joins a growing body of research that indicates exceptional customer experience lifts revenue, increases profitability and wins market share.
When customers love a business, it grows wallet share and market share, according to Picoult. Not only do customers obsess over a company’s products or services, they also broaden their spending with it and encourage others to patronize the business.
That even trickles down to shareholder value. The latest Watermark Consulting report found that brands with the best CX outperformed brands with some of the worst CX by a nearly 8-to-1 margin in shareholder return.
The JKR and Kantar report also underlines the importance of driving brand engagement through experiences. “Owned” media — what customers see and feel for themselves — accounted for 30% of brand equity, while “earned” media — what they hear from friends, family, reviews and socials — accounted for 41%.
“Consumers’ perceptions about a company’s brand will ultimately be forged not through paid search results, sponsored social media posts, or even Super Bowl ads; rather, it will be informed by their direct interactions with the firm’s products, services, and people — and also by what they hear from other trusted sources,” Picoult said. “Paid media might pique someone’s interest, but it’s the longer-tailed, end-to-end customer experience that actually drives durable brand engagement and loyalty.”
Marketing plays a role, but it’s limited without fulfilling brand promises. Fulfilling those promises means businesses need to focus on what may appear to be the mundane mechanics of reliable customer experiences.
“The unfortunate reality, however, is that the marketing of a company’s brand promise often gets far more attention than the fulfillment of that promise,” Picoult said. “And it’s that disconnect for customers that will undermine even the most carefully orchestrated branding campaign.”
