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“Customer Experience is not just about

passion. It is about profitable results.”

~Lior Arussy

Strativity Launches Economics of Customer Experience™

Posted: Jun 19, 2008 by Lacey Stephen

Innovative Analysis Helps Companies Build the Financial Case for Customer Experience

Rochelle Park, NJ June 19, 2008 – Strativity Group announced today the launch of its Economics of Customer Experience™ to help companies establish the business case for investing in exceptional customer experience. The new methodology links investments in customer experience to financial returns based on the economics of relationships model.

“The usual approach toward customer experience is based on ‘common sense.’ As a result, companies treat the effort as incremental and miss the big financial pay off” said Lior Arussy, President of Strativity Group. “Economics of Customer Experience™ enable companies to build a solid, customized case for why they should invest in customer experience as a strategic effort and what return they should expect to gain.”

The Customer Experience Economics™ methodology builds the business case for customer experience and customer-centricity by focusing both on the increases in revenue and the reduction in costs that improved customer experience creates. Revenue enhancements are calculated based upon the 5 P’s of customer relationships that Strativity Group developed:

 

Preference of Company or Product – the change in the number of new customers per year

Portion of Overall Customer Budget – the change in the percentage of a customer’s budget captured each year

Premium Prices – the change in the net price charged for goods or services

Promotion of Company or Product – the change in the number of customer referrals

Permanence of Relationship Longetivity – the change in the average length of a customer’s relationship

 

The cost analysis focuses on redefining the basic cost units employed within a company so that costs are analyzed from a customer rather than a functional perspective. Arussy noted that “Traditional cost units are based on internal company silos that fail to accurately capture the true cost of delivering the customer experience. For example, measuring the cost of a call neglects the fact that a customer may call more than once or that the customer called after visiting the corporate web site. Shifting to customer-focused cost units provides a far more accurate picture of the true costs to deliver an experience.”

 

84.3% don’t know the cost of a customer complaint (up from 81.0% in 2006)

88.8% don’t know the total cost to resolve an issue (up from 80.3%)

59.4% don’t know their company’s annual customer retention rate (up from 49.7%)

79.6% don’t know their company’s average annual customer value (up from 70.8%)

84.9% don’t know the cost of a new customer (up from 75.1%)

64.6% don’t know the length of an average customer relationship

 

The Economics of Customer Experience™ is designed to be tailored to a company’s specific business model and ability to link financial data with customer loyalty data. It helps ensure that customer experience initiatives don’t whither on the corporate vine as a result of the lack of a full understanding of the return on investment that companies can receive by moving from a product-centric to a customer-centric strategy.

About Strativity Group, Inc.

Strativity Group, Inc. is a global customer experience research and consulting firm which assists organizations with the creation of differentiating experiences and profitable customer relationships. Utilizing research, consulting, education and communication programs, Strativity design customer experience strategies for its clients utilizing a methodology to develop actionable plans and drive organizational change.

Strativity Group, Inc. works with Global 2000 companies as well as emerging businesses around the world. Our clients include Akibia, American Management Association, AMO, Capital One, CATIC, Circle K, CA, Crowne Plaza Hotels & Resorts, Dimension Data, DVTEL, FedEx, Herbalife, ICMI, Honeywell, Jacada, Lockheed Martin, Nokia, Nordea, Nortel, RightNow Technologies, Sage, SAP, Seagate Technology, Siemens, The Fund, University of Pennsylvania, Verint Systems and Wyeth.

Among other milestones, Strativity Group established the industry’s first and only CEM Benchmark Study and developed the industry’s first CEM Certification Program. For more information on Strativity Group, please visit www.strativity.com or email info@Strativity.com.

Contact:

Michael Starr

(201) 843-1315 ext. 1009

michaels@Strativity.com