Every contact center provider tells me that customer satisfaction scores (CSAT) matters, but every customer service interaction confirms the opposite. This observation caused me to write “CX Doesn’t Matter” earlier this year. It was a painful conclusion, but a reality that I could not ignore.
Despite breakthrough improvements in contact center technology, customers are more frustrated than ever. I thought it was just me, but Forrester studied it and concluded that customer experience in the US continues to decline and sits at an all-time low.
There are numerous reasons, but the bottom line is that customers are increasingly tolerant of complacent vendors. Bad experiences are normal, and the fear of losing customers to bad experiences is overblown. Even as I write this now it seems improbable; we all have the right to vote with our wallet — but we don’t.
As an advocate of the CX world, this was a painful realization. Of course, some premium brands use customer service as a means of differentiation, but those are the exceptions. We call them premium brands in part because they do offer customer service.
While I contend the new norm is bad CX, I’m pleased to report good CX does have an ROI. That’s a statement that has always sounded reasonable, but difficult to prove — until now. NICE did some fascinating research that concluded good CX correlates with improved shareholder value. The research, as obvious as seems, appears to hold water. This has to be right up there with other great obvious and valuable discoveries, like when an apple fell on Newton’s head. Specifically, NICE concluded that businesses with happier customers have better stock performance.
NICE is one of the largest CCaaS providers in the world, and that gives them a lot of data to work with. Of course, this is confidential customer data, so research publication required scrubbing and anonymizing. The AI-powered capabilities that NICE offers its customers were used by NICE to analyze customer interaction data from 2022 through July 31, 2024. NICE analyzed every interaction across every channel, and scored sentiment on a scale of 0-100.
Sentiment scoring has come a long way, and is now very good at interpreting sarcasm and other pitfalls. Sentiment scores can now be applied to all interactions instead of limited samples. These sentiment scores were then consolidated into an averaged score per company.
NICE then determined which of these companies were public. This netted them a list of 300 customer companies. Then, they excluded companies that had less than a year of data, either NICE sentiment scoring data or public financial filings. This reduced the data set to 254 companies.
Next, they obtained one-year and five-year stock performance results ending on July 31, 2024, and sorted the data into quartiles (64 companies each). The top quartile contained the brands with the highest average customer sentiment and the fourth quartile had brands with the lowest customer sentiment.
The data confirms a strong relationship between customer sentiment and shareholder value. The companies with the highest customer sentiment scores are also the companies that experienced the highest appreciation in stock performance.
Due to customer privacy commitments, NICE can only release aggregated, anonymized data. This data still provides a far more compelling business case for improved CX than the vague threat that bad CX might cost a business a customer.
The conclusion is that happier customers, measured by positive sentiment, does correlate directly with higher profitability. It’s music to the ears of every contact center professional.
I would like to take a moment to defend my “CX Doesn’t Matter” conclusion: both outcomes can be true. Customers have become more tolerant of bad service. That’s clear, and the vendors seem to know it. However, this new, shabby status quo creates an opportunity, and firms that do deliver better customer service will likely see improvements in shareholder value.
What’s particularly exciting to me is how AI and cloud-delivered solutions can provide broader CX insights. NICE literally sampled billions of conversations across thousands of organizations of all sizes to complete this analysis. This is a cross-industry, and outcome-focused study.
Of course, the entire data used in the study came from NICE CXone customers, so it may be more than customer sentiment alone. NICE demonstrated that positive sentiments of its CXone customers correlates with shareholder value. I’d like to see similar studies from other providers, or even better, a cross-provider study, maybe from Verint, that adds comparisons across multiple CCaaS providers. It would be nice to see more studies that validate the correlation between customer sentiment and shareholder value. This one is a good start.
Dave Michels is a contributing editor and Analyst at TalkingPointz.
