Lindsay Sakraida
Director of Content Marketing @ Yotpo
June 14th, 2023

Forrester shares details about the “hard and fast ROI” from improving your customer experience.

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As businesses navigate rising ad costs, privacy changes, and heightened competition, the challenge of customer acquisition and retention becomes increasingly complex. In our recent webinar, Reducing Brand Vulnerability Through Customer Relationships, we asked special guest Michelle Beeson, Senior Analyst at Forrester, to shed light on the evolving landscape of customer experience and its impact on brand vulnerability. 

Along with Ellie Garabedian, Product Marketing Manager at Yotpo, we discussed how brands can adapt to the changing environment and foster long-term customer loyalty. If you missed the event, don’t worry: you can watch it in playback here, or check out the top takeaways below.

The Shifting Paradigm of Customer Acquisition and Retention

We kicked off the event with a discussion about the current eCommerce marketing climate, which has brands facing difficulty in reaching customers. 

This is largely due to the mounting challenge posed by rising ad costs across key acquisition channels. As costs soar, brands find it increasingly difficult to effectively reach and engage their target customers. Apple’s privacy changes have added another layer of complexity to customer understanding and data collection, as competition heats up in the direct-to-consumer space. To overcome these hurdles, brands must explore alternative ways to identify and connect with their target audience.

As a result, it’s important to shift focus towards customer retention strategies, rather than exclusively prioritizing customer acquisition. Retaining existing customers is of paramount importance in light of these eCommerce challenges, especially when considering that acquiring a new customer is five times more expensive than retaining an existing one. Brands hoping to beat the odds should therefore create experiences that prioritize customer satisfaction, loyalty, and ongoing engagement.

The Essential Elements of Customer Experience

So what makes a customer experience so good that it provides value for the customer, and in turn, your business? According to Forrester’s CX index, it all boils down to three essential elements: Emotion, Ease, and Effectiveness. 

Emotion is just that: creating an emotional response in your customer. Joy and satisfaction are key drivers that contribute to customer loyalty, but so is the emotional feeling of making confident decisions or being valued as a customer. Those priorities, and the emotions that are elicited in good customer experiences, can shift in nuance depending on what product is being purchased and the context of the customer.

Ease is a critical aspect of customer experience, and in many ways, it’s fairly self explanatory; ease means minimizing the effort a customer has to make and the barriers to purchase, like reducing the number of clicks it takes to check out.

Effectiveness goes a bit deeper; this refers to how well your experience is supporting a customer’s goals, and there are two layers to this that are important. One is helping customers find, decide on, and buy the product or service that they want. Information like product availability, recommendations, or descriptions all help customers make an informed decision. The second pillar goes beyond those immediate needs and speaks to the customer’s intention: why do they need the product? How is it fitting into their life? What is the value it’s creating for them?

And when brands get it right, it creates value not only for their customers, but for their business as well. 

The ROI Of CX Transformation | Forrester. Base: 97,931 US online consumers (18+) who interacted with a specific brand within the past 12 months. Source: Forrester Analytics Customer Experience Index Online Survey, US Consumers 2020


According to Forrester’s customer experience index score — which evaluates CX quality according to the Emotion, Ease, and Effectiveness pillars — a one point increase in the score translates to an incremental revenue increase of $5.23 per person. 

“There actually is a hard and fast and solid ROI to improving your customer experience, because it drives loyalty and business performance,” Beeson says. 

How to Execute on Better Customer Experiences

So how can your brand target emotion, ease, and effectiveness in your customer experiences?

Focus on selling a solution, rather than a product, like UK mattress brand Eve. Eve doesn’t just sell mattresses and accessories; they sell the idea of a good night’s sleep, which provides far more value. The brand of course provides all the necessary information for navigating options and decision making, while layering in this very personal, emotional value add that supports a shoppers goal: they want to sleep well.

Align with your customers’ core values and interests, like skate and surf brand Volcom. Volcom marries ease and effectiveness by making it easy for customers to find and shop their eco-friendly collections; customers can filter products by recycled materials or zero waste manufacturing, which speaks to their intention as a shopper.

Provide a value exchange to generate insights that support decision making, like DIME Beauty. DIME gets customer insights on actions and trends in subscription order management, but also provides value and ease to their most loyal customers, allowing them to conveniently manage those subscription orders through SMS. Customers can simply reply via text to automatically skip, delay, or redeem loyalty points on an upcoming order.

Like these brands, the best customer experiences are able to seamlessly drive emotional engagement, reduce effort, and help customers achieve their goals.

If you aren’t sure where your brand should start, Forrester recommends focusing on a single touchpoint. Look at the user experience of that touchpoint, and see if there are any obvious pain points. Then decide if there are quick fixes that can have an impact on those emotion, ease, and effectiveness elements; rather than getting overwhelmed by needing more and more information, these small changes can make an impact and brands should regularly review and optimize their user experiences to ensure success.

Leveraging Data and Communication Channels for Enhanced Customer Experience

Two major requirements to provide these next-level customer experiences are enriched data and the right communication channels. Zero- and first-party data are essential to understanding your customers and tailoring your offerings to their needs while channels like SMS and email can help you reach them at the right time to spark engagement.

Data like purchase frequency, product preferences and sentiment, and past purchases are all insights that indicate a deeper understanding of your customer. Forrester refers to companies that effectively leverage this customer data as “insights-driven businesses,” and the more mature a company’s efforts are with these insights, the greater value they see. For example, insights-driven businesses are 8x more likely to grow 20% or more and 1.5x more likely to see an increase in customer lifetime value. 

Beginner level compared to Advanced level businesses. Base: 2956 global data and analytics decision makers at enterprises. Source: Forrester Analytics Global Business Technographics ® Data and Analytics Survey 2021. Base: 122 to 750 global data and analytics decision makers at enterprises (1000+ employees) (sample size varies by year). Source: Forrester Analytics Global Business Technographics ® Data and Analytics Survey 2021.


Why? Insight-driven businesses use their customer understanding to improve the relevance of their experiences, creating greater value for customers and driving deeper loyalty. 

“There’s an increasing value on first party data, and direct customer engagement,” Beeson says. “Because when you’re faced with customers putting up walls, privacy regulations, and different facets that are depreciating the value of data, this is your resource for customer understanding. And that is ultimately going to help you create better, more relevant products, services, and customer experiences.”

You can easily collect and activate customer data through your brand’s SMS and email marketing engagements. Ask customers about themselves and their preferences directly through email surveys or conversational SMS flows, and gather product feedback through review requests sent via either channel. Leverage what you already know about your customers, like how many loyalty points they are eligible to redeem, to further personalize your communications for conversion.

Brands like The Turmeric Co. are already doing this especially well. Relying on insights from customer reviews, The Turmeric Co. provides hyper-relevant texts that keep customers coming back, leading to a 60% customer retention rate.

After analyzing their own customer data, PSD Underwear discovered that their loyalty members who are subscribed to SMS tend to purchase 5x more on average. These insights told the brand: customers want to be updated about their loyalty status via SMS with things like point balance updates or redemption reminders. PSD was then able to curate a mobile loyalty experience that drove repeat purchases and greater redemption rates overall.

Overall, Brands Need to Invest in Customer Relationships 

The biggest takeaway? A focus on customer experience is essential in today’s competitive landscape. Brands must adapt their strategies to focus on both customer acquisition and retention, leveraging personalized experiences, emotional connections, and effective communication. By investing in customer experience excellence, businesses can drive long-term customer loyalty, unlock incremental revenue, and differentiate themselves in an ever-changing market.

For more information, click here to watch the webinar on demand.


Contributed to the article: Lindsay Sakraida