Why Knowing Your Customers Improves Your Business

C Space Customer Inspired

We have always believed that the closer a company is to its customers, the better it will perform. But there’s a difference between belief and proof. That’s why we developed Customer Quotient™ (CQ), a framework that puts this long-held belief to the test.

This year’s CQ report offers even more evidence that we’re right. CQ shows a clear link between how well a company gets its customers and the strength of its business performance. A one point increase in CQ score can translate into millions – or billions – in revenue and net income. For a company like Verizon, for example, this would mean between $5,393M and $8,988M in revenue and between $733M and $1,221M in net income.

You can think of CQ as a customer’s emotional buying criteria, or a blueprint of what draws customers to certain brands. CQ is unique in that, unlike traditional methods used to gauge brand relevance and customer sentiment, it reveals how people really feel about companies, and the experiences they provide, entirely from the customer’s perspective.

CQ identifies five distinct brand behaviors that consumers value: openness, relevance, empathy, experience, and emotional rewards (as in whether a brand makes people feel smart and proud to be customers). While these qualities can be described as intangible – and therefore tough to pinpoint – they do exist and matter. A lot. They shape the customer experience, drive loyalty, and ultimately attract customers to certain brands – this year, it’s brands like REI, Wegmans, Dove, and Marriott that are coming out on top in North America. In the UK it’s brands like LloydsPharmacy, The Body Shop, and Virgin Atlantic.

Captured from nearly 20,000 US consumers, and more than 4,000 consumers in the UK, this year’s CQ data presents some intriguing insights and hard truths. For example, when it comes to brand loyalty, do discounts, points, and rewards really keep customers coming back, or is there something deeper and more emotional at play? We have found that it’s the latter. Take Trader Joe’s, for example. The US grocery store chain has no loyalty program at all. Yet, it scores favorably with consumers for its curated product selection, friendly and helpful employees, and decidedly neighborhood feel.

What I find most intriguing about CQ is that it reinforces what strong relationships look like, and why companies have little to lose and everything to gain by investing in their customers.

CQ shows that growth depends on the strength of customer relationships. As John Chambers, executive chairman and former CEO of Cisco Systems, states in this interview, “Companies will succeed or fail based on how they reinvent themselves, starting with the CEO and throughout their whole organization. Companies will succeed or fail based on how they evolve their relationship with their customers and partners.”

The value of that relationship – understanding what customers need, how they feel, how they are changing – cannot be overlooked. Especially now.

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