Harvard Business Review Study Reveals How Real-Time Data Drives Deep Customer Loyalty

Consumers today are more empowered, engaged, and connected than ever before. Their expectations are constantly on the rise and the buying journey is rarely linear. But while all of this has been a win for the consumer, it’s made it far more complicated for businesses to deliver customer experiences that actually move the needle on customer loyalty and retention.

To create loyal customers in the age of unlimited choice, organizations must provide exceptional experiences across every customer touchpoint, every time. In fact, new customer loyalty research from Harvard Business Review Analytic Services reveals that “The strength of a company’s customer loyalty relies heavily on the quality of the experiences it offers its clientele. These experiences, in turn, increasingly involve apps.”

In today’s digital landscape, flawless application performance has become essential to customer loyalty. In fact, nearly one-third (32 percent) of respondents in a recent AppDynamics survey said they have taken their business elsewhere due to poor digital experiences, and a quarter would be less likely to use the service in the future. So, how can organizations deliver app experiences that drive customer loyalty? The answer may surprise you.

Creating Loyal Customers in the Digital Age

As it turns out, the key to greater customer loyalty is real-time CX performance data that is easily accessible by cross-functional teams. The Harvard Business Review Analytic Services Report, “Using Real-Time Data to Drive Deep Customer Loyalty,” reveals, “Companies with the greatest amount of customer loyalty have much more frequent access to CX performance data, often in real time. They also involve the largest number of functions to assess and improve the CX.”

The study also found that more than 30 percent of leaders said they could access CX app performance data in real time, compared to just 4 percent of laggards. And nearly 40 percent of laggards wait a month between app performance reports, despite the fact that app performance metrics—like app crashes and time from app request to page load—have a significant impact on customer satisfaction and loyalty.

As James Walker, global head of analytics at London-based OC&C Strategy Consultants, notes, “Strategic metrics such as average cart size or number of new customers acquired take time to act on and improve. So this data doesn’t have to be reported in real time. App performance, on the other hand, often needs immediate action since it impacts the quality of experience in the moment. The faster a company has access to this data, the better off it will be.”

How IKEA Uses Real-Time Performance Data

IKEA—the popular Swedish retailer known for its cult-like customer following—is one company leveraging real-time CX performance data to boost customer loyalty. With real-time app performance metrics, the company can keep tabs on the entire online shopping experience to deliver the app experience its customers expect.

The company thoroughly tracks how often an app crashes and the performance of business transactions in a customer’s online sessions. By doing so, IKEA can tie these metrics to strategic business KPIs such as the conversion rate of online prospects to customers.

Winning the Battle for Customer Loyalty

Organizations that arm cross-functional teams with frequent, real-time CX performance data are far more successful at delivering app experiences that drive customer loyalty and retention. And when increasing customer retention rates by just 5 percent can increase profits by 25 to 95 percent, the business impact is clear. Without real-time access to quality app performance data, an organization can never fully optimize its customers’ digital experience—or its bottom line.

Access the Full Research

For more exclusive insights from Harvard Business Review Analytic Services’ research into the relationship between app performance, customer experience, and brand loyalty, download the report: Using Real-Time Data to Drive Deep Customer Loyalty.

3 Reasons Financial Services Companies Need APM Right Now

Financial Services companies operate in a difficult environment. Many of their applications are absolutely vital to the proper workings of the global economy. They are one of the most heavily regulated industries in the world, and they are a constant target of hackers. Their systems need to be available, performant, and secure while generating the revenue sought by Wall Street and their shareholders.

In this article we’ll take a look at 3 factors that impact revenue and how APM is used to mitigate risk.

1. Customers Hate to Wait

Losing a customer is a bad thing no matter the circumstances. Losing a customer due to poor application performance and stability is preventable and should never happen! If you lose customers, you either need to win them back or attract new customers.

Fred Reichheld of Bain & Company reports that:

  • Over a five-year period businesses may lose as many as 1/2 of their customers
  • Acquiring a new customer can cost 6 to 7 times more than retaining an existing customer
  • Businesses who boosted customer retention rates by as little as 5% saw increases in their profits ranging from 5% to a whopping 95%

Based on this research, you should do everything in your power to retain your existing customers. Providing a great end user experience and level of service is what every customer expects.

APM software tracks every transaction flowing through an application, recognizes when there are problems and can even automatically fix the issue.

FS Transaction View

Understanding the components involved in each servicing each transaction is the first step in proper troubleshooting and problem resolution.

2. Customer Loyalty = Revenue Growth

On the flipside, better performance means more customer loyalty and, as a result, revenue gains. The Net Promoter methodology, developed by Satmetrix in cooperation with Bain & Company and Fred Reichheld, is a standard way to measure customer satisfaction. Satmetrix developed the Net Promoter methodology, which is an indexed measure of customer loyalty. In their Net Promoter whitepaper, Satmetrix discovered a direct correlation between high customer loyalty scores and the rate of revenue growth for those companies. The paper showed that the higher the customer loyalty score a company achieved, the higher their rate of revenue growth over a 5-year period.

With applications playing a dominant role as the most common interaction between company and customer, it is imperative that customers have a great experience every time they use your application. Slow transactions, errors, and unavailable platforms leave customers dissatisfied and will reduce your loyalty score. Over time, this will have a significant impact on revenue.

So if we accept the premise that performance should be top-of-mind for anyone with a critical banking or FS application, what do we do next? How do we improve our application management strategy to prevent loss of revenue and improve customer loyalty? The answer: by taking on a transaction-based approach to application performance management.

APM software tracks the performance of all transactions, dynamically baselines the normal performance, and alerts when transactions deviate from their normal behavior. In this manner you’re able to identify performance problems as they are beginning instead of waiting until customers are frustrated and abandoning you applications.

FS Business Transaction List

List of business transactions classified by their level of deviation from normal performance.

3. Transactions = Money

Transactions are the lifeblood of banking. From making an online payment or converting currency to buying or selling stock, just about everything a bank does involves transactions. Furthermore, a significant portion of banks’ revenue comes from transaction fees for activities ranging from ATM withdrawals to currency conversion and credit card usage. For these fee-based transactions, the faster you can ring the cash register (response time of business transactions), the more money you will make and the better likelihood that your customer will come back to you for their next transaction.

With this in mind, it is imperative that IT organizations take a user-centric, or rather, transaction-centric approach to managing application performance.

APM software provides context that enables you to understand the business impact of failed and/or slow transactions. The data gathered by APM software can be used to focus on improving functionality that is used most often or responsible for the most revenue.

FS Prioritization

Having various data perspectives allows application support and development teams to prioritize what needs to be updated in the next release.

If you aren’t using an APM tool yet, or if your APM tool isn’t providing the value that it should be, then you need to take a free trial of AppDynamics and see what you and your customers have been missing.