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S&P Global research finds CX leaders have almost 3x equity returns

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S&P Global research finds CX leaders have almost 3x equity returns

S&P 451 Research CX

Improving the customer experience is often associated with improved loyalty, increased revenue and other benefits, but a recent study from financial information firm S&P Global suggests it also correlates with business results that make investors happy, too.

The New York-based company partnered with 451 Research to analyze earnings transcripts of nearly 10,000 global issuers for its study. It looked at those firms that disproportionately used not just the term “CX” but “cloud,” “digital transformation,” “data-driven” and more.

Companies were then classified as digital CX leaders, digital CX learners, and digitally delayed companies.  The study found that the top 22 percent of digital CX leaders have 2.7 times higher average equity returns than their digitally delayed peers. It also found three-quarters of CX leaders are rated ‘BB’ or higher, compared with 62 percent of their global peers. (A BB rating means a firm is less vulnerable to adverse financial conditions than those with lower ratings).

“As companies invest in algorithmic technologies and intelligent applications take over execution, that can free up resources–helping to lower capital and operational costs and preserve investor capital,” the report’s authors wrote.

360 Magazine Insight

At first glance, it’s tempting to assume that better equity and credit performance is simply a matter of getting more CEOs and CFOs to talk the talk in terms of CX. The S&P/451 Research report is much more detailed and convincing, however, in making the case that those using certain terms on investor calls are backing up their words with real action.

Given the scrutiny that greets an earnings report, business leaders need to come armed with details about their strategic response to their results — whether they’re good or bad. The report suggests terms like “machine learning” in particular are showing how some organizations are seeing significant bottom-line benefits from synthesizing customer and operational data at scale.

The study, which is not gated, also does into depth about the differences in digital CX adoption across industries. The impact on equity and credit performance was greater in verticals like automotive, for instance, than utilities. There was a good explanation for this from the authors:

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“Together, these trends underscore a certain point of elasticity: Companies in sectors rewarded by responsive changes in revenue generation, profitability, and customer retention–generally sectors that customers themselves will notice–saw better equity performance because this connection between CX strategy and return to equity investors is explicit,” the report says.

This is fascinating research, and could be applied in a number of ways. On one hand, it could help CX leaders make the business case for greater investment in the digital capabilities they’re looking for. On the other, it may suggest a possibly overlooked step among many firms in their CX strategy.

Articulating the work CX teams do and making it a part of the story they tell investors may be an important sign that CX programs are being given due importance. And perhaps equity and credit scores could become a new CX metric.


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