Briefing at a Glance

  • Brands that improve customer experience are 2.5 times more likely to achievemarket share growththan others, according to a report released Wednesday by global brand agency JKR and market data and analytics company Kantar.
  • Customer experience is the cornerstone of brand equity: the report shows that 71% of brand equity is built through direct and indirect experiences. Marketing plays a relatively minor role, with only 28% of brand equity coming from paid media and paid touchpoints.
  • "What these data really reveal is what beloved brands have long understood: you can't buy great customer experience with advertising," Jon Picoult, founder of Watermark Consulting, told CX Dive.

Deep Insights

The report joins a growing body of research showing that superior customer experience boosts revenue, increases profitability, and wins market share.

Picoult noted that when customers love a company, both wallet share and market share grow. Customers not only become devoted to the company's products or services but also spend more with the company and encourage others to patronize it.

This impact even extends toshareholder value. Watermark Consulting's latest report found that brands with the best customer experience delivered shareholder returns nearly eight times higher than those with the worst customer experience.

The JKR and Kantar report also highlights the importance of driving brand engagement through experience. "Owned" media—the experiences customers see and feel firsthand—account for 30% of brand equity, while "earned" media—what customers hear from friends, family, reviews, and social media—accounts for 41%.

"Consumers' perception of a company's brand is ultimately not shaped by paid search results, sponsored social media posts, or even Super Bowl ads; instead, it is shaped by customers' direct interactions with the company's products, services, and people, as well as what they hear from other trusted sources," Picoult said. "Paid media might spark someone's interest, but it's the longer-tail, end-to-end customer experience that truly drives lasting brand engagement and loyalty."

Marketing does play a role, but its impact is limited if brand promises are not fulfilled. Delivering on those promises means companies need to focus on the seemingly mundane yet critical mechanisms of reliable customer experience.

"However, the unfortunate reality is that marketing of a company's brand promise often receives more attention than the delivery of that promise," Picoult said. "It's this disconnect with customers that can undermine even the most carefully crafted brand campaigns."