The Direct Relationship between Stock Price and Customer Experience

Stay Connected

Blog updates via Email

Apple Historic Stock Data Analysis
Customer sentiment and the customer experience directly affect stock price. Just look at this infographic from Derwent Capital Markets (DCM Capital), who used a social media sentiment analysis technology to compare investor sentiment of Apple, Inc. against its share price. The correlation is shocking. And, we can assume that Apple investors are also Apple customers. After all, who doesn’t have an iPod, iPad, or iPhone these days?

The study was performed during September and October 2012 and found a link between historic stock price and social media sentiment data. DCM Capital describes sentiment as a leading asset price indicator that can be a trading advantage. While some may want to use social data to pioneer trading in the financial markets, customer care leaders should use this information to understand the deeply intertwined relationship between profitability and customer experience.

Let’s use some simple deductive reasoning: If the customer experience impacts customer sentiment, and customer sentiment impacts the stock price, then clearly customer experience impacts the stock price. Put another way:

customer experience --> customer sentiment --> stock price

So, if investor sentiment is the leading price indicator, customer experience is the PRE-leading price indicator.

Financial markets are driven by fear and greed, two primitive human instincts that before now were difficult to study and measure. But with modern technologies today, we have ways to measure both customer experience and sentiment. In fact, companies that do not measure and improve their customer environment risk falling stock prices and much more. At a time when products are commoditized, markets are hypercompetitive, and economies cross all borders and continents, companies are building their competitive edge by holding customers closer than ever and listening to them very carefully through every possible communication channel. Such is the case with Apple. According to the latest Satmetrix Net Promoter benchmark report, Apple ranks as the number-one technology leader for Net Promoter ScoreTM (today’s standard for measuring customer experience).

And, judging by these strikingly parallel patterns between stock prices and sentiment, measuring and improving your customer experience is key to increasing the value of your business and providing strong returns to shareholders. Apple needs to turn these downward trends up again. If I had to guess, I would assume that in early 2013 Apple will invest even deeper into its customer experience improvement initiatives.

This infographic was created by DMC, and this article summarizes some of its contents. The original infographic is here. Net Promoter Score is a trademark of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.