We’ve all heard the adage ‘what gets measured gets done’ – but in the modern business landscape, ‘what gets measured gets funded’ is more accurate.
Articulating the impact of Customer Experience in terms of financial value is no easy task, yet investment in CX touches on all levers of the P&L – from reducing costs to growing profit margins.
While there’s an intuitive understanding of the importance of investing in a customer experience programme, getting executive buy-in is very difficult. Providing your organisation with ROI projections and quantifiable benefits is an absolute necessary requirement in order to create rock solid business cases for investment.
CX is the opposite of an investment in niceties and abstract gain; it is a direct investment in the organisation’s financial performance and success.
Excellent CX saves money across the organisation in direct ways.
- Support costs reductions, because the experience is intuitive and seamless, and customers do not need as much assistance.
- Marketing spend reduces, because customer acquisition costs reduce: your compelling proposition is supported by excellent word-of-mouth advocacy, so choosing your organisation is an easier decision.
- Value propositions shift towards longer-term customer benefit, because short-term ‘hooks’ such as discounts and one-time offers are needed less often when potential customers know the quality of experience on offer.
In order to gain executive buy-in, you will need to prove that CX will directly grow revenue and prove that CX will cuts costs for your organisation.
Very often when asking for funding for CX, people begin with the money and then softly promise a benefit. Instead you should first begin with the benefit and once you have buy-in then ask for the money.
Forrester has a great tool for doing this, the One Sentence Business Case.
· We propose to do A . . .
· to improve B . . .
· which will bring us economic benefit C . . .
· at a cost of D.
Five ways to quantify the ROI of CX
Recover at-risk customers: enables you to close the loop with customers, identifying those who are at risk of defecting in time to pull them back into the fold.
Engage existing customers as a sustainable engine for growth: enables you to identify your most loyal customers and single them out for rewards and promotional offers. The ROI of these actions translates into more future visits and more money spent.
Reduce cost of new customer acquisition: there is a strong correlation between how consumers rate their experience with a company and their likelihood to recommend that company to a friend. When positive buzz about your company abounds, new customers tend to follow.
Engage employees and reduce staff turnover: engaged employees are less likely to quit, even for more money and more likely to refer friends and family to apply to work for their companies. Use CX to measure satisfaction and engagement among employees, and take steps to improve if necessary.
Reduce cost of feedback infrastructure: A unified CX program brings together customer feedback data from across customer interaction points, providing a holistic view of the customer and allowing teams to understand weak and strong points in your products, services, and processes. Leaders can understand where to invest time and resources to drive improvement. Cross-functional issues are clear and prioritised, driving improvement that directly impacts satisfaction.
The goal for you, is to create business cases for your CX initiatives that demonstrate how your efforts will produce business results. Armed with an ROI projection model, you can make a compelling argument for your CX programme and boil it down to a one-sentence business case.
We intend to transform our customer experience to increase customer-generated revenue while reducing customer-related expense, which will bring £X of incremental benefit, at a cost of £Y, for an ROI of Z%.
Identify what works for you, deploy the right tools, and make data-driven decisions to identify and scale up highest impact CX strategies as efficiently and effectively as possible.
We can all surmise that a better customer experience is better for our business than a poor one. But without the right metrics in place to understand what creates a great experience, you will never know how much to invest to positively impact your business.
Find a few meaningful metrics and start extrapolating several data points to help define and optimise the impact of CX. Ask yourself “What if?” as you explore different trigger points of the experience, and you will uncover your path to creating a killer customer experience and a highly profitable business.