Let’s be frank—establishing a customer experience (CX) program’s return on investment (ROI) is one of the greatest challenges that CX practitioners and the organisations they serve face in the modern experience landscape.
Did you know, according to Forrester research, only 14% of CX Professionals strongly agreed that ROI from CX is well established in their firm?
Across all businesses, the entire C-Suite leadership team is looking to validate an experience program by understanding: what is the financial impact of my CX investment?
The dilemma we face as CX and EX professionals is that across our organisations people can rationalise the need and function of excellent customer experiences with relative ease. We easily create an “emotional connection” and take the leap of faith that our belief will be true.
However, at a business level, when we are looking to make decisions to invest more in our voice of customer and voice of employee programs, we as CX/EX professionals often struggle to show the return on the CX and EX investment and thus can miss out on further invested funds as the rational minds look to maximise returns on what is tangible.
Here are some suggestions I’ve put together to enable the organisation to be customer centric, but also to understand how that centricity adds value to the organisation beyond “emotional connection”.
First Up: Map Your Program to Economic Pillars
In order to prove business value, it’s essential to draw a line back to economic pillars. Here are a few examples of economic pillars that could be affected by your experience program:
- Customer Acquisition. Understand the market environment and changing consumer preferences.
- Customer Retention. Address organisational or procedural issues that negatively impact customer experience.
- Cross-sell and Upsell. Identify opportunities to expand loyalty and share of wallet within existing customer base.
- Minimise Costs. Find areas for achieving greater efficiency, eliminating unnecessary elements.
Next: Understand Your Driver Tree
While the industry conditions and expectations for a CX investment vary from one organisation to another, there are basic ingredients across the board that should be included in your benefits driver tree.
CX practitioners have a much greater chance of proving financial linkage between CX and ROI if they can demonstrate CX’s ability to increase revenue, decrease costs, and reduce capital.
These pillars are fundamental to how a company’s CEO and CFO manage a business (and how both shareholders and the broader market evaluate a brand’s future viability).
When looking at the wider driver tree there are some more common areas of focus the VoC programs can focus on like a reduction on failure demand costs, a reduction of churn, an increase in tenure and more—see graph below.
Finally: Build Your Financial ROI Roadmap
To win the minds of your executive leadership team, it’s really important for each listening post (i.e. survey program) to think about the related operational and finance measures already being used by the business and link to those so the program is relevant. In other words, you need a financial ROI roadmap to continually point back to.
For example, your roadmap might include steps to reduce repeat calls or reduce wait times. An in-person brand could be focused on sales, basket size, queue time. For an episode survey like onboarding, it could be increasing product/service uptake or reducing early tenure churn. Your organisation already has success metrics that it’s focused on. Find out what these are and draw a link.
Focus where you can on cost saving assumptions first, as these models are typically easier to defend than revenue based models (e.g. reducing churn, increasing share of wallet, increasing average tenure or LTV). They generally require less calculations, less assumptions, and less time to prove an impact. For example, failure demand—where you identify the issues that drive avoidable contacts into the organisation—can be much quicker to identify and act upon. Empowering frontline teams to deliver better outcomes, increasing engagement and reducing staff attrition (or turnover) is another. But something like proving the multiplier effect on acquisition (so how WOM drives new business) is often a lot harder.
For more ideas on building a business case for your CFO (or anyone else!) check out this guide of our most frequently asked questions.