Ever-Elusive Customer Experience ROI

When you’re trying to get executive commitment for your employee and customer experience improvement initiatives, what’s the first question they ask? Typically, it’s something along the lines of: Why? What’s in it for us? What’s the customer experience ROI? If I spend money on those improvement initiatives, that takes money from some other initiative. Which is more important?

It feels like it’s a no-brainer, and yet, it can be a challenge. The problem arises because executives like to see immediate returns, while customer experience improvements often take 18 months to two years to design, deliver, and begin to show up on the bottom line.

If you’re faced with this challenge, you’re probably wondering how you’ll ever be able to answer the seemingly elusive customer experience ROI question. Let’s take a look at five approaches you can take. (You’ll likely want to use all five of them together.)

1. Develop a proof of concept

This approach is all about baby steps. Pick a small project within your own budget authority or authorization level — or engage the help of a department head who gets it and wants to help you champion the larger initiative — and build your proof of concept. For example, listen to customers, build a closed-loop process for service recovery, and show how many at-risk customers you were able to save by doing this. Link your customer experience metrics to financial outcomes. Those saved customers translate to reduced acquisition costs and revenue saved, as well. This is probably one of the most impactful proofs of concept to use.

2. Go the stats route

There is a ton of industry stats out there to help make your point. While these don’t necessarily reflect the impact on your own organization, they do demonstrate impact and help to support the cause. Some examples include:

• 97% of dissatisfied customers can be rescued with proactive intervention, and more than 40% of those people actually become raving fans. -Dell
• One-third of American consumers would be willing to pay an average of about 4% more for simpler brand experiences. -Siegel+Gale Global Brand Simplicity Index
• 94% of customers who have a low-effort service experience will buy from that same company again. -CEB
• A 1% improvement in first Call Response = $276,000 in annual operational savings for the average call center. -SQM Group
• 70% of buying experiences are based on how the customer feels he or she is being treated. -McKinsey

3. Look at some hard data

I can’t write an article about customer experience ROI without sharing one of my favorite examples of hard data that supports the overall business impact of focusing on the customer experience: Watermark Consulting’s annual tracking of customer experience leaders and laggards versus stock market performance. Their latest analysis shows that customer experience leaders outperform laggards by a large margin: leaders’ stock outperforms the S&P 500 index by 35% and beat laggards by almost 80%. Any CEO can appreciate that.

4. Use existing customer data

You already know a lot about your customers; you’ve got a ton of data on who they are, their purchase behaviors, purchase history, lifetime value, profitability, and more. You’ve got call center data, e.g., call volume, hold time, wait time, first call resolution, etc. Work with your CFO to get the data you need. Link that data to the customer experience metrics you’re getting through listening to customers. Segment customers by type, age, NPS segment, etc. to get a better picture.

The most important thing to remember is that you need to focus on business metrics that matter to your CEO and talk about — and tie your results to — business outcomes.

When you make your case for customer experience improvements, the picture you paint for your CEO ought to clearly show him that benefits include: increased purchases, incremental new business, increased retention, more referrals, and a subsequent lower cost to acquire and/or to serve.

5. Sometimes it’s not about the money

OK, it’s always about the money. But sometimes, just sometimes, we need to sell the story of the customer a bit more. Humanize the customer. Give them a face. I realize that your CEO may still be of the traditional mindset that the purpose of a business is to maximize shareholder value. But the purpose of a business is really to create and to nurture a customer. Then and only then can you maximize shareholder value; that’s secondary.

Sometimes, ROI comes in more of a softer or an indirect fashion (with no immediate metrics to track). If we show that we truly care about the customer, the money will come. This is a harder story to sell, and the longer way around to showing or getting to ROI. But it has to be said. Tell your customers’ stories. Share feedback. Map and discuss their journeys. Help your executives understand their desired outcomes — and the pain in achieving them because the experience is just so bad.

People cringe when they hear it, but ROI doesn’t have to be a “three-letter word.” Take a look at these five approaches and start to build your case. Once you’ve built a solid case for your CEO, the rest should be easy. If it’s not, perhaps it’s time for a new CEO.

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