Improving customer experience continues to grow as a priority for many businesses, with no lack of data to back this up - here are some great statistics collated by Forbes around this.
While there is a lot of talk about the benefits that a strong CX program can deliver, actually determining the ROI of CX can be less clear cut.
To get a new CX program across the line, or articulate the value of the one you have, you need to be able to demonstrate the value of your CX program and its relevance to the core business.
Here are five steps to help you achieve this.
1. Define your CX Objectives
The best place to start is to look at your CX objectives. These should align with your business objectives and will depend on the type of business you operate. A subscription business, for instance, will rely on customer acquisition and retention, so try to align your CX goals accordingly.
Some popular CX objectives include:
- Decrease customer churn
- Grow average spend
- Increase referrals
- Increase renewal rate
- Decrease customer acquisition costs
- Decrease cost to serve
When deciding on your objectives, consider a combination of top line benefits - such as increasing retention and recommendation - and bottom-line benefits - like reducing cost to acquire and serve.
2. Establish a CX Baseline
Once you are clear on your objectives, the next step is to establish your CX baseline. How were you performing on your key metrics when you launched your CX program, or if you haven’t launched a program yet, where are you today? If you are just setting up your CX program and don’t have any data, consider doing a pilot study in order to establish your baseline.
3. Calculate the Business Benefit of CX
Taking your baseline, you can start to forecast what the impact would be on your business if you improve your customer experience.
When doing your forecast, it helps to segment your customer base into Promoters, Passives and Detractors. Consider how many times a year customers in each segment transact and what they spend. Look at each segment, the value they provide to your business, and the impact they have on driving loyalty and spend.
For instance, if one of your CX objectives is to grow average spend, and you know that each Promoter spends an additional $20 per transaction with your business compared to a Detractor, if you put measures in place to increase Promoters by 10%, how much additional value will you derive?
4. Determine your CX Investment
To determine ROI, you will need to calculate how much you will invest in your CX program.
Some of the elements that you might like to consider include:
- Personnel - to run your CX program and implement actions based on the feedback received.
- Employee training - a big part of a successful CX program is ensuring that customer-centricity is embedded in your business. Supporting your team with training on how to deliver great customer experiences is a fundamental part of this.
- Technology and tools - ideally you will have a real-time customer feedback and analytics solution, where all the key stakeholders can review customer feedback as it comes in, through a centralized dashboard.
- Operational costs - these will vary depending on what needs to be improved in your business to provide a better customer experience. For example, you may need to change some underlying business processes to create a frictionless experience for your customers. This could include upgrading your website, implementing an omni-channel strategy etc.
5. Calculate your ROI
The final step is to subtract the cost of the CX investment from the additional value that you have derived through your CX program, divide it by the cost of investment and multiple by 100 to get the ROI.
CX ROI% = (Benefits – Cost of Investment / Cost of Investment) x 100
And there you have it!
If you need help deriving the ROI for your CX program, please reach out. At Potentiate we have been helping businesses to design and implement CX programs for over a decade and our unique “Solutions with a Service” (SwaS) approach means that we don’t just deliver the tech, but also provide a team of CX experts to support you along the way.
If you would like to learn more, please contact us at firstname.lastname@example.org.