Customer experience leaders, you aren’t the only ones expected to prove ROI on your initiatives!
Every business team or department has to measure its results to understand what is and isn’t working (or worth the organization’s investment):
- Marketers show how social media campaigns and ebooks attract new leads
- Salespeople explain how account-based tactics help land big-ticket sales
- Human resources pros tie culture initiatives to improved retention and faster recruitment
Customer experience teams are no different; We must prove how our efforts result in tangible business results. But it is notoriously challenging to connect our individual efforts to clear benefits and ROI, because CX can span so many areas. (Don’t worry: It does get easier with a solid strategy!)
Customer experience management, or CXM, is the process of understanding and managing your customer’s interactions with your brand to create positive experiences at every touchpoint. A solid CXM strategy makes it inherently easier to make informed improvements and shows how activities uplift the entire organization—and companies that excel in this consistently outperform their competitors.
Let’s examine the foundation you need to prove the ROI of your CX investments and unlock a flywheel of innovation, helping you more quickly align your organization, identify areas for improvement, and gradually expand your resources to accomplish more than ever.
Defining What Customer Experience ROI Looks Like
There are countless ways to show the value of your CX efforts. Multiple studies reinforce the powerful potential of investing in CX:
- Companies that prioritize CX see 1.7x higher customer retention rates
- Customer-centric companies are 60% more profitable than companies that don’t focus on customers
- 86% of buyers say great customer experiences increase their willingness to pay more—a clear connection to CX ROI.
Your work can achieve these for your organization. But first, you need to define what success means for your current state to measure it in ways that will matter to your organizational leaders. Saying “we’re customer-centric” is not a strategy. Neither is saying “we’re going to differentiate with experience.” You need to define YOUR customer experience promise and YOUR definition of success.
There are a few foundational elements you need in place to get started:
- Customer Experience Mission Strategy, which will explain what experience customers should receive, every time. This aligns all team members around the experience they should strive to provide regardless of if they interact with customers directly or not.
- Customer Experience Strategy Success Statement, which identifies the specific customer experience outcomes that will matter most to your organization and how those tie to the broader company and leadership team goals.
Effective CX Management is about priorities. And typically, there are too many priorities for CX teams. The only way to determine priorities is to establish these foundational elements so you know where to focus and have a clear understanding of what CX success can look like.
Start With One Customer Touchpoint
Sometimes, you need to start small. Start with a pilot program, a test project, or a small goal. If you aren’t sure where to start, consider touchpoints as a jumping-off point.
Touchpoints are where your customers interact with your brand. Identifying these touchpoints helps you see where you can improve and make a real difference in the customer experience—from browsing your website to receiving customer support and beyond. This works best when you can tie everything back to those foundational ideals around your CX Mission and CX Strategy.
Customer journey mapping is a crucial process to identify your customer touchpoints. Start with just one persona or customer demographic at a time, like your highest value or most common customer type. Follow their journey and assess how to improve each touchpoint. And remember: Even small changes can have a big impact on the customer experience.
Related Content: How to Use Customer Journey Maps to Solve Your CX Challenges
Especially when you’re getting started or want to earn buy-in from your organizational leaders, focus first on touchpoints or experiences that are a commonly agreed upon pain point that your leaders are aware of:
- Are your customer support teams inundated with calls, meaning customers experience a long wait time? Consider implementing a chatbot or creating a help center to answer common questions and relieve pressure on the support team. Measure your success by looking at total calls or messages before and after your intervention, as well as how many visits and interactions your new solution receives.
- Do you see a sharp drop off in customers after their first three months of using your service? Prioritize the onboarding and new customer experience. Speak with new customers to understand what support they need and identify how you can improve their experience to make it better. Measure your customer retention rates and customer lifetime value to see how your efforts have helped.
- Do customers often shop with you just once, and then you never see them again? Rethink your customer outreach channels and partner with your marketing team to craft personalized messages and journeys that offer complementary or similar products based on items your customers purchase. You could also create a focused survey strategy to identify if there are common reasons why customers don’t return. Measure your success by looking at return purchase rates and customer lifetime value.
Another way to prioritize is to identify if there is an indicator of customer defection at each touchpoint. When customers call for service about a specific issue, how many leave in a certain timeframe? If customers download your app, how many never make a purchase? Find moments that feel most critical to longtime loyalty and test ways to improve those experiences.
Getting Real about CX Metrics
When measuring the results of your CX actions, it’s easy for leaders to get into a cycle of measuring feedback metrics like Net Promoter Score (NPS), customer effort score, or customer satisfaction (CSAT) rate and reporting on those monthly.
If things don’t change much from month to month, however, executives may start wondering why the organization is spending time and money collecting data in the first place. And they likely won’t consider adding to the budget if they get a perceived lack of return.
When considering the spectrum of data-driven CX metrics you can measure, leaders need to define how and why they’re used. Any metric can be valuable; but focusing solely on any single metric might distract you from other indicators that show how your experience can be improved.
Select the metric that most closely aligns with your organizational goals and map the many elements that may influence that score. In the process, be sure to identify which areas you do or do not have control over and where you will need cross-organizational support to effectively influence the metric.
Whatever you choose to measure:
- Set a benchmark before implementing your CX initiatives
- Track changes over time, like monthly, quarterly, or annually
- Calculate the CX impact score and financial impact
Proving Financial ROI With Customer Experience Investments
It can seem obvious to CX pros that satisfied customers are more likely to make repeat purchases, which accelerates revenue growth and increases customer lifetime value. But how do we connect our day-to-day activities and specific investments to these benefits?
- Start with why. Understand what your organization values and map every action back to those values.
- Align with business goals. If your business leaders are focused on increasing revenue, how can CX support that? One way is to encourage customers to spend more once they’re customers through cross-sell and upsell campaigns. Track metrics like average purchase value or purchase frequency, because these measurements help tie your efforts back to organizational success and show the ROI of CX investments.
- Showcase efficiency gains. A great customer experience will lead to benefits in other business areas, like fewer calls to the customer success team or a shorter sales cycle. Set a baseline for these stats and measure how they change as you make targeted investments in these areas, like creating robust customer help resources, investing in a chatbot to answer routine questions, or revamping your website to speak directly to the pains your customers often seek your solution to solve.
Even a small bump in repeat purchases or average order value could lead to millions of dollars in value. My team’s customer lifetime value and key metrics calculator can help you see how small improvements can make big differences. (The calculator is completely confidential, so you can test as many combinations as you’d like.)
Communicating CX Successes to Executives
It’s critical for CX leaders to know how to champion their wins with executives and convey key facts quickly. Executives want a concise explanation of what has happened and what it means for the business. Involving them when crafting your CX Success Statement is vital for priming them for ongoing productive conversations.
When speaking with executives, remember that every organization wants two basic outcomes: Higher revenues and lower expenses. This even counts for nonprofit organizations, regulated industries, and government agencies.
The key is to translate your metrics to appeal to individual leaders and include context to your metrics. Connect financial outcomes directly with feedback and actions whenever possible.
Here are a few examples of great ways to position your impact:
- While NPS remains stagnant, customers are saying they want an easier online purchasing experience. We recently revamped our post-purchase journey with new emails offering complementary products, and that has led to a 25% increase in new purchases. We recommend auditing the website UX to identify new site headers and introduce new features that will streamline the shopping experience and spotlight other items they should consider during the checkout process.
- Our total number of customers this quarter increased by 33%, which was in part fueled by our new referral program that incentivized our existing customers to invite their connections to subscribe to our service. These new customers contributed to 13% of our total revenue. To ensure we retain these new customers, we recommend issuing a feedback survey of new customers to understand their experience and understand what support resources we can provide to ensure a smooth onboarding.
Speak to clear business metrics whenever possible, and map specific activities to those outcomes. Then, identify what can be done next to preserve those wins.
Customer Storytelling to Gain CX Buy-In
As you gain buy-in from individual leaders, help them advocate the value of CX and get other leaders on board. Celebrate clear wins for individual departments and use those to showcase what you can deliver across the organization.
- What are the most important insights from the customer feedback we’ve gathered?
- Are there investments that need to be made to react to and improve the customer experience?
- What are the expected returns on that investment?
Charts and graphs and data points are all meaningful, but nothing really helps leaders understand more than the actual customer story. Use actual quotes from customers who called for support, verbatim quotes from open-ended questions, social media feedback, and descriptions of the customer experience from your frontline workers.
It could even help to showcase how your competitors’ customers are advocating for them and speaking positively in ways your customers aren’t.
Delivering Ongoing Business Value and Proving ROI with CX
Many teams are doing more with less these days, which makes it crucial to prioritize activities that will drive results. Your C-Suite wants to do what’s right for the organization, and you play an immensely valuable role in helping them do that.
Set the necessary foundation to align your organization on what CX can accomplish and how every team supports those goals. Prioritize your activities based on your goals and connect those activities to tangible results on a regular basis.
Invite dialogue about your progress and use customer storytelling to reinforce what’s working and where your team can focus next. As you continue measuring your impact, you will become more confident in knowing where to focus—and you’ll soon have your entire organization rallied behind you.
There are more resources around proving the value of your CX strategy and optimizing CX for long-term value, in my LinkedIn Learning course on The CX Value Chain: Linking Customer Experience to Business Outcomes. I hope you check it out!
Jeannie