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Defining the Value of Customer Experience: A Guide for Creating CX ROI in A Constantly Changing World

The landscape of consumer expectations is constantly evolving, and understanding the value of customer experience has emerged as a cornerstone for businesses aiming to sustain growth and maintain a competitive advantage. CX leaders know customer experience (CX) is not just about transactional exchanges; it’s about building lasting relationships.

But today’s C-Suite is still questioning the value of customer experience and asking if investing in CX is worth it. CX leaders need to present strong business cases for every step of their journey.

Leading customer experience efforts within a larger business strategy can offer a blueprint for fostering customer loyalty, enhancing customer (and employee) retention, and ultimately, driving brand loyalty. By prioritizing the customer’s perception from pre-purchase to post-purchase stages, organizations are positioned to navigate the complex nature of consumer needs effectively. And they will be rewarded for that focus on the customer!

CX leaders today face a long list of challenges, including adapting to a dynamic market environment and ensuring every stakeholder, supervisor, and employee in the business is aligned with the customer-centric vision.

But, leaders, take a deep breath! It’s time to make your case. Let’s explore customer experience management (CEM or CXM), its pivotal role in shaping customer lifetime value , and strategies for measuring the return on investment of CX initiatives. In embracing a real-life, business-centered approach and understanding key elements of customer demands like speed, convenience, and human touch, businesses can craft experiences that resonate deeply with customers, solidifying a foundation of customer loyalty and competitive advantage in today’s market. (And the results that go with them!)

Understanding Customer Experience Management (CEM)

Let’s start at the beginning. Customer experience is happening whether you have a strategy for it or not. If you have customers, then they’re having an experience with your brand, your products, and at every step in their journey.

Customer Experience Management is a strategic approach that focuses on proactively designing and delivering the entire customer journey to meet or exceed expectations. Ultimately, these efforts are prioritized to focus on enhancing customer satisfaction, loyalty, and advocacy in ways that achieve organizational goals. CEM involves strategic planning and execution that help an organization track, oversee, and organize interaction between a customer and the organization throughout the customer lifecycle. (Is this the same as Customer Relationship Management, or CRM? No. CRM is about managing the data and input from customers to help deliver on a Customer Experience Strategy. Often, CRM systems are the tools used to track important customer data and feedback metrics.)

Speaking of data…any type of business strategy requires incorporating key data and analysis to get to the insights, improvements, and priorities in a plan. CEM is no different, but tracking metrics  alone is not a strategy. Metrics from customer surveys like Net Promoter Score (NPS) or Customer Satisfaction Rate (CSAT) are measurements from a certain group of customers to consider in your strategic decisions. However, feedback alone cannot direct a strategy.

Ideally, being a CX leader means knowing what is most valuable in your organization first. Understand the organization’s needs, goals, and desired outcomes. Then consider how to intentionally design and execute on customer journey improvements, internal process design, and employee engagement efforts to move the organization closer to those goals.

Making customers happy is certainly a step in this process, but that happiness must be pointed back to how it will help the organization succeed to justify investment. And tracking that happiness? That’s a measurement that can help make your case, but it’s not necessarily the end-goal.

This may sound contradictory for a CX professional to say. But while it’s a nice idea to “start with the customer” or “be customer-centric,” those ideas are not business strategies. This is why CX leaders must consider a future time when they are explaining a lot more than why those customer feedback scores are “good enough.”

Consider this a rallying cry! CEM is about understanding customers, yes, but it’s also about why that’s important for your organization.

For CX leaders, understanding and implementing a true, proactive, intentional customer experience means investing in customer experience efforts that are well-defined and well -understood. And these efforts can significantly impact business outcomes. Prioritizing the right CX management not only helps in retaining customers by improving their experiences, but also enhances the overall brand image and increases profitability. Some organizations find that focusing on retaining customers in volatile times can provide more revenue than sales. And it’s often shared that a 5% increase in customer retention can lead to exponential gains in profitability. So investing in customer experience priorities is not just about improving individual touchpoints as they’re found, but rather about creating a cohesive, meaningful experience that fosters long-term customer relationships and drives business success.

The bottom line here is that if you ONLY focus on customer metrics, you’ll miss an opportunity to make a real business impact. Strategy First. Define Success Always!

We approach this process with our clients through a Mindset/Strategy/Discipline approach. Learn more about how to set up your Mission, Strategic Vision, and Team Charter here .

For now, let’s help you make your case. Use these ideas to inspire you to make your customer experience case for your organizational success.

The Financial Impact of Customer Experience

There are significant financial implications from investing in customer experience. Research indicates that improved CX leads to increased customer loyalty, with customers who have positive experiences being seven times more likely to remain with a brand. This loyalty translates into substantial financial benefits, as loyal customers are not only more likely to make repeat purchases but also to advocate for the brand, thereby increasing referrals and sales. For instance, referred customers at a German bank were found to be 25% more profitable than those acquired through other channels.

And while more revenue is great, organizations also want to lower expenses. Proactive customer experience can prevent expenses by delivering experiences that don’t lead to customer service issues.

So there’s always a case to be made. Enhancing CX can lead to direct cost savings. By improving the overall customer experience, there is a noticeable reduction in the burden on contact centers, which decreases customer support requests, wait times, and time to resolution. This efficiency not only cuts costs but also boosts employee retention, productivity, and satisfaction—happy customers often mean happy employees. Many leaders are seeing heavy turnover in contact centers, leading to costs around hiring, training, and losing institutional knowledge. CX leaders can prioritize improvements around the employee experience for service in things like knowledge bases, AI tools, and more visibility for key customer data. Empowering agents to serve customers in faster, more efficient, and even more delightful ways leads to happier employees, lower turnover, and fewer costs associated with turnover.

The financial impact of CX can be highlighted in the potential revenue growth it offers. Companies focusing on CX see their revenue grow 1.7 times faster than those that do not, and their customer lifetime value increases by an average of 2.3x. There IS a clear link between superior CX and enhanced financial performance, making a compelling case for strategic investment in customer experience initiatives. It’s up to CX leaders to clearly communicate about these connections for their organization.

This is where some business acumen can help. Insights from operational data, like conversion rates, as well as feedback from customers, can help prioritize what efforts should come first. For example, knowing that an increase in customer lifetime value would support long-term organizational goals can be part of a business case for investments in improved customer experience throughout the journey. Don’t just talk about improving customer experience metrics; talk about how that will happen and what the business will gain from those efforts.

Measuring the ROI of Customer Experience Initiatives

As long as you first define success and understand your CX strategy, you can find several ways to measure the success of specific initiatives. But don’t just measure to measure! Know your desired outcomes first, and get real about what’s important.

Key Metrics and Steps to Consider for Measuring ROI

1. Identify and Measure Key Performance Indicators (KPIs)

Understanding the connection between CX initiatives and KPIs is crucial. Metrics such as Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), Customer Lifetime Value (CLV), Average Order Value (AOV), order frequency, and price sensitivity provide a quantitative basis for assessing performance and identifying improvement areas. These metrics help CX leaders to gauge the effectiveness of each initiative and its contribution to our strategic goals. Using before and after data, A/B tests, and pilot programs can clearly show return on investment.

2. Calculate and Analyze Financial Returns

To effectively measure the financial ROI of customer experience initiatives, start by calculating the current CLV and customer churn rate . Use feedback from churned customers as a benchmark to understand the gaps in your service or product offerings. Project the potential revenue increase from improving customer retention rates by even a small margin, and subtract the costs associated with CX programs to determine the net financial gain.

3. Utilize Advanced Analytics and Customer Feedback

Robust customer feedback platforms can streamline gathering and analyzing customer data. By managing customer interactions and feedback efficiently, you can secure more leads and enhance the customer journey, ultimately leading to improved business outcomes. Additionally, segmenting your customer base and using text analytics to review qualitative data can pinpoint opportunities for the most significant impact, optimizing resource allocation and enhancing overall customer experience.

By following these steps and focusing on the right metrics, we can demonstrate the tangible value of investing in customer experience to our leadership, ensuring continued investment and focus on initiatives that drive real business growth and customer happiness.

Strategic Investments in Customer Experience

As we often say, CX is a team sport. This means we need to involve and engage stakeholders, leaders, frontline employees, and customers in everything we do. There may be varying levels of involvement, but executing on Customer Experience Management means considering the people, processes, standards, technology, and tools within our organizations that lead to the experience for customers.

Empowering Teams and Enhancing Tools

To truly excel in customer experience (CX), strategic investments must be thoughtfully planned and executed. We typically assist our clients in team development through ongoing coaching, hands-on workshops, and specific training. This not only enhances skills but also fosters a culture that prioritizes customer experience. Cultivate a proactive environment by inviting employees to share ideas on improving customer interactions. A strategic outcome in any area of business is to get ahead (and stay ahead) of the competition. This requires a culture of innovation, and customer experience innovation is a known differentiator in the market.

Analyzing Data to Drive Decisions

Monitoring and analyzing key metrics like Net Promoter Scores (NPS) and other customer feedback metrics provides invaluable insights to guide strategic decisions. Implementing advanced analytical tools, like those that leverage AI to recognize patterns and sort data quickly, helps us evaluate the effectiveness of different CX strategies with speed. CX leaders need to constantly ensure investments are yielding the desired outcomes. This data-driven approach allows us to tailor experiences that create more personalized customer experiences at-scale, enhancing both loyalty and retention.

Integrating Technology and Personalization

CX leaders know that investing in technology such as AI and automation empowers our customers. These investments are long-term strategies for returns for both customers and employees alike. Building an omnichannel experience ensures a consistent journey across all touchpoints, providing a seamless interaction for our customers. Personalization is key; by understanding who our buyers are and their preferences, we can curate experiences that resonate on a deeper level, thus fostering stronger connections and loyalty. These technologies and tools also allow employees to better understand and recognize customers for who they are, what they need, and where they are on the journey.

Make Your Case

To make your business case and really showcase how CX efforts paid off both literally and figuratively for your organization, think about how to tie your outcomes to organizational success.

(Hint: it’s always a win to highlight more revenue and/or lower expenses!)

Here’s an example of how to think about customer experience value for your business case!

Organizational Goals: Higher sales through better conversion rates Customer Feedback Project: Discovered customers hesitated to convert digitally because they couldn’t see realistic designs for their projects Customer Experience Improvement Project: Invest in digital design and user testing to lead to more conversions Track specific customer feedback “listening posts” to see impacts of A/B testing and pilot programs Invest in contact center knowledge base and training for improved support along the conversion journey Aim for higher conversion rates and improved feedback scores ROI: Higher conversion rates and lower service costs

Securing the Future with a Customer-Centric Approach

In a world where customer experience can make or break a brand, it’s crucial to understand that CX is more than just a trend—it’s a fundamental aspect of business success. This guide has explored the many layers of customer experience management, from the foundational elements to the advanced strategies that drive ROI. To build lasting relationships with customers and gain a competitive edge, companies must focus on creating value at every touchpoint of the customer journey.

Leading businesses know that a strong customer experience strategy results in tangible benefits: increased customer loyalty, reduced costs, and enhanced profitability. The data supports this, showing that companies with superior CX see greater revenue growth and a lower churn rate. Investing in CX isn’t just about the feel-good factor; it’s about bottom-line results.

As you consider your own CX strategy, remember that it’s a team effort. Engage stakeholders, frontline employees, and customers in the process, fostering a culture that embraces customer feedback and innovation. By leveraging technology and data-driven insights, you can deliver personalized experiences that not only meet but exceed customer expectations.

Ultimately, the success of your customer experience initiatives relies on your ability to measure, analyze, and adapt. Keep your focus on key metrics, ensure alignment with business objectives, and make a compelling case for continued investment in CX. The future of customer experience is bright, and the businesses that prioritize it today will be the ones leading the way tomorrow.

So, take these insights and put them into action. Whether it’s improving customer support, investing in technology, or redefining your business processes, there’s no better time than now to start transforming your customer experience. By doing so, you’ll not only meet the demands of today’s consumers but also secure a stronger, more sustainable future for your organization.

About Jeannie Walters, CCXP, CSP

Jeannie Walters CCXP CSP small square photoJeannie is an award-winning customer experience expert, international keynote speaker, and sought-after business coach who is trailblazing the movement from “Reactive Customer Service” to “Proactive Customer and Employee Experience.” More than 500,000 people have learned from her CX courses on LinkedIn Learning, and her insights have been featured in Forbes, The Chicago Tribune, The Wall Street Journal and NPR

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