Customer loyalty is widely recognized as an indicator of repeat business and increased spend. What might surprise some, however, is that customer experience (CX) must still earn its right to exist. It’s known that getting management buy-in is key to getting a Voice of the Customer (VoC) program off the ground and ensuring its longevity. It’s also important to take this one step further – companies must provide greater clarity into what really motivates the board level executives to invest in CX.
To demonstrate this value, companies need to build and maintain a systematic and disciplined approach in order to create a strong financial argument to invest in a successful CX program and initiatives that deliver results and business change. For board-level executives, revenue and profit are top-of-mind, so securing budget and authority to implement a strategic VoC program must involve proving that the program can make an impact on the bottom line.
Making the financial case for CX at this level may seem like a complex task, but it should follow the same core principles as any other investment:
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- Identify the risk. Current financial risks may include detractors that may fail to renew, the cost of acquiring new customers or the cost of servicing complaints.
- Maximize the opportunity. This involves demonstrating how promoters can result in increased shares and revenue by cross-selling and increasing “share of wallet.”
From there, you’ll have the insight to build a clear, fully-defendable financial business case, showing expected cash flow impacts for each risk and opportunity. However, how do you work out these financial impacts? You have to do the heavy lift here, which means extracting data from across the company.
This will take time and energy to integrate large financial and operational data sets with customer and loyalty data to provide context and help the decision-making process for the entire organization. However, the more focus you put in here, the stronger your business case becomes.
The Business Case Phase
By clearly modelling your outcome objectives for CX, such as customer retention, account growth or new business through referrals, you can express tangible ROI to your executive team. At the same time, you may uncover ways to demonstrate cost savings and other efficiencies.
You can also take this business case phase as a way to share knowledge, teaching executives who might not understand the connection between focusing on CX and increasing revenue and profits.
The time spent on this phase of your business case is beneficial, because with a financial linkage model in place, investments in CX can be made knowledgeably. This will not only help prioritize what improvements to focus on, but also provide an accurate measure of their impact on the business and on customer loyalty.
Presenting the Case
From here, you can create an overall cash flow summary that pulls your totals into a proven ROI model, along with the proposed investment and recurring expense amounts, to show ROI and payback period for your CX initiative.
Working in this proven, financially sound and accountable way, it is much easier for the executive team to visualize the impact of the CX program on the business. It also ensures you provide tangible arguments to those who are doubtful about less familiar metrics, or more ‘theoretical’ measures such as loyalty and engagement.
It’s important to know your audience. When presenting your case, you need to be able to demonstrate clear alignment with your corporate strategy. Focus on facts, figures and numbers – and be sure that your projections make sense and any assumptions are reasonable. Equally important is your commitment to a realistic roll-out. By explaining a clear path towards the ‘end game,’ with careful phasing of your program, you can demonstrate that you are willing to continually evaluate the investment being made, ensuring you get each step right and can make adjustments that minimize financial risk.
Investment is Secured… Now What?
Even when an investment is secured, it’s essential to continue to demonstrate the importance of ROI by creating some quick wins for CX and the bottom line. Using alerts and reporting once the program is in its first phase, you can make sure that you’re able to take swift action that counts towards the financials you’ve committed to. You can then feed this back to the executive team to provide clear, visual evidence of the impact that CX is having on the business.
Securing executive buy-in from the outset of any CX initiative is key to ensuring all stakeholders take the program seriously, that staff understand the targets they need to meet and that people across the business are empowered to achieve these goals. By investing time in your business case, you’ll also be able to ensure buy-in for the long term – not only are you much more likely to get the investment you need from the business, but you will also demonstrate that your program can truly pay for itself and exist in 2017.