Three essential strategies for providing financial return on customer experience

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The customer experience (CX) movement has always declared that businesses will benefit by designing experiences around their customers. Now, more than ever before, organizations are understanding the importance of CX on the bottom line and are implementing experience management programs. These companies are willing to invest because they have faith that doing so will pay dividends.

But since the first days of CX, its reputation has been more of a nice-to-have, offering little backing from hard numbers and oftentimes unaccountable in terms the C-suite easily understands. Subsequently, CX practices are often viewed as less of a value principle and more of a sunk cost.

This result is deeply undesirable for CX programs, as they can become targets of cost reduction pressures if they cannot clearly delineate their business value. The only counter-strategy is to deliver business and financial value in a way the organization’s leadership will immediately recognize. Without this, the noise from the sidelines will only get louder and the scrutiny will become tougher.

Here are three essential strategies that will help CX practitioners earn a seat at the table:

Utilize CX value metrics

CX value is often presented in marketing-specific terms, like net promoter score (NPS) and customer satisfaction score (CSAT). The problem is that these are not financially useful metrics. Companies can’t tell whether an increase in NPS or CSAT is good for the finances of the business. Are they making customers happier or are all the unhappy customers simply leaving?

Compare this conundrum to the finance team, which is measured on the same 10-15 metrics in every meeting. Even the marketing team – which had fuzzy metrics for many years – now has a codified set of measurements that relate to acquisition costs and filling the top of the purchase funnel. These financial and activity metrics are already established and almost every company uses the same metrics within these departments.

The CX realm – as a profession – must align on champion metrics and codify how those metrics are calculated. Without this, the real strategy work will remain wildly inconsistent from firm to firm.

When calculating value, there are only a few metrics that fit squarely into the customer experience portfolio and align with the vocabulary of the finance team, such as customer lifetime value (CLV), share of wallet, retention and cost to serve. While there are other important CX metrics, the difficulty with entrenching all of these metrics in the CX team is that several teams can claim the outcomes as partially their own; this afflicts support teams of all stripes.

The CX industry needs to adopt more financial-based metrics in the same way every other accountable business group has done. By adopting and equipping themselves with generally-accepted and financially-validated professional standards, organizational leadership can calculate and produce financial results through CX.

Embed CX in the culture and make it a part of every department

Positive customer experiences have always been at the heart of great businesses, well before practitioners began to call it “CX.” Building the value of CX programs includes the need for leadership to integrate best practices and a customer mindset into the company culture.

In order to crystalize CX as part of firm culture, companies only need to do what they’ve always done to perpetuate their ethos: respect and assert core values at every meaningful moment for employees and customers alike. An example: engineering companies have safety engraved into their DNA with training and communications delivering consistent reinforcement.

Metrics need to be learned and shared. Corporate comms need to be laced with CX messaging. Internal meetings need to start with a “Customer Minute” so focusing on the customer becomes a corporate habit. Financial reviews should include customer experience metrics so that we never divorce the idea of revenue from the place where it’s sourced. Customer experience must be a part of employee onboarding and training. Great customer experiences – and the people who deliver them – need to be celebrated.

By making CX an essential part of the corporate culture, customer interactions will become more natural, improve with attention and the substance of CX efforts will become co-owned throughout the organization.

Create a partnership with the financial team

On the surface, the CX team and the finance team are not the most obvious corporate couple, but experienced CX practitioners are eager to create a partnership with this essential function. Not only do finance professionals understand how to define value for a business in a way that C-suite leadership will accept, but engaging finance teams will ensure tighter integrations of CX measurements into operational and financial reporting.

For CX teams failing to engage the finance team, they will discover that the value they generate is accredited to other departments which are eager to put the best face on their own efforts. As the CFO’s role is to allocate a reasonable amount of credit to a myriad of teams – and because they like it when things add up to 0 or 100 – it is likely that this dispensation of value will exclude the CX team if that linkage is not actively established.

One of the barriers to developing this relationship often comes from the CX team itself, who are wary of arriving at an ROI conversation for which they are not duly prepared. Ironically, partnering with the financial team is the only path to validating value and earning financial attribution in most firms.

Conclusion

Maximizing return on investments in CX is contingent upon corporate recognition of its financial value. CX teams cannot shy away from financial accountability. Engaging the finance team highlights the value CX generates and presents it as a viable strategy for value creation and firm differentiation.

It‘s time for CX to come of age and truly occupy a real and respected seat at the table. This will require practitioners to do what others at the table do, and that must include demonstrating ROI. By developing a CX plan that includes risk, explains operational and financial aspects, and generates financial value, CX leadership can earn their place.

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