The customer experience (CX) landscape is evolving rapidly due to technological innovation, shifting customer expectations, and the desire to differentiate in an increasingly competitive economy. Companies are investing heavily in CX initiatives to meet the requirements of their customers.
To guarantee that your company’s leadership continues to invest in the customer experience program, you must demonstrate its return on investment (ROI) as a CX leader.
In one of our earlier studies, when we asked 102 CX professionals what their greatest CX difficulties are, more than half of the leaders responded that brands tend to lose steam and forsake a focus on CX when they don’t see a quick return on CX efforts.
Julianna Katrancha, SVP, Global Strategy Director, McCann New York. “It often takes brands a lot of time and investment to fully understand the total experience and the opportunities within it. It can feel overwhelming when there aren’t full teams dedicated to these processes.”
Read More here: 102 CX Experts Reveal Their Challenges and Actions
Despite these challenges, some CX leaders have been able to measure the customer experience ROI and demonstrate its value to their organizations. In this article, we will explore the challenges CX leaders face in measuring the ROI of customer experience and how 20 leaders have overcome these challenges.
3 Challenges CX Leaders Face While Proving Customer Experience ROI Investments
CX leaders often need help when attempting to analyze the results of their CX investments, as they have no definitive way to calculate the return on investment of every initiative they have taken.
Lack Of a Clear Definition Of What Constitutes CX
CX encompasses all customer interactions with an organization, from marketing and sales to customer service and support. It isn’t easy to measure the impact of each of these interactions on the overall customer experience. Therefore, it is crucial to define what CX means for the organization and how it impacts the customer journey.
For example, improving customer satisfaction may increase customer loyalty, leading to higher revenue and profitability. However, the relationship between customer satisfaction and revenue sometimes needs to be clarified, and it may take months or even years to see the financial benefits of CX initiatives.
CX Initiatives Often Involve Multiple Touchpoints And Stakeholders
Developing and implementing a customer experience program needs the collaboration of individuals with diverse backgrounds and expertise. These stakeholders could include customer care teams, marketing teams, information technology teams, product teams, and many others.
For example, improving the online customer experience may require collaboration between the marketing, IT, and customer service departments. As a result, it can be challenging to isolate the impact of specific CX initiatives and attribute them to specific business outcomes.
Lack Of Clear Metrics For Measuring Customer Experience ROI
Choosing the right metrics to measure the ROI of customer experience initiatives is one of the most challenging problems for CX leaders. While numerous potential indicators exist, determining which ones are most relevant and valuable for a particular firm can be difficult. Nevertheless, some CX measures, such as customer loyalty or brand perception, might need help to quantify.
Companies must therefore create specific and measurable metrics for customer experience initiatives to accurately measure the return on investment. This can include metrics like customer engagement, customer satisfaction, loyalty, and lifetime value.
20 Global CX Experts Demonstrate How They Proved the Customer Experience ROI
Despite the challenges, there are several solutions that CX leaders can use to measure the ROI of customer experience initiatives and demonstrate their value to the C-suite. These solutions involve a combination of measurement frameworks, metrics, and communication strategies.
It has been challenging, but not impossible, to find real-world instances of organizations that have successfully converted improvements in customer experience as a result of their CX programs. Investing in customer experience delivers a considerable return on investment when done correctly. The idea is to present a captivating tale while using statistics to demonstrate the ROI of customer experience.
One solution is to use a customer-centric measurement framework. For example, the Net Promoter Score (NPS) is a popular metric that measures customer loyalty and can be linked to revenue and profitability.
MarketCulture Strategies Inc – 5% improvement in NPS after analyzing customer insights
“We developed the Market Responsiveness Index (MRI) to provide insight to leadership on the strengths and weaknesses of the employees in the company being able to deliver a superior customer experience,” says Sean Crichton-Browne, Head of Global Partnerships & Customer Engagement, MarketCulture Strategies.
Another solution is to use data analytics to track the impact of CX initiatives over time. This involves collecting and analyzing customer feedback, behavior, and other data to identify patterns and trends. Data analytics can also help CX leaders to isolate the impact of specific initiatives and attribute them to specific business outcomes. This can help to build a compelling case for the ROI of CX initiatives.
Bell Flavors & Fragrances – Increased customer engagement by 20% after optimizing digital experience across different devices
David Banks, Senior Director of Marketing at Bell Flavors & Fragrances, says, “We made adjustments to the formatting and worked with vendors to implement changes to the templates they have created.”
To measure the ROI of this project, the company looked at the open rates and time spent by customers on different devices. This was calculated based on prospective customers’ click-through and view times as they engaged with the platform.
This involves working closely with other departments to develop a shared understanding of the impact of CX on business.
A third solution is to involve stakeholders from across the organization in measuring outcomes.
The Janssen Pharmaceutical Companies of Johnson & Johnson – $11.1 million ROI growth & improved customer engagement with digital technologies
There was a disconnected digital customer engagement leading to poor CX. Julie Ryan, Director, Patient Engagement & Customer Solutions at The Janssen Pharmaceutical Companies of Johnson & Johnson, says, “During this project, we realized that we needed investments in digital technology, change management, automation, web solutions, self-service tools, and EDI/automation. ”
To measure the ROI of their CX projects, there were three key business outcomes measured:
Growth of business
Retention
Efficiency
By using a consistent measurement framework, CX leaders can ensure that their initiatives are aligned with business objectives and are easier to measure and communicate.
Our findings are consolidated into a report, “Clootrack’s Global CX ROI Study 2023,” which includes 20 real-life examples of effective CX efforts related to measurable business benefits.
7 Strategies For Overcoming Struggles And Demonstrating ROI of customer experience
To overcome the challenges of measuring the ROI of CX initiatives, CX leaders need to take a strategic and collaborative approach. This involves aligning CX initiatives with business objectives, developing a consistent measurement framework, using data analytics to track progress, and communicating the value of CX initiatives to stakeholders.
1. Present the CX Program to the appropriate stakeholders
Determine what is giving your C-suite headaches. What problems are they facing? What is it about CX that makes them nervous? Finally, what outcomes do they intend to achieve through customer experience programs?
You’ll need stakeholder permission before investing in your CX program. To do so, you must first comprehend their concerns and misgivings about the CX program. Show how your CX program can relieve their worries and headaches.
2. Develop your own customer experience ROI model
While there are different techniques for calculating the ROI of customer experience projects, it is necessary to create an ROI model that is unique to your organization in order to demonstrate that ROI is solid and your efforts to improve customer experience can be tracked.
We discovered that many CX leaders developed their own ROI model using operational variables such as revenues, renewal rate, churn rate, customer lifetime value, basket size, and so on.
3. Verify that the appropriate VoC is captured
Many businesses do not have access to consumer feedback, which is crucial for calculating the ROI of customer experience (CX). In some of the previous situations, people in charge of CX initiatives performed suitable analysis utilizing sufficient VoC data on customer perception, such as NPS, customer contentment, or desire to renew.
It is critical that leaders have access to relevant consumer feedback and CX insights.
4. You can’t improve something if you can’t measure it
We noticed that some firms are not currently measuring ROI but plan to do so in the future. Businesses that implemented CX programs experienced better customer satisfaction, lower turnover, and an overall improvement in the online experience.
Yet, you won’t know the full extent of your CX program’s influence unless you quantify it. As a result, measuring the effects of your CX strategy is crucial.
5. Concentrate on long-term customer experience results
Leaders are frequently pressed to deliver short-term financial results. Yet, it is vital to evaluate the long-term benefits of increasing CX investments, which will ultimately raise business value through customer loyalty and advocacy.
Connect CX investments to longer-term benefits rather than just monetary gain.
6. Remember that It is an ongoing process of development
CX projects cannot be a one-time event. CX initiatives have been launched in some cases but have yet to produce measurable results.
They are, however, continuously airing it and without pausing it in the midst. The results will be felt as soft ROI at first, but as the program progresses, there will certainly be hard ROI.
7. Proving the customer experience ROI increases investment in CX
CX leaders face the challenges of meeting and exceeding customer expectations, thereby increasing sales and overall business value. But often, leaders struggle to connect the dots between the investment and the results.
Tying CX metrics to top-line revenue performance can work, for example, by tracking whether NPS advocates actually do recommend you and what effect this has.
Conclusion
To measure the ROI of CX, CX leaders must define what CX means for their organization, capture and measure the emotional aspects of CX, standardize their metrics, and be patient in demonstrating the impact of CX on the bottom line.
The 20 examples of global companies demonstrate that investing in CX can lead to increased revenue, reduced churn, and a loyal customer base. Therefore, CX leaders must make a compelling case for the ROI of CX to secure the necessary resources and support from their organizations.
To download the full report, visit: GLOBAL STUDY: ROI of Customer Experience
