CX ROI: How to Justify Improving the Customer Service Experience


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To gain funding to improve the service experience, CX pros must support the KPIs of the customer service department. Improving customer satisfaction is not enough.

At first blush, it should be a no-brainer to justify a Customer Experience (CX) program to improve the service experience.

Customer Service (CS) is often the first thing people associate with CX. CustomerThink’s research found that 73% of CX initiatives focused mainly on customer service/support at the beginning, while other stages of the customer journey (buying, usage) garnered more attention later on.

Conceptually, it’s simple. Make service “better” to raise customer satisfaction scores. Then wait for the revenue gains to roll in as promised by CX advocates. Eventually, your stock price will take off, too!

But that’s not how it’s working out for at least three of four CX programs, according to CustomerThink research and other industry studies. After the excitement wears off, business executives will only continue to fund programs that produce benefits for the company. CX is no exception.

The purpose of this article to reveal some of the underlying issues preventing CX from being embraced by CS leaders. And, to present approaches that can help connect the dots from CX dreams to the desired funding for service experience improvements.

Bank of America Turnaround Hinges on Improved CX

I’ll start with a brief story about a bank that historically has struggled with customer satisfaction. Based on ACSI reporting, Bank of America has been a perennial bottom-dweller in the rankings dating back some 25 years.

Even if we narrow the focus to the past 10 years, you can see (chart) that its ratings were noticeably below other large US banks from 2011 to 2015. But after that, ratings improved substantially and now BofA is competitive with its main rivals.

Source: ACSI

What happened? According to BofA’s Holly O’Neill, Chief Client Care Executive:

“Between 2013 and 2015, Bank of America pivoted from a product and fee-driven approach to a more relationship-driven approach that focused on the expertise of our people and our innovative technology. We like to call this our high-tech and high-touch approach.”

This “pivot” was accomplished with a massive technology investment to improve digital experiences, which saved money because human-based interactions are more expensive. They could have stopped right there and pocketed the savings, but thankfully they didn’t.

BofA invested the digital savings in upgrading “expert advice” for customers having more complex requirements. In 2016 they launched an Academy to provide training to frontline associates. Then the bank implemented a new client survey “Voices” program which makes it easier for customers to provide input and for frontline teams to take action.

In early 2019, J.D. Power rated BofA ranked highest in customer satisfaction with retail banking advice. A year later the same study found BofA and Citi in a virtual tie for the top score. Great progress.

Increasing Customer Satisfaction and Loyalty is the Heart of CX Management (CXM)

The beating heart of the CX movement is a powerful idea. Improve customer satisfaction and loyalty, and over time you’ll see higher revenue growth (compared to those who don’t) because ‘happier’ customers tend to remain customers, buy more, and refer others.

You see this reflected in virtually all CXM definitions. For example, Gartner says:

“Customer experience management (CEM) is the practice of designing and reacting to customer interactions to meet or exceed their expectations, leading to greater customer satisfaction, loyalty and advocacy.

The CXPA breaks it down this way:

“CX Management is the set of practices that an organization employs to meet (or exceed) customers’ expectations.”

Now, just to be clear, customer experiences are customer perceptions of their interactions with your company (buying, usage, service, … anything). This is key; just making a change and calling it “improved CX” doesn’t count unless your customers agree. Typically, customer perceptions are captured via surveys, which enable the calculation of customer satisfaction and loyalty metrics.

Customer satisfaction is a measure of how well customer expectations were met. Did the experience meet, exceed, or fall short of what the customer expected? Loyalty refers to both continuing as a customer (retention) and having a positive feeling about a brand, which may lead to referral behavior.

Satisfaction and loyalty tend to rise and fall together, but not always. It’s possible to have highly satisfied customers who don’t buy again due to change in circumstances. Or, customers may be unhappy but appear to be loyal because they have limited choices or are trapped in a long-term contract.

The Business Case for CX Improvement is Revenue Growth. That’s a Problem.

OK, so that’s how CXM is defined, but what’s the goal? The short answer is growth.

The most commonly accepted CX “formula” is:

Improve CX > Increase Satisfaction and Loyalty > Grow Revenue

And you won’t have to look hard to find numerous industry studies supporting this relationship.

Forrester claims that increasing a brand’s CX Index™ (a measure of CX quality including effectiveness, ease, and emotion) by just one point can equal up to $1 million in incremental revenue. Furthermore, the analyst firm finds that “CX leaders outperformed CX laggards on both stock price growth and total returns.”

Most everyone agrees: Great experiences lead to higher levels of customer loyalty which, over time, increases revenue growth.

Why is this a problem?

Unfortunately, business executives are generally more receptive to a mix of growth and cost/efficiency improvements. And in customer service, the balance is often tipped towards cost/efficiency, according to many experts I’ve interviewed.

Bill Price of Driva Solutions says that while executives may claim they place equal weight on customer satisfaction and efficiency, those closer to the front lines give efficiency far more attention – about 80% of the priority. Price says it’s hard to link customer satisfaction to tangible benefits, while efficiency is easy to measure and show business results.

Customer service trainer Steve DiGioia is a crusader for service as a differentiator and loyalty strategy. But he laments that the hotel industry has become focused on efficiency, with management upping the workload to the point there is little time for personal service. While surveys can help identify problems, he thinks CX people would be wise to get out of their offices and spend time with employees and customers. Insight gained from that experience would help identify areas to focus attention.

Now, to be fair, this is still an improvement over many years ago, when cost was the overriding priority in customer service. That resulted in a rush to offshoring and other cost cutting that, for some brands at least, resulted in reduced levels of customer loyalty which eventually negated some of the cost savings. You might say: penny wise but pound foolish.

So, CX pros, if you’re pushing growth as the sole reason to invest in CX, you’ll have a tough time getting CS stakeholders on board if they are being asked to do more with less.

Misalignment of Key Performance Indicators

Key Performance Indicators (KPIs) reflect the business priorities of an organization, be it the corporation or a functional department like customer service. Here’s a formal definition from (emphasis mine):

Key Performance Indicators (KPIs) are the critical (key) indicators of progress toward an intended result. KPIs provides a focus for strategic and operational improvement, create an analytical basis for decision making and help focus attention on what matters most.

I would take it a step further and say that the metrics used to judge management performance – driving bonuses, promotions, etc. – reveal the true strategy of the organization. KPIs should include a few truly critical indicators that have a direct connection to the success of the business strategy and are actively used by management.

CX proponents believe CSAT, NPS or some other measure of experience quality is the key to success. But I wonder how many take the time to understand the current KPIs of stakeholders. As mentioned, customer service metrics are tilted towards efficiency. That’s a misalignment that make the CX business case challenging, unless you can get stakeholders to embrace a new KPI.

Bill Price, who has decades of experience in large/complex contact centers, says he still finds ASA (Average Speed of Answer) and AHT (Average Handle Time) given too much weight compared to the quality of the customer experience. Surveys have low response rates, and internal “quality management” efforts are often more concerned about complying with internal procedures like “Did you apologize three times?” than service quality as the perceived by the customer.

Jeremy Watkin, Product Marketing Manager at 8×8, found first hand in his BPO industry experience the challenges of quality management. Like Price, he says top management likes efficiency measures. Customer satisfaction is often secondary, until a situation blows up and a complaint is made to senior management. Then hours are spent researching what happened and developing a fix. Simply put, bad customer satisfaction stimulates action to prevent client defection, but it’s not something that service organizations pursue proactively.

These findings were echoed in numerous other interviews. To be clear, I’m not saying that customer satisfaction is unimportant to service managers. Just that it has a much lower priority than you might think if you take executive proclamations at face value.

How Does Customer Service Justify Investments?

Yes, most executives say they want to “compete based on CX” – but as Harley Manning, Research Director in the CX practice at Forrester puts it so well:

“Let’s make our customer happier” gets smiles but not funding.

So, what does get funding in service organizations? In short, the answer is: Investments that move the needle on KPIs.

CX pros, take a tip from the technology vendors selling into service organizations. Most use “improve customer experience” as a marketing message, and that’s true to a point. But when I asked vendors to explain how their solutions were justified at their clients, the CX rationale (improving customer satisfaction/loyalty) faded to the background, and cost/efficiency benefits were usually featured.

For example, visit the ROI calculator of TeamSupport, which the home pages says provides a “B2B-focused customer support solution that actually helps you build satisfaction and loyalty.” I filled out the forms indicating I was a mid-sized B2B support organization, and quickly found my “personalized ROI” was cost/efficiency benefits:

  • 26 % Reduction in Tickets Per Month
  • 49 % Reduction in Support Hours Per Month
  • Savings Per Month: $ 5,610
  • Savings Per Year: $ 67,318

Nothing at all was mentioned about customer satisfaction or loyalty increases. TeamSupport’s founder and CEO Robert Johnson says some customers do appreciate the value of increasing loyalty, but “it’s very difficult to assess the revenue impact.” More typically, a business case is made that the right customer support technology can help a company grow without adding resources. Again, that’s an efficiency benefit.

Another case in point is CallMiner, a speech analytics provider used for a variety of contact center applications. Jeff Gallino, CTO and Founder, says in some cases the best customer experience means no experience – by understanding the root case of an issue causing a customer call, and eliminating the reason for future calls. Business cases are often built based on compliance (risk of fines for not meeting regulations) or optimization (improving resource efficiency).

Comm100, a provider of chat solutions, says it can be used for “upgrading the customer experience so you can make every conversation count.” I’m sure that’s true, because customers increasingly prefer chat or other digital channels for real-time help. But the firm’s ROI calculator is based on the tried and true basis of savings due to call deflection, not CX-based loyalty and growth.

Speaking of call deflection (shifting calls to self-service), it’s not meant as a negative thing – provided that customer gets the job done quickly online instead of waiting on hold. Otherwise, deflection can turn into defection. According to eGain, AI-powered self-service and knowledge bases can help reduce calls by preemptively offering support via a virtual assistant, or informing customers of digital support while they’re on hold.

The point of these examples is not to critique these vendors, or any technology providers for that matter. CX is often a door opener, and aligns with what senior executives talk about. But when it comes time to make a business case with hard numbers, efficiency and cost often come to the forefront.

Let’s review three approaches to CX justification for service experiences, in order of increasing difficulty.

The Best Service is No (or Self) Service

For some companies like Zappos!, customer service is the key to differentiation. The company logo includes “Powered by Service” and stories abound about the extra efforts made to earn customer loyalty through great service.

But, truth be told, in many if not most companies, customer service is viewed as a necessary expense, not a loyalty-building investment. Necessary because those pesky customers want information or to solve a problem. Now!

In the early days of, Bill Price helps set the direction of the company to eliminate the reason for service calls – known as “The best service is no service.” While even Amazon doesn’t eliminate all calls, consumers will find little reason for customer service if the experience is flawless. And digital tools like “where’s my stuff?” reduce call volume further.

Harley Manning sums up nicely.

Customers with problems contact your company, running up service costs. Track down and eliminate the problems that are making them unhappy and they will not call you to complain. That makes them happier and saves you a ton of money.

The savings can be massive. Manning says that companies with improved CX scores all focused on business process and operational improvements that decreased costs and also increased customer satisfaction. In a Forrester study commissioned by Qualtrics, about two-thirds of the benefits come from “improved customer care and service” – meaning a shift of incidents to self-service.

Paul Selby, Product Marketing Director at ServiceNow, says the weighting of efficiency/cost vs. customer satisfaction depends on the priorities of top management. But a common business case involves shifting some interactions to self-service and improving internal collaboration to shorten response time. A Forrester study found substantial revenue benefits due to an uplift in renewals and new agreements, but cost savings or avoidance generated the lion’s share of hard benefits.

Source: “Business Value of ServiceNow Customer Service Management” by Forrester Research

I want to emphasize that just pushing to customers to self-service doesn’t qualify (to me, anyway) as a service improvement unless customers say it is. Monitor customer satisfaction/loyalty scores to make sure you’re not moving backward. If you can save money and at least maintain current levels of customer satisfaction, that’s a win.

The Justification Two-Step

Spend some time reviewing the ROI advice of CX experts and you’ll find a balance of short-term cost and longer-term growth arguments. You see this justification two-step used by BofA. Self-service improvements funded the longer-term growth fueled by better retail advice. Smart.

Nancy Porte, an experienced CX leader at Verint, says it’s critical that connect the outcomes of a CX program to the organization’s goals. And, the justification should include short-, mid- and long-term goals.

I’ve also found that it’s easier to “find and fix” when a program is first created, which often improves operations and decreases costs. So, these can be the first short-term successes of a new program. Improving customer satisfaction and increasing revenue are mid- and long-term efforts since they are typically larger projects with more investment and longer timelines.

CustomerThink’s research finds higher success rates for CX initiatives that focus on the end-to-end customer journey, rather than just improving one touchpoint like customer service. In some cases, enhancing customer service may not change customer behavior. Optimizing cost and providing “good enough” service can free up funds.

CX consultant and speaker Lior Arussy recommends that you “fully qualify the emotional impact of the issue / touchpoint.”

Just because it is a pain point doesn’t mean customers are seeking exhilarating resolution. Sometimes it is just a “fix it” issue. To figure this out, we divide pain points between hygiene factors and differentiating factors. And we qualify what is what with customers. Additionally, you measure what are they willing to live with in exchange for what improvement. A trade-off exercise. Lastly, we try to correlate with the financial impact which can be done through a study and regression analysis.

This approach requires thinking outside of the customer service box. While customer service may be mainly concerned with cost control (while at least maintaining customer satisfaction), the savings can be put to use elsewhere. That “elsewhere” is a different stakeholder you’ll need to get on board.

Don’t Just Serve Customers, Help Them Succeed

To be sure, good customer service can have an important role in building loyalty. And, bad customer service is often a leading cause of defection. Because when customers are experiencing a problem and they don’t get help as expected, it can spur them to look elsewhere.

The cost of defections is getting a lot more attention in subscription-based business models, such as those pioneered by Software as a Service (SaaS) companies. Why? As I mentioned in my customer success article, “vendors realized that churn reduction was critical because it could take one to two years to recoup customer acquisition costs.”

These days, retention efforts are often the mandate of specialized Customer Success Management (CSM) teams, and it’s one of the fastest growing jobs out there. Gainsight, one of the leading vendors providing CSM solutions, defines it as follows.

Customer Success is the business methodology of ensuring customers achieve their desired outcomes while using your product or service. Customer Success is relationship-focused client management, that aligns client and vendor goals for mutually beneficial outcomes. Effective Customer Success strategy typically results in decreased customer churn and increased upsell opportunities.

My take is that this trend will continue to gather steam in B2B especially because achieving goals is a more powerful loyalty driver than an effortless experience or great customer service.

Tom Sweeney, an expert in IT service/support and Founder of ServiceXRG, sees more companies evolving to “annuity-based” relationships. And that means a shift from serving customers to helping them succeed, which leads to increased retention and growth.

Ah, we’re back to growth! I’ve presented this as an obstacle for CX pros attempting to get buy-in for CX initiatives if KPIs are focused on efficiency. But for progressive companies with the right culture, customer service can play a vital role in retention and thus, deliver the ROI management wants — like increases in Net Recurring Revenue.

For example, Sweeney says a CX business case can be built on fixing product issues, removing the need for support calls, and reducing the associated customer frustration that drives defection. Or, instead of just fixing problems, help customers improve their usage and adoption of the solutions they’ve already bought. That’s one big step towards continuing a relationship.

The challenge with this approach is that it may require organization change to get customer service/support to take on success-focused activities. But, that’s a brighter long-term future than sticking with CS as a (cost-focused) utility, says Sweeney.

What’s Your Plan?

Based on many interviews, I think CX and Customer Service people are talking past each other… if they talk at all.

Kate Leggett, VP and Principal Analyst for CRM and Customer Service at Forrester Research, says it’s not uncommon to find that CX people don’t talk to customer service, and therefore don’t understand the wealth of data already available on calls and customers. So, the CX team creates a separate voice-of-customer program that duplicates customer service efforts.

I’ve also found that many customer service experts have only a hazy understanding of what those “CX people” are doing, aside from sending out surveys and tracking NPS. Yet CX teams have data and skills that customer service can use to not only drive down costs, but also contribute to growth.

Let me suggest the following actions for CX pros to build a business case in collaboration with customer service leaders.

1. Reach out to your colleagues in customer service and ask them about their job, key objectives, pressures, and KPIs.

Listen, don’t preach CX. Spend some time observing – or doing – the job of customer service agents so you can experience first hand the pressures of that job. This is a critical step because without this understanding, you can’t build a good ROI strategy.

2. Assess the likely source of benefits / ROI, including how they’ll be received by those with budget authority.

Ask customer service leaders how they build a case for investments. If you only see “do more with less” cases, this is probably not the time to pitch CX as the key to increasing revenue. On the other hand, you may find that CS would value a partner to make a more robust case that customer service has a role in retention and growth.

3. Build a case based on hard numbers, strategic impact, and intangibles.

While this article doesn’t get into how ROI should be calculated, there are many spreadsheets available (including this one from Forrester) that can help. Better yet, use one that has already been accepted within your company and adapt. Then add other less tangible forms of value, such as supporting strategic priorities, improved employee engagement, or potential growth.

Hopefully this article will help those struggling with CX ROI in customer service to craft a winning strategy. Good luck, and if you have other tips please share in the comments!

Further Reading:


  1. Hi Bob,
    Excellent article. Well researched and noted. My, and probably your, hope is that both the CS & CX practitioners (plus ownership/senior management) come together to identify what procedures really work for the benefits of both the customer and business. Less focus on metrics and more on real-world, direct-with-customer interactions. Only time will tell. thanks for allowing me to be a part of your research.


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