Businesses are swimming in CX metrics. But most organisations are still data rich and insight poor when it comes to measuring the business impact and return on their efforts. By their own admission, about one-in-six companies are unable to link customer experience investment back to business results, according to CX Network.
This inability to prove CX ROI is one of the biggest barriers to securing executive buy-in and budget, and then sustaining investment and sponsorship for programmes. Without this hard evidence, it’s virtually impossible to forecast and plan future improvements, change tack or double down on what’s working.
Organisations that are unable to demonstrate a direct link still focus their efforts on tracking NPS (Net Promoter Score), CSAT (Customer Satisfaction) or CES (Customer Effort Score). These are all customer perception metrics that are important to benchmark and evaluate. They are a snapshot of customer sentiment, which influences current and future behaviour. But tracking how customer experience is influencing these perceptions is one thing. It’s another thing to be able to demonstrate the business benefit.
As a short cut, some businesses simply then conflate improvement in metrics like these with positive business results. Take NPS for example. It would be a mistake to assume that happy customers will buy more and recommend your organisation to their friends and family. Key stakeholders will want hard evidence that a CX investment in a specific area drives higher NPS scores, which in turn translates into higher spend and more word of mouth referrals.
Businesses looking at how to design and implement a CX plan that delivers demonstrably better outcomes for their customers, their people and the organisation will need a stronger measurement strategy that goes beyond perception metrics that are viewed at 40,000 ft.
What to measure?
Less is more when it comes to measuring the impact of your CX plan. Start simple. And start with the business results. Each business is unique so choose a goal to include in your ROI calculation that is important to your organisation and will be directly impacted by improvements in your CX. Resist the temptation to include multiple metrics. Ask yourself, what is the one factor you want your CX programme to impact? It might be revenue or profitability from a particular product (or set of products). Or it might be a reduction in costs (e.g. customer acquisition costs). Either way try to identify just one metric. We call this the ‘power of one’. The benefit of creating just one goal is that it makes it far easier to achieve company-wide focus and alignment. Once you have mastered this, then think about tracking additional metrics (see our example below).
Setting your goal is the starting point for the CP2 CX Measurement Framework, which is designed to help organisations like yours explore six big picture questions as you plan your measurement strategy. These questions will help you think about how and where your customer experience adds value and determine the priority metric you want to track.
1. Business results – what is our priority goal and which metric do we want to focus on?
2. Customer behaviour – how must our customers behave to deliver these goals? Do they need to spend more, buy more products, recommend our organisation, stay longer as a customer? (See our insurance customer loyalty guide for an example of how to measure the ROI of increase in customer advocates who score 9 and 10).
3. Customer experience – what experience must we provide to drive this behaviour?
4. People – what must be unique about our people – their attitudes and their capabilities – and our culture?
5. Products, service, technology, channels – what must be distinctive about our products, services, technology and delivery channels?
6. Processes – what internal processes do we need – and how must they perform – to enable us to deliver this experience?
By identifying these six ‘essential’ factors, your organisation will be able to establish priorities that will drive improvements in your customer experience and thereby deliver improved business performance.
Proving ROI – a winner’s story
Our partner Permanent TSB won the financial services category at last year’s The Irish CX Impact Awards. The bank took home the award for its transformational Blackbelt CX programme. The national programme incorporated a unique framework for training, coaching and education for branch colleagues, including managers, to develop the skills required to deliver a consistently excellent customer experience across the branch network.
The training initiative, which was designed and delivered by cp2experience, was interrupted when the pandemic broke. With the health and safety of colleagues the bank’s number one priority, the cp2 team worked quickly and closely with Permanent TSB’s training and health and safety teams to adapt the approach and continue the training in full compliance with national Covid guidelines at the time. The programme was redesigned as a blended learning solution. This incorporated multimedia e-learning modules, in branch activities, and briefing and coaching sessions delivered via video conference.
With a robust measurement framework for the initial year-long programme, the bank was able to clearly demonstrate, and quantify, the direct link between its investment and better outcomes for its customers, employees and the business.
Business results – given the importance of mortgage sales to Permanent TSB and the belief that there were plenty of upsides, the bank decided to make mortgages its key priority. As a result of the programme, the number of qualified mortgage customer leads increased by +64% year on year. From a customer viewpoint, the benefits of buying a home with Permanent TSB was more clearly understood, which resulted in the desire to progress with an application.
Customer impact – the bank’s transactional Net Promoter Score improved by 42% in just over 12 months, which drove an increase in the number of mortgage applications that reached the application stage.
Colleague impact – there was a significant improvement in two key employee engagement metrics:
- ‘I believe that I am a member of a High-Performance Team’ measurement improved from 77% (2018) to 85% in 2020
- ‘I have opportunities for personal development to help me serve my customers more effectively’ improved from 57% (2018) to 76% in 2020
The training is ongoing and it is used both for new recruits, and as a refresher programme for current staff. Read more about Permanent TSB’s winning story here.
What will you measure?
Keep it simple to prove your CX ROI. Identify the priority business goal that underpins your CX investment. Next, identify, and influence through customer journey mapping, the drivers of customer behaviour that deliver this goal.. Choose the right metrics to track to demonstrate the value and business impact of your efforts. With this simple formula you will be able to demonstrate a direct link between your CX efforts and improvements in business results. What will you measure? Get started with our Insider’s Guide to Measuring CX.
