Rethinking the ROI of CX

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Articulating the return on investment (ROI) of Customer Experience efforts is a recurring theme among CX professionals.  As I moderate panels on webinars and sit as a guest on podcasts, listen to my peers talk, and read articles, I hear the questions all the time:  How do you define the ROI?  How do you sell CX to leadership?  I’ve even written about it myself on several occasions.

I know some of my fellow CX consultants go so far as to use the ROI of CX as their calling cards…not only engaging in the discussion but also leveraging it as the heart of their pitches to clients.  Some make bold promises and predictions, and some are simply advocates of the idea that you’ll boost your business results in some undefined (and sometimes not so undefined), yet unambiguously wonderful way with a dose of CX.  Now, of course, some are more circumspect than others, but there certainly seems to be a trend toward using things like revenues, sales, and market share as the driving reason for engaging in CX endeavors.

I wonder to what degree these folks are setting themselves up for a risky situation.  Think about it:  If I promise you some sort of return on CX as specific as, “one point in NPS improvement means $XX,000,000 in revenue growth,” this is almost impossible to prove, and sets up a very dangerous expectation.  For that matter, even if I were to say in some generalized way that, “oh yea, CX pays for itself,” that’s a big bite to take out of the future.  And in the end, it’s not just my reputation as a CX professional (and Fractional Chief Customer Officer or CX consultant) that’s at stake:  It’s the overall impression of CX as a profession itself.

If we go around promising that this or that is going to happen with regard to top-line financial numbers as a result of using this new awesome thing called “Customer Experience” and then don’t deliver, nobody is likely to be able to come after us and pick up the pieces.  There isn’t much taste for a second shot at it if a leadership team of your organization (or your client’s organization) has already been burned once.  What’s even a greater shame is that it’s a self-inflicted wound if that comes to pass:  It’s all based on a promise that shouldn’t, and needn’t have been made in the first place.

It shouldn’t have been made for these very reasons I’ve listed here:  It’s not guaranteed and can’t be proven regardless.  And it needn’t be made because CX has its own actual value and virtue as a discipline in and of itself…it doesn’t have to defend itself in the typical business realm of investments anymore than any other vital aspect of a functioning company.  HR doesn’t have to present its ROI, because everybody knows you need a strong and robust system in place for finding, recruiting, hiring, training, and retaining the right people.  Has your head of HR ever had to stand up and defend his or her very existence?  Of course not.  Now, surely, here and there, budgets themselves undergo scrutiny, and rightly so…but nobody ever says, “Hm…should we really do HR?  I mean, what’s the return on that, really?”

So, how about we view CX not as some nice-to-have that we need to find a budget for based on promised future revenues, or demand it “pay for itself.”  What if, instead of trying to draw a correlation between, say, CSAT and revenues, we approach CX as though it’s fundamental to the very nature of the business we are in?  If we appeal to the actual strategy of our organizations, we can see the vital role CX should and could be playing if we really cared to:  CX should be the link between what our Customers encounter when they deal with our brand, and the Brand Promise we market and endeavor to deliver to them.  If CX is centered on that goal, rather than sales and market share, its success becomes much more engrained in the very fabric of our brand in the first place.

The payoff then, isn’t necessarily more revenues coming in (although, hang on to that thought for a second), but rather it’s validation that we’re actually living up to our corporate values, principles, mission and vision, in the eyes of our Customers.  The entire goal is to drive that alignment, and the signal that it’s happening is that our Customers are saying so.  The VoC results should be an indication not as to whether or not they’d recommend us or if they’re simply ‘satisfied’ with their most recent interaction.  No, it should be a resounding “Yes, I do believe you’re living out your Brand Promise, based on my most recent interaction with you.”

Then the topic can more naturally shift to those revenues and sales.  Because this can drive an even more important discussion (existential, in fact):  What level of confidence do you as leadership have that living up to your brand promise will result in revenues?  If that’s high, then the KPI for your CX efforts should be about that… If you’re so sure about your mission/vision/values, then it’s a no-brainer… If not, poor CX isn’t your biggest risk anyway, and no level of “doing CX” is going to help you out there.

Republished with author's permission from original post.

Nicholas Zeisler, CCXP, LSSBB
I’m a Customer Experience executive, certified Process Improvement professional, Agile Scrum Master, dynamic educator, change management strategist, and in-demand business and leadership coach. I've worked from the inside and from the outside; in organizations large and small; public sector and private; from oil and gas to technology to non-profit (with lots in between too). I've seen a lot, but I haven't seen it all.

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