It is very hard to provide direct, causal, linear connections between investment into customer experience management and growth of revenue, reduction in operating cost or improvement of profit margins. To be fair, there is plenty of evidence that uses correlations to illustrate the impact of customer experience improvements on:
- increase in market share,
- reduction of customer churning rate and
- even an increase in share prices.
However, none of the evidence demonstrates an indisputable cause and effect relationship that could be attributed by non-believers to other variables like successful marketing campaign or state of economy. The certainty of money outflow to fund customer experience improvements is hard to overcome by uncertainty of outcome and time horizon.
- The practice of estimating operational ROI without evaluation of impact on customer experience.
Utilization of this methodology is too common and often constitutes the triumph of efficiency over effectiveness. While it simplifies estimation and measurement of isolated results for a specific business unit, it completely ignores the effects of the proposed investment on the overall goal of any business:
“The purpose of business is to create and keep a customer” Peter F. Drucker
Applications of this methodology are responsible for:
- cutting costs of customer support labor at the expense of an increase in customer churn rate. While it could be profit margin positive for the next few quarters, this investment threatens the long term viability of the entire business.
- cutting costs of market research at the expense of increasing the product return rate and poor market adoption.
- paying minimum wage plus commission on the retail floor to the detriment of customer experience and destruction of loyalty.
Customer experience management is a holistic discipline which means that a variety of factors, internal and external, can influence the perception of your customers at any given period of time. Top level customer experience metrics cannot deliver definitive proof that cx investment into specific improvement generates factual return within a specific period of time. Detailed analysis that identifies and measures components or attributes that influence the top level customer experience metric, can enable direct association with specific operational KPIs. The correlations between a department KPI and the associated CX attribute trends should be monitored monthly or quarterly for possible diversions that serve as alerts. Most importantly, no operational investment ROI should be estimated without thorough examination of its potential impact on customer experience.
