Customer Experience ROI: Risks of Inaction

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Issue #39: Customer Experience ROI: Risks of Inaction

One of the most important things you can do as a customer experience leader is to illustrate the returns on improvements—or the costs and risks of doing nothing. My recommendation is to build a “toolkit” (repertoire) of methods you draw from.

There are two categories of considerations: returns and risks. Five each, for a total of ten considerations. Let’s begin with the good stuff. These are five potential benefits of improving customer experience. They include:

• Customer loyalty. Loyal customers stay longer, spend more over time, and cost far less than the expense of winning new customers.
• Brand promotion (also called word of mouth). The better the customer experience, the more likely you are to create customers who are brand advocates promoting your products and services through referrals and positive reviews.
• Operational improvements. Customer experience improvements often positively impact operations—inventory, shipping, customer service, technical support, or others. These processes become more scalable and cost-effective.
• Product and service innovation. A focus on customer experience creates better products and services, which lead to more revenue, tend to cost less to support, and boost trust in your brand.
• Employee engagement. Improvements to customer experience almost always boost employee engagement (and vice versa), leading to better attendance, retention and productivity.

What are risks of inaction if you don’t develop or improve customer experience? They are the flip sides of the benefits, and include:

• Customer defection. All the investment to earn the trust and business of those customers walks right out the door.
• Brand damage. Customers who speak poorly about your products and services drive away business and create negative perceptions that are hard to overcome.
• Recurring problems. Product glitches and faulty services—even if small—cost enormous time and money as you fix the same problems over and over.
• Compliance, safety and legal costs. In most every industry there have been heartbreaking cases where defective products or insufficient services caused harm. Even if it’s very unlikely, consider the potential for brand damage, fines, lawsuits, even bankruptcy.
• Employee dissatisfaction. Finally, many organizations are unaware of the extent to which poor customer experience contributes to employee dissatisfaction. Good employees leave. Apathetic employees may stay but not provide the contribution your organization and customers need.

So, these are the basic tools in your toolkit - five returns, five risks—ten overall considerations. You won’t use all of them in every case. But you should consider at least one return on improvement and a risk of inaction for any significant decision.

If you’re interested in a deeper dive on this topic, here are three recommendations:

First, you can find a guide on my website that covers these methodologies in more depth. It’s free and it’s my hope that it can help give you a big push forward, especially if you’re just getting started.

Second, you can check out Measuring the Value of Customer Service , a course I present through LinkedIn Learning. In about an hour run time, it walks you through formulas that are applicable to customer service and customer experience.

Third and most importantly, talk with your finance department. They may already be using this kind of analysis. Either way, they can be a great ally as you chart a path forward.

So, thank you for reading—and go make your case!

How do you illustrate the benefits of CX at your organization? I'd love to hear from you. Subscribe to an expanded email version of this newsletter here .