Connecting CX to business value: The pitfalls of treating satisfaction as a proxy for business value

Many organizations fall into the trap of treating customer satisfaction (or other CX metrics) as a proxy for business value. This often shows up in the form of statements like “Increasing customer satisfaction by 1% results in $x to the business,” or questions like, “What is the dollar value of a 1 point improvement to NPS?”

Just because customer experience can impact business value doesn't mean that CX metrics are a good proxy for it.

But organizations often need to rely on imperfect proxies in order to drive change and results. So what’s the harm in treating customer satisfaction (which, all else equal, is a good thing) as a proxy for business value?

Let’s take a look at how this approach can result in suboptimal decisions under a few simple but common scenarios:

"Our customers are unhappy with customer support"

• Satisfaction a proxy for business value: "We need to invest more into customer support to address the reasons customers aren't satisfied"
• Satisfaction not a proxy for business value: "We need to provide the right level of support based on how it impacts customer behavior"

"Our customers are spending a lot with our competitors"

• Satisfaction a proxy for business value: "We need to increase customer satisfaction with better services or lower prices to capture share of wallet"
• Satisfaction not a proxy for business value: "We need to understand why our customers use our competitors and determine which of those reasons are worth addressing"

"Our customers are leaving at an increasing rate"

• Satisfaction a proxy for business value: "We need to address the issues that are causing dissatisfaction in order to decrease customer churn"
• Satisfaction not a proxy for business value: "We need to identify the sources of our customer churn and determine which are worth addressing"

"We aren’t getting enough customers from word of mouth"

• Satisfaction a proxy for business value: "We need to improve the experience for our existing customers so that they generate more referrals"
• Satisfaction not a proxy for business value: "We need to understand which customers are / aren't referring others, why, and what is worth doing about it"

"We aren’t seeing the relationship we hoped to see between customer satisfaction and behavior"

• Satisfaction a proxy for business value: "We need more collect more responses and conduct more analysis to prove that satisfaction equates to business value"
• Satisfaction not a proxy for business value: "We need to establish a relationship between the actions we are taking and changes in customer behavior"

Business value is a function of cash flow, which is impacted by factors such as customer acquisition, customer spend, customer churn, and cost to serve. Include relevant customer behavior metrics in your decision-making criteria to improve the quality of your decisions.