ROI in CX: establishing a return when investing in experience

The CX Network Debrief is the LinkedIn Newsletter from CX Network and each week we share our take on a key trend in experience management, with links to our extended coverage of the most noteworthy developments.

This week’s big story is investments and how to prove their return. In the current economic environment every cent in the budget counts, however, 60 percent of CX practitioners told CX Network they doubt their brand’s ability to calculate the link between CX initiatives and business benefits.

Still, it hasn’t stopped CX leaders from spending as they continue to evolve to meet their customer’s growing expectations. Our recent Buyers’ Guide To Smart CX Investments found that EMEA brands are spending big on digital CX, a particularly difficult area in which to prove returns.

Despite the challenges, establishing a return when you’re investing in experiences, is far from impossible. It simply requires a deep understanding of customers, as well as numbers.

Earlier this year, TPG Telecom’s Gabrijela Juel told our network members how they can begin to calculate the potential ROI of their projects and strategies, not just by looking at money invested vs. profits returned, but by closely assessing the impact of operations and efficiency on overall experience.

One of the more immediate – and often impactful – financial returns can be found by reducing the cost to serve through more efficient operations. But this doesn’t mean closing the call center.

To begin, Gabrijela says practitioners must understand customers by assessing their needs and experiences across all Voice of the Customer (VoC) sources. This requires an extensive VoC program to establish where the most pressing pain points are.

Customer lifetime value (LTV) and churn-rate data can be gathered from previous and existing customers before being leveraged to benchmark and measure the impact of a CX program, as well as the operational efficiency of the business.

Customer feedback from NPS, Customer Satisfaction (CSAT) and even focus groups can then be harnessed to confirm if churn and LTV issues can be solved through improvements to CX and business operations.

Ultimately, brands need to identify the objectives of each CX decision and determine the most appropriate means by which to measure its success. In this, existing measures of experience, satisfaction and retention all have a role to play and a number of vendors have created online calculators that draw on different metrics and investment figures to guide leaders in establishing ROI.

It goes without saying that investment drives innovation and satisfaction, which ultimately drives revenue. However, there is no magic bullet when it comes to CX, or EX. Great experiences aren’t created through single solutions or investments alone, they are a product of culture.

As Bain & Co’s Stan Swinton told to CX Network: “If you focus on the customer longer term the financials tend to work themselves out as opposed to the other way round. If you focus on the long term and the health of customer relationships, then over time these companies outperform others financially.”

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