The ROI of CX - Part 3: Steps to Success
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The ROI of CX - Part 3: Steps to Success

This 3-part series has sought to answer the question: How do we show the connection between the value of our CX program and real business returns.?

In Part 1 we looked at the extensive body of research that show a well-executed customer experience strategy can positively influence stock prices, enhance customer loyalty, drive revenue growth and decrease costs. In Part 2, we saw three practical examples of this through the success stories of Kmart Australia Limited , Flybuys and the Foxtel Group .

In this part, I’ve identified what I see as the 7 essential steps to take to not only improve customer experience and satisfaction but also strengthen the market position and overall financial health of your organisation.

Before You Begin

I should note that the 7 steps below assume you already have:

  • A CX person or team with the mandate to improve the overall customer engagement.
  • An Experience Management Platform (eg Qualtrics , Medallia , NICE or InMoment ) for gathering customer feedback - ideally across multiple touch-points including post purchase, in-store, call centre, website, app etc.
  • Sufficient historical quantitative and qualitative data available for analysis. What is sufficient will vary depending on what you are trying to understand.

If these are missing, then you might need to get the foundations in place first.

I'd also note that you might not follow these steps in exactly this order. That's ok. Sometimes the flow might be different based on where you are in the process. But all 7 steps are still essential, so be careful not to miss one all together.

1. Executive Sponsor and Cross-Functional Team

Effective CX requires the collaboration of diverse teams across the organisation, including:

  • Customer Service Teams: Ensuring every customer interaction adds value.
  • Research/Voice of the Customer (VoC) Teams: Gathering and analysing customer feedback.
  • Service Designers: Designing the services to meet customer needs across various touchpoints.
  • Data and Analytics Teams: Integrating and interpreting customer data.
  • Marketing and Sales: Utilising insights to enhance customer acquisition and retention.
  • Finance and Operations: Aligning CX with financial outcomes and operational efficiencies.

As seen in the Kmart story in Part 2, these teams each contribute different perspectives, helping to create a holistic view of the customer journey and align CX objectives with broader business goals. This cross-functional approach ensures that all areas of the business are focussed on improving customer satisfaction in a way that is aligned with broader business outcomes.

All successful examples of a CX program also have strong backing & support from the executive level sponsors, something that will be easier to maintain after step 4, below.

2. Bring Together Quantitative Data and Qualitative Insights

Merging quantitative data with qualitative insights provides a full spectrum view of CX.

  • Quantitative data shows WHAT is happening, such as sales figures or service usage stats,
  • Qualitative data explains WHY it's happening, based on customer scores and verbatim feedback.

This might include Integrations with your data warehouse or systems like Salesforce, ServiceNow, Zendesk, Adobe Analytics, Google Analytics and so on. To do this, you might use a Data Virtualisation solution (from TIBCO or Denodo) and/or cloud-based data warehouse systems like Snowflake, Amazon Redshift, Google BigQuery or Microsoft Azure Synapse, perhaps combined with a big data processing analytics platform like Databricks or Apache Spark which can process data science models.

Speaking of data science, if you haven’t already done so, this would be the right time to look at implementing AI and Natural Language Processing (NLP) text analytics for large-scale identification and tagging / coding of the sentiment, products, actions, themes and so on that is found in the feedback.

Some examples of this from Part 2:

  • Kmart: Analysed NPS scores alongside transaction data to identify how positive experiences correlate with increased spending and return visits.
  • Foxtel Integrated customer feedback with actual usage data to explore the reasons behind customer churn. They brought together traditional market research data, audience / ratings data and customer experience / VOC feedback from In-Moment. Soon they will start bringing in unstructured data, such as social media feeds, and getting this Experience Management Platform to apply the same coding scheme used for other data so they have consistent and holistic feedback across all customer signals.

3. Confirm Your Customer Experience Metrics

Selecting the right metric(s) is crucial for accurately assessing CX. Metrics like NPS, CSat, OSAT, or custom indices like "Customer Engagement" should be clearly defined and understood across the business and consistently applied all customer interactions. This standardisation helps in benchmarking performance and understanding the impact of CX initiatives on the customer's experience.

Some examples mentioned in Part 2:

  • Foxtel: Utilised Strategic Net Promoter Score (NPS) to measure CX not just within the company but also relative to the industry, helping to highlight performance against competitors.
  • Flybuys: Chose member engagement as the metric, focusing on how engaged members interact with the platform and the resulting impact on loyalty and revenue.

You might go deeper and look at subsets of NPS, such as:

  • TNPS (Transactional Net Promoter Score) asking how likely they are to recommend the company based on that transaction. This measures customer satisfaction based on specific interactions or transactions to gauge the immediate response of customers to a service or product.
  • RNPS (Relational Net Promoter Score): This score evaluates the overall relationship between a customer and a company over time. It assesses customer loyalty and overall satisfaction over the entire customer experience, not just based on a single interaction.

4. Use Unified Data to Identify Causal Connections and Prove Value

Analysing unified data to find causal links between CX initiatives and business outcomes is essential for justifying CX investments. Techniques like regression analysis can pinpoint which CX improvements drive key business metrics. Predictive modelling can also be also used to project potential revenue increases, or cost savings, from incremental increases in your customer experience metric.

Quantifying the financial impact of CX improvements is then key to securing executive support. Demonstrating how CX metrics influence financial outcomes—such as revenue growth or cost savings—can help executives see the tangible benefits of investing in CX, ensuring continued support and resource allocation.

Some examples from Part 2:

  • FlyBuys: Identified that “fully engaged” members could deliver up to 15 times more value compared to less engaged ones, allowing them to show how much additional value the member, partner and Flybuys could all earn by helping members to becoming ‘fully engaged”.
  • Kmart: Presented data linking NPS scores to revenue, successfully gaining the support of senior management to address CX issues.

5. Conduct Driver Analysis to Understand what Moves Your Metric

Driver analysis helps identifies the specific elements of CX that most significantly impact overall customer satisfaction and business performance. Understanding these drivers allows organizations to target improvements more effectively and allocate resources where they will have the greatest effect on customer loyalty and financial returns. For instance:

  • Kmart: Used driver analysis to that product availability on shelf has the largest impact on NPS
  • Foxtel: Used driver analysis to link the viewing app's performance with NPS, providing a focused area for improvements.

6. Prioritise and Address Key Pain Points that Move Your Metric

Based on the understanding of what drives impact on your CX metric, you can more easily identify the CX pain points that affect customer satisfaction. Simply ask, as Kmart did: “How much is it worth to fix pain points?”

Once you know what needs to be fixed to get the biggest benefits, then, of course, you must do the work to actually fix the issue(s). Here you leverage through all the tools available to a CX professional, from personas and journey mapping to a full website or app update.

By identifying and addressing these prioritised issues, companies can enhance the customer journey, reduce churn, and improve operational efficiency.

Some examples of this seen in Part 2:

  • Kmart: Addressed the main pain point of product availability by using operational interventions that customers do not see, such as automated stock replenishment systems.
  • Flybuys: Focused on resolving a long-standing set of 'minor' annoyances that, taken together, were impacting member engagement.

7. Embed Customer Experience in the Culture and all Decision Making

Incorporating CX into the organisation’s culture and strategic decision-making will take time, but it ensures a sustained focus on customer needs across the business. This ongoing commitment helps align customer metrics with operational performance and reinforces the role of CX in achieving business goals

Some tips on doing this from the stories in Part 2:

  • Intentionally move from more passive function (eg delivering reports and insights) to becoming more proactive and participating in decisions on equal footings with other groups like operations and finance.
  • Be sure that your customer experience metrics (eg NPS) are, and stay, aligned with operational metrics (eg the stock on shelf metric, used by Kmart)
  • Ensure that organisational Key Performance Indicators (KPIs), including those for the executive team, reflect the importance of CX metrics. Several organisations at the Customer 360 Symposium noted that NPS was a key KPI for the executive team.
  • Continue to demonstrate value anytime you can. Use your insights and data to find quick wins that increase your CX metric and so bring business returns.

Conclusion

Part 1 showed the strong connection between CX investments and ROI. Part 2 gave local case studies which make the research real. In this part, I’ve tried to distil down what I’ve heard from industry leaders into 7 essential steps to measure and prove the financial benefits of CX initiatives, supported by examples from the case studies.

My hope is that, together, these 3 parts provide a complete answer to the question I've heard in many meeting and events: How do we show the connection between the value of our CX program and real business returns?


<-- Part 1 | Part 2 | Part 3 -->

Please leave any comments or questions below, or connect with me if you need any help with CX, Data or general Digital Transformation.

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