A recent Forrester study of customer experience (CX) found that 90 percent of respondents claimed it is a top strategic priority for their firm. However, a surprising 86 percent said their companies do not expect to get much value, or return on investment, from CX.
Statistics showing that modest increases in customer retention result in lower sales costs and higher revenue have been well-known for 25 years. More recent studies illustrate similar business results for leaders versus laggards in CX performance. So why is it so hard for a company to show conclusive evidence of ROI?
Culprits of this predicament include the silo treatment of CX management, limited to a single function such as customer service or marketing; by definition, a silo is only part of the full customer experience, so it is difficult to attribute customer behavior to a silo program. Another culprit is over-emphasis on immediate revenue opportunities without sufficient attention to long-term gains or cost opportunities.
ROI has a numerator and a denominator: The numerator is revenue and the denominator is cost. Revenue divided by cost produces your return on investment. Yet too often companies seek only to increase the numerator (revenue) and miss the rich upside of decreasing the denominator (cost). This is not to be confused, however, with austerity, cost-slashing or starving CX management of funding.
The denominator upside of CX ROI lies in company practices that are standing in the way of customers’ ease-of-doing business with the company. Each of these practices represent a "cost" because they result in lost revenue, and these costs should be included in the denominator for calculating ROI.
The reason is simple: Customers gravitate to the company that makes it easiest to do business. This is true among all the companies perpetually appearing on lists of best-loved companies. Stand out from the crowd in ease-of-doing business, and your revenue stream (the numerator) is allowed to grow more-naturally.
To address the other culprit – silos – think of CX management as a sequential flow. Like any other living system, all the components need to work in tandem in order to produce optimal results:
Continuity across the CX system is the silver bullet for maximizing ROI. There is no off-the-shelf, one-and-done solution. The CX system starts with customer feedback, which informs improvements and innovations, which earn customer trust and engagement.
Companies have the opportunity to maximize their customer experience ROI through taking the following steps: