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Creating inspired experiences
Quantifying the success of your customer experience (CX) program can seem daunting. In fact, a recent McKinsey report showed out of 400 CX leaders, only 4% felt confident in their ability to tie ROI to their CX efforts.
But demonstrating the business results of your CX program is vital. When you can prove how your CX program can drive positive customer experience and financial results, it’s much easier to convince your leadership why they should continue investing in your efforts.
The good news it’s not as challenging as you may think. In this blog, we’ll show you the best path to proving CX program ROI and keeping your stakeholders happy.
First, let’s put on our math hats. The traditional customer experience ROI formula is the CX program benefits (net profit) minus the CX program cost, divided by the CX program cost. ROI indicates the dollar amount returned as a benefit for every dollar spent, which can then be converted to a percentage by multiplying by 100.
Several additional methods can be included under the umbrella term “return on Investment.” One such method is the payback period, or your total investment divided by the annual savings expressed in years.
One of the biggest challenges CX professionals face is several metrics used to gauge engagement and outcomes of their strategies are burdened by bias, leading to an unintentional manipulation of the data to paint a rosier picture than what is actually going on.
To avoid this error and ensure you’re taking the right approach, there are small steps you can take to get the most helpful and effective insights. And when you can report those insights that resonate with your key stakeholders, the payoff will be more than worth it. Not only do you elevate your program’s status, but you’ll also get much-needed investment to continue to advance and optimize the CX program. Doing so will help you to be viewed as an important player in achieving broader business goals.
The first step for showcasing ROI involves moving beyond providing metrics the rest of the organization doesn’t care about or understand. Isolated datapoints, such as increased number of completed surveys, don’t show a connection to the bottom line. Instead, CX measurement needs to align and correspond to financial outcomes.
To determine what CX metrics to track, you must thoroughly understand your organization’s goals and what they mean. One way to do this is to review corporate business objectives. For example, if your business aims to cut the cost of acquiring new customers, you can explore business unit spending against CX program expenditures. Then you can establish how you’ve maintained costs through adjustments and other initiatives focused on reducing costs.
Another step that many CX professionals fail to execute is communicating and identifying which metrics are important to the key stakeholders in your organization. Ask your leadership about their specific objectives and CX-related questions they need answered. For example, you might learn increasing basket spend is a high priority for your brand. If you show an increased spending rate per transaction or store visits, you can demonstrate tangible ROI.
Once you understand organizational objectives, the next step is to locate where the data resides and if you have access to track and monitor relevant metrics. If not, you’ll have to collaborate with stakeholders who own the data or support you to take additional steps to measure effectively.
As the American engineer and author W. Edwards Deming once said, “Without data, you’re just another person with an opinion.” You must be able to back up your CX efforts with tangible data and ensure you’re leading your brand in the right direction.
For example, imagine if your CFO wanted to discontinue the customer loyalty program because it cost the brand a lot of money. But, by digging into the data, you learned customers who have a loyalty card spent 18% more with your brand and are 40% more likely to return to the store within 14 days. That valuable piece of information could prevent your organization from losing out on loyal and profitable customers—which can considerably impact company performance.
Retail CX leaders should be governed and dictated by what their data tells them: where are their customers, what are the dwell times in store, and what are they interested in buying. Combining that data with customers’ behavior in physical stores will define how brands evolve and their ability to become agile.
To showcase how your CX program drives organizational value and ROI, work with internal or external data specialists to correlate the right metrics. If you don’t know where problems are, it is hard to solve them, and you won’t be able to make the best decisions for your brand.
To continue demonstrating the ROI of your CX program, you need to regularly report performance metrics against the agreed objectives that matter most to the business.
Collaborate with internal or external experts to set up a CX dashboard that updates in real-time so you can continually capture valuable data points. Every month, carry out deeper reporting and analysis to uncover additional trends and findings that you can share with your leadership.
Ongoing measurement ensures you’re focused, aligned, and always up-to-date on progress towards your business objectives. Plus, you’ll be able to pivot if metrics aren’t impacting the business or if market trends are going in a different direction.
With these 3 steps, you can provide meaningful organizational updates to elevate the value of your CX program. This will also help shift traditional perceptions that CX is a cost center rather than a key driver of organizational success.
Now that you have the data and insight, you can calculate the value of improving your CX metrics, the financial impact of a shift, and the impact of enhancing your customer experience program.
For more on demonstrating the tangible impact of your CX program, check out: The ultimate guide to experience management ROI.
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