According to the Watermark Consulting Customer Experience ROI Study, companies that deliver a great customer experience far outperform those that don’t by a 3-to-1 margin. We can all agree customer experience is important. In fact, CX leaders outperformed the broader market, generating a total return that was 45 points higher than the return on the S&P 500 Index and nearly three times greater than that of customer experience laggards.
The benefits come through a combination of better revenue growth and improved expense control. Yet before making any changes in CX capabilities or strategy — most of which would require the company to make additional investments, marketing leaders need to C-Suite buy in. The following are some tips to convince them of the value of dedicating additional financial resources to your organization CX initiatives.
Know Your Audience and Use the Right C-Suite Terminology
To convince skeptical executives of the value of customer experience differentiation, it’s important to speak to them in terms they can understand — and more often than not, that means using the “universal business language” of shareholder value. Whether they lead public or private companies, executives have a healthy respect for that common business valuation measure, said Jon Picoult, founder and principal of Watermark Consulting.
He recommended focusing less on project-by-project ROI justifications and more on the macro impact of an effective customer experience strategy — thereby making the critical conceptual case that CX is worth investing in.
“The approach of using shareholder value metrics to make that case has a second important advantage — it captures both the revenue and expense impact of an effective CX strategy, Picoult added. Many C-Suite CX presentations focus on revenue growth (e.g., our customers will be happy, so they’ll buy more and tell others to do the same). But revenue growth is an incomplete measure of CX ROI, because a great customer experience doesn’t just help raise revenue, it also helps better control, if not reduce, operating expenses. For example, preempting unnecessary downstream customer contacts.
“Shareholder return metrics account for both parts of the CX economic calculus, revenues and expenses, which is why they again represent one of the best ways to make the case for customer experience to the C-Suite.
Make Sure To Share These 10 Points
"Ultimately, the best demonstration of a successful CX strategy is showing improved customer acquisition and retention rates; improved share of wallet for specific markets or customers; incremental revenue; and even margin,” said Jeb Dasteel, founder of Dasteel Consulting. If using those strategic or financial measures is the second step, as the most definitive, relatable approach to ROI, then the first step is to show operational improvements in areas such as:
- Effort: Is doing business with us easier?
- Deployment: Are product implementations (or new product introductions) and updates faster and more effective?
- Relationship: Can we be better counted on as a trusted partner?
- Issue Resolution: When things go wrong, do we correct the situation more effectively and faster?
- Transactions: Are we increasingly straightforward, efficient, and transparent when we transact with you?
- Product Quality: Do we do a better job delivering the product you expected?
- Value: Are we doing better in helping you achieve your desired outcomes?
- Renewal: Are you more likely to buy from us again?
- Reference-ability: Are you more likely to recommend us to someone else?
- Engagement: Are we improving in how we adapt to your style of interaction and transaction?
“I’m a believer of focusing on continuous improvement in any and all of the above, versus setting specific, arbitrary values as goals,” Dasteel added.
Focus on Challenge, Costs, ROI
Several marketing experts pointed to the need to focus on ROI in making any such presentation to the C-Suite. A solid calculation on the expenses and expected returns are essential. “Provide a concrete and vivid example of the CX problem you are solving, convert the problem into dollars, state your solution, convert the solution into dollars and list other measures of benefits and costs, shared Vivek Astvansh, assistant professor of marketing at the Kelley School of Business at Indiana University.
First, explain what you mean by customer experience, Astvansh For example, the company aims to improve the experience of a customer while she or he tracks their order. A concrete example makes the presentation vivid and lends the presentation a problem-solving view,
Next, quantify what the fixed and variable costs the company will need to invest to sole the issue above. The fixed expenses would include costs for self-service features. These could include a page on the company’s website or app where the customer can enter the order number and track the order; a “contact us” form or email address; a chat application or some combination. What will these features cost? If costs for agent-handled quarterly, these variable costs should be figured on a quarterly basis.
Then explain how you would solve the challenge presented, Astvansh said. “For example, you will add a chatbot to the website and the app as the first line of support. The chatbot would answer simple but more common questions. If the customer prefers to chat with a live agent, a live agent will take over as the second line of support.”
The difference in the estimated expense pre-solution and post-solution indicates the cost saving and thus the benefit; but their can unquantifiable effects that should also be included in the presentation.
These would include items like improved customer satisfaction and expected improved customer retention.