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PHOTO: Daniel Cheung

Those who lead customer experience efforts believe these initiatives are beneficial for the company — but unless they can convince executives of these benefits, CX may be viewed as a cost center rather than an investment in the long-term health of the company.

We asked experts to share their most successful tactics in proving customer experience ROI.  

Dive Into Specifics, But Think Big 

“Executives are reluctant to invest unless they see a clear and compelling ROI,” said Mazen Ghalayini, who leads the West Monroe Partners customer experience practice. “It’s crucial to start by building a stronger business case around CX, one that will convince the CEO, the board of directors and, particularly, the chief financial officer. You need to build a case based on ROI and quantifiable metrics. It’s not enough to say: ‘We will boost revenue if we improve the customer experience.’ You have to get specific.”

The main reason many CX efforts fall short, according to Ghalayini, is companies tend to approach CX as tinkerers rather than conquerors. They tweak instead of committing to full-blown transformation. They may add a survey tool that provides voice-of-the-customer insights, but they do not incorporate the findings into their operations.

“Many companies have initiatives, but very few tackle CX in ways that are tied lockstep with their business strategies. Very few truly put the customer at the center of everything,” Ghalayini added. “It’s important to define key performance indicators (KPI) that enable you to measure improvements. Metrics should include measures of customer and employee satisfaction. They should also include efficiency statistics. The resulting data can be correlated to cost savings and revenue growth, producing defendable ROI figures demonstrating the value of CX to the board and the members of the C-suite.”

Related Article: How to Convince Your CFO to Invest in Customer Experience

Use Unified Data

Unified data can clearly demonstrate what drives CX and results in a business win, according to Carl Tsukahara, Optimizely CMO.

“For example, Barney's created a new website where almost every page — including the homepage, category pages and individual pages — featured personalized content based on data from both a shopper’s in-store purchasing and online browsing behavior,” Tsukahara said. “By looking at this unified data, Barney’s learned that many of the women who purchase fine jewelry in its stores had previously browsed for it online — a powerful insight that led to a shift in marketing strategy.”

Unified data showed the rewards of CX go beyond customer loyalty to significantly impacting the bottom line, Tsukahara explained. For example, experimenting with the checkout flow, such as potentially adding a recommended product to increase cart size or streamlining the experience to reduce abandonment, can show which is the best strategy in meeting both CX and revenues.

Related Article: Customer Experience ROI: The Secret Formula

Consider Costs vs. Benefits of Features

To show the value of CX, we can calculate the cost savings that come with building the right feature, as well as consider the unnecessary cost of building features customers aren’t looking for or that drive them away, said Richard Alvarez, UX practice manager at Saggezza.

"UX and CX teams are totally focused on understanding customer needs and frustrations. We think it's important to dig deeper, to truly understand what customers want and deliver those solutions, instead of just any solution. We want to avoid having our customers beta test for us," Alvarez explained.   

For example, if an organization wants to build and deploy a feature in the next two weeks, consider the development team’s combined salary and the value of their time and effort that will go toward developing this feature. The UX/CX teams can help evaluate if the cost will be worth the effort of if customers will be dissatisfied with the new feature.

Related Article: 4 Customer Experience Takeaways From Mary Meeker's Internet Trends Report

Demonstrate Improvements if Direct ROI Is Unavailable

Usually you can’t show executives that CX is providing a positive ROI (especially if you’re in the B2B world with a complex sale), but you can show whether CX is providing improvements, said David LaVine, marketing consultant and founder of RocLogic Marketing, LLC.

“Just because you can’t show that something has a positive ROI, doesn’t mean that CX is just a cost center. It may just mean that there are too many partially observable factors, or touch points that are can’t be linked together in a causal fashion,” LaVine added. “You’re generally going to be observing and measuring the what, not the why, and that will likely limit your ability to fully understand the customer experience.”

Marketers can demonstrate the benefits to executives through A/B testing the baseline experience versus the improved experience, according to LaVine. “First you have to isolate the conditions and group that you want to test. Then you have to set a metric for improvement (e.g., the conversion rate of potential customers reaching out for a consultation) and be able to take enough measurements in order to provide the statistical significance you’re after.”