ROI in customer experience
The field of CX is beginning to attract the respect it deserves in many businesses, as evidenced in recent CX Network’s Advisory Board discussions and our recent Customer Experience Predictions Report: 2022 report. To access the budget and resources needed to upgrade customer experiences, however, persuasive business cases must still be made. CX practitioners are expected to quantify exactly how a CX investment is going to unlock business benefits.
Also read: Five CX trends in retail
Accurately calculating the return on investment (ROI) of CX has long existed as a sticking point in the industry. For the last five years in CX Network’s Global State of Customer Experience series, hundreds of CX practitioners flagged calculating return on investment (ROI) as one of the toughest challenges they face.
The long-term nature of some CX projects can complicate the task of isolating the cause and effect of an initiative. This places some CX practitioners in a complicated spot when asked to demonstrate CX’s financial benefits.
Drawing on intelligence from a research group of 120 CX experts, this report presents key learnings from a range of CX practitioners including McDonalds, Huawei and Infobip. The insights can be utilized to enhance ROI calculation skills so brands can generate healthy returns from CX investments.
“It is extremely important to fit the solution to a customer need and not the other way round.”
KV Dipu
Head of customer service, Bajaj Allianz General Insurance
About the respondents
To offer a clearer understanding of the survey results, this section visually breaks down the 120 customer experience experts surveyed in the research for this report, including their seniority, company size, industry, geographical focus and budget.
68 percent number of respondents with direct responsibility over CX investments.
Job title
Industry
Region
respondents could select all regions in which they operate
Drivers and ROI calculations
In alignment with the consensus seen in the Global State of Customer Experience series, these results indicate a lack of ROI in CX confidence. Just over 45 percent of respondents doubt their brand’s ability to identify business benefits from CX initiatives.
How many metrics do you use to measure customer experience success?
Does your brand have visibility on all the CX benefits it generates?
59 percent of those surveyed label NPS as their top CX metrics.
Customer loyalty drivers
To enhance the health of CX returns, investments should be dedicated to addressing specific customer needs rather than blindly following an industry trend. “It is extremely important to fit the solution to a customer need and not the other way round,” says KV Dipu, head of customer service at Bajaj Allianz General Insurance. “The temptation to latch on to the latest tech buzzword in town and then force-fit that system to a customer need should be completely overcome.” To unearth the exact customer needs that can influence buyers to spend more, remain loyal or churn, CX practitioners should examine customer journey data, voice of the customer data and voice of the employee insights. The Big Book of Customer Data and Analytics saw year-on-year growth in this area, with customer and employee feedback inspired process and product improvements standing as the most popular CX personalization tactic.
Yvette Mihelic, director of customer experience for rail and transport at construction firm John Holland, agrees that organizations can understand customer mindsets better with voice of customer programs. She adds that a holistic approach is imperative, remarking: “Basing decisioning and strategy on only one or two types of customer metrics [will] not provide a fully formed picture of what makes customers and prospects tick.” The respondents that admit to only using two CX metrics could benefit from expanding to a larger suite of measures for a more comprehensive view as an overreliance on one or two metrics can create dangerous blind spots.
Rather than default to the industry favorite – Net Promoter Score (NPS) which measures a customer’s likelihood to recommend a brand – success can be seen in customizing metrics to customer loyalty drivers. Based on her experience, Mihelic claims reliability and punctuality are the most useful metrics in public transport.
“Knowing that these metrics underpin the majority of customer satisfaction for commuters means that we can focus on the delivery of these ‘foundation’ metrics and improve customer satisfaction,” she explains.
“Basing decisions on only one or two customer metrics [will] not provide a full picture of what makes customers and prospects tick.”
Yvette Mihelic
Director of customer experience for railand transport at John Holland
ROI calculations
Pain points in customer journeys are helpful targets for ROI purposes. After observing that the growing sophistication of mobile handsets were rapidly increasing the price of delivering customer service, UK based telecoms operator Virgin Mobile invested to address its most expensive and complicated contact center calls. These calls involved either handset exchanges or call transfers to a specialist team.
Pilot tests for a knowledge management system, which gave agent guidance and removed pain points around handset exchanges, saw call quality increase by 23 percent. Calculations indicated that ROI would be seen in three years with a five percent reduction in handset exchanges. The actual roll out managed to exceed the pilot’s forecasts with a 38 percent reduction being achieved in just six months.
If a CX investment addresses a pain point that triggers customer churn then calculations similar to the formula on the right can quantify how the project could generate potential savings.
Also read: ROI Calculators to keep CX budget on track
These formulas can help create the all-important financial statistics for unlocking investment for CX. Andy Shirey, director product marketing from Infobip, notes that strong data architecture is crucial for identifying CX’s financial linkage. “To showcase the ROI of customer experience, CX experts need to connect money and data to key aspects of the customer journey that showcase acquisition, onboarding, customer churn and loyalty.
“In order to do that a unified communication platform [is needed] that captures customer data throughout the journey and across all channels,” Shirey adds.
“To showcase the ROI of customer experience, CX experts need to connect money and data to key aspects of the customer journey.”
Andy Shirey
Director product marketing from Infobip
Forecast calculation:
Quantifying the financial harm of customer churn
Case Study
The omnichannel investment that unlocked a return of 10 percent lead conversion growth
How Southeast Asian car e-commerce platform Carsome managed to improve its lead quality by 10 percent by investing in Infobip’s platforms?
With an aim of elevating its car buying and selling process, the digital-native company introduced a new car buying functionality. The new service revealed a set of communication challenges including:
- Unoptimized customer experience:
The launch sparked an increase in customer queries about the logistics of buying cars online. As the new service was not available on WhatsApp – the preferred channel for many Carsome customers – this led to a loss in lead conversion and enquiry resolution.
- Agent inefficiency:
Not having a centralized platform to handle customer queries forced agents to manually address social media questions without conversational history. This hampered agent productivity and led to longer customer wait times.
- Unverified customers:
The car e-commerce platform lacked the functionality to verify the contact numbers of website visitors who were seeking assistance from Carsome. Agents had to make generic verification calls which made for an expensive authentication process.
Carsome partnered with Infobip to access an end-to-end omnichannel customer experience strategy to effectively engage prospects and increase sales.
Infobip’s Shirey notes that the limited reach and long wait times created by siloed customer communication: “…can result in high costs regarding the amount spent vs. customers acquired. It can also result in low customer satisfaction leading to less repeat business.”
Automation can generate strong CX returns because: “Automation helps improve agent productivity, streamline onboarding processes for customers, and can significantly reduce costs in the long run,” adds Shirey.
“Having one solution that connects all your customer communication and data makes generating reports and sharing ROI metrics with stakeholders easy.”
Andy Shirey
Director product marketing from Infobip
Converting website visitors to leads
Infobip’s Live Chat solution was embedded into Carsome’s website to help customers navigate the purchase journey effortlessly. Answers, a keyword chatbot,, was deployed to assist customers with simple queries and deliver information through automated FAQs. For complex enquiries that needed a human touch, customers could connect with an agent via Infobip’s Conversations system which provided employees with an end-to-end view of the customers’ conversation history.
Channel accessibility
By integrating Infobip’s WhatsApp Business API into its channel model, Carsome was able to provide personalized messages on customers’ favorite chat app. Automated after-hour messages ensured customers received prompt replies 24/7.
Customer authentication
To solve the number authentication challenge, Carsome used SMS for OTP verification to filter out invalid numbers.
These investments enabled Carsome to accelerate lead conversions by providing always-on support for test drive appointments, buying or selling cars, refunds and promotions.
Results
- Less complaints and better reviews:
with always-on support, and seamless agent takeover for complex queries.
- Optimized lead conversion process:
by being present on the preferred channel for customers.
- 10 percent improvement in lead quality.
- Seven to 14 percent increase in leads confirming appointments.
Reflecting on the returns seen from the partnership, Anna Kim, regional marketing director of Carsome, said: “We are happy to find a single platform solution to cover our entire customer journey right from service to transactional and promotional activities. Infobip’s solutions were not only easy to integrate but implement as well, enabling us to quickly get up and running with an omnichannel strategy.”
“Automation helps improve agent productivity, streamline onboarding processes for customers, and can significantly reduce costs in the long run.”
Andy Shirey
Director product marketing from Infobip
ROI communication and business case buy-in
What is the level of pressure at your brand around proving ROI in CX :
In its November 2021 discussion, CX Network’s Advisory Board members maintained that it is common to encounter cultural disconnects when seeking approval for CX investments. Even if an appreciation for CX is present in a company’s DNA, when it comes to taking action and making CX investments, resistance can still flare up.
Our research respondents acknowledge the necessity to prove CX’s ROI to win needed budgets and resources, in fact, over half of respondents feel this requirement is on the rise.
An inner circle of CX advocates, fit with representatives from various departments, is a useful tool for building buy-in momentum. With skepticism around CX’s financial benefits present today, it is vital CX practitioners tailor their communication tactics.
From senior leadership to the staff members who will be interacting with your investment daily, highlight how this project aligns with their priorities and can accelerate their own agendas.
To ensure business cases are persuasive, practitioners need to evidence their reasoning using relevant data and historical trends. A common mistake when communicating CX ROI is using non-financial language. McDonald’s head of customer experience, Luka Popovac, explains: “Customer Satisfaction (CSAT), NPS and effort scores are good metrics, but there is a need to demonstrate the link to top-line and bottom-line results.”
One member of the CX Network Advisory Board noted that their analytics team calculated how much money their brand had saved because of CX initiatives. This calculation proved crucial for motivating the wider business to contribute to future CX projects.
To achieve a holistic argument, Rekha Weerasooriya, senior general manager of CX and people development at Dialog Axiata recommends not only showing short term direct monetary returns, but also the long term CX indices improvements. She explains: “This could incorporate improving your CSAT score, NPS, reducing Customer Effort Scores (CES) and employee effort – such as by reducing your frontline agent effort [you can earn] cost savings. Make clear demarcations of the form of savings this technology solution will bring in qualitative as well as quantitative terms and by when.”
Infobip’s Shirey notes that centralized hubs which combine customer data sources, analytics and reporting can greatly simplify the task of gathering the required ROI figures and trends. “Having one solution that connects all your customer communication and data makes generating reports and sharing ROI metrics with stakeholders easy.”
If you can clearly communicate the ROI of CX it will be much easier to mobilize the business so forecasted returns can be realized.
Communication tips for winning stakeholder buy-in
- CMOs:
One of the strongest customer experts in the brand. Usually persuaded by brand growth and demand generation possibilities.
- CRO:
Interested in value accuracy, cost savings, bottom-line revenue growth, product innovation and productivity.
- Frontline sales manager:
Persuaded by bolstering sales efficiency and productivity with various buyer personas and converting prospects into sales.
- Customer service agent:
Interested in how common customer complaints can be eliminated, as well as upgrades that simplify workflows, develop their skillsets and increase their job satisfaction.
“Customer Satisfaction (CSAT), NPS and effort scores are good metrics, but there is a need to demonstrate the link to top-line and bottom-line results.”
Luka Popovac
Head of customer experience, McDonald’s
Tracking and achieving forecasted returns
How often do you achieve the returns forecasted for CX projects?
To ensure a CX project delivers returns in the face of other corporate distractions shouting for staff attention, CX practitioners will have to fight to prevent a ‘launch-and-forget’ mindset from taking hold. Without the alignment and end-to-end support from the wider business, CX projects are likely to fail from the offset and never reach their full potential. Active project management is important because competing priorities are a huge threat to the attention given to CX initiatives, as seen in the last six annual editions of CX Network’s Global State of Customer Experience series.
More than 50 percent of our respondents have seen healthy ROI realization with CX – because of apt business mobilization, however, 41 percent say they are struggling to lock in adequate stakeholder support. A useful tactic for our CX Network members has been providing staff members with a structured plan of action to ease the integration of the CX investment into their daily roles.
Some aspects of CX projects have longer lead times than others which can drain momentum. Rather than only measuring the CX investment’s impact on with macro customer issues, such as retention or customer churn which can take months or years to measure, break the journey down. Do this by selecting metrics that celebrate progress on a micro level, such as increasing first-time resolution rates, deflection rates or custom loyalty metrics.
Accelerate buy-in by prioritizing CX projects with quick wins and deliver these well. This will earn you the credibility and trust to implement more complex, expensive, longer-term CX projects.
Tracking trajectory with data
Tracking a CX project’s trajectory will illuminate areas for improvement. Ryan Creamore, director of global customer success from Infobip, notes that this tracking must stretch beyond customer survey results.
Creamore explains: “CX practitioners need to deep dive into analytics and first-party customer data that has been captured via their own channels. By doing so, they will continuously improve the customer journey and eventually meet the returns promised. Constant A/B testing, data analysis, and hyper-personalization are the three things CX practitioners must keep in mind and be diligent on to meet forecasted returns.”
Also read: ROI of UX research to improve CX
When making data-led decisions to optimize a program’s roll out, David Wray, global accounting and reporting senior director at Huawei, warns that before CX practitioners push forward with conclusions they must validate the insights with colleagues.
Wray explains: “I don’t know of anyone in a reasonably sized company that has a complete view [of a business] with the degree of depth and breadth of understanding necessary to make decisions in a vacuum. So, it is really important people validate what they are seeing with other teams – it is a form of sanity check.
“If we are going to make growth, transformation or investment decisions, then we should only make them with data we know is reliable.”
Efforts placed into delivering CX returns today will prove useful for accelerating the buy-in process with future investments.
“Having one solution that connects all your customer communication and data makes generating reports and sharing ROI metrics with stakeholders easy.”
Andy Shirey
Director product marketing from Infobip
Final remarks
As indicated by the results of our survey of CX professionals, the duty to prove ROI within CX is not going to disappear from the lives of CX practitioners any time soon.
The majority of respondents agree that urgency around proving ROI in CX is on the rise. One key route away from this burden is found in winning trust from the wider business by delivering returns from previous CX investments. To deliver healthy returns from CX investments, customer loyalty drivers must stand as crucial pillars in ROI strategy and decision-making.
The cultural and operational support of employees at all levels of seniority is an integral part to bringing CX returns to life. Rhetoric around the merit of a CX investment should be customized to the individual priorities of stakeholders. Sophisticated communication tactics will accelerate the success of mobilizing the business around the project.
CX practitioners need to support the momentum of an investment’s roll out to ensure forecasted returns are realized. Life-after-pilot is achieved by tweaking trajectory where necessary and vocalizing the successes achieved along the way.
By mastering these elements not only will CX practitioners unlock the needed upgrades to boost customer lifetime values, but they can earn the freedom to approach slightly more ambitious and experimental CX projects that will charge customer loyalty.