Evidencing return on investment (ROI) has long been a contentious issue for CX practitioners who want to demonstrate the value of customer experience initiatives to high-level executives. A recent CX Network survey revealed that more than half of CX professionals are failing to identify the returns from CX projects and just under half are feeling the pressure to prove ROI is on the rise. This guide offers key tips from leading names in the world of CX for how to calculate the ROI of CX.
Here are a few things that you need to ensure you get RoI in CX, including:
- Follow a CX-strategy roadmap to evidence ROI
- Reframe your approach to evidencing ROI for VoC
- Calculate your at-risk revenue from customer churn
- Employ a human-centered approach to evidencing ROI
Follow a CX strategy roadmap to evidence ROI
CX expert Jamey Iris Galias, who has worked at the likes of Disney Cruise Line and Etihad Airways, says ROI can be evidenced through a three-step strategy of identification, measurement and monitoring of CX activities. On a CX initiative that aims to reduce complaints at a certain CX touch point, brands can create a monitoring system from the time it was implemented to make comparisons between the previous month’s total incurred expenses with the recent month’s cost of expenses.
Iris offers a roadmap for implementing her three-stage strategy for ensuring ROI is evidenced:
- Brands should begin by identifying all CX activities targeting short-term results.
- Next, determine the main objectives of these CX activities and create a measurement for each result.
- Finally, practitioners should enable progress monitoring at predetermined time intervals so that the brand can easily quantify the ROI.
By following this three-stage ROI roadmap, CX practitioners can enable full visibility over ROI for any CX initiative and evidence the results to stakeholders.
Reframe your approach to evidencing ROI for VoC
Philips D2B voice of customer specialist Jay Callery says one of the most difficult areas of CX to prove ROI on is voice of the customer (VoC). Callery notes that siloed thinking about financial returns from this core CX initiative can be a common mistake when demonstrating ROI.
“When we talk about ROI we have to clarify that boosting ROI on something doesn’t mean direct impact,” Callery remarks. “When monetizing CX VoC efforts I would look at alternatives to explore in terms of how you frame ‘what’s the return on doing this?’”
Callery suggests alternatives such as how strategic improvements will improve cash flow, how efforts will reduce costs or if the findings created new market space. He says that if you start to focus on ROI with a technology alone, you start to silo the program overall and can miss a lot of value.
Calculate your at-risk revenue from customer churn
Many business cases focus on customer retention, so to evidence ROI, many brands employ the following calculation to determine an organizations ‘at risk revenue’ and act as a quantitative financial metric for ROI.
Number of customers in your base that signal they are detractors
The estimated average cost per customer
Your brand’s at risk revenue
Deploying this calculation can link customer retention to financial outcome and demonstrate retention successes to executives.
Employ a human-centered approach to evidencing ROI
APAC customer experience expert Jin Wan believes that the traditional approach of attempting to evidence ROI from a financial perspective may not be effective and suggests adopting a human-centered customer experience strategy instead.
Jin Wan advises: “Look at investment as everything needed to rally people and change their mind-sets, behaviors or culture. Embed processes and look at return as the desired change in team, function, company culture or behaviors.”