How can you tell if your customer experience measures up?
18 October 2018
Creating a competitor-beating customer experience isn’t easy. It takes time and money. So, measuring the return on your investment is business-critical. Digital has step-changed customer expectations, they demand personalised interactions with your business at every stage, and if you don’t have a plan, you risk extinction.
But just how do you measure the ROI for customer experience (CX) enhancements? Is it simply a case of recording sales before and after the improvements you make? Or are there other subtler measures that are equally important?
In Engage Hub’s most recent whitepaper ‘Digital Transformation, Customer Experience & Calculating ROI’, it outlines a simple five-step process that will help you create an achievable way of modelling the returns on your CX actions.
Step 1. Understand your objectives. It sounds simple, but in fact it may be more complex than you think. There are a number of questions you will need to answer. For instance, sales value is likely to be a key measure. But should you be tracking new customers and repeat customers separately? And what about different product lines with different levels of profitability? You may also need to consider whether “pre-sales” actions such as signing up to a newsletter should on your list of objectives, and if they are how you will allocate value to them? And what about internal measures such as call centre efficiency? Asking the right questions, and finding appropriate answers, is an essential part of planning.
Step 2. Define your cost centres. Understand where your costs are coming from. Technology may be one of your biggest investments. But transformation isn’t just about technology. Staff may need extra training. Marketing may need to develop new assets. Distributors may need additional incentives. You need to identify where all the costs related to CX are located and who is in control of them.
Step 3. Identify a comprehensive set of measures. There are many different elements of the customer experience that will have an impact on revenue. Some will be indirect, such as customer satisfaction scores, referrals and social media posts. Others will be “harder”, such as repeat purchases or increased basket size. Go as wide as you can, remembering to include internal metrics such as incentive scheme costs and employee efficiency, and you will get the truest possible picture.
Step 4. Make sure your measures are appropriate to different circumstances. The way you record ROI for a new product may well be very different from one that is moving towards the end of its commercial life. Just because your newly launched product requires more advertising or customer support than a well-established market leader doesn’t mean it won’t be as profitable in the long run. So when you are analysing your CX metrics, make sure you take different circumstances into account. That way you will give yourself a chance of making the best decisions.
Step 5. Keep on measuring. Your P&L account is a snapshot of your business. But it doesn’t represent what the business is really like, where it has come from and where it is headed. Likewise, with CX returns. Taking a snapshot of your metrics only tells you what is happening at that moment. True insight comes from studying long-term trends and identifying inflection points.
Understanding how your investments in CX are driving your business is vital. After all, ultimately it is the experience that your customers have of your products and services that will dictate whether your business will thrive or merely survive.