How to Prove the Value of Customer Experience Programs

All aspects of your organization’s inner-working should be designed with intention, and for larger companies, it is necessary to be able to verbally prove this intention to higher-ups. Customer Experience is not special in these terms, meaning that CX specialists must possess the ability to back up the importance of their work with financial proof. This can take shape in multiple different forms, and Karine Del Moro outlines several of these options in her piece for MyCustomer.com. You can access the article by clicking here, or by reading below: 

This piece was originally published by MyCustomer on February 3, 2017.

“Back in the heady days of 2010, and even as recently as 2015, CX programmes were ‘the next big thing’ and proving value was often a secondary consideration. The focus was firmly on using new, exciting ways of measuring experience – often side lining the need to justify investment.

With customer loyalty widely recognised as an indicator of repeat business and increased spend, many would assume the business case speaks for itself, without the need for detailed financial planning. However, in 2017 – in no small part thanks to the general turbulence of the past year – CX must earn its right to exist. As with any other transformational company initiative, CX professionals must be prepared to make their case.

While it’s already well documented that getting management buy-in is the key to getting a VoC programme off the ground and ensuring its longevity, there needs to be greater clarity about what really motivates board level executives to invest in CX. Do they see value in tracking NPS® or want to hear about ‘non metric’ concepts like culture change?

To demonstrate this value in the language of the board, companies need to build and maintain a systematic and disciplined approach in order to create a strong financial argument to invest in a successful customer experience programme and initiatives that deliver results.

Of course, top of the agenda for most C-level execs is revenue and profit, so securing budget and authority to implement a strategic VoC programme must involve proving that VoC can make an impact on the bottom line.

Making the financial case for CX at this level may seem a complex task, but it should follow the same core principles as any other investment. You need to:

• Identify the risk: outline the current financial risks to your organisation, such as the detractors that may fail to renew and lose the business a significant chunk of the annual sales target, the cost of acquiring new customers compared to retaining existing ones, the cost of servicing complaints, etc.
• Maximise the opportunity: demonstrate how promoters can result in increased sales and revenue by cross-selling and increasing ‘share of wallet’, and the financial reward associated with reducing churn rates by even 1%, for example.

This is the first step in outlining your CX case. From this, you can build a clear, fully-defendable financial business case, showing expected cash flow impacts for each risk and opportunity. Depending on the focus areas of your proposed CX programme, you may be able to build a clear, visual model of cash flow for areas such as pre-empting unnecessary contacts to the business, reduction of agent-assisted contact through improved self-service, reduction in shopping cart abandonment rates, and increasing first call resolution.

But how do you work out these financial impacts?

You can also take this business case phase as a way to share knowledge, teaching executives who might not understand the connection between focusing on the customer experience and increasing revenue and profits.

The time spent on this phase of your business case is more than worth it, because with a financial linkage model in place, investments in customer experience can be made knowledgeably, with a clear understanding of the business benefits they will provide. This will not only help prioritise what improvements to focus on, but also provide an accurate measure of their impact on the business and on customer loyalty.

From here, you can create an overall cash flow summary that pulls your totals into a proven ROI model, along with the proposed investment and recurring expense amounts, to show the return on investment and payback period for your CX initiative.

Know your audience

Working in this proven, financially sound and accountable way, it is much easier for the executive team to visualise the impact of the CX programme on the business. It also ensures you provide tangible arguments to those who are doubtful about less familiar metrics, or more ‘theoretical’ measures such as loyalty and engagement.

It’s also important, of course, to know your audience. When presenting your case, you need to be able to demonstrate clear alignment with your corporate strategy. Focus on facts, figures and numbers – and be sure that your projections make sense and any assumptions are reasonable.

Equally important is your commitment to a realistic roll-out. By explaining a clear path towards the ‘end game’, with careful phasing of your programme, you can demonstrate that you are willing to continually evaluate the investment being made, ensuring you get each step right and can make adjustments that minimise financial risk.

Even when investment is secured, it’s essential you continue to demonstrate the importance of ROI by creating some quick wins for CX and the bottom line. Using alerts and reporting once the programme is in its first phase, you can make sure that you’re able to take swift action that counts towards the financials you’ve committed to. You can then feed this back to the executive team to provide clear, visual evidence of the impact that CX is having on the business.

Securing executive buy-in from the outset of any CX initiative is key to ensure all stakeholders take the programme seriously, that staff understand the targets they need to meet, and that people across the business are empowered to achieve these goals.  And by investing time in your business case, you can ensure buy-in for the long-term too: not only are you much more likely to get the investment you need from the business, but you will also demonstrate that your programme can truly pay for itself.”

Customer Experience Programs FAQs

How can businesses prove the value of customer experience (CX) programs?

Businesses can prove the value of CX programs by tracking metrics like customer retention, satisfaction (CSAT), and revenue growth, linking these directly to improvements in customer service and satisfaction.

What key performance indicators (KPIs) should be used to demonstrate CX value?

KPIs such as Net Promoter Score (NPS), customer lifetime value (CLV), and churn rates provide clear insights into CX program effectiveness.

Why is it important to measure CX ROI?

Measuring ROI helps justify investment and ensures CX efforts contribute to business growth.

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