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Posted by Harley Manning on March 1, 2013
Last month, I was in Europe with a group of customer experience professionals from various divisions of the same large company. Although their expertise was at varying levels, no one was clueless, and everyone seemed highly motivated. About halfway through the all-day session, one of the attendees asked me a question that I’m going to paraphrase here.
After some preamble about the pressures the company was under to increase revenue and profits, he asked, “Given that, when should we put aside the need for profits and fund customer experience projects instead?”
His question surprised me. And I clearly surprised him when I responded, “Never.” I let that hang in the air for a moment so that it could sink in. Then I added, “You should never put aside the need for profits when you fund customer experience projects.”
I could see that people were a little confused, so I went on. “You should only fund customer experience projects that will produce profits. That’s why you do those projects in the first place. And if you have other kinds of projects that will produce better business results, do them instead. But if you take the time to create the business models for your CX projects, you’ll probably find that they’ll produce better ROI than most of the initiatives they’re competing against.”
To be clear, the guy who had asked the question seemed very bright and had a lot of expertise in his area (metrics and measurement). But he had fallen into the same trap that so many customer experience advocates fall into. He wasn’t thinking of improving customer experience as a path to achieving business results. Instead, he was thinking of it just as a generally good thing to do for customers (which it is, but that’s not why you should do it).
In our book, Outside In, my co-author Kerry Bodine and I describe numerous examples of companies that made money or saved money by focusing on customer experience. Here are just a few examples of the most obvious way to show ROI: finding and fixing customer experience problems.
We see new examples of extreme ROI from improving customer experience on an ongoing basis. For example, in a recent report about the winners of our 2012 Voice Of The Customer Awards, we found that:
I hope these examples make it clear: Customer experience leads to profits — if you treat it as a business discipline. With that in mind, I’d like to conclude with a couple pieces of advice.
First, get in the habit of always including a business case as part of your customer experience improvement proposals. It doesn’t have to be elaborate, but it must show how what you intend to do will save money or make money for your firm. Will you reduce calls to the contact center? Get incremental sales from existing customers? Retain customers longer?
Second, remember to always associate actual dollar figures with those benefits. How many calls do you plan to avert? Multiply that by the average cost per call at your company (a number that whoever runs your contact center will know). How many more sales do you plan to make? Multiply that by your average order value (a figure your marketing department can supply).
Finally, when you do these things, don’t get paralyzed by striving for precision. All benefits in every business case are estimates (and will remain so until someone learns how to accurately predict the future). All you have to do is make estimates that reasonable people won’t disagree with, and you can do that based on the results of past similar projects your company has done. Or look up the results that other firms have achieved, something that’s increasingly possible with the growth in research into customer experience as well as the seeming explosion of events and interest groups for customer experience professionals.
If you have your own tips or examples you’d like to share, please add your comments below!