Marketing & CX Strategy

How to Prove the Business Value of Your Customer Experience Investment

13 Jun 2019, Kevin Hanley

Customer experience (CX) investments are often measured with soft evaluations of how an omnichannel marketing funnel feels to a customer. From a human-centered design perspective, a smoother, simpler experience is a successful outcome. But CEOs and board members want hard data about the effect on P&L: Does the new CX increase customer acquisition and revenue? Is the product or service delivery more efficient? Do customers have a newfound affinity that improves lifetime value?

Justifying your investment in customer experience requires tailoring its value proposition to company leaders and board members. To claim (and keep) your seat at the decision-making table, prove business value by aligning your cross-channel customer experience metrics with performance metrics translated for your company. Here’s how to do that.

Measure How All Touchpoints Impact Customers

Track and analyze customer behavioral data in all your channels, segmenting it by customer lifetime value, geography, items last purchased, and any other relevant factors. It’s not imperative to have it all; start small and build. Then assess how your customers engage with channels differently. For example, which ones prefer to shop online versus browsing online and buying in store?

Based on your analysis, consider the best ways to create and augment customer experiences. Start with the end goal and work backward to create a strategy aimed at removing friction.

For instance, if you’d like to increase lead conversions on your website, you might try to boost your traffic. But more visitors doesn’t equate to more leads if the experience on your website — or leading up to arrival on your site —doesn’t convince customers to convert. Instead, you might start by examining conversions, identifying the intent, and then address customer goals with a better experience. Once you understand the different levers that impact conversions, you can pull them to test your way to success.

Let’s say your data indicates that email traffic drives high-quality sales lead generation on the website. Then you can explore further. What is the incremental value of that traffic? What’s the projected revenue that a one percent increase in clickthrough rate would generate? And what’s the cost to increase that clickthrough rate?

With this data in hand, you can evaluate the costs and benefits and calculate the impact on the company’s bottom line.

The Hidden Costs of Making Decisions in Silos

To continue the example above, let’s assume that the cost and effort to pursue the higher clickthrough rate is worthwhile. The next step is to figure out how to generate more email clicks by improving open rates.

If you know your customers love free shipping, marketing might be tempted to highlight a special offer in subject lines to spur more opens. But is this the right tactic? It might positively impact clickthrough rates, but there are both operational and potentially behavioral costs.

With free shipping, your business eats the expense to deliver orders. Incremental revenue gains might be offset by the cost to deliver those services, which could deteriorate business value and land poorly with executive leadership. This effect may compound if customers become conditioned to expect free shipping offers and won’t make future purchases without it.

Results like these typically happen when organizations operate in silos. It’s dangerous for teams to focus on only their own goals (like customer acquisition), regardless of the impact across the organization.

Thus, breaking down silos can improve tactical choices. Plus, it helps to build an organization that makes healthier big-picture decisions.

Let’s say a retailer drives 30% of its revenue from its website. Their goal is to double that percentage with the hopes of reducing their brick and mortar footprint and saving money.

If they assessed the situation holistically, however, they might find that the physical locations are not only profitable, but also having a spillover effect on web sales and customer satisfaction. Thanks to increased brand awareness and consistency as well as some online customers completing their customer experience in-store, keeping brick and mortar in the retailer’s ecosystem could increase customer lifetime value and advocacy.

If you combine cross-touchpoint data, you can make more informed decisions that will scale your organization faster and more efficiently. This requires overcoming cross-departmental divides that prevent working toward truly collective goals.

Get a Seat at the Decision-Making Table

Make customer experience more than a fuzzy buzzword with provable, data-driven performance metrics translated for your business. Analyze these metrics across all the customer touchpoints and look holistically at the customer journey.

By doing so, you’ll gain a deeper understanding of what shareholders and board members care about — the impact on the company’s bottom line. And that could help you position yourself as a reliable strategic partner, increasing your chance to lend even more CX expertise that drives business value.

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