Determine the ROI of customer experience management

Especially in times of crisis, companies and retailers have to fight hard for their market position – and defend it fiercely. Because products and providers are becoming increasingly easy to replace. Therefore, it pays to retain and continually inspire customers once they have been won over.

Companies that succeed in doing this trade much more successfully in fast times. Observations of the global economy over the years following the 2007 financial crisis show that customer experience leaders clearly outperform those who do not focus on customer centricity and customer satisfaction in terms of their cumulative total returns. Nevertheless, strategists often still need a lot of persuasion to justify investments in the customer experience management success factor.

On the test bench

Without a doubt, ROI (return on investment), which compares profit and investment costs, is one of the cornerstones of the classic profitability indicators of entrepreneurial activity. Indicators for determining the ROI of Customer Experience Management (CXM) can be found at different levels. For example, they look at brand loyalty, order value, conversion rates, repeat purchases and length of stay. If the target audience can be satisfied, they remain loyal to the brand longer, consume more, buy repeatedly, react more calmly to changes, have no need to look around for alternatives, actively recommend others and are open to additional products and services . The income statement reflects this: high sales, falling expenses, increasing resilience.

Out of sight, out of mind

Companies and retailers without a focus on customer centricity and customer satisfaction, on the other hand, risk significant losses. There is a rapid migration to competitors, the company leaves the up- and cross-selling potential untapped, no longer benefits from referrals and even risks a bad reputation that would hurt sales.

Today, it is important to perform perfectly at all levels, throughout the customer journey. No one tells a company how to do it, apart from each individual customer themselves, but those who make the decisive adjustments often only hear about it when it is already too late and the financial statements are messed up. Professional customer experience management solutions help listen to customers with respect and find out exactly what moves them. If the Voice of Customer is systematically recorded and measured, a decisive basis is created for reacting accordingly. Through CXM, companies get to know their target audience’s expectations and sensitivities. But if you don’t even know if your customers find processes complicated, websites confusing, waiting times long, service critiquing, communication exhausting and products defective, you’re missing out on a valuable opportunity to change something.

In media res

It is precisely these valuable qualitative and quantitative insights that form the basis for minimizing the gap between customer expectations and the company’s performance. If companies collect meaningful data at the right touchpoints, they not only learn where to improve to inspire their target audience in the long term. With the right evaluation methods, they also generate the key figures that quantify the ROI of CX management and prove the positive effects of greater customer satisfaction.

With a professional CXM solution, not only key performance indicators such as Net Promoter Score (NPS), Customer Satisfaction Score (CSAT) and Customer Effort Score (CES) can be determined. Hot alerts – dissatisfied customers – are instantly recognized and reported by the system via AI-based text mining of additional open feedback questions or analysis of comments in social media channels. Those responsible on the company side now have the opportunity to react immediately. They can use any means at their disposal to annoy customers before they even consider canceling or before negative reviews spread. It is crucial to do this very quickly after customers have given their feedback. If companies and retailers take care of their target audience in this way, they increase their ROI sustainably.

A simplified calculation example takes into account one million customers. Every fourth person sends one helpdesk request per year at a cost of ten euros per request. call. If the number of complaints is reduced by just three percent due to improved customer understanding, the company would save 75,000 euros; with five percent fewer calls, even 125,000 euros.

If the average turnover for these customers is 500 euros per year, i.e. 500 million in total, the picture is complete. Suppose this increases by ten percent because these people take out additional dental insurance in the following year because of their good experiences, for example, in addition to their existing liability insurance. If they also attract other new customers through their recommendations, these also have a significant influence in addition to the aforementioned up- and cross-selling potential. In this way, the contribution to the profit can be calculated using the margin contribution.

The causal relationships between customer satisfaction along the entire customer journey and the performance of all the company’s departments can therefore be calculated. In addition, the figures also show the concrete effects that stable or fragile customer relations have on complaint handling, sales, service and sales. Every single percentage point increase or decrease in customer satisfaction means additional revenue or cost. These arguments speak for sustained, effective investment in CXM programs. But the conclusions that the companies draw from the data collected are also decisive.

After measurement comes rethinking

Customer experience management has a strategic dimension – companies and retailers themselves define what they want to influence on the basis of the feedback data obtained. This cultural change cannot be decided within the individual departments’ areas of responsibility. Customer experience management is a holistic business task that defines success and stability through satisfied customers. The initiatives introduced for more customer orientation are at the same time the start of a positive development cycle that begins with measuring, enabling understanding, triggering action and finally leading to new thinking, which is again compared with the target group’s reaction. In this way, companies in any industry are able to think appreciatively from the customer’s point of view and express this attitude at all relevant touch points at all times. The results of such an attitude will be measurable – in the form of added value for the company.

A worthwhile investment?

The following does not only apply in times of crisis: the customer experience is increasingly becoming a critical factor for the company’s success. Investing in professional CX management along the entire value chain has proven to be worthwhile in the long term and in the long run. Many factors affect, for example, a company’s share price, but a good CXM program significantly improves results and thus increases the company’s value and its resilience in the long term. On the surface, customer experience appears to be an emotive and difficult subject – in fact, its effects are quantifiable. It is time for every company to include customer experience management in their business calculations.

More info:

More information on why it pays to rely on an excellent customer experience, especially in critical times, and instructions on how companies can easily and scaleably improve their customer experience in four steps can be found in the current white paper “Safe through crises with a professional customer experience management How companies stay optimistic on course for the future.” The white paper is available for free download here:

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