Financial Metrics to Measure ROI on CX Initiatives
By By Fred Beunink – Digital Customer Engagement Lead at MSD
We are aware that technology is changing the way customers interact with brands, services or a company in general. As customers become more comfortable with using technology, their expectations increase, and they become more demanding with regards to everything they use.
It is just not enough to have a well-laid out store in a busy mall, you need to focus on the other customer touchpoints. I recently wanted to make a booking with a well-known restaurant in Johannesburg but the number on their website did not work. On the app they mentioned that the form below can be used to make the reservation – only there was no form. This restaurant could likely be counted as part of the 80% who believe they are delivering an excellent customer experience – and only 8% of their customers agree.
This brings me to the point of customer experience and how companies should go about developing their approach towards their customers. By the end of 2020, Customer Experience will overtake price and product as the key brand differentiator. Companies need to adopt a stronger focus on CX which is driven by the need to accommodate changing customer tastes and expectations, create a brand that is innovative, and enable adoption of digital capabilities. This is to be implemented across all divisions to ensure that every single touchpoint in your customer’s journey with your business is valuable, meeting customers’ expectations, and engaging them emotionally and personally.
According to Forbes, 84% of companies that work to improve their customer experience report an increase in their revenue.
What ROI is your leadership team expecting from the shift in focus to CX?
They are expecting this focus to be an engine for growth and require distinct metrics to ensure that there will be a significant impact on the bottom line. But is this wishful thinking at best?
Not if you use the correct metrics as set out by GetFeedback and Kapiche – knowing what the right metric is to use and the right time to use it. This will allow you to quantify your customer’s experience as well as understand the link between CX and revenue. The three most common customer metrics for measuring CX are:
- Net Promoter Score (NPS) : NPS can be used to measure the long-standing loyalty of customers with questions such as “How likely are you going to recommend this company to your friends?” The most important part of the NPS is the second part of this question which is an open-ended response to the reason behind the score. Since NPS is a leading growth indicator, it provides the best anchor for your CEM program to allow you to build a framework to enhance your CX initiatives – helping to transform detractors into promoters and boost referral marketing via promoters.
- Customer Satisfaction Score (CSAT) : The CSAT is used more for a measure almost immediately after the purchase or survey has taken place. Here the open-ended response to the reason for a score is also important and will provide an indication of a specific stage in the customer journey and where improvements can be made.
- Customer Effort Score (CES) : The CES measures user experience – how difficult it was for a customer to complete a particular action or transaction but does not factor in the satisfaction of the customer. The thought is that consumers should be more loyal to an easy to use product or service.
It therefore depends on what you are solving for which of these metrics will be useful. You might want to use all three to demonstrate the impact of an increased CX focus on the bottom line.
The important thing is that you’re able to create a quantifiable link between your chosen CX metric and the effect that score has on your bottom line.