November 2014

 Customer Experience ROI - Building The Business Case


Posted @ 1700:00 on 25 November 2014

Customer Experience CX  Return on Investment ROI Infographic Case StudiesIntroduction

It is generally accepted great or good customer experience, consistently delivered, results in happy customers who are more loyal and who share their positive  experience with others . This in turn results in improved financial performance

What is less clear is

• what level of improved performance is attainable

• what is the optimal customer experience investment

Sceptics may simply doubt whether CX is worth the trouble, cost and resources

Forrester 2014 CXi analysis shows just 11% of brands achieved an excellent score. There is clearly a big opportunity for the majority to improve their CX performance so why does progress seem slow?

There are many barriers to improving CX , here we focus on the business case for investment and the evidence that CX investment results in a positive ROI


Customer Experience and ROI

Follows a number of case studies that  quantified the financial impact of CX investment.

For those needing to build a business case from scratch  , these case studies provide a good start point


All three case studies show brands who invest in  Customer Experience improve business performance and key customer metrics


Temkin Group showed


CX leaders outperformed CX laggards by around 20% on key metrics

• advocacy and likelihood to recommend

• retention and reluctance to switch brands

• future revenue and willingness to re-purchase


Medallia showed


• customers with highest customer experience scores went on to spend 2.4x more than those with the lowest scores

• future customer tenure was 6 x longer for those with the highest customer experience scores


Watermark Consulting / Forrester showed


CX leaders had a 43% gain in performance (in terms of cumulative stock market returns ) compared to a negative 34% for laggards over a 6 year period


This clearly demonstrates both the opportunity and the cost of not investing in CX and the ability of CX investment to generate shareholder value



Customer Experience building the business case


Like all ROI calculations and business cases the link between  the performance improvement and level of investment must be made


It is clear there is significant evidence justifying CX investment on financial grounds alone , though as always not every CX investment is guaranteed success as careful consideration must be given to how, where and when to invest across the customer journey




Why talking about Customer Experience is easier than  implementing it


In 2007 Forrester looked at what business thought were the biggest barriers to implementing CX programmes

More than 6 years later, much of this still remains a significant challenge

• CX Strategy not developed

• Limited co-operation between departments

• Few  or no CX management processes in place

• Little or no budget assigned

• Limited customer knowledge and insight


Forrester's analysis showed brands who had improved their CXi scores the most usually had dedicated CX teams and resources including board room representation.


It is likely  that simply adding CX to someone’s already full day job will not produce the hoped for results



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