To secure and retain support and budget, CX leaders must effectively use their data to demonstrate the ROI of CX. This involves proving the link between improved customer satisfaction and wider business outcomes. Customer retention, purchase frequency, lifetime value and referral impact on conversions are included in this.
A recent Gartner survey of 362 global CX practitioners found that organisations are nearly 30% more likely to report CX budget increases if they have calculated this link. Organisations are 15% more likely to report exceeding management’s expectations.
Of course, there are right and wrong ways to justify CX investments, particularly in periods with greater economic headwinds. To “play offence” and proactively protect your CX budgets, follow three steps to show the rest of the C-suite why CX matters to growth, margin and reputation.
Step 1: Capture the right customer data to support CX needs
To evaluate the ROI business case of CX, it is vital to start with an understanding of customer perception. The first step in proving the ROI of your programmes is to ensure the right voice of the customer (VoC) data is captured. This consists of the collection of direct, indirect and inferred customer feedback that reveals customer perceptions.
Customer perception can be measured in many ways, but direct customer surveys remain the foremost way to do so. Three common methods are Customer satisfaction (CSAT), Net Promoter Score (NPS) and Customer Effort Score (CES) questions. None of the three is a single “best” measure.
Therefore, CX leaders must determine which is the best fit for their objectives based on their strengths and weaknesses. These include:
- CSAT questions offering the greatest flexibility since they can be phrased in different ways, allowing you to capture customer perception about specific aspects of services or products.
- NPS has been validated as effective at gauging overall impressions and usually works better in relationship surveys than transactional ones. Since it is standardised in terms of question and scale, it can offer more opportunities for benchmarking.
- CES has a proven relationship with meeting organisational goals such as improving loyalty and reducing the cost of service.
Step 2: Analyse data to determine why customer satisfaction really matters
Executive leaders continue to prioritise the challenges that CX can help solve. In the 2022 Gartner CEO and Senior Business Executive Survey, the top priority for CMOs was customer acquisition, retention and engagement. Show your leaders how CX can deliver on those goals and the business value of satisfied customers by:
- Identifying, securing and merging business key performance data: Determine which business and financial indicators are most important to their peers. Typically, these include attributes like customer spending (frequency of purchase, average order value and total spend) and retention (likelihood of repurchase, retention/churn rate and breadth of product mix).
- Analysing the relationship between customer satisfaction and business outcomes: Ensure your CX or analytics teams probe the merged data for the relationship between customer perception and business KPIs. Do NPS promoters spend more, churn less and call the customer care line less often? Are highly satisfied customers more likely to refer new business and have a significantly higher customer lifetime value (LTV)?
As an example, the head of CX at a B2B SaaS organisation used this process to provide “data-driven insights that promote the economics of loyalty and satisfaction.” His analysis demonstrates that promoters churn 40% less, spend 50% more and deliver an improved LTV of over $5,000 compared with detractors.
Leaders who fundamentally understand the business impact of CX and are better able to prioritise and invest in improving customer satisfaction. Understanding voice of the customer (VoC) data and using it to demonstrate the value of lifting customer perception is the key to securing budget and encouraging a customer-centric approach throughout the organisation.
Step 3: Align the right CX metrics to the right stakeholders
Although demonstrating how customer satisfaction drives top-line business KPIs is useful, CX leaders can do more to make their programmes relevant to leaders throughout the organisation. The key is to show how satisfaction and other CX metrics help to drive the outcomes about which each leader cares.
Less-mature CX programs often distribute a single CX dashboard throughout the organisation, without tailoring the metrics to speak to the specific interests and needs of each leader. The key to driving more focus on CX is to provide differentiated data and analysis to peers based on their needs and interests. For example, show call centre leaders who want to reduce call volumes and how customer satisfaction decreases call volumes and call centre costs. Prove to product leaders that customer satisfaction is associated with improved repurchase.
By collecting, analysing and more effectively communicating VoC data to executive leaders across the organisation, CX leaders can highlight the relationship between their programme and the organisation’s desired outcomes.