Why is it so hard to prove the ROI of CX?

Ask any CX professional.  Proving the direct ROI of what you do can be hard work.  Any number of reasons can be given for this – lack of executive understanding, business ownership or clear objectives of a program immediately to mind – but a recent article by Alyone Medellyan, co-founder of AI-startup Thematic, clearly identifies three key recurring issues that many face when trying to establish an effective CX program.

  1. Speed and Precision of Insight – getting hard data that is both timely and accurate is tough
  2. CX ‘Fatigue’ – customer experience is seen by some as fluffy and non-quantifiable
  3. Revenue Opportunity – the impact of even small changes to CX on revenue is often not fully understood

If customer experience is to have an extended life beyond a buzz worthy business phrase, CX professionals need to take a hard look at building in a clear proof of ROI when proposing strategic initiatives.

The Problem with Contemporary CX Methodologies  

If one was to take a glance of the most common measurements of customer experience across the US, Europe and APAC, the likelihood of coming across references to the terms OSAT or NPS would be pretty high indeed.  While recent years have seen an increasingly sophisticated approach to analysis – it’s not uncommon to see terms like social listening, AI-powered surveying or natural-language processing in the modern CX toolbox – many of the world’s largest businesses continue to rely on one or two common methodologies.

One of the reasons for the prevalence of CSAT and NPS – is that traditionally they are two of the only CX metrics that have been able to show any real correlation to sales.  That said proving the ROI of your efforts using these tools isn’t simple.  Compared to digital marketing efforts, which provide a simple cost-evaluation effort based on objectives vs spend (see below), it can take months, or even years, to show the value of CX programs.

fb.png
Digital Marketing allows for simple attribution (if not guaranteed results!)

In the article mentioned at the top, Medelyan, lays out a multi-step process for measuring the return on investment for CX:

  1. Measure CX using a metric like NPS and identify its drivers
  2. Implement improvements
  3. Wait for customers to notice improvements
  4. Measure again and evaluate change in behaviours – are customers mentioning the same themes? What’s their impact on NPS?

While providing a ‘framework’, it’s not one that suggests speed to action.  Not only is it unclear how long we might have to wait between second and third steps, there’s no guarantee that positive results will be the yield, potentially rendering the whole process a lengthy and costly mistake.

A compounded problem

Beyond simply being a clunky and slow process – there is no guarantee that using an NPS or OSAT style measurement will give you accurate readings.  While these metrics can provide a useful top-level indicator of consumer-opinion, once you start to dig into the data to look for key drivers between behaviour and spend you immediately start to lose the connection to financial performance.

The metrics most commonly used by businesses today are simply not granular enough to show you what’s happening in real terms, and worst still, the lack of response rates usually mean there’s simply not enough feedback at the store level, to actually drive the outcomes you’re looking for.

If you’re a store manager doing up to 2500 transactions a month, yet you only hear from 19 customers – there’s a clear disconnect.  For those who’ve made it through the potentially cumbersome process of filling out a receipt-tape invitation survey, there may be the odd high-level response that you can track down to make right, but how many others have you missed?  Acting on trend data that’s been delivered 5 months after the fact based on a total of 100 responses, is not a viable approach.  Too much has changed, staff have turned over, the store layout is different, it’s a new season… and potentially yet another missed opportunity…

Redefining CX as it relates to financial performance

There’s a case go be made that the primary issue customer experience professionals face today, is a problem of attribution.  Put simply, there has not been a fast or easy way to prove that CX initiatives are actually having a positive impact on business numbers. 

Many businesses have historically seen the role of the customer experience team as something more akin to tactical brand managers, read to intervene when a customer complains or to monitor and respond to online comments.  But for CX to have a functional role in 2020 and beyond, it has to prove itself as a metric that drives and impacts spend across the board. 

No matter how customer-centric you are or how positive the experiences you design – if you can’t tie that back to profit and show it’s increasing company numbers – there’s absolutely no point to it!”

Mary Drummond, CMO Worthix 

Businesses and customer experience professionals must continue to invest in ways to understand the impacts of their actions at a granular level, to search for tools that allow them to make decisions in a timely and measurable way and to ultimately, reassert the strategic importance of their actions as they relate to profit.

Want more?  Check out some of our recent posts on the issues facing retailers when it comes to CX and feedback today:

 

 

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s