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.

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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:

 

 

 

 

RetailNow 19: The TruRating Round-up

The TruRating team was lucky enough to be in attendance for the annual RetailNOW event in San Antonio this past week.  While we certainly enjoyed our panel session on Innovating as an SMB Retailer – thanks to ScanSource’s Kevin Kent and TSYS’s Marc Castrechini for being such good sports! – there was more than enough on the floor to keep even the casual attendee interested.

With the VAR community undergoing something of a transformation at the moment, evolution was a key word on the lips of many. Here’s a selection of some of our key takeaways and what they mean for the payment’s world at large.

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“We have to do the hard things today, so we don’t have to do the impossible tomorrow” – John Kirk, President of RSPA

The traditional VAR model has long focused on one thing and one thing only – selling POS and then making money on the processing.  While this may once have been sufficient, the model has evolved and it’s a plain fact that SaaS (Software as a Service) and HaaS (Hardware as a Service) are the new norm.

While some forward-thinking parties have embraced this change, a large part of this has been driven by an increased sophistication in terms of expectations from retailers.  Technology has changed the game – the businesses who succeed in the future are those who offer a truly consultative approach to payments – a one-time cash hit and run is no longer a sustainable approach.

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SMB retailers are ready to innovate  – with or without you.

A point echoed in several sessions across the course of the event was that SMB retailers are ready to innovate – and they’re ready now.  Many SMBs are now run by tech-savvy millennials with high expectations.  The role of the reseller community is now judged by a new standard – ‘near perfect’ is taken for granted as the rule, not the exception.

The VARs and ISVs that will succeed in this new world are not necessarily expected to be ‘experts’ when it comes to every value-added solution under the sun, but they do need to know what is available and, perhaps more to the point, which solutions will add the most benefit to their retail clients.  By bringing new opportunities to the fore that deliver clear and measurable value to the retail community, resellers can not only keep their current customers happy, but drive acquisition too.

ISVs and VARs need to maximize vendor-partner relationships for growth

While the message from retailers sounded loud and clear, on the other side of the ecosphere vendors, manufacturers and distributors were also vocal about their desire to work with the reseller community to help drive innovation and growth.

In a panel hosted by veteran Jim Roddy, it became clear that the idea of VARs as purely buyers, and vendors as purely manufacturers, is one that is now simply out of date.  By working closely together and developing a deeper understanding of the services each party offers, there is an opportunity to maximize vendor-partner growth, through identifying adjacent revenue streams and delivering an expanded business offering that works for vendor, partner and retailer simultaneously.

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The future

 In a statement from the closing session of the event – Uncrappify-ing the future – Jeff Haven made a passionate plea to the reseller community to provide solutions that are simple but powerful enough to allow retailers to focus on what they do best: selling. “We’ve got to find a way to make the world smaller for our customers, so they can feel they have a place in it.”

By empowering retailers with innovations that give them the confidence to know that they are providing experiences their customers love, the community as a whole has the power to do just that.

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If you were in attendance at RSPA 2019 and have thoughts on the key takeaways from the event we’d love to hear them – tweet us @TruRating.

To find out more about TruRating’s point-of-sale customer feedback technology, visit our website and book time with one of the team today.

What’s the verdict from Forrester’s CX NYC Conference?

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Forrester’s annual CX NYC event is known in the CX world as one not to be missed, and so we were delighted to be in attendance yet again. If you couldn’t make it this year, we’ve brought you some of our key takeaways from this year’s thought-provoking two day event, with a deeper dive into one theme that we know is a particular pain point for CX professionals.

  1. Authentic commitment to brand values that resonate with your audience is essential to growth and maintaining loyalty, especially as Gen Z are entering the market.

Forrester are defining this as the rise of “values-based customers”: a growing number of consumers who will choose, switch and boycott brands based on its ethical/social justice stance, who expect company CEOs to stand up personally for what is morally ‘right’, and who trust companies more than governments to solve social issues.

Ahead of the curve here are brands like Patagonia for their stance on environmental awareness, foregoing potential revenue to encourage people to reuse old damaged clothes and product instead of buying new ones; and REI, again sucking up potentially significant losses to close down for Black Friday as part of their core belief that people should #optoutside instead, to destress and spend time with loved ones instead of being stuck inside working or part of a frantic shopping melee.

Forrester advises all CX professionals to work with their companies to consciously decide how much they should integrate their values into their business model, and how much they will highlight those values to consumers. No longer can businesses remain aloof and agnostic about issues, if they wish to stay relevant.

  1. CX is stagnating.

Forrester used an early keynote speech in their flagship event as a wakeup call, to brands and to the CX industry as a whole.  The scores in this year’s CX Index report remained largely flat against last year, with no organizations emerging as leaders of the pack.

Forrester recommend two ways that businesses who want to ‘change the game’ can really start to push here: a) understand the impact that emotion has on CX, and really focus – more than ever before –  on how you can start to tip the scales here for your customers; and b) Ensure you’re capable of measuring CX, how those changes you make impact it, and that your measurement tools allow you to tie this to business objectives of loyalty and – of course – revenue (more on this below).

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  1. Tying CX to revenue growth is absolutely vital.

And yet it’s one of the toughest challenges for CX professionals, according to those we’ve spoken with.

Proving the value and ROI of your company’s CX programs is key to a) getting buy in from the top down – a must if said programs are going to thrive and succeed – b) securing further investment, whether that’s in terms of time, technology or training & recruitment, and c) ensuring that your programs are ultimately successful in terms of your key business objectives: increasing customer loyalty and spend.

According to Forrester, one of the common missteps in tying CX to revenue include over-reliance on NPS as the only metric. They don’t suggest that NPS isn’t valuable by any means, just that there are other indicators that may have even more impact, particularly those associated with enrichment of the relationship.

They note that collecting feedback at point of sale is an important data source when it comes to tying CX to revenue, especially with the additional value of real-time responses and gaining a much larger sample size.

Having a plan for what you want to measure is obviously important. It sounds like common sense, but it’s very easy to get almost too enthusiastic and start trying to capture data that actually doesn’t relate to your core objectives.

Which brings us to the final point – prioritization. How you prioritize which fixes to make first depends on the relationship between CX and revenue, and this is why getting mass, accurate data is key. It’s impossible to prioritize effectively without first measuring which elements of CX matter most – to your brand and bottom line. And most businesses right now don’t have the tools to do this. Accurate, mass feedback from customers at the point of sale, returned in real-time, is a powerfully  effective tool in any CX practitioner’s toolkit.

The opening keynote speech from Forrester at CX NYC 2019 began with the idea that CX as an industry has stalled and needs a fresh outlook. It’s our goal to provide that fresh outlook by giving a voice to every customer, and helping our retailers listen, understand and ultimately change their CX for the better, based on that voice, that truth, that only customers can provide.