How To Quantitatively Measure Customer Experience ROI Customer experience ROI

How To Quantitatively Measure Customer Experience ROI

Companies today are under a lot of pressure to provide great customer service. Customers and clients want a personalized, lightning-fast experience, and they have more channels than ever before to share about a good experience — or to lament a bad one.

As important as the customer experience may be, the return on investment (ROI) of customer experience is often dismissed. Executives and leaders remain laser-focused on metrics like market share and quarterly growth with the perception that these metrics keep the doors open and the company growing. 

But customer experience ROI matters more than you may think. From influencing brand integrity to customer retention and so much more, the ROI of customer experience is truly significant to your organization’s bottom line. 

While it may seem like a far stretch between good customer service and cashing in, there is a significant return on investment inherent in good customer service. For example, a study by Forrester Research and Watermark Consulting found that companies with high marks in their customer experience metrics had double-digit gains even during the treacherous recession years of 2007-2012. 

How To Quantitatively Measure Customer Experience ROI Customer experience ROI

How To Measure Customer Experience ROI

What is the ROI of customer experience, and how can it be measured? Customer experience ROI is a complex metric because it includes more variables and requires a more complete set of data than, say, operational metrics.

Answering questions like what, when, and where is easy to do. For example, what do customers buy? When do they call for support? Where do they contact a company, and what makes this the most popular support channel?

Answering the why and how questions that reach the heart of the customer experience is significantly more challenging. But it’s a calculation worth tackling to find the customer experience ROI for your contact center.

Pointing to a single metric will not be sufficient for measuring the ROI of customer experience. Answering key questions about the impact of customer service requires a variety of inputs. 

Related Article: Why You Need to Measure Customer Experience in Your Contact Center

To Measure Customer Experience ROI, Analyze These Points:

How likely are customers to return for further purchases?

It is common knowledge among those in business that it is significantly more profitable to keep an existing customer than to acquire a new one. Customer retention always wins over customer acquisition. Therefore, loyal customers returning to a company is a good indicator of profitability. Customer loyalty can be determined easily using a quality CRM system.

How likely are customers to recommend your company’s products and/or services to others?

In the age of social media, not only are customers more vocal than ever, but they also have a broader audience when they voice their approval (or disapproval!) of a company’s goods and services. The ROI of customer experience, in this case, is the recruitment of new customers and clients who will follow the recommendation of a trusted friend or colleague. The numbers don’t lie: 93% of consumers say online reviews influenced their purchase decisions.

What is the cost of dealing with an unhappy customer?

Rather than just considering customer experience ROI in the positive sense, consider also the importance of avoiding negative customer interaction. More time and money will have to be invested to right the wrongs of an angry customer to make them happy again.

Moreover, the cost of a scathing review or social media post could have reverberations well into the future, discouraging potential customers from embarking on a customer journey with you and thwarting the efforts of your marketing department. One poor customer experience can tarnish an otherwise exceptional reputation, and this is crucial when considering the ROI of customer experience.

Measuring The Financial Impact Of A Great Customer Experience

To track the ROI of customer experience, begin with the end in mind. Though the importance of customer service is widely accepted, precisely measuring its financial impact is a more elusive goal. Some companies blindly accept that better customer service will lead to more profit, throwing improvement measures on their contact centers with the hope that something will stick.

Here’s an alternative:

  • Determine a list of customer behaviors that result in higher profits. This could include visiting your website more often, spending more per transaction, or a reduction in product returns. These should be measurable, observable outcomes (not customers’ impressions or feelings). 
  • Next, review this list and select the customer behaviors that can be directly influenced by customer service efforts, like first-call resolution, for example.
  • Finally, consider what specific skills, training, technology, or materials could help customer service agents to increase the likelihood of these customer behaviors. This is where to focus your time, money, and effort toward improving the ROI of customer experience. (Bonus: When you’ve defined the traits of a strong contact center agent, you’ll be better equipped to hire well too!)
  • Then, to measure the results, refer back to the list of measurable, observable customer behaviors that you began with, and measure again.

After determining the profit impact of increasing these customer behaviors and subtracting the cost of the training or materials that were implemented, you should have a pretty good idea of your customer experience ROI efforts. This process should be completed in a cyclical manner, returning, refining, and re-measuring the list of outcomes and their profitability in light of the costs. 

By using this process, your company will remain focused on the customer service attributes that have a direct impact on profit and better determine the ROI of customer experience. A high-performing contact center can drive exceptional results for your organization. Interested in learning more? Schedule a demo today.

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