Four ways to calculate ROI in customer experience

Leading CX practitioners who have worked with the likes of Disney Cruise Line and Philips share their ideas on how to evidence ROI

Add bookmark

Adam Jeffs
02/10/2021

Return on Investment in CX

Evidencing return on investment (ROI) has long been a contentious issue for CX practitioners who want to demonstrate the value of CX initiatives to high-level executives. A recent CX Network survey revealed that more than half of CX professionals are failing to identify the returns from CX projects and just under half are feeling the pressure to prove ROI is on the rise. This guide offers key tips from leading names in the world of CX on how to evidence ROI via CX.

  1. Follow a CX strategy roadmap to evidence ROI

CX expert Jamey Iris Galias, who has worked at the likes of Disney Cruise Line and Etihad Airways, says ROI can be evidenced through a three-step strategy of identification, measurement and monitoring of CX activities. On a CX initiative that aims to reduce complaints at a certain CX touch point, brands can create a monitoring system from the time it was implemented to make comparisons between the previous month’s total incurred expenses with the recent month’s cost of expenses. Iris offers a roadmap for implementing her three-stage strategy for ensuring ROI is evidenced:

  • Brands should begin by identifying all CX activities targeting short-term results.
  • Next, determine the main objectives of these CX activities and create a measurement for each result.
  • Finally, practitioners should enable progress monitoring at predetermined time intervals so that the brand can easily quantify the ROI.

By following this three-stage ROI roadmap, CX practitioners can enable full visibility over ROI for any CX initiative and evidence the results to stakeholders.

  1. Reframe your approach to evidencing ROI for VoC

Philips D2B voice of customer specialist Jay Callery says one of the most difficult areas of CX to prove ROI on is voice of the customer (VoC). Callery notes that siloed thinking about financial returns from this core CX initiative can be a common mistake when demonstrating ROI.

“When we talk about ROI we have to clarify that boosting ROI on something doesn’t mean direct impact,” Callery remarks. “When monetizing CX VoC efforts I would look at alternatives to explore in terms of how you frame ‘what’s the return on doing this?’”

Callery suggests alternatives such as how strategic improvements will improve cash flow, how efforts will reduce costs or if the findings created new market space. He says that if you start to focus on ROI with a technology alone, you start to silo the program overall and can miss a lot of value.

The evolving state of the retail industry

Complete this survey to share your views on how retail business growth is being shaped by the impact of agent experience and the accelerated digital transformation rates triggered by the Covid-19 pandemic.  

As a thank you for completing the survey we will be awarding one lucky participant a $250 Amazon voucher in our prize draw. Input your email below to enter the draw.

The survey itself takes five to 10 minutes to complete, depending on the length of your answers.

  1. Calculate your at-risk revenue from customer churn

Many business cases focus on customer retention, so to evidence ROI, many brands employ the following calculation to determine an organizations ‘at risk revenue’ and act as a quantitative financial metric for ROI.

Number of customers in your base that signal they are detractors

The estimated average cost per customer

Your brand’s at risk revenue

Employing this calculation can link customer retention to financial outcome and demonstrate retention successes to executives.

  1. Employ a human-centered approach to evidencing ROI

APAC customer experience expert Jin Wan believes that the traditional approach of attempting to evidence ROI from a financial perspective may not be effective and suggests adopting a human-centered customer experience strategy instead.

Jin Wan advises: “Look at investment as everything needed to rally people and change their mind-sets, behaviors or culture. Embed processes and look at return as the desired change in team, function, company culture or behaviors.”

RECOMMENDED