Organizations are making greater investments in customer experience technologies and supporting processes. According to Forrester, 82% of CX leaders are expecting their budgets to increase in 2023.
However, customer experience is becoming less of a differentiator as organizations realize that good CX is table stakes. “With the increase in demand and spend for CX talent, it is expected that in 2023, four in five CX teams will lack critical design, data, and journey skills This problem is a serious one, because customers are increasingly less patient with inadequate experiences. In contrast, excellent customer experience leads to increased customer loyalty and retention, as well as higher revenue. Investing in CX technologies to improve the customer experience is a priority but the question is how that investment should be allocated and how ROI will be measured.
Also according to Forrester 54% of CX teams are unable to prove ROI. This problem is also serious, because it means that the CS leaders’ expectations of higher budgets may not materialize.
Understanding the Customer Journey
Measuring ROI begins with understanding the customer journey and where in that journey an intervention will have the greatest impact. Martech vendors continue to proliferate, and marketing technology stacks are becoming more complex. Moreover, it is not unusual for a large enterprise to have more than 50 different CX technologies in their enterprise ecosystem. Organizations always need to consider the entire ecosystem when they make decisions about investing resources, but they also need to optimize their supporting processes and internal employee experience. Upstream collaboration to solve problems before a customer calls the call center needs to be part of the total experience (or TX as Gartner characterizes the integration of upstream and downstream processes and removal of silos between functions.
The customer journey has the following characteristics:
- Traverses multiple channels and touch points
- Interacts with every part of the business (throughout the product or service lifecycle)
- Is supported by multiple departments
- Takes place across many systems and applications
- Governed or managed through various processes and organizational structures
- Leverages models of the customer to varying degrees (attributes, characteristics, preferences)
- Is more than sales and support, and depends on all the other parts of the organization
The better this journey is integrated and optimized, the greater the impact of technology investments.
- Learn – Prospects need to learn about the organization and offering – usually the primary goal of marketing
- Choose/Select/Make Purchase – They need to choose, select or make their purchase – typically part of the sales process
- Acquire – They need to acquire the product or service – this may be through a dealer, agent, in – store pick-up, online processes or delivery
- Use – They need to use the product or service – product or service usage requires some interaction
- Support -They may need to get support, assistance, or maintenance while consuming the product or service – use and support can overlap or be distinct parts of the lifecycle
- Engage -They need to continue to be engaged so that they can advocate for the product or service – this can be through community development, social media, or word of mouth KPI’s and OKR’s
Each stage of the journey requires a strategy, baselines, and success metrics. What departments and processes are responsible for a particular stage? What are their Key Performance Indicators(KPIs) and Objectives and Key Results (OKRs)? How will an investment improve performance metrics?
Each department of function has a role to play in enabling the experience. Marketing might be responsible for informing prospects about the offering – lead generation metrics for inbound marketing is one measure, for example. Sales or an ecommerce function enable selection of the correct product that will meet the customer needs. This may be measured by click-throughs, conversions and website usability. Logistics or distribution gets the product in their hands, and turnaround or provisioning time and ease can be an important measure. Usage can be part of customer success and adoption measures.
The support function has many metrics, such as time per incident, first call resolution, and many more. Engagement after the sale can be part of loyalty measures such as social media engagement or an aggregate score such as Customer Satisfaction (CSAT) or Likelihood to Recommend. The aggregate scores within each function need to be teased apart in order to understand the impact of a particular initiative on the customer experience CSAT is an overall indicator of the health of the relationship. By tracking customer satisfaction scores before and after implementing CX technologies, businesses can get a sense of whether these investments are having a positive or negative impact on customer perceptions.
Other metrics to consider include customer loyalty and retention. If CX technologies are successful in improving the customer experience, it’s likely that customers will be more likely to return and recommend the business to others. This can be measured through metrics such as customer lifetime value, repeat purchase rate, and Net Promoter Score (NPS).
Another important metric to consider is the impact of CX technologies on operational efficiency. If a technology streamlines processes or improves communication, it can help reduce costs and increase productivity. This effect can be measured through metrics such as cost per customer interaction, resolution time, and employee satisfaction.
It’s also important to consider the impact of CX technologies on revenue. If customers are more satisfied and loyal as a result of these technologies, it’s likely that they will spend more money with the business.
This outcome can be measured through metrics such as average order value, conversion rate, and overall sales.
In addition to these traditional metrics, Business can also use a number of newer metrics to measure the impact of CX technologies. For example, the customer effort score (CES) measures how easy it is for customers to interact with a company, and can provide valuable insights into the effectiveness of CX technologies. Similarly, the customer emotion score (CES) measures the emotional response of customers to their interactions with a company, and can help businesses understand the emotional impact of their CX technologies.
It’s important to recognize that CX technologies are just one piece of the puzzle when it comes to improving the customer experience. Other factors such as product quality, service level, and overall brand reputation also play a significant role. However, by using analytics to measure the impact of CX technologies, businesses can get a sense of the value they are providing and make informed decisions about future investments.
In addition to traditional metrics, businesses can also use data from customer feedback and social media to understand the impact of CX technologies. By analyzing customer reviews and social media posts, businesses can get a sense of how their CX technologies are being received by customers and identify any areas for improvement.
Overall, the use of analytics in measuring the impact of CX technologies can provide valuable insights for businesses looking to improve the customer experience. By tracking key metrics such as customer satisfaction, loyalty, operational efficiency, and revenue, as well as newer metrics such as CES and CES, businesses can get a sense of the ROI of these technologies and make informed decisions about their use. By doing so, they can better understand the role these technologies play in enhancing the customer experience and driving business success, and can therefore justify and allocate resources most effectively.