Most business owners believe that customer experience is a prime factor in boosting a company’s competitiveness. However, when it comes to actual work, things don’t always move as expected. If we want our businesses to grow exponentially, giving adequate attention to customers’ Return on Investment (ROI) is imperative.
What is the ROI of customer experience?
Improving customers’ experiences requires money, and prioritizing customers’ comfort over the company’s profit may seem tough for most business operators.
Customer experience is one of the major aspects of any business that brings a huge difference. By investing in customer experience, the companies will improve engagement with the customer, and hence ROI will improve.
However, simply acknowledging this fact does not crack the deal for businesses, as continuous actions need to be taken to bring change!
Although most companies receive customer feedback in large volumes; still, acting upon them can seem hard. It generally takes place due to a lack of ownership in case any issue exists.
But, what exactly is ROI? How does it bring a massive change in the success of any organization?
In this article, we will tell you the concept of ROI and how you can improve customer experience ROI. So, without any further ado, let’s get started!
Introduction to ROI
Return on Investment (ROI) is a percentage or ratio that can convey anything from a gain in efficiency to a financial return. It enables us to determine the profit or loss our investment has generated in a company, an asset, or a venture. This metric shows how successful a venture will be.
ROI aims to quantify the amount of return on a particular investment concerning the cost of the investment. We can compare the efficiency or profitability of various investment options since it is given as a relative value.
Facts About Customer Experience ROI
Statistics provide evidence that investing in improving customers’ experience brings maximum results!
- A business that makes its customer’s experience their top priority generates revenues 1.7 times faster than businesses that ignore it.
- Businesses prioritizing customer experience improve their customer lifetime value by 2.3x.
- 66% of businesses giving adequate attention to customer experience improved retention. At the same time, 60% of businesses experience improved customer lifetime value.
- Companies with better Customer Experience attract 5.7 times more revenue than their competitors.
Based on the data mentioned above, it can be concluded that if we invest correctly in Customer Experience, it can bring unexpected results offering a robust ROI. According to a report by Forrester, there are three primary areas on which brand owners or CEOs need to drive their focus. These include – profit growth, stock price, and revenue growth. Customer experience or CX leaders should focus on bridging the gap between financial growth and customer-centric initiatives to gain results and continuous funding.
Customer Experience Metrics
When we look around, there are several customer experience metrics, such as customer satisfaction (CSAT), customer effort (CES), net promoter score (NPS), and so on, ruling the market. While these customer experience metrics successfully highlight the actual position of customer experience programs, they fail to display the impact that businesses may have.
Since the financial metrics offer actionable insights, they add value to the core team, leading to better results and improved customer experience programs. These metrics allow us to analyse whether our business is making enough money or falling into debt.
Metrics to understand business growth
Expenses that are not related to manufacturing and production come under the category of support costs. It generally includes things such as customer service programs and quality assurance.
The churn rate primarily deals with the number of customers leaving our brand in a given period. It can be calculated by dividing the number of churning customers by the number of acquired customers. For convenience, we can use a churn rate calculator to save time and energy.
Average transaction size
When the total revenue is divided by the total number of sales, the average transaction size can be calculated. This gives a clear understanding of the most preferred products by our customers.
Customer lifetime value
The customer lifetime value reflects the total amount of money a customer will spend on our brand’s product. It is generally calculated by multiplying the total customer value by the average customer lifespan.
How can you improve the customer experience and ROI?
Companies taking their first step in customer experience analysis might start by exploring CSAT or NPS scores. Understanding and measuring such metrics uncover unexplored opportunities and trends. However, if we do not dive deeper, it becomes nearly impossible to understand what is happening under the hood or what actions to take to enhance overall performance. If we want to generate more funds while understanding our customers better, here are some major points to focus on.
Search for historical trends
Once the data is in our hands, look out for patterns that have attracted maximum results in the past. For example, does every customer like a particular product? What is the one feature that attracted the most customers? What do they have to say about the business?
A thorough understanding of all such points allows us to look through a bigger lens. Also, we can make a quick comparison between the customer experience program and the metrics we rely on, which will give us a better idea of what works and what does not!
Review of qualitative data through text analytics
Tired of sorting support tickets and hearing phone recordings for data? We no longer have to waste our time and energy manually sorting these valuable customer insights, as text analytics software can get the job done more efficiently.
It can quickly analyse data from all survey responses, online reviews, customer conversations, social media conversations, etc. This allows a ton of data to be processed quickly without reviewing each piece of information single-handedly.
Categorize customer base
To better understand our customer base, the best way is to separate them into different groups based on factors like their behaviour and personal characteristics. Every customer is different. And identifying and understanding our customers can take us closer to success.
Here are the factors to segregate our customer base in an organization and to do this our social listening tool will help.
- Product or Plan Purchased
- Number of Daily or Monthly Visits
- Job Title
- Contract Value or Average Transaction Size
- Focus on opportunities that bring maximum growth
Once we clearly understand how the customer experience program is working, it’s time to identify opportunities to attract maximum growth. Start by targeting high-value segments with high churn rates to improve customers’ overall experience with the brand. Analyse all initiatives from the past that have worked exceptionally well. Based on it, we must decide our next steps in the audience’s favour.
With millions of businesses running online and offline, making a business stand out becomes hectic and sometimes impossible if there are no right resources and strategies. For any business to grow, its customers are its key assets, and its experience needs to be on point. Customer experience ROI allows the business to prepare for future projects, improve team morale, and generate customer centricity.
Companies today are making conscious decisions to bring about change by driving their focus toward the customer experience. Executives make bold decisions to delight their customers and bring them to the table, thereby increasing the ROI of the customer experience. However, they often fail to prioritize the customer experience over other factors that contribute to business growth. If we want our business to reach unexplored heights and improve our business value, giving prime attention to the customer experience can only break the ice.
If you want to improve your customers’ experience, Konnect Insights can help you at every step.
Begin today to upgrade your brand for the better!