Surely, satisfactory customer experience (CX) increases customer loyalty and loyal customers spend more, churn less, recommend you more and generally cheaper to serve. However, while CX professionals give huge efforts to improve customer experience, the budget approvers do question CX investments and many CX professionals do have difficulties to quantify the impact of customer experience on business KPIs like revenue, churn, lifetime value. Having ability to quantify the CX ROI is not only needed to get approvals for continued investment but also to optimize the CX efforts. But is it possible to quantify CX ROI at all? The answer is surely yes, if you can link customer behaviours with measurable operational variables and identify improvement areas.


1. Define business metrics
Start your work by defining important CX business metrics which have impact on your organization’s revenue. While selecting your metrics, make sure that they are measurable and quantitative. If you are having difficulties to identify metrics, you can start with following ones:

  • Revenue per Customer/Average Annual Spend
  • Retention Rate of Customers
  • Churn Rate of Customers
  • Cross-sell Rate
  • Up-sell Rate
  • Willingness to Recommend
  • Cost-to-serve
  • Live-time-value
  • Average Number of Products per Customer


2. Identify customer groups and link business metrics with customer groups
One of the easiest and measurable way to group customers is to use customer survey responses. You can use NPS data to define key customer segments;

  • Detractors (customers whose score range is between 0 – 6)
  • Passives (customers whose score range is 7 & 8)
  • Promoters (customers whose score range is 9 & 10)

After grouping your customers based on some quantitative scores, link each group with metrics which you have selected in step 1. What is the average annual spend of detractors? How much does it cost to serve to promoters? Are detractors churn more than passives?

To work easy, you can prepare a table view like following:


3. Determine main issues & improvement areas for each customer group, and make an action plan to fix the issues and improve customer satisfaction
To provide better customer experience to your customers, you just not need to identify each groups’ pain points but also ways to improve satisfied customers’ experience. To determine main issues, you can use again voice of Customer surveys. Issues that have most impact on customer segments appear with higher frequency and intensity. Do your customers complain about number of call transfers or unexpected hidden costs? How many percentages of the detractors complain about long wait times? Is there huge difference between the call resolution satisfaction rates of detractors and promoters?

As a starting point you can try to identify main issues by using “aggregated NPS results” without having a deep dive analysis about the channel and time it was captured for each customer within their unique journeys. However, if you have right analysis tools to assess customer journeys, then you can try to make analysis for each channel and every touch point; e.g. which channel do your customers generally use for product returns? Chat, call centre, mobile app or online customer portal? Does your organization perform same in all channels? Do your customers give less score for call centre while they give higher score for self-service platform? That kind of analysis will not only support you to find solutions to fix the issues, but also to optimize your CX efforts.

After making these analyses, you need to ask yourself following question:

“Which actions should I take for each group at which moment and on which channels to fix their issues and increase their satisfaction?”


4. Make investments and implement your changes
Answering to the question above will give you an action plan and show the investment areas. Try to identify quick wins and start with them. This will support you to proof yourself and you will be able to get investments to your projects easier. While prioritizing your projects, do not forget your company’s goal too.


5. Wait for customers to notice your improvements and measure the satisfaction again
After implementing your changes, wait a while until your customers notice your improvements and then make the same surveys again to see the improvements. If the number of promoters is higher, cost-to-serve is less, retention rate is increased after the changes, it means you are on the right path. By calculating your cost savings and considering your investments, you can analyse your ROI now.

The most important point here is to remember that CX investments have often longer payback periods. So be patient and keep working. No doubt, your customers and organization will see the benefits of the investments. If you need support to identify your organization’s CX improvement areas and assistance to build your roadmap for a better customer experience, contact us now.

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