Over time, customer experience (CX) programs have evolved into the next big thing. Proving value for these programs, however, has fallen to the wayside. Organizations are increasingly focused on new and exciting ways of measuring experience, rather than actually justifying investment in the program itself. With customer loyalty widely recognized as an indicator of repeat business and increased spend, many would assume the business case speaks for itself. Yet, today CX must earn its right to exist. CX professionals must be prepared to make the case for a CX program, as must be done with any transformational company initiative.
Getting management buy-in is key to getting any coice of the customer (VoC) program off the ground. What is needed now is greater clarity about what motivates board-level executives to invest in CX. To demonstrate this value, companies must build and maintain a systematic and disciplined approach to create a strong financial argument to invest in a successful CX program and initiatives that deliver results. Priorities for most C-level executives involve revenue and profit, so securing budget and authority to implement a strategic VoC program must prove that VoC can make an impact on the bottom line.
Making the financial case for CX at the board level doesn't need to be (and isn't) a complex task, as it follows the same core principals as any other investment. There are really two key steps: Identify the risk; and maximize the opportunity
To identify the risk, outline the current financial risks to your organization. This might include the following:
- Detractors who might fail to renew and lose the business a significant chunk of the annual sales target;
- The cost of acquiring new customers compared to retaining existing ones; and
- The cost of servicing complaints.
Maximizing the opportunity requires you to demonstrate how promoters can result in increased sales and revenue by cross-selling and increasing share of wallet, and the financial reward associated with reducing churn rates.
Building a Financial Business Case
These are just the first steps in outlining the case for your CX program. Once these are complete, you can then build a clear, fully-defendable financial business case, showing expected cash flow impacts for each risk and opportunity.
Depending on the focus areas of your proposed CX program, you mightbe able to build a clear, visual model of cash flow for areas, such as the following:
- Pre-empting unnecessary contacts to the business;
- Reducting agent-assisted contact through improved self-service;
- Reducing shopping cart abandonment rates; and
- Increasing first call resolution.
It will take time and energy to integrate large financial and operational data sets with customer and loyalty data to provide context and help the decision-making process for the entire organization. However, the more focus you put in here, the stronger your business case will be.
By clearly modelling your outcome objectives for CX, you can express tangible ROI to your executive team. Concurrently, you might uncover ways to demonstrate cost savings and other efficiencies. You can also take this business case phase as a way to share knowledge, teaching executives who might not understand the connection between focusing on the customer experience and increasing revenue and profits.
The time spent on this phase of your business case is more than worth it, because with a financial linkage model in place, investments in CX can be made knowledgeably and with a clear understanding of the business benefits they will provide. This will help prioritize on which improvements to focus and also provide an accurate measure of their impact on the business and on customer loyalty.
From here, you can create an overall cash flow summary that pulls your totals into a proven ROI model, along with the proposed investment and recurring expense amounts, to show the ROI and payback period for your CX initiative.
Working in this financially sound and accountable way makes it easier for the executive team to visualize the impact of the CX program on the business. It also ensures you provide tangible arguments to those who are doubtful about less familiar metrics, or more theoretical measures, such as loyalty and engagement.
Additional important considerations when presenting your case to the board include the following:
- Know your audience - Demonstrate clear alignment with your corporate strategy. Focus on facts, figures and numbers and be sure that your projections make sense and any assumptions are reasonable.
- Commit to a realistic roll-out - By explaining a clear path towards the end game, with careful phasing of your program, you can demonstrate that you are willing to continually evaluate the investment being made, ensuring you get each step right and can make adjustments that minimize financial risk.
- Demonstrate the importance of ROI, even when investment is secured - Create some quick wins for CX and the bottom line. Using alerts and reporting once the program is in its first phase, you can make sure that you can take swift action that counts toward the financials to which you've committed. You can then feed this back to the executive team to provide clear, visual evidence of the impact that CX is having on the business.
Securing executive buy-in from the outset of any CX initiative is key to ensure that all stakeholders take the program seriously, staff understand the targets that need to be met, and people across the business are empowered to achieve these goals. By investing time in your business case, you can guarantee buy-in for the long term too. Not only are you more likely to get the investment you need from the business, but you will also demonstrate that your program can truly pay for itself.
Karine Del Moro is vice president at Confirmit and has 20 years experience designing and managing marketing programs, including customer retention and business development. She was instrumental in the development of Confirmit Voices, a customer engagement model that provides an end-to-end approach to the voice of the customer. A Certified Net Promoter Associate and Certified Customer Experience Professional (CCXP), she has considerable knowledge of best practices in customer experience management. She is a recognized speaker and thought leader in the voice of the vustomer industry.