Identify the ROI of Customer Experience to Recession-Proof Your Business
Global business leaders are evaluating the current economic climate and developing plans to address it with haste. While there are some common responses, each overall strategy will be unique to the business itself. Uncertainty doesn’t always mean that businesses stop spending on improvement. But, in uncertain times, every expenditure may be scrutinized more closely.
Investments in customer experience must be tied to measurable ROI to be successful during a recession.
To describe that link in an impactful way, consider two approaches to evaluate how customer experience improves business performance - these efforts will result both in lower costs and higher share of wallet - generating a positive impact on the bottom line.
Lower Costs
A better customer experience impacts the bottom line by reducing costs throughout the organization. These include costs of customer support, customer retention, and operational spend.
Customer support
According to research from Deloitte, organizations that consistently deliver positive customer experiences can reduce the cost of customer service by up to 33%. These cost reductions may be related to the techniques used to improve customer service. For example, investing in a technological solution like adding self-service functionality or automation can make CX better - while at the same time reducing costs. Empowering agents to resolve customer issues on first contact improves CX, while eliminating the need for customers to call multiple times - reducing costs even further.
Customer retention
Repeat customers are 9x more likely to convert than new customers. This means that for the same cost of resources, your business can sell to significantly more existing customers than would need to be invested in acquiring new customers.
Operational spend
When customer service is improved, it takes fewer resources to resolve customer issues. Companies can save on labor costs either by right-sizing the number of agents devoted to resolving customer issues, or by channeling valuable human resources to higher-level, strategic objectives.
Greater share of wallet
Accenture found that leveling up your business from customer-oriented to customer-obsessed is linked to a 6x increase in profitability. This is because satisfied customers spend more and stay longer.
Larger spend
Loyal customers spend significantly more than new customers. A company’s top 1% of customers will spend 5x more per purchase than the other 99%. Making the customer experience better for your existing audience improves retention, and turns regular customers into champions - who will then spend more every time they buy.
Research from Deloitte shows that customers that have had a positive experience with a brand will spend 140% more than those that report negative experiences.
Lower churn
75% of consumers that have had a great CX experience with a brand are likely to forgive a bad engagement, rather than switch to a different provider. Customer churn results in an immediate loss of revenue. But there are other outcomes that are linked to churn, including:
Lost Customer Lifetime Value (CLV)
Additional revenue through cross-selling or upselling
Referrals or testimonials
Price Flexibility
Customers that are happy with the service they have received from a brand are willing to pay more for the same product or service.
Salesforce found that 67% of customers will pay more for the same product or service if the company offers a superior customer experience. If price increases have to occur due to inflation, supply chain, or other any other logistic concerns, offering a better CX will allow you to maintain a loyal customer base.
A better customer experience can make your business recession-proof: improving competitive advantage, strengthening the relationship between customer and brand, and turning one-time purchasers into loyal, lifetime customers. Tying CX to measurable ROI is an important step to aligning the entire operation to a long-term CX improvement strategy.
If you are interested in taking the first step to implementing changes that will have a significant impact on your business, consider talking with Peak Process Group. A focus on CX and operational excellence allows us to be a true partner in your business's future success.
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References:
(1) https://cdn2.assets-servd.host/paltry-coyote/production/exports/2194a329d6f053118e42d885fe38fae7/zendesk-cx-trends-2022-report.pdf
(2) https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-cons-the-true-value-of-customer-experiences.pdf
(3) https://business.adobe.com/ca/why-adobe/digital-economy.html
(4) https://www.accenture.com/us-en/about/accenture-song-index
(5) https://www.bigcommerce.com/articles/ecommerce/ecommerce-metrics/
(6) https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-cons-the-true-value-of-customer-experiences.pdf
(7) https://www.qualtrics.com/xm-institute/roi-of-customer-experience-2019/
(8) https://www.salesforce.com/uk/form/pdf/state-of-the-connected-customer-2nd-edition/