The success of a business largely depends on its ability to deliver excellent Customer Experience (CX)Opens a new window . There is no framework to assess Return on Investment (ROI), as customer experience is subjective and largely based on perception. In this article, we discuss how you can use customer experience analytics to measure how it drives revenue and growth.
According to a ForresterOpens a new window study, â€œsuperior CX drives superior revenue growth in industries where customers are free to switch business and competitors deliver differentiated customer experience.â€ Customer experienceOpens a new window is a competitive differentiator, hence a crucial element of a successful marketing strategy.
Customer Experience Impacts Revenue Growth
Improving customer experience drives revenue because a delightful experience helps earn customer loyalty, which turns a customer into your brand advocate and motivates them to do more business with youOpens a new window .
According to Bain and Company’s analysisOpens a new window (2015), â€œcompanies that excel in the customer experience grow revenues 4%â€“8% above their market.â€
The challenge, however, remains to quantify CX and its impact on ROI.
- CX is unpredictable, as it depends not just on what you do, but how customers perceive your actions.
- Emotions largely influence CX.
- The cross-departmental nature of CX results in inconsistencies in identifying issues.
- Bad customer experience may have an immediate impact or may take months to reflect on your growth.
To combat these challenges, customer experience analytics can be used to associate your CX activities with your financial metrics to interpret ROI. In the next section, we tell you how.
Customer Experience Analytics to Determine Revenue Growth
Measuring CX is more complicated than taking a purely metric-driven approach. A single metric will not fit all stages of the customer journey. This is where Customer Journey Analytics comes into play. Marketers need to capture significant moments, understand different touchpoints and their interactions to measure impact on the customer. You will need to prioritize what to measure, when to measure and how to measure, to determine whether your resources are being used optimally and what your ROI is.
Customer Journey Analytics
In the words of Nishant Maliakel Oommen of Cloudnix Software Labs Pvt. Ltd.,Opens a new window â€œIncreasing digital connectivity (digital touch points) and channel hopping makes it harder for a digital marketer to plot the buyer’s journey. In the current world, the customer journey doesn’t end with a transaction.â€
Let’s talk about some of the metrics that can effectively calculate these touchpoints and interactions:
According to HubSpotOpens a new window , â€œSatisfaction is the key metricâ€ and â€œTransactional satisfaction is the most successful metric.â€
McKinsey researchOpens a new window shows, â€œEnhancing the customer experience can bring rich rewards. Across industries, satisfied customers spend more and stay more loyal over time.â€
Customer Satisfaction (CSAT) scores measure the number of satisfied customers based on a feedback survey for a specific experience. It provides a baseline measurement on how customers feel about your brand and provide you with insights on what aspects have the maximum impact on them â€“ what can make them stay or go. Knowing this can help you align your priorities for your revenue goals.
â€œLikelihood to recommend and satisfactionOpens a new window are the two most popular metrics, used by 85% of the companies.â€ Loyalty has the most substantial impact on revenue growth. The probability of selling to an existing customer is 60â€“70 percent as compared to selling to a new prospect, which is only 5â€“20 percent, according to Marketing MetricsOpens a new window .
Net Promoter Score (NPS) can help you measure how likely a customer is to recommend your brand. It can help you identify Promoters, Passives, and Detractors and help you estimate ROI for moving Passives to Promoters.
3. Interaction Satisfaction
You can use interaction satisfaction measures such as the Quality of Customer Interaction (QCI) Score to calculate the various elements of your customer interactions and identify what matters most to each customer. For this, you need to bring together customer dataOpens a new window to create a customer journey profile and map behavior patterns to the profile, which will make it easier for your staff to access a customer’s background information in time to personalize interactions.
This will also help improve the QCI score and simplify customer analyticsOpens a new window . The QCI score can help identify key sources of delight and despair and take necessary action accordingly. Insight into every stage of the customer journey proves the ROI of CX, as it captures the outcome of each interaction and identifies ways to optimize them.
4. Customer Behavior and Intent
Speaking exclusively to MTA, Doug Bell, CEO, The Experience ManagerOpens a new window , says, â€œI’ve always advised companies to measure specific customer behavior that can be easily observed without disrupting the customer’s life â€“ e.g. repeat purchase, referral, review etc. Then and only then you can focus an entire organization on producing that behavior consistently.â€
Customer behavior gives you what, exactly? You need to link it to why to prove ROI. Digital touchpoints can help you measure visitor intent, which gives you a clear view of your visitor’s requirements and expectations.
Understanding the link between what customers are doing and why they are doing it, can help identify key drivers that impact your metrics.
5. Churn Rate
Unhappy customers return more products, create more tickets, and dissuade others from doing business with you. You need to evaluate these costs to determine how it impacts your growth.
Customer Churn Rate is also an indicator of your overall business health and is calculated as the number of customers who have stopped doing business with you (or have left you for a competitor) or unsubscribed from your services in a given time frame.
Identifying the metrics to understand CX better and tying them to ROI not only helps improve overall customer experiences but demonstrates its impact on business outcomes.