ROCX I Show me the money!
Measuring return from your investments in Customer Experience management
There is plenty of evidence that leading CX companies grow faster and make more money than their less customer centric competition - the NPS evidence from Bain, Satmetrix and a host of others.
These companies are realising that “Experience is the New Product” - emphasising the entire experience surrounding a product or service.
This good news has led to a passionate belief among CX practitioners that the secret to success is to “make customers happy and they will buy more”.
Is it really that easy? How happy and how much more? What can I afford to spend on customers happiness?
Seems to us that the “...and they will buy more” is often silent in CX initiatives - and that a leap of faith is taken to justify the investment, admittedly supported by some industry numbers (like the table above) and the performance of NPS Superstars like USAA. Why is it that the same Superstars are cited repeatedly? Because it is not easy.
We hasten to add that many studies that attempt to quantify CX returns use survey “intention to re-purchase” ratings, not actual sales and given the known “say-do gap” in such surveys we doubt the results.
Also, many CX programs are measuring the wrong things or not enough of the right things to prove effectiveness. Many metrics for product and functional management simply do not provide a reliable compass for tracking overall experience. My interaction with the contact centre might be a 10/10 experience - but this may have little correlation with what I am ultimately trying to achieve (obtain a bank loan, install broadband at home) on my overall experience.
Another blind spot for these programs is that CX ratings are relative - a rating needs to be judged in the context of the ratings of competitors. Your best performing outlet/store/team at an NPS of say 60 may be blown out of the water by its most relevant local competitor at NPS score of 75.
So yes, better performing CX ratings on the whole predict CX value or ROI but there are plenty of nuances and rabbit holes to avoid with your CX programs. Put simply, you just donʼt know if your specific CX program is contributing positively to ROI unless you have the evidence.
Data Driven Marketing
These folks delve into the customer data, facts about customer behaviour and use them to predict purchases, rank customers on their likelihood to accept your offers, weight timing and offer content then measure short term results methodically.
In most cases the quality of the CX and the sentiment of the customers during the purchasing episode is assumed to be acceptable or not material to the models. Which also seems strange as CX quality does matter - and increasingly “experience is the product”.
Yet few, if any, marketing attribution models consider CX scores such as NPS.
This is even stranger given that sales growth is the explicit purpose & rationale for NPS programs - and variations (like stores) across larger organisations provide a perfect test bed for CX quality vs Sales results.
If investment improved CX leads to more valuable customers, variations in CX scores should have a measurable relationship with customer sales, loyalty and advocacy. We should be able to determine what CX improvements do to impact the sales results we get from owned, earned and purchased channels.
Is the lack of an integrated view the result of specialisation within marketing; CX teams do not talk to Data Scientists? Or is it more fundamental?
Marketing is Getting Harder
Especially in retail, the need to establish and track individual customer identity was a potent justification for loyalty programs and billions of plastic loyalty cards. This is being disrupted by the convergence of the payment infrastructure with loyalty and facial recognition technology.
When you can recognise your customers online & offline automatically, when Facebook and Google can close the Online-to-Offline loop for sales why do you need a loyalty mechanic like a card?
Many valuable customers do not join loyalty programs. Loyalty program customers do not always use their cards. And a loyalty program wonʼt tell you whether someone is currently in store. But facial recognition technology will allow you to measure the quality of the CX you are providing for all customers, automatically. (Facial Recognition: Are we there yet?)
Transactions to Telemetry
Similarly, the advent of new tracking technologies (facial/object recognition, beacons, blockchain assured supply chains) has opened up a whole new world of behaviour and movement beyond the static transaction.
In a retail setting, we can now know which items moved from which shelf to which basket and back again before a transaction; and which part of a store is producing the most “unhappy” customers and under what circumstances.
Third Party Data
The availability of payment data at the market level allows marketers to not only measure their returns in absolute terms but also relative to their competitors and the market generally. Did that campaign really steal a visit from our competitors?
This will allow customers to solicit the help of AI in managing their finances & purchases. Smart e-wallet providers will optimise returns to users by selecting the payment account that maximises the discounts and/or rewards in this merchant at the checkout.
You only need to look at some of the new tech giants to understand the centrality of fast customer feedback (be it surveys or the collection of behavioural data). The likes of Uber has trained us all to just expect ratings (two-way!) as “business as usual” - and virtually real-time. Imagine the agility and power that this provides Uber to react and anticipate problems and opportunities.
ROCX® Understand your Return on CX
Because CX management and targeted marketing are dependent on the specific attributes of your organisation, brands, products and customers, a planned but individualistic fast start program is proposed.
The pilot is predictable in scope and scale and includes:
- Resonate implement the appropriate CX scoring systems to measure & analyse customer feedback & sentiment for significant episodes. Problem resolution will be planned and executed with the clientʼs CX team.
- Ellipsis build appropriate marketing models, using customer & third party data. We then work with your marketing team to execute marketing campaigns to test the value of the models in generating sales lift.
- During the trial we will introduce CX measures into the direct marketing models and campaigns - they also become part of the analysis (or other appropriate treatment), that identifies the contribution CX is making to the marketing/sales results.
We measure how much more accurate the models are/will be in predicting actual sales as CX scores are incorporated. We can also determine the relative importance of each model component, for example RFM and CX. This will objectively identify the value of CX improvements in your specific environment.
Why guess when you can know? Exactly how happy and exactly how much more.
We propose the pilot project runs for six months, with regular reporting on progress and the impact on your sales results.
The result will be a comprehensive report that can form the heart of a business plan justifying CX (and targeted marketing) investments by demonstrating positive returns.
Prove your investments in CX generate a positive ROI. For more information visit www.rocx.com.au
In Partnership with Resonate Solutions
Resonate is the leading Australian Customer Experience Management (CEM) provider. Specialising in Voice of Customer (VoC), Net Promoter Score (NPS), Employee Engagement and driving customer centricity within the organisation.