How to measure customer experience impact: CX Mini Masterclass – E73

Welcome to Decoding the Customer, a podcast about customer experience and how to realize customer-centric change in today’s dynamic business world. I’m Julia Ahlfeldt, certified customer experience professional, business advisor, and host of this program. Thanks so much for tuning in. If you’re new to the show, welcome.

If you’re a returning listener, thanks and it’s great to have you back. This episode is part of my CX mini masterclass series here on Decoding the Customer. These weekly episodes are published each Thursday and designed to be punchy, bite-size overviews of key customer experience concepts and ideas for how you can help your organization thrive through customer centricity. Whether you’re new to the field of customer experience, are preparing for the CCXP exam, or are a seasoned professional looking to brush up on a few basics, this series will help you improve your knowledge, skills, and performance to stand out as a CX professional.

This is episode 73, the fourth episode of February 2020. Today, we’re going to talk about ideas for measuring the impact of customer experience. It’s easy for CX professionals to get wrapped up in a world of metrics and scores, but at the end of the day, we need to be demonstrating our value to the business bottom line. To do this, we have to find ways to link customer experience to business impact at a level that is quantifiable.

From time savings to market share growth, I’m going to share several practical ideas for just how to do this. If you are tired of being a slave to your CSAT or Net Promoter score, and want some inspiration on how to demonstrate the business impact of customer experience, then stay tuned. As always, if you’re out and about while listening to this and hear something that you’d like to remember later, don’t worry about writing it down. You can find an overview of the key concepts that we’ve covered today in the show notes for this episode, which are on my website, juliaahlfeldt.com or decodingthecustomer.com.

Whenever I speak to CX professionals, it seems like all roads lead to metrics and measures. We are constantly looking for ways to demonstrate our value and worth to the business. All too often, I see this take the form of score chasing. Others in the field, notably Jeanne Bliss, have famously raised the flag about the dangers of score chasing.

When we become obsessed with net promoter score, customer satisfaction or other metrics, we can easily lose sight of the bigger picture. How customer experience helps brands thrive and grow. Of course, the classic CX metrics are important, and there’s plenty of research showing that happy customers are good for business. But when it comes time to have conversations about things like business budget allocation, it’s difficult to put happy customers are good for business up against we’re going to save the business $2 million.

Executives are, after all, beholden to their own performance metrics. And most of these are related to classic business indicators like market share, profit, and loss. If CX professionals want business leaders to prioritize customer experience, because we all know it’s good for the business in the long run, then we’re going to need to show our impact in the short run. So today, I’m going to go through several ideas for measuring the impact of customer experience efforts.

Nine times out of ten, I’ve seen that what’s good for customer experience is also good for the business. When a customer experience involves a lot of hurdles or extra steps, it probably means that there are the same hurdles or extra steps going on from a process perspective. If your CX initiative is simplifying or cleaning up the customer journey, look at how that translates into business efficiency. Does your improved customer experience save time in terms of behind-the-scenes processing?

Are you proactively addressing an issue that used to result in a high volume of customer calls? Both of these things translate into time saved. And in the business world, time is money. If journey improvements are resulting in time saved, then calculate the value of that time to the business, either as a cost savings or as time that can be diverted into a more productive activity.

For example, if a journey improvement results in a reduction of 10 calls per day at an average of five minutes per call, that’s 50 minutes per day of time saved, which can translate into money saved through either more efficient resource planning or perhaps diverting those 50 minutes of agent time to some sort of outbound revenue generating customer interaction. Improved accuracy is another area where CX professionals can look for ways to measure and demonstrate impact. The more that we know about our customers, the more precisely we can interpret their needs and tailor our interactions with them. Often, these insights emanate from within the customer experience team, so we should not be shy about highlighting the results.

From an impact perspective, there are a couple of ways that you can measure this. One is to look at how improved accuracy of understanding customers might drive efficiency. So, for example, if we can provide the sales team with more accurate information about their customers, does this reduce the extra back and forth, enabling them to save time when providing recommendations, or does it streamline their process of making a sale? If so, then the improved accuracy of information about customers translates into an efficiency gain for the sales team.

Improved accuracy can also positively impact customer lifetime value. And if you aren’t familiar with customer lifetime value, I’d suggest that you check out Episode 22, which covered this topic in detail. Have your customer experience efforts to better understand your customers translated into improved revenue per customer, a higher conversion rate, or better retention? If so, there’s a story to be told about impact to the business.

For example, if tailored communications are being sent out, has this translated into better sales or lower churn? If so, definitely build your story about impact to customer experience. Impact on customer lifetime value is definitely not limited to improved accuracy of understanding of customers. Any place where the customer journey has been improved, there could be an opportunity to investigate if this has catalyzed an improved revenue per customer, better retention, or reduced churn.

All of these are the ingredients of customer lifetime value. It’s easiest to make this cause and effect link when we can get as micro as possible, looking at how a single change in the journey impacts immediate customer behavior. I’ll openly admit that this is a lot easier when we’re looking at transactional journeys, things like retail or travel. Subscription-based journeys like banking or utilities are a little bit trickier because the time horizons are longer and the repurchase transactions are few and far between.

But that doesn’t mean that you can’t still make an argument for an aggregate impact of journey improvements on customer lifetime value over a longer period of time. Finally, customer referrals are a great way to connect customer experience to market share growth. In a world of abundant choice and overwhelming information, we know that customers are increasingly turning to friends, family, and colleagues as a primary source of information on recommendations about when and where to spend their money. We also know that happy customers are more likely to recommend brands to others.

So, if your organization tracks referrals, be sure to add this to your arsenal of ways to measure customer experience impact. Where customer experience improvements result in market share growth due to recommendations, this should absolutely form part of the story about customer experience impact. For example, if you’ve made improvements to the journey and you see that this catalyzes an increase in referrals from the affected customers, be sure to quantify that. New customers mean a larger market share, and the value of customer base growth can be quantified by multiplying the number of new customers by the average customer lifetime value.

So just to quickly round up what we’ve covered today, don’t limit your view of customer experience impact to just the usual suspect metrics. Be sure to connect your efforts back to business results. Where journeys have been improved, or the accuracy of understanding of customers enhanced. Explore if this has also translated into business efficiency that could be quantified as a time savings with a monetary value behind it.

The same thing goes for investigating how journey improvements have translated into better customer lifetime value, getting as granular as you can with the cause and effect relationships. If you have a way to track customer referrals, leverage this as a possible avenue for demonstrating impact. And so you see, we have so many options for proving our worth to the C-suite. We just need to be smart about it and tap into these.

Have you come up with a novel or innovative approach to measuring the impact of customer experience at your organization? I’d love to hear about it. If you’re looking for help demonstrating the business value of your customer experience efforts, please get in touch. I’d be happy to explore how I can help.

You can reach me via email, tweet, or LinkedIn message. My handle is at Julia Ahlfeldt, and my full contact details are also listed on my website, juliaahlfeldt.com or decodingthecustomer.com. I hope that you’re enjoying the show. Please share with others who might be interested or head on over to iTunes and rate the podcast.

I’ll be back next week with another episode. See you then.