The business value of CX: Speaking the leadership’s language
- The ROI of CX: How aligning your CX activities with commercial objectives can lead to business success
- Asking the right questions (to get the right answers)
- How CX can deliver opportunities for expansion
- How CX can reduce churn and costs
- Demonstrating value beyond ROI: getting the results that matter
The ROI of CX: How aligning your CX activities with commercial objectives can lead to business success
Did you know that consumers are 3.5 times more likely to make a repeat purchase from a brand after a positive customer experience? Yep, CX makes a pretty big difference to your company’s bottom line, but we’re preaching to the converted here.
As a CX pro, you already understand the vital importance of delivering top notch customer experiences – but have you ever stopped to considered how aligning your CX activities with commercial objectives can lead to bigger and better business outcomes?
In this blog, we’ll explore the two types of commercial impact, unpick common commercial objectives, and uncover how to bring your business goals into sharp focus – all by speaking the language of leadership (namely, business objectives and commercial impact).
Let’s get going!
Finding answers that speak directly to business goals
To build a really strong CX program – one that even the most budget-conscious of stakeholders can buy into – savvy CX professionals will always align their CX activities with the commercial objectives that matter to their business. To get this right, you need to understand how CX impacts the wider business and its overarching objectives.
While ROI will always be a critical metric for any organization in any industry in any part of the world, your CX program must deliver value beyond ROI; that’s because the impact of a great CX strategy can’t always be measured in pennies and pounds. Not directly, anyway.
Instead, you need to focus on commercial objectives, like increasing revenue, or cutting costs, and build your CX initiatives around them. Some of the most common goals for any business include increasing customer satisfaction, improving customer loyalty, and reducing customer churn – but get to grips with what matters most to your organization, as that’s where you’ll win points.
Let’s look at a quick example: if your business is aiming to reduce customer churn, your CX strategy should focus on improving customer satisfaction and identifying at-risk customers. By proactively engaging with at-risk customers and addressing their concerns, you can take decisive and demonstrable action to reduce customer churn and protect that all-important revenue.
A 5% reduction in customer churn can result in revenue savings of up to 85%, so unsurprisingly, this is a very common objective for businesses to aim for.
This is how you calculate your churn rate:
(Lost Customers ÷ Total Customers at Start of Chosen Time Period) x 100 = Churn Rate
So what initiatives can you employ, as a CX professional, to reduce customer churn and keep leadership happy?
- Deliver a seamless onboarding experience
- Personalize the customer experience by leveraging top tech
- Pinpoint the cause of customer churn
- Strengthen your customer relationships by building a solid brand community
- Make sure your product or service delivers real value
Acquiring new customers costs 5-25x more than retaining existing ones; not only that, but the likelihood of selling to an existing customer is between 60-70%, compared to just 5-20% for prospects. So while CX doesn’t always directly deliver ROI, it can be shown to have a monumental impact on the bottom line.
Asking the right questions (to get the right answers)
Asking the right questions is a crucial step in understanding your customers and improving your CX strategy – and there are two types of questions that you need to be focusing on. It’s important to ask growth-focused questions to drive business expansion and revenue, as well as revenue protection-focused questions to protect existing revenue and customer loyalty.
By asking a combination of the two, you’ll get a much deeper understanding of your customers’ needs and preferences – allowing you to make data-driven decisions that ultimately lead to improved CX.
A growth-focused question might be: “What are the key factors that drive customer acquisition and share of wallet/spend?” To answer, businesses can analyze customer data to identify patterns and preferences and use that information to tailor their marketing and sales strategies. They might also explore new channels for customer acquisition – such as through social media, or via partnerships with complementary businesses.
A revenue protection-focused question might be: “What are the main factors that drive customer churn?” By analyzing customer feedback and behavior data, businesses can identify pain points and areas for improvement, such as long wait times for customer service or difficult-to-use websites. They can then take action to address these issues – such as investing in new customer service technology or redesigning their website to be more user-friendly (quick fact: a one-second delay in mobile load times can impact mobile experience conversions by up to 20%).
Asking the right questions also means involving the right people in the conversation. You’ll need to collaborate with stakeholders from across the business, including marketing, sales, customer service, and product development teams. Getting everyone in on the act makes sure the whole business is aligned with the overall goal of improving the customer experience: involving people at this stage not only gives you some very valuable insights and perspectives, but also helps to engage the wider business in CX. If people see themselves as completely removed from the customer experience, they’re less likely to push for improvements – so show them how vital they are.
One way to do this is by bringing a cross-functional team together to answer: “What are the key factors driving customer satisfaction?” The marketing team might provide insights on how customers discover and engage with the brand, while the customer service team might offer feedback on common customer complaints and issues. Do you see how this gives you a more comprehensive understanding of the complete customer experience? This is a great approach for helping you to identify opportunities for improvement.
Above-the-line growth: how CX can deliver opportunities for expansion
Now that we’ve looked at the importance of speaking directly to business goals and asking the right questions (of the right people), let’s turn our collective attention to growth strategies – and how CX feeds into them.
Above the line growth, explained
Above the line growth is a critical aspect of any business strategy, and it can be a game-changer for companies looking to expand their customer base and increase their market share. It’s a core metric for your executive team, and ultimately the board and its shareholders.
Although often neglected, CX initiatives play a significant role in driving above the line growth, as they can help your business understand what motivates your customers to spend more, and what factors impact their purchasing decisions. In fact, B2B and B2C brands with innovative CX strategies are three times more likely to significantly outperform their financial goals.
To achieve above the line growth, you need to create opportunities for expansion by:
- Increasing share of wallet
- Generating new cross and up-sell opportunities
- Improving customer acquisition
One of the most effective ways to do this is by focusing on delivering an exceptional customer experience across all touchpoints. This includes offering your customers relevant and timely product recommendations, streamlining their interactions with your brand, and engaging them with personalized journeys (side note: 75% of US consumers are more likely to develop brand loyalty if they receive a personalized customer experience).
However, while the pursuit of above the line growth is a worthy endeavor, it’s essential to approach it with caution. Pursuing growth at the cost of revenue protection can lead to higher costs and reduced efficiency, so you’ll need to strike a balance between growth and revenue protection. This means identifying opportunities for growth, while also protecting existing revenue streams and ensuring operational efficiency.
Below-the-line protection: How CX can reduce churn and costs
Below the line protection is an essential part of any successful CX strategy. By focusing on reducing churn and costs, businesses can create a stable and sustainable foundation for growth. To achieve this, companies need to:
- Prioritize customer loyalty
- Understand what drives retention
- Streamline processes to become more efficient
As a prime example, improving customer service is a key CX initiative that can support below the line protection. By providing exceptional customer service, companies can build trust with their customers, improve satisfaction, and increase retention. Another initiative that can help to reduce churn and build loyalty is personalizing the customer experience. By tailoring interactions to each customer’s needs and preferences, companies can create a more meaningful connection with their audience.
One word of caution: a focus solely on cost-cutting can have negative consequences for CX. Cutting corners to reduce costs can lower customer satisfaction, which will ultimately result in revenue loss. It’s therefore crucial for businesses to balance any efforts to reduce costs with a commitment to providing a high-quality customer experience.
By focusing on both above and below the line initiatives, you can create a comprehensive CX strategy that supports growth, protects revenue, and drives customer satisfaction and loyalty.
Demonstrating value beyond ROI: getting the results that matter
As we mentioned way back at the beginning of this article, demonstrating value beyond ROI is an essential component of any successful customer experience strategy. While ROI is a critical metric in any business, it’s important to consider the long-term benefits of customer experience initiatives, as these can impact the bottom line in ways that go beyond immediate returns.
In fact, one study found that a rather convincing 80% of businesses that deliver the best CX strategies outperformed their competition and retained more accounts.
Now, let’s take a look at some real-life examples of companies whose customer experience initiatives have boosted their bottom line.
Airbnb has become known for its exceptional customer experience. The company’s success can be attributed in part to its focus on building trust and establishing a sense of community among its customers. By prioritizing the customer experience and fostering a culture of openness and transparency, Airbnb has been able to build a truly loyal customer base: one that’s willing to refer friends and family to the platform, leading to increased brand awareness, customer acquisition, and ultimately, revenue growth.
You can’t talk about customer experience without referencing Zappos. The online shoe and clothing retailer has built its reputation on delivering exceptional customer service, and its efforts have paid off in terms of increased customer loyalty and revenue growth. By focusing on building deep, lasting relationships with its customers, Zappos has been able to establish itself as a trusted brand in a competitive market. This has led to increased customer retention and repeat business, as well as new customer acquisition through word of mouth.
This US-based airline is known for its unique corporate culture and employee-centric approach. The airline invests heavily in its employees, providing extensive training and opportunities for growth and development. This focus on employee experience has translated into a great customer experience, as employees are empowered to go above and beyond to help customers and provide a memorable travel experience.
The popular streaming service uses data and algorithms to offer its customers highly personalized recommendations. By analyzing viewing history and other data points, Netflix suggests new content that its customers are likely to enjoy – leading to a big ol’ increase in engagement and loyalty. The company also uses this data to inform its content creation strategy: creating original programming that’s tailored to its audience.
We couldn’t possibly overlook Amazon, which has become one of the most successful companies in the world by prioritizing customer experience. Amazon’s focus on delivering fast, reliable service, offering personalized recommendations, and providing exceptional customer support has made it a true behemoth of a brand that customers are willing to return to, again and again. As well as increased revenue growth and market share, Amazon’s CX strategy has led to enviable opportunities for expansion into new markets and product categories.
It’s hard to believe that a company which started life as a bookseller now dominates household purchasing. Nearly 90% of shoppers in the UK use Amazon, with more than 25% of British adults signed up to Prime. And with predictions that their sales will reach a value of over £83 billion by 2026, CX is clearly the way to go!
All of these examples demonstrate just how invaluable CX initiatives really are. Done right, they deliver value beyond ROI by:
- Building trust and loyalty with customers
- Leveraging customer feedback to drive growth and expansion
- Investing in employee experience to improve the customer experience
- Offering personalized experiences that meet individual needs and preferences
By focusing on these areas, you can create a sustainable competitive advantage that drives long-term success and growth.
Hopefully by now we’ll have convinced you that aligning your CX activities with the commercial objectives of your leadership team is a critical step towards achieving all-out business success.
Leveraging CX to drive above the line growth – by focusing on opportunities for expansion, increasing customer share of wallet, generating cross and up-sell opportunities, and improving customer acquisition – helps to demonstrate the value of CX, but remember that it’s crucial to strike a balance between growth and revenue protection.
Using CX to boost below the line protection can create a stable and sustainable foundation for growth by reducing churn and costs – but if you really want to develop a comprehensive CX strategy that supports growth, protects revenue, and drives customer satisfaction and loyalty, you need a mix of the two.
Finally, it’s worth a reminder that demonstrating value beyond ROI is essential for a successful CX strategy, as CX can impact the bottom line in ways that go beyond immediate returns.
By prioritizing the customer experience and fostering a culture of openness and transparency, companies like Airbnb, Zappos, Amazon, Southwest Airlines, and Netflix have successfully demonstrated the true value of customer experience.
Now it’s your turn.
Discover how Forsta’s customer experience survey software can help you to increase revenue growth and market share by putting the customer experience at the heart of your culture.
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