For almost any initiative in business, the way to convince leadership to invest is to show them a return on investment (ROI).
In turn, the best way to secure executive sponsorship in VoC is to demonstrate that improving the customer experience pays big returns.
Start with the facts
If you are leading a customer experience (CX) team, begin by gathering statistics and public information about companies that have invested in the customer experience and seen a return on that investment. Then begin to create your own internal business case for VoC.
There are a plethora of publicly available studies and reports available for you to use to bolster your case. Here are two to get you started:
- Forrester has a must-read report called “Why CX? Why Now?” (2016) that provides compelling ROI evidence that CX matters, including the ability to charge a higher price when you deliver a better customer experience.
- Watermark Consulting, a US-based customer experience advisory firm, analyzed the stock market returns of the Top 10 and Bottom 10 publicly traded companies in Forrester’s Customer Experience Index for their Customer Experience ROI Study (2019).
Over the long term, a portfolio of those Customer Experience Leader firms far outperformed their Laggard counterparts.
In industry-specific studies, they also showed that this relationship between CX excellence and stock market performance held up in both the auto insurance and home insurance markets.
Look inside at CLV to determine ROI
- Determine the customer lifetime value (CLV) for each of your average clients, or the average revenue you can expect from the client—say, on average, $100,000 per client.
- Identify fifty clients who had a problem or concern that you were made aware of through VoC*.
Let’s say billing was inaccurate and hard to understand. Maybe the customer had a difficult time adding and deleting phones, and their changes never showed up accurately on their bill. They might have tried to resolve the issue with the less-than-empathetic billing department before simply giving up. Soon enough, contracts end and it’s easy for an unhappy customer to give thirty days’ notice with no warning. Without VoC, your organization might not know about this situation until it's too late.
On the other hand, if problems like this are identified via VoC and someone from the customer experience team follows up with the unhappy customer immediately, the situation can be turned around before the customer cancels their contract.
Maybe the customer experience team needs to facilitate a resolution with the billing department so that statements read more clearly, or maybe they need to find a way to improve the process of adding and deleting phones. Either way, their job is to find a resolution and save the customer. At $100,000 a pop, it’s not hard to justify this work.
*Psst... you can prove ROI in a small-scale study like this without contacting all your customers. This type of small pilot study—with a limited budget—carries so much potential for proving ROI that most executives will fund it.
- Assume that 10 percent of clients would have gone to a competitor if you or your team had not followed up and resolved the issue. Five out of fifty customers may not sound like a lot, but when you consider that each brings in $100,000 of revenue over their lifetime, the benefit of VoC becomes a no-brainer. It’s $500,000 saved in churn compared to whatever you are investing in VoC.
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About the Author
Sean McDade, PhD is the author of Listen or Die: 40 Lessons That Turn Customer Feedback Into Gold. He founded PeopleMetrics in 2001 and is the architect of the company’s customer experience management (CEM) software platform. As CEO, he guides the company’s vision and strategy. Sean has over 20 years of experience helping companies measure and improve the customer experience. Earlier in his career, he spent five years at the Gallup Organization, where he was the practice leader of their consulting division. His company offers CEM software with advanced machine learning solutions and hands-on analytical support to help companies make sense of their CX data. Sean holds a Ph.D. in Business Administration with a specialization in marketing science from Temple University in Philadelphia. He has published eight articles in peer-reviewed scholarly journals and has taught over 25 marketing classes. Sean was named a 40 under 40 award recipient of the Philadelphia region. He is an active Angel Investor, including investments in Tender Greens, CloudMine and Sidecar.
Posted on 08-07-2019