customer experience value

Determining the Value of Better Customer Experience

It’s difficult for leaders to show that customer experience changes create value. Does a satisfied customer really make a big difference at the end of the day? How much revenue to loyalty actually bring in? Are phone calls from dissatisfied customers a burden on my business, or is it just a part of how things work?

It’s not a simple equation to figure out. But there are some important rules customer experience teams and company executives to realize:

Rules of Changing Customer Experience:

  1. The right changes to customer experience are self funding
  2. It is possible to define the value of better customer experience

Steps to Defining Value of Improved Customer Experience

  1. Define the customer behavior that creates value for your business, and define the value.
  2. Create hypotheses about customer outcomes that matter
  3. Follow customer satisfaction over time
  4. Apply changes to areas where customer satisfaction changes (positive or negative)
  5. Track results

How to use the customer data.

Link customer feedback to their actions. This is easier in an online retail space than other industries, but surveys, reviews, recommendations, etc. should be linked to specific customer actions. This is valuable data moving forward with new customer service initiatives.

Divide the customer data into segments. For example, you might divide them into happy, neutral, or dissatisfied customers. Organize your data so that you can see the outcomes over a long period of time. Learn how much each group spends, and how much of a financial burden each group is.

Determine the different costs associated with each customer segment.

Dissatisfied customers consume resources. Returns, phone calls, complaints and more demand employee time and lead to loss of revenue. If your business depends on repeat customers, unhappy customers are especially costly, because your loss of future revenues. Furthermore, you need to define what value a happy customer has over a neutral one. This can require following customer actions for an extended period of time.

What’s Your Goal?

Set a goal to change your percentages of happy, neutral, and dissatisfied customers. For example, set a goal to move 5 percent of dissatisfied customers to the neutral category, and 5 percent of neutral customers to the happy category.

Focus on the most valuable areas of change. In most industries, helping dissatisfied customers feel neutral is the most valuable change to make. Some companies spend too much time and effort trying to get more customers to be evangelists, instead of changing the feeling of dissatisfied customers. That said, in some industries, making one customer so happy about a product or service that they are willing to recommend it is very economically valuable.

Achieving Your Goal

Define what a successful customer experience is. Maybe it is a maximum of two phone calls, zero callbacks and purchase within a week. Maybe it is zero phone calls, and payment within a day. Maybe it is defined by how long someone is actively on your website. Start gathering data based on these categories.

Focus on end-to-end customer experience. Onboarding is one thing, but make sure you’re defining effective fulfillment processes as well. Track where customers change from neutral to a different state (positive or negative).

As you discover the points where people are changing from neutral into happy or sad customers, that is where you place budget and customer service initiatives. Maybe the improvement will be in UX/UI, maybe it will be within how customers are billed. Maybe it’s simply the cost of the service. Maybe it occurs at the point of sale in store. This is where you may need to innovate to find new sources of customer data. Emotion recognition is a hot new source of customer experience data.

Establishing Budget For Customer Experience Changes

Since you’ve established previously the value of different customer experience states, it should be easy to define how much budget you can push into your customer experience goals.

Each initiative should be built to achieve one of these goals:

  • reducing the cost to serve
  • capturing long-term revenues through loyalty
  • improving overall customer satisfaction

It is important to establish a time frame for expecting visible results to a customer service change. For example, if the goal of the changes is to capture long-term revenues and build customer loyalty, that may take a year to bear fruit. Other changes may result in immediate results, however, such as a revamped point of sale system, or updated user interface.

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