Customer Experience Investment: Making the Case on the ROI of Improved Customer Service


What’s the ROI on money and resources invested in improving your customer experience?

If you’re not sure, you’re not alone–but figuring out how much each cent invested in customer experience benefits your company is critical if you’re interested in increasing revenue.

You may be surprised at exactly how profitable customer experience investment can be. According to a report by McKinsey, strong customer experience improvement programs rapidly become self-funding.

With this in mind, it’s no surprise that companies are scrambling to improve their customer experience.

What Does It Mean To Invest In Customer Experience?

Investing in customer service and investing in your overall customer experience are closely related but distinct concepts.

Your customer experience incorporates your customer service funnel as well as your product’s features and design. This means that improving your product could easily be a way to provide a better customer experience, but it’s not the only way.

In practical terms, customer experience investment could involve:

  • Hiring staff
  • Adding new customer support channels
  • Tracking new customer support metrics
  • Updating customer support training
  • Removing the most common friction points in the product
  • Streamlining the buying process
  • Improving follow-up with existing customers

Investing in customer experience doesn’t have to be expensive to start, but you need to be clear about what aspects of your customer experience you’d like to improve and the actions that you plan to take to improve it.

Which KPIs Are Useful To Track Customer Experience Improvement After Investment?

Before your company can start improving your customer experience, you need to decide how to measure success.

There are quite a few metrics your company can use to assess whether the customer service aspect of your customer experience improvement plan is working. The main metric most companies measure is CSAT. In fact, seventy-one percent of companies choose customer satisfaction as their primary metric for assessing their customer experience improvement campaigns, according to a study by Worldwide Business Research.

But don’t feel tied to any one metric because everyone else is concerned about it–track a handful and set goals that make sense for your business and your customer experience.

Expect Increased Revenue After Improving Customer Experience

It’s clear that businesses that can provide a stellar customer experience will have much higher levels of customer satisfaction and loyalty. Satisfied and loyal customers are responsible for contributing to the majority of your annual revenue.

The link between better customer experience and higher revenues is well established; according to a study by Oracle performed in 2011, 86% of customers are willing to pay more for better customer experiences.

Likewise, a Harvard Business Review article estimated that customers who reported the best customer experiences spent 140% more than those who reported the poorest experiences.

The biggest factor in high customer experience ROI is customer retention.

Better Customer Experience Leads To Better Customer Retention

Stemming the money lost from unhappy customers will account for a large slice of the returns you’ll see from your investment into your company’s customer experience because it’s very expensive to lose customers.

It’s also extremely easy to lose customers, with a Forrester report finding that 53% of people say they are very likely to abandon their online purchase if they cannot find a quick answer to their question. This is a clear signal that your company’s website needs to be extremely easy to navigate and provide instant resolutions to customers’ questions.

It’s also an indication that your customer service needs to be supremely good.

Beyond your company’s website, your customer service is an opportunity to improve how your customers feel about your company and their interactions with your company. Fifty-six percent of Millenials claimed that they’ve terminated one customer relationship to start anew with a different company after a poor customer service experience.

But what about retaining customers who are already satisfied?

Given that they’re likely to be the most profitable segment of customers, satisfied customers are a high priority to retain. According to Harvard Business Review, customers who reported a great customer experience had a 74% chance of still being a customer a year later. There’s more to the story, though.

A study by Adobe Digital Index indicates that for every 1% of customers who buy a product twice, revenues increase by 10%.

You’ll need to make it a priority to improve your customer service to reliably produce great customer experiences and retain more customers.

Invest In Customer Service To Invest In Customer Experience

Customer service that makes customers feel like you’re going the extra mile to please them is in short supply, with an American Express study finding that 42% of US customers think businesses are helpful but don’t do anything beyond the bare minimum.

The same study found that 22% of customers thought businesses took their patronage for granted, and 4% said businesses didn’t seem to care at all. But that doesn’t capture exactly how devastating poor customer experience is in terms of money lost.

A report by New Voice Media finds that businesses are losing upwards of $62 billion per year as a result of bad customer experience in customer service interactions. Any money spent improving your company’s customer experience during service will save a few customers from taking their business elsewhere.

Improving customer experience via customer service must include measures which make customers feel valued. The best part about making customers feel valued is that it doesn’t have to be expensive–it just needs to graciously give them what they want, pronto.

Cheaper Customer Service Can Provide Better Customer Experience And Higher ROI

The high ROI of investments in customer experience comes from more than mere customer retention; customer service costs can be reduced to increase profits as well.

McKinsey’s report on customer experience ROI finds that it costs as little as $1 to solve a customer issue on social media, which is far cheaper than if the same interaction was handled at a call center. Call center interactions could be as expensive as six times the cost of a social media customer service interaction.

This means that your company can drive your customers to social media customer service channels to simultaneously improve customer experience and cut costs–an appealing proposition for most businesses. The McKinsey report found that companies who prioritized social channels in their customer experience improvement campaigns bolstered their revenues by 6.7% year over year.

But perhaps the biggest way efficient customer service leads to better customer experience and increased revenues is by giving the customer the tools to help themselves through self-service. Seventy-three percent of customers want to solve their own problems rather than reach out to customer service–an investment in self-service experience not only saves your business money in the long run, it’s also what your customers prefer.

It’s far less expensive to provide customers with issue resolution tools which don’t require interaction with your staffed customer service channels.

Crunching The Numbers To Calculate The ROI Of Customer Experience

So, what will the exact ROI of investments into customer experience be for your company?

It’s difficult to predict, especially because 13% of companies surveyed by Worldwide Business Research claim that execution is the biggest obstacle to implementing a customer experience improvement strategy.

If you want a ballpark figure for how much to expect your customer experience investment to grow, check out this spreadsheet. It’s made with a few assumptions, but playing around with the numbers will give you a rough idea of what to expect and drive home the cost of losing customers to your leadership team and help you set priorities for 2

It’s clear that customer dissatisfaction is enormously expensive. Reducing any of the metrics of customer dissatisfaction by improving customer experience is a surefire way to pad your bottom line–so why wait?

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