Five ways to defend the customer during economic uncertainty
Now more than ever CX owners need to articulate the value of CX investments and how improvements in CX KPIs translate to revenue. Here’s a guide.
During times of economic uncertainty, budget owners are faced with pressure to defend, rethink or limit investments. In these times, Experience owners must make even smarter decisions on how they allocate their CX budget. Decisions must be structured to maximize the impact of each dollar and minimize the risk of churn from underinvesting in key areas. And more than ever, brands must articulate the value of CX investments and how improvements in CX KPIs translate to revenue.
Here we outline five common challenges faced by CX leaders in times of economic uncertainty. While each organization is unique, there are best practices every CX leader can employ when faced with budget pressure.
Challenge 1: Stopping Short
“A multi-phased effort to improve the customer experience is at risk of being paused before completion, which will delay ROI and put the quality of outcomes at risk. As a CX leader, I need to defend continuity of this past, in-flight strategic decision.”
— LINDSAY, HEAD OF CUSTOMER ACTIVATION, FINANCIAL SERVICES
The best way to maintain buy-in and secure incremental budget, especially for longer-term investments, is by showcasing early wins and promoting leading key performance indicators (KPIs) of success. If a campaign to evangelize success with data points isn’t already in place, we recommend quickly gathering proof points and socializing them across communication forums and during business updates.
Another proactive action is to brush off the original business case and revalidate it. This can mean reinvigorating the storyline in an action-oriented way to point to business outcomes, or it can be updating the business case with more recent information. When a major investment comes under scrutiny, the key is to show that the need is still real and the early signs of success indicate you must keep going to achieve value realization.
“Just 12% of CX leaders say their organization is “leading” based on Ipsos CX’s Maturity Framework, which measures six core competencies. Many clients have the foundation for great CX in place, but without continued transformation, full achievement of potential will not be reached. CX leaders must continue to advocate for the customer year after year, which makes CX practitioners some of the most tenacious leaders across industries.”
— SOURCE: IPSOS CX GLOBAL VOICES
Challenge 2: Interrupting the Insights Engine
“A long-standing CX insights program is seeing budget pressure, but the insights from the program are used to power decisions, and even financial compensation, across business units. As a CX leader, I need to rally my stakeholders in support of the importance of this program.”
—ANTHONY, CMI DIRECTOR, TELECOMMUNICATIONS
The implications of changing long-standing programs are often not fully understood when budget pressure is first applied. Our recommendation is to defend the merit of the program by crowd-sourcing support, while also taking this as an opportunity to evaluate how to optimize it. Gathering stakeholder feedback across business units allows you to demonstrate how truly integrated the program is, and by using the voice of your internal customer, it becomes easier to defend merit without being “defensive.”
While collecting that feedback, it’s also wise to pressure test the current state—is the current cadence required? Are all of the reports still being used? Is all of the data being collected still relevant? Can anything be automated? Proactively identifying optimization opportunities demonstrates that you understand the business pressure and are open to adapting. Since optimization may require trade-offs, we recommend actively engaging stakeholders to identify and discuss those implications. By having early sign-off, or their joint defense on the status quo, CX leaders have a more united front for protecting or evolving long-standing programs that support the business.
Challenge 3: Articulating Value
“My organization hasn’t been great at articulating the impact of CX investments, so now my budget is at risk. As a CX leader, I need to quickly demonstrate the ROI of recent CX investments and size the potential impact of future investments.”
—ANNA, HEAD OF CX, RETAIL
In a recent Ipsos CX global study of CX leaders, only one in six companies have models in place capable of linking CX success to financial performance. This challenge makes it difficult for CX leaders to justify current spend or petition for further investment.
Ipsos CX has a proprietary approach to measuring the return on customer experience investments (ROCXI), but when the heat is on, establishing a full-scale measurement strategy may not be an option. When that’s the case, we recommend CX leaders select a few key investments to perform a retrospective pre/post impact analysis. Another quick and dirty option is to run a short “pulse” survey asking highly engaged customers about how their recent experience with the brand may have improved.
While these may help in the near term, we still advise implementing an ongoing measurement program complete with KPI targets and a plan to track and evangelize success.
Challenge 4: Maximizing Impact
“We know there are a number of customer pain points that are causing churn and preventing us from maximizing the value of customers we acquire. We need to make smart investments in initiatives that will have the broadest impact and simultaneously maximize value from current high value customers. As a CX leader, I need support figuring out where to allocate my budget.”
—RICK, VP CUSTOMER SUCCESS, TECHNOLOGY
One of the main challenges faced by CX leaders is prioritizing the litany of opportunities to improve and enhance the experience. In times of limited resources, we advise clients to increase their focus on investments that will impact customers who fall into their high value and high-potential value segments. When supporting clients in this effort, our first step is to identify key drivers of satisfaction and spend for the high value cohort.
Next, we estimate the impact of improvements to those key drivers for the entire customer base knowing that although high value customers will yield higher impact, there can be a halo effect for the full audience. By combining the estimated cost of the investment with a data-driven simulation of the upside, CX leaders can be confident they are prioritizing the right opportunities and have a solid business case in place.
Challenge 5: Securing Buy-In
“My executive leadership is bought into the principles of customer centricity, but always prioritizes budget for core functions like sales, marketing and operations over CX. As a CX leader, I need to demonstrate how investments in CX also drive impact across sales, marketing and operations.”
—EDDIE, CXO, MANUFACTURING
In many organizations, the CX business function is still in early stages of maturity. Globally, only one third of organizations have a formal governance structure in place to allocate resources towards CX activities. Since getting a formal (and functioning!) governance structure in place won’t happen overnight, we recommend CX leaders start by associating existing investments across business functions to the central CX mission. From there, the conversation can focus on “where to go next with CX” instead of a tug and pull between the CX organization and other business functions.
By engaging cross-functional leaders, CX leaders can tell a unified story and demonstrate how coordination on CX investments will yield faster, better outcomes than fragmented efforts. If a key colleague is bearish on the potential from CX, it’s the CX leader’s prerogative to clearly articulate how CX investments will help them achieve their KPIs, make life easier for their team, and better deliver the brand promise. By taking a “connector” approach, CX leaders can demonstrate to executives that investing in CX doesn’t necessarily require incremental corporate budget; rather, it can be about reallocating budget or having a governance model in place that gives the customer a figurative seat at the table on existing budget decisions.
As we continue through these uncertain economic times with a looming recession, continued inflation, and relentless supply chain challenges, we expect CX leaders to face additional scrutiny in their quest to better the customer experience. Now is the time to make even smarter investments and close any historic gaps in attributing CX investments to revenue.
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