Money Talks or Budget Walks

Customer experience (CX) is a business imperative that can be the difference between organizational success or failure. Especially in the age of Generative AI, consumer attitudes are more unique and changing faster than ever, with fierce competition and higher demands from brands. 

Ipsos’ Return on Customer Experience Investment (ROCXI) approach provides a proven methodology for combining survey data, financial data, and operational data to calculate the value CX investments bring to the business.

Achieving ROCXI is accomplished in three steps.

1. Align and Select: Align CX goals with overall business objectives by selecting the metrics that best reflect the Customer Experience and the desired business outcome.
2. Assess and Analyze: Conduct a data assessment to set expectations on what is achievable with the available data and run analytics to determine ROCXI.
3. Communicate and Rally: Communicate the impact of CX across the organization and rally the entire organization around the CX mission and the impact to the bottom line.

The $103M Impact of Improving Satisfaction

A global automotive services retailer was at a crossroads with their CX program. After over a decade of running their CXM program, the insights were spotty at best and lacked activation. Stakeholders were left questioning the ROI of their CX initiatives. Enter ROCXI. Ipsos conducted workshops with key client stakeholders to select the right KPIs and assess the available data to include in the ROCXI analysis.

Through ROCXI, Ipsos demonstrated that if the client moved just 10% of customers scoring their satisfaction a 1-8 to a 9 or 10, it would result in a gain of $103 million in revenue or 2.5% in annual sales. Also, just a 1% decrease in customers rating a 9 or 10 would put $13 million in revenue at risk. 

A year later, after making significant improvements in their CX program, the client showed the investments had paid off. They realized $10 million in revenue gains from improved customer experience.

Align and Select

Before getting into the data, it’s critical to align on CX goals throughout the organization. Thoughtfully consider the KPIs that best reflect your business objectives and the instruments you will use to measure CX.

Next, define the financial/operational metrics that most align to the CX goals you identified. It’s easy to default to financial KPI’s like revenue or spend; however, if financial outcomes are not the primary metric your CX program is looking to drive, other metrics like retention, advocacy, or engagement might be better measures. Most importantly, all levels of the organization must “buy-in” to both the CX KPI and the financial/operational metrics that will be used to show the Return on CX Investment (ROCXI). And there must be trust in the underlying data and any assumptions that go into modeling impact.

Assess and Analyze

After aligning and selecting your KPIs, it’s time to drill into your data sources. Attempts to measure ROCXI are often stifled in search of the perfect financial/operational dataset that aligns to CX surveys. While having a 1-1 match between survey and financial data certainly increases the precision of the ROCXI evaluation, it is not necessary to answer how CX is impacting financial/operational outcomes. Even with high-level financial/operational data, a ROCXI outcome can be produced, and business acumen plays a key role in any driving assumptions.

In addition to the financial/operational data at the core of ROCXI, the analysis highly benefits from other organizational data. In a ROCXI analysis completed for an automotive services retailer where we found a 10% increase in top 2 box respondents resulted in the opportunity to increase revenue by $103 million, one of the key components of the model was the level of technician certification. Business descriptors like region, trade area, and other details regarding the location make ROCXI applicable to frontline employees.

While ROCXI can be achieved with just an overall CX KPI, we recommend embedding drivers of your CX KPI in the survey. It is possible and effective to measure the ROI using only the overall CX KPI and business/operational inputs; however, mature organizations take it all the way from the drivers of CX through ROCXI using financial/operational outcomes.

A global equipment manufacturer used ROCXI to validate their investments in their Customer Feedback Management system, allowing them to understand both the drivers of their CX KPI and measure how that KPI drives revenue. The lead client said, “This has been a powerful tool that has helped bring measured value to our investments in CX that we’ve never had before. The conversations are now grounded in facts versus the feeling that something might be a good idea.”

After the assessment, the data points are connected and the iterative modeling process begins. It is critical to the success of the ROCXI analysis that business context is included in addition to the science outputs to produce the right, explainable model that will make sense to business users.

Communicate and Rally

Now that the results from the model are complete, it is time to communicate those results and rally all levels of the organization around the CX mission.

The key to rallying the organization around the ROCXI impact is simulation and scenario planning, showing how changes in both the drivers of CX and the CX KPI will drive improvement in financial/operational metrics. It is also important to go beyond the ROCXI calculation and work out how to improve the key CX areas identified. This allows for setting high-level CX objectives at the upper levels of the organization and then showing the specific actions that should be taken at the field/location level to improve CX.

CX Professionals continue to be expected to do more with less. Consequently, there is the increasing need for tangible evidence of the impact of CX, not only to engage investment from the C-Suite, but also to activate frontline employees by showing what is in it for them when they improve the customer experience. Quantified impact of improved experiences is a game changer at all levels of the organization. 

Quantifying the impact of CX on the bottom line can appear to be a daunting challenge and getting all levels of the organization rallied around CX and its impact an even bigger hill to climb. With ROCXI, brands are empowered with empirical evidence that CX drives financial/operational gains at all levels of the organization. For more information on how Ipsos can help you make the most of your CX investments, contact Sarah Logman.