The ROI of Customer Experience


How to Develop a Strategic Customer Experience Plan

It’s rare to encounter a company that doesn’t have some sense of urgency when it comes to customer experience. We’re inundated with articles, studies, and statistics about the importance of acting quickly when it comes to putting together a plan of action. Let’s get a few out of the way early–95 percent of senior business leaders say that customer experience is the next competitive battleground1, and 58 percent of high-performing marketers are leading CX initiatives across their businesses already.² Urgency is one thing, but in order for companies to truly buy into experience-enhancing initiatives, direct value (whether it’s loss or gain) must be measured. Let’s dive into how businesses can develop a strategic customer experience plan based on those hard values that will both promote urgent action and prove true ROI.

Whitepaper If You’re Not Winning CX, You’re Losing (In More Ways Than You Realize)

In a survey that included more than 170 large companies, more than 80 percent of respondents cited interaction-satisfaction and likelihood-to-recommend as the most key metrics for determining the success of their CX initiatives.³ When customers aren’t satisfied with their experience with a brand, brand loyalty is compromised. Eighty-two percent of people who had a bad experience abandoned the brand altogether⁴, and brands only have a 43 percent chance of retaining disappointed customers one year after an incident⁵. Their likelihood to recommend is affected, too. Eighty percent of unhappy customers spread the word about their poor experiences⁴, creating a network of brand bashers–some of whom may have never even interacted with your brand firsthand.

The most obvious result of a poor customer experience is, of course, disappointed customers. But what tangible losses can be traced back to customers that have poor experiences? And how do we monetize likelihood-to-recommend and interaction-satisfaction? A survey of 1,300 senior executives revealed that potential revenue loss associated with not providing a positive, consistent, and brand-relevant customer experience was estimated to be about 20 percent of their annual revenue (think: $400 million in losses for a company valued at $2 billion)⁴. These losses aren’t only due to customer retention and brand reputation, though. There are numerous ways for companies to lose money due to a poor customer experience without ever losing customers. For example: an unclear channel of communication causes confusion, which results in more support calls or an increase in product returns.⁵

Word of Mouth Matters

A 2006 YouTube video of a Comcast technician asleep on a customer’s couch was just the beginning. Writer Bob Garfield created the website after experiencing some less-than-pleasant interactions with the cable company’s customer service team, and the rhetoric resonated⁶. Other dissatisfied customers came out of the woodworks to listen to his “Comcast Must Die” podcast. Although this was a catalyst for the company to take major steps toward fixing its customer experience shortcomings, they were never able to fully recover, with Comcast still being voted the Worst Company in America by the Consumerist in 2014⁷.

It Pays to Invest in CX

It’s no secret that the ways to financially lose out when customer experience is lacking are plenty, but let’s take a look at the silver lining; Investing time and money in providing an excellent customer experience plan pays off in both reputation and revenue. Eighty-six percent of customers that consider their experience with a brand excellent are likely to repurchase, 79 percent are likely to trust, and 62 percent are likely to forgive.⁸ By providing a well-thought out customer experience that will engage, surprise, and delight, you are creating brand loyalists that will not only reach for your brand over the competition, but will also recommend the brand to others, providing you a growing revenue stream.

When Consumers Feel A Brand Experience is Excellent...

When Consumers Feel A Brand Experience is Excellent...

While a poor customer experience is reflected in monetary loss, an excellent customer experience is proven to yield significant financial gain. And, just a small amount of effort and planning can yield massive payoffs. If a brand can pull off just a one point gain on Forrester’s Customer Experience Index (which takes into account customers’ feelings around needs being met, ease and enjoyability of experiences, hold times and agent friendliness, etc.) it’s looking at up to $175 million in additional revenue.⁴ 

ROI of CX_v1

Real World Examples

Companies that take time to strategize their customer experience see the payoff in a multitude of ways. Take Ascena Retail Group, for example. The parent company of popular clothing brands such as Ann Taylor, LOFT, and Dressbarn reevaluated how its customers were shopping and in turn provided an easier way to communicate and purchase across channels. This effort paid off when they saw not only happier customers, but a 40 percent increase in revenue.⁹

While the wins that accompany a stellar customer experience are great, the losses that accompany a poor customer experience may be even greater. We all know the stories of brands like Kodak and Sears–the companies that failed to keep a pulse on their customer base and quite literally paid the price when they were forced to file for bankruptcy. It’s said that customer experience is now the key brand differentiator–even above price and product–which is why these companies ultimately failed even with competitive products and prices.

Your Value-Based CX Strategy Starts Here

There is true ROI associated with providing a well-thought out customer experience, and there are significant losses for those companies that fail to strategize with a customer-first mindset. But how can you ensure that your strategy will yield maximum payoff? And how can you justify the up-front time and spend to the one footing the bills internally? We’ve got a few steps to help you get started:

Take Stock of Where You Are

Start internally. This is where you’ll map out exactly who within your business is involved with the strategy behind your customer experience, and how decisions get made regarding CX. You’ll want to be sure you’re aware of where the budget for this strategy comes from, as that purse-holder will most likely need to be involved in strategic conversations moving forward.

After mapping out what your customer experience looks like from the inside, now it’s time to take stock of the experience from the outside. If you haven’t already done so, this is a perfect time to create a Customer Journey Map, which details the typical touchpoints a customer has throughout their journey with your brand, and what resources your brand is providing in each of those touchpoints.

Make It Measurable

Once you have a grasp on the current state of your processes, it’s time to dive into how your customers perceive those processes. This is by far the most important information you can gather, and is crucial in order for you to put together a value-based case for investing in your customer experience strategy. In order to gather this crucial information, you can conduct customer surveys, hold focus groups, gather reviews from online channels, etc. 

No matter how you gather the information, it is essential that you implement an ongoing measurement and optimization process. You need to make sure that you’re constantly measuring your efforts for effectiveness and impact on your overall customer experience. You’ll also want to have a process for optimizing your efforts so you can make changes based on the results you’re seeing. This can include formal customer surveys, informal pulse checks with customers, internal feedback, focus groups, digital measurement (i.e. website visits, engagement, etc.)

Identify Pain and Measure Change

After gathering some initial feedback from your customers, you’ll likely have a better idea of some weak spots within your customer experience processes. This is where you’ll want to focus first as you begin to reimagine your customer journey. It may take some trial and error, but taking the time to discuss, strategize, test, and revise some of these changes before full implementation will save you in the long run. 

Remap Your Customer Journey

Determine your project plan for getting from your current customer journey to your ideal customer journey. When determining what changes to implement when, you’ll want to consider balancing changes that will give you quick wins with changes that will have a significant impact on the customer experience. It’s important to remember that having a strategic focus on customer experience is a marathon and not a sprint so you don’t have to accomplish it all right away.

Never Stop Measuring

In every step of this process, it’s imperative that you document changes and the subsequent investments associated. KPMG recommends linking these investments back to activity measurements such as attrition, repurchase rates and/or customer lifetime value in order to prove ROI over time.10 By carefully documenting your customer experience, you’ll quickly be able to see areas that you can improve to yield even better results. 

It is imperative that you not only keep a pulse on your customers and their feelings toward your brand, products, and services, but also record and react to their feedback in real time. Putting in the small amount of effort on the front end to set processes that will measure customers’ feelings will ultimately pay off in the end, with increased customer retention and overall brand loyalty.


¹Proving ROI on Customer Experience, McorpCX, 2015
²58% of high-performing marketers are leading cx initiatives across the business
³Turn Customer Metrics Into Business ROI, Bruce Temkin, 2014
⁴The Customer Experience Imperative: How to Justify The Investment, Bill Hobbib, 2016
⁵The Value of Customer Experience, Quantified, Peter Kriss, 2014
⁶Implementing Word of Mouth Marketing: Online Strategies to Identify Influencers, Craft Stories, and Draw Customers, Idil M. Cakim, 2010
⁷Congratulations to Comcast, Your 2014 Worst Company In America!, Consumerist, 2014
⁸ROI of Customer Experience, Customer Experience Matters, 2016
⁹The 2015 Customer Experience ROI Study, Watermark, 2015
¹⁰How Much is Customer Experience Worth: Mastering the Economics of the CX Journey, KPMG, 2016

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