How to keep CX funded during a recession
There can be little doubt that we are about to enter a recession; the only question is 'how deep?' Unfortunately, the potential impact on customer experience programmes, and the professionals who lead them, may be just as profound.
In this article, I will explain why CX professionals must become expert in building and pitching a compelling business case to senior executives if their program is to survive the recession (or even better, win additional funding).
Even before the outbreak of COVID-19, CX professionals were under pressure to demonstrate the measureable business value of delivering great customer experiences. Now, looming recessionary pressures will only make this challenge harder - executives are going to be looking for ways to reduce costs as they face a 'perfect storm' of economic pressures:
- They have already invested heavily in transformation - for example, in the ‘dash to digital’ and virtualising their business; what’s more, this may well have been using funds not allocated for this financial year and therefore borrowed from elsewhere
- Revenue is under pressure - the lockdown severely hit sales in all but a few sectors, and the need to accommodate social distancing may further impact future sales (for example, restaurants may not be able to seat as many customers, deep discounts may need to be offered to tempt wary customers out of their homes)
- Costs are increasing - supply chains have been disrupted and the cost of raw materials (if available) are higher. Meanwhile operating costs have also increased (for example, enabling staff to work from home is not cost-free, neither is additional PPE, or sanitisation measures)
- Low consumer confidence – many consumers are both anxious and uncertain about what the future may hold, as well as worried about their own economic outlook. As a result, they are going to put off making significant financial decisions until they feel more confident.
It’s no surprise then that CFOs are looking at every aspect of their organisation to see where they can cut costs – especially if they want to fund a continuing and accelerated transformation programme, or fully operationalise some of the short-term measures they put in place during lockdown.
To survive a round of significant cost cutting, it is now vital that customer experience professionals can show and quantify the value they and their programs bring – in terms that will engage and win the support of every member of the leadership team. After all, we have probably all seen examples of where a good business case with a positive ROI still fails to get funding, but why? How do we avoid the same fate?
According to recent research conducted by the CXPA Ireland and W5, "Getting access to funding and CX specific budgets to drive CX change and build a roadmap is proving challenging. Many practitioners are not confident in measuring the return on investment.” – CX - On The Cusp? Customer Experience Management in Ireland 2020
I think that some of this can be put down to some of the attributes of those in the profession – they are often from customer facing / customer service roles, where focussing on and satisfying the needs of customers takes precedence. In addition, whilst they have experience in managing a budget and costs, they’ve often not been given opportunities to develop a more holistic, business-centric business case – one that balances the need of the customer with those of the organisation.
In thinking about these challenge, I have identified some fundamental skills that CX professionals need to master if they are to make a winning business case to senior leadership:
1.Making a sound financial case – using terms that business leaders are familiar with and yet, whilst essential, a positive RoI on its own is not enough
2.Quantifying the benefits – calculating the incremental benefits that a good CX programme brings – in both the short and the long-term
3.Allocating true costs – ‘average’ is not your friend: identify where costs are actually being incurred and how your CX program impacts them
4.Optionality – if the axe must fall, work with the CFO and the leadership team to prioritise what must be preserved, what can be shelved, and what can be cut
5.Tie it all up in a bow – in a previous article, I stressed the need to ‘join the dots’ for senior leaders – they neither have the time or your experience to work out the business case for themselves.
This will require getting comfortable with both the way that organisations thinking about finance and the psychology of the Executive Suite and how they make funding decisions.
Finally, I will leave you with a final quote…
“CX metrics have their place, but the lack of ability to tie CX back to financial metrics underpins the challenge many face. Focus on ROI must be the priority for 2020 to secure the future of our discipline.” - Claire Sporton of Confirmit, commenting in MyCustomer.com’s ‘Rise of the customer experience leader: 2020 research report’
You might also be interested in
Peter is an expert in using a combination of data and behavioural sciences to lead transformation in the field of Experience Management (XM); encompassing Customer Experience (CX), Employee Experience EX) and Partner Experience (PX) within an omnichannel environment (and...