customer experience return on investment

The myth of customer experience ROI that could be costing you millions


In this extract from 'The Human Experience' by John Sills, he explores the fatal flaw in customer experience ROI measurement - and how to find out if you're one of those falling into the trap. 

20th Mar 2023

The train company that shuttles me in and out of the city wrote me a letter I’d been hoping to receive. I could finally get rid of my old paper ticket and replace it with a shiny, contactless card. The smartcard arrived a few days later and I went online to load my existing season ticket onto it.

And that’s where the problems started.

They seemed to have decided to gamify the experience, providing a cryptic challenge involving multiple systems and screens, apparently unlockable to a Luddite like me. I asked their Twitter team for help, who suggested a visit to the local train station. They suggested a visit to one of the bigger stations, who suggested I phone the services helpdesk. They suggested the bigger station again. There were lots of mentions of ‘loading’ and ‘validating’, but not many offers of ‘we’ll sort that out for you’.

This experience went on for over a month, trying to set up the new card with a team of people who meant well but clearly had no idea what to do. It was pretty terrible for me as a customer, but clearly very costly for the company too: repeated failures causing increased calls and queues for them to deal with. While this was happening, I received two more letters suggesting I apply for a new smartcard.

That same month, I bought a new car. A few days later, I received three letters from the company, on the same day, in three different envelopes, all giving information about slightly different parts of my contract.

For both of these companies, my preference is online and email only, and has been for about 15 years.

This is where the traditional question of the ‘return on investment of customer experience’ is flawed. It’s not simply about working out how many more products can be sold by installing a new webchat function.

Firstly, many organisations seem to forget that the ROI of a good customer experience is, well, more new customers and more current customers buying more from you (and the ‘return on investment’ on that is through your business you are making people’s lives better).

As the UK Customer Satisfaction Index (UKCSI) reported in 2018 (UKCSI report, January 2020): "Organisations that maintain higher customer satisfaction than their sector average have achieved stronger turnover growth, profit and employee productivity than those whose customer satisfaction is below the sector average.’

Secondly, many organisations don’t connect customer experience and commercial performance in a way that shows the money that is being wasted, failing to consider the cost of inaction. This could be the waste we’ve seen above, or it might be having to fix the things that have gone wrong: repeat calls, avoidable errors, complaints.

Consultancy firm Vanguard call this ‘Failure Demand’, which shows the costs associated with not getting something right first time: Failure demand is defined as “a demand caused by a failure to do something or to do something right for the customer”. Failure to do something – turn up, call back, deliver something – causes the customer to make another demand on the system.’

Finally, organisations fail to consider the cost of opportunities lost through bad customer experience.

When I moved house, I compared energy companies. They all answered the phone quickly, seemed keen to tell me about what they could offer and made a compelling case to join them yet none of them asked for my contact details to get in touch nearer the time of my move and help with the switching process.

I checked out the broadband providers too. In an entertaining webchat with one, they insisted it was impossible for them to send the equipment to my existing address:

Me: Hi, we’re moving house and looking to get the broadband sorted so we can set it up on the day we move in. If we join you, can I set up the account and have the equipment sent to my current address, please?

Agent: No. It’ll be sent to your new address.

Me: But the current owners live there.

Agent: You won’t need to wait in for a delivery as our box has been designed to fit through most letterboxes!

Me: But we won’t be living there. Are there any other options?

Agent: There are no other options.

Me: There must be a way. Can you talk to someone and find out, please?

Agent: It cannot be delivered to an alternative address. You can go to a store. They might have a router there.

Me: Can you check if they have one?

Agent: No. You have to visit the store.

Me: Right, that’s not great really.

Agent. You’re welcome. Thanks for chatting with us. Have a great day!

*Chat ended by agent*

The big exception in my house-move debacle was Direct Line, first on my list for home insurance after impressing me with their car insurance experience. The process was quick, simple and, as promised, and the agent also offered to change the address on my car insurance policy while I was on the line.

Of course, organisations should consider which improvements will make the biggest difference and invest accordingly but the decision should be less about trying to calculate a theoretical answer to how much money it will make and more about how much happier it will make your customers, how much more attractive you’ll be to potential customers and how much money you’ll save in wasted effort and failure demand. It’s closing the gap between the marketing promise and the customer reality – a gap that could be costing companies more than the price of the posters in the first place. After all, bad customer experience is expensive to provide.

As a result of people and organisations believing in these myths, an empathetic, systematic approach to customer experience is often replaced by a functional, transactional one. If you’re wondering whether your company is one of these that’s falling into the trap, it’s easily recognised by – among others – these six symptoms:

  1. Reactively fixing pain points as a customer experience strategy (rather than proactively designing for the future);
  2. Prioritising customer experience effort primarily by what customers are complaining about, or what the CEO has said is important because of a single complaint they received (rather than by what will create value for customers and the business);
  3. Subscribing to generic frameworks suggesting that all customers want the same outcomes, such as ‘personalisation’ or ‘speed’ (rather than creating design principles specific to your business – I may want my food to arrive quickly in McDonald’s, but I don’t in a Michelin starred restaurant);
  4. Building large expensive journey maps that end in a recommendation of ‘Transformation’ (rather than having a laser focus on the few moments that matter most);
  5. Obsessing over a single number as a proxy definition of success and measuring everyone in the organisation against it (rather than creating a balanced scorecard based around earning customer decisions in your favour);
  6. Pestering customers for feedback and focusing on averages, not actuals (rather than using the information you already have available to you and focusing on the experiences at the edges).

Instead of loyalty, organisations need to focus on usefulness. Instead of feedback surveys, on genuine understanding. Instead of ROI, on the cost of inaction. However, while that’s easy to say, it’s hard to do.

'The Human Experience: How Making Life Easier For Your Customers Can Boost Your Organization's Reputation and Profits' by John Sills is available now. 


Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.