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Why your CX budget may be cut - and what you can do about it

Research suggests CX budgets will increase this year. But with higher budgets comes higher expectations - and many organisations are poor at demonstrating the business value of CX.

5th Feb 2020
Contributor MyCustomer
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With Gartner research suggesting that nearly three-quarters of customer experience leaders anticipating their budgets will increase this year, the expectations being placed on the outcome of their activities are higher than ever.

And this growing focus on - and investment in - customer experience management is encouraging organisations to drive CX at a board level, ensuring that it is receives appropriate scrutiny. 

For customer experience leaders, this puts additional pressure on them in the coming year to ensure they are able to measure and demonstrate the business value of their CX programmes - something that has historically been a challenge. 

Those that fail to do so, could see their budgets cut - or their teams culled, with Forrester already warning that as many as one-in-four CX professionals could lose their job in the coming year as a result of failing to demonstrate the business value of CX programmes. 

Trouble on the horizon for CX?

According to Gartner’s ‘2019 Customer Experience Management Survey’, which ingterviewed 401 respondents in the US, UK and Canada, nearly all respondents (86%) believe that they will mostly, or entirely, compete on the basis of CX over the next two years. So it’s little wonder that organisations are increasing investment in CX – with 54% of those surveyed predicting a slight CX budget increase in the coming year, and a further 20% forecasting the rise will be a significant one.

These figures demonstrate that investment continues to gather pace – in the previous 2017 poll, a  mere 47% expected to see more money being assigned to CX.

This suggests that, two years on, CX programmes are delivering results, and the top three perceived benefits reported by respondents consisted of increased revenues (63% of respondents), increased customer retention and reduced churn rates (55%) and increased customer lifetime value (54%).

As a result, some 96% of the CX leaders questioned believe that their programmes have met or exceeded customers’ perceptions over the last 12 months, while 93% feel they have met or gone beyond managers’ expectations. These figures compare with 81% on the customer front and 75% on the management side of things during the last survey in 2017.

But how well is the ROI of these programmes actually being communicated to company execs?

Harley Manning, VP and research director at Forrester, believes that the only metrics that matter will be those with a dollar sign in front of them. 

He noted: "CX leaders who can’t prove their value to the business will find themselves on the street, just like the dozens of high-profile CMO positions wholly eliminated in the past year — including those at Johnson & Johnson, Walmart, Netflix, McDonald’s, and Kellogg’s.

"Those who do keep their jobs will do so by ensuring that their metrics and measurements relate to what matters most: KPIs with a dollar sign in front of them. We expect that financial services industries will be hardest hit by CX job elimination, especially in retail banking and investment firms. This dynamic will also be important in B2B firms, where executive teams tend to be even more skeptical about the business impact of CX relative to other factors such as price and contractual lock-in."

The findings echo Confirmit research from last year, which indicated CX budgets are stalling. Confirmit’s State of CX 2019 report concluded that to get more CX investment, customer experience leaders will need to prove how their programmes are delivering business value now – a challenge when the study's findings also indicated that few organisations are presently able to demonstrate ROI.

This growing scrutiny has also meant that the expectation is that customer experience programmes will increasingly report directly to the board. New research from Gobeyond Partners found that over three-quarters (81%) of the 400+ managers that it interviewed said that customer experience must be driven at board-level. 

Measurement improvements required

Given the growing focus on CX programmes, in particular from the board, it is unsurprising that there are signs that CX leaders are devoting greater time to demonstrating the business value of their work. 

In Gartner's 2019 survey, three-quarters of those questioned indicated they had spent time calculating the business impact of improving their CX compared with only 48% of them two years ago.

But according to Gartner, the CX metrics used by most organisations are still too widely diffused and tend to focus on easy-to-collect but ultimately weak indicators of customer perception. So while work on demonstrating ROI is increasing, it is still failing to hit the mark. 

As a result, the research house recommends that businesses would benefit from:

  • Changing their approach from one of control to facilitation in order to ensure that CX programmes are properly executed across the enterprise. The idea is to encourage all staff to take ownership of their part of the CX;
  • Consistently measuring the value of improved customer satisfaction to the business in order to justify and maintain current growth in CX budgets – something that is particularly important when fears of an imminent recession are widespread;
  • Eradicating poor CX metrics by dedicating a portion of larger budgets to collecting more useful CX measures in order to improve the identification and diagnosis of CX problems and drivers.

 

 

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