Will data and insight investments help CX leaders to calm ROI concerns?

While the findings of the latest MyCustomer survey of customer experience leaders reveals that organisational silos and company culture stubbornly remain the biggest obstacles to CX programme success, concerns about budgets and investment are soaring. 

The research report – Customer Experience Leadership In An Uncertain Economy – picked the brains of 143 of the best and brightest customer experience leaders in the sector, in an attempt to unearth the biggest barriers that are preventing CX programmes from fulfilling their potential.  

Published in collaboration with the European Customer Experience Organization (ECXO), the findings revealed that budgets/investments have seen the sharpest rise in concern amongst our respondents – with 39% saying it represents a potential obstacle to CX success in the latest study, compared with only 15% citing it as a concern in 2020.

Considering the current economic uncertainty that has seen the UK hit with inflation, supply chain issues, and constant recession predictions, it is unsurprising that our leaders share these financial concerns. 

Indeed, the CX space has been awash lately with expert tips and advice on everything from proving ROI, to effective cost-cutting – all in anticipation of reduced budgets. 

So what can CX leaders do to prevent their budgets from being slashed?

Time to put up or shut up

For Shaun Smith, founder of Smith+Co Consultancy, the answer is simple: “When margins are under pressure and costs are rising, then every department will be asked to justify its budget and make cost savings where possible. That means CX departments have to prove their worth. That requires a much better line-of-sight between actions and outcomes, particularly financial.”

Sue Nabeth Moore, customer success consultant and French ambassador at the ECXO, is also a firm believer in the importance of customer success and CX teams showing their value. “In customer success, leaders need to prove their worth in order to maintain and even increase their budgets,” she emphasises. 

However, saying something and doing something are two very different things – and when it comes to CX, teams often struggle to prove their ROI.

For Moore, this issue is due to CX and CS teams not playing to their strengths, and focusing on the wrong metrics – but there are signs that things are beginning to shift in the right direction.  

“Until now, many customer success metrics have been tracking indicators such as retention or negative indicators which mitigate risk, eg. saving at risk customers and churn reduction. Many of the reasons for these risks lie in different parts of the company, e.g. bad fit customers, bad product, poor service, not delivering upon the promise, etc. It has therefore been difficult to prove the impact of CS.

“But CS leaders are beginning to mature in their ability to do storytelling around their impact, via data that ties to the bottom line and profitability of the company. Many customer success leaders for example own or contribute to the metric of NRR (net revenue retention) which measures the capacity to retain and expand customers. It is widely used by investors as one of the key metrics to determine the health of a SaaS or subscription-based business. 

“However, CS leaders are still struggling to measure their impact on the profitability, by measuring CLTV rather than cost to serve, for example. Leaders should focus on proving their impact and ROI via key financial metrics around: retention, churn reduction, upsell and cross sell, financial benefits of internal alignment, and financial benefits of retaining and developing CS staff.”

Steve Belgraver, senior manager of client delivery at NTT and a founding member of the ECXO, also commented on the disconnect between CX’s proven impact on ROI, and leaders being unable to effectively showcase this. 

“The gap between the majority anticipating CX to influence the bottom line and the few that actually measure and monitor is a confronting reality. 

“Although the ROI of CX programmes is often touted as one of the most effective ways to get the c-suite onboard and actively driving customer-centricity, too often the responsibility actually rests in an organisational silo – often the marketing department.”

For Belgraver, the best way that CX leaders can avoid this silo is by adopting a more sophisticated strategy that aligns company objectives with individual goals. 

“Ideally, organisations refresh their strategic aims at the start of each financial year triggering the process from the very top, cascading down to form a nested hierarchy of business objectives reinforced with individual performance KPIs. Clearly and convincingly translating the ROI business case into individual targets and tasks will help ensure everyone is pulling in the same direction.”

Investing in data and insights

With proving the ROI becoming so important to ensuring future company support, it's perhaps no surprise to see that the investment plans of CX leaders are very data and insight focused. 

Over a third (35%) of respondents told us that they anticipated investment in Voice of the Customer tools, making it the most popular tools. But close behind are customer journey analytics (32%), and CRM and customer data platforms (both reported by 29%).

Arguably this focus on data (in particular, CRM, CDP and analytics) and insight (Voice of the Customer) is highly reflective of the need to better understand customer requirements and outcomes, and demonstrate value and ROI.

Susanne Fries-Palm, chief customer officer at Yonder, and a founding member and senior advisor of ECXO, notes: “If you want to have a budget for your CX programme, you have a strong advantage if you can point out the positive outcome with facts and figures instead of assumptions."

She continues: "The focus on data and insights is driven by the need for organisations to understand their customers better and to use this information to drive improvements in the customer experience. Investing in these technologies allows organisations to collect and analyse customer data, identify opportunities for improvement, and drive positive change in the customer experience.”

Founder of the ECXO, Ricardo Saltz Gulko, adds: “We all know that data is driving our ability to understand our customers better. Any basic journey mapping that is not driven by accurate customer data and emotions on B2B has minimal value, especially in journey orchestration and professional journey mappings. 

“VoC is a natural acquisition and consequence for many companies to better understand more about customers, CX basics, and the importance of adequately closing the feedback loops.

“Technology acquisition demonstrates that the CX market is progressing faster, and companies of all sizes are more focused on their customer's needs than before."

But Shaun Smith has a word of warning for those hoping that tech investment will be a silver bullet solution to the challenges they are currently confronting.

“In an attempt to justify budgets CX leaders are desperate to measure the customer experience and show how this links to ROI. The problem is they think, or are persuaded by vendors, that buying a VoC platform will automatically do this - but our view is that you need to be clear on what is important before you decide how best to measure it and how often,” he notes.

“Ideally, if you identify the key drivers you shouldn’t have to ask customers for feedback except on occasion when you really want to know their views rather than simply measure your operations. Customers are getting increasingly fatigued and irritated by this trend of receiving a text or email immediately following each and every transaction. This isn’t true VoC, it is lazy quality control.”

While there is a tendency to try to spend your way out of a problem, what if the solution to the ROI problem wasn't a (tech) solution at all. What if more prudent investment was the best way of benefiting CX programme ROI? Sylvia Lohr – principal marketing manager of Nuance Communications, and co-founder and ambassador at ECXO – certainly thinks so. 

“When talking about CX and costs, companies need to understand where their ROI is coming from and finally, they need to understand their customer lifetime value. Aside from the pure marketing and sales costs, companies should also start reviewing their investments in technology and people, and adjust to their current needs.

“They should start planning in phases, and define short, middle and long-term goals. This would avoid investing in fast-to-implement technical products which might help short-term but will become much more inefficient and expensive in the middle- and long-term.”

Whatever the approach, Kari Korkiakoski, CEO of Futurelab Experience, believes that it is clear that customer experience management now needs to step up. "We are getting to the stage where CX needs to deliver value," he emphasises. "CX needs to show numbers."