Of course everyone wants to choose the customer experience initiative, but which project will the CEO likely fund? At the end of the day, CEO’s are under an enormous amount of pressure to improve financial performance of their organization.
The good news is, improving customer experience the right way delivers tangible, immediate, financial impact to your organization and at the same time improves your customer experience. While we all know that improving the customer’s experience will increase revenue, decrease costs, and mitigate risks, proving it to a group of executives can be challenging for some.
So where do you start?
1. Change your mindset. Your new mantra = "I lead a profit center"
It’s been beat into our heads for decades that customer experience/service is a cost center. I encourage you to take the leap, throw away that old mindset and embrace the new mantra "I lead a profit center". Realize that this shift in mindset is going to be hard, but you can do it! You drive business value to your organization and my goal today is to equip you with some tools you need to prove it. So, you must think of yourself and your section of the organization as a profit center, because you are. As a side note, I heard a recent statistic that 62% of all live communication that your customer has with your organization happens directly with your contact center. That speaks volumes!
2. Understand how your organization is motivated
It’s important to understand that any project that adds value to your organization will tie back into at least 1 of the following 3 categories.
- Generating Revenue
- Improving Efficiency
- Eliminating risk
Each one of these categories is extremely important, however the importance of each is different in every organization. For example, if you are a for-profit business and the CEO has just made a mandate that the organization will increase revenue by 20% it’s obvious that generating revenue takes priority. However, if you work for a hospital, eliminating risk is probably the driving motivation.
Understanding the motivation of your company not only helps you “sell” your project internally, it helps you choose to tackle projects that align with the goals of your organization.
3. Tie your initiative quantitatively back to your organization's primary motivation
While many people think that showing an ROI takes financial wizardry, it really doesn’t. As a matter of fact it’s pretty simple. All you have to do is tie your initiative back to at least 1 of the 3 categories mentioned earlier.
Here are three simple examples, one for each category mentioned above that can help you get a kick start to building your ROI:
Generating Revenue – Imagine that you are a customer experience executive and you have learned through survey data that your customers would like the ability to interact with your support organization through web chat. Now imagine that you have found a vendor that estimates the cost to implement chat for your organization at $100,000. If you stop here, you will be killed in the executive business case review because it appears that this is just going to add financial burden to your organization instead of the true value it delivers. See what happens when you take the next step in quantifying business impact.
We are getting ready to dig into a few numbers, stick with me!
With a little collaboration with your marketing/ecommerce team you learn that 75% of customers abandon their shopping cart and never finish placing the order. You also learn that the average order value is $100 and that 1,000,000 people fill their online shopping cart every year (which means that 750,000 don’t actually finish checking out). What would be the impact of offering web chat to consumers who are on your shopping cart? If you were able to increase the number of actual checkouts by 5% by offering assistance at the time of need, that would give your organization an additional 50,000 purchases every year. And, if the average shopping cart size stays the same, you would add an additional $5 million in revenue to your organization!
Improving Efficiency – Imagine that your customer’s are complaining because there is no real online access to an up-to-date knowledgebase. The only way they can reach your organization is calling between 7:00 AM and 7:00 PM…and wait in line. You know it’s going to help your customers but it is also going to cost $100,000 to implement it. How do you prove an ROI?
With some due diligence you discover that your contact center receives 1,000,000 calls every year. After doing some research on status codes, you realize that 50% of the calls are very basic and could be solved instantly with readily accessible knowledge. You also do some additional work and discover that it costs your organization $5.00 every time a customer calls you. What impact would your organization receive if they were able to reduce the total number of calls by 10%? That would mean that you eliminated 100,000 unnecessary calls to your contact center and saved your organization $500,000 per year!
Decreasing Risk – Imagine that you notice your customers have been tweeting lately about waiting on the phone with your organization for really long periods of time. Solving this issue is going to cost $100,000. Also, you know that your organization is in a regulated industry and has government mandated service levels that your organization must maintain with your customers or face a fine. How do you present the business case to the executive team? Well, with a bit more due diligence, you discover that your organization faces a financial penalty of up to $1,000,000 per year if the service level falls below certain contractual levels. Presenting the business case to the management team in a way that shows that a $100,000 investment could eliminate the risk of a $1,000,000 fine could be very compelling.
The good news, customer experience initiatives impact financial metrics. It is a win for the customer, a win for the organization and a win for you! Now that you have the basic building blocks for developing a solid ROI, don’t let customer experience projects get pushed down the line. As you well know, customer experience is more important today than ever before. Be the change.
I hope this empowers you to strengthen the financial justification for delivering exceptional customer experience! If you have any questions whatsoever, please feel free to drop me a line!