Calculating ROI of CX: Defining The Success of Your CX Strategy

Customer Experience is almost everywhere and with the pandemic changing the landscape of the markets, it is more important than ever for brands to focus exclusively on providing an impeccable customer experience. According to Gartner’s research, more than 90% of brands today have a CXO in their company. This just goes onto show how brands are focused on improving their customer experience. But how would you measure the improvement and how would you measure the success of the CX strategy you have put in place. This is where the ROI of CX comes into play. Once you begin calculating the ROI of CX, you will be able to decide if your current CX strategy is a success or not.

Unlike the social media platforms which offer you an immediate insight into the ROI of your latest campaign, the ROI of CX is slightly harder to calculate. The reason for that is calculating the ROI of CX requires you to have certain data, which can sometimes be a bit hard to comprehend. However, if you follow this blog to the end, you will have an idea about how to calculate your own ROI for your company’s CX program. If you wish to have a detailed guide that assists you with the entire process of calculating your ROI of CX, you can download our eBook, which has every step with calculations and examples, that will help you calculate your ROI to decimal places.

What do you need to calculate the ROI of CX?

To put it in simple terms, your ROI for CX can be calculated with a simple formula. The formula is ROI is equal to (Benefits-Investments)/Investments x 100. But in order to be able to calculate it efficiently, we need two more data sets, which can be equally tricky to calculate.

Calculating Benefits of Customer Experience

Calculating Benefits depends a lot on your brand but there are some broad parameters across which you can calculate your benefits. Now each company has its way of calculating the customer experience metrics such as NPS, CSAT, similarly, the way to calculate benefits would differ but the ways that are mentioned below are bound to work with every company.

Top Line Revenue

Top Line Revenue refers to the full sales price of services and goods sold to the consumers by the company. The top Line Revenue metric is believed to be the most reliable when calculating the ROI of CX. A recent Forrester Study concluded that a company with a robust CX outgrew the revenue of their non-CX competitors by 5:1.

Customer Satisfaction(CSAT)

While NPS helps you identify your promoters, CSAT or Customer Satisfaction helps you understand the level of satisfaction your customers experience with your brand. This is said to go hand in hand with your customer loyalty. With this, we will measure the increase in spending with the increase in the CSAT Score. To calculate CSAT Score, use the formula — CSAT= {Count of( 4 and 5 score)/ count of total responses} x 100. With your average spend per customer, you can see the difference in revenue with an increase in the CSAT score.

Customer Retention

Another important metric to determine the CX is Customer Retention, indicating how many customers are willing to stay with you. A retained customer is a customer you don’t have to win with marketing spend. Although, retained customers are said to spend 60% more than new customers. So our next set of the challenge is how do we quantify the impact of customer retention on your CX program.

To measure that, we will measure the impact a retained customer has on your brand in terms of revenue. You can simply calculate that by calculating how much revenue number changes if you retain some customers.

Cost To Serve

An efficient way of streamlining your CX program is analyzing the customer journey and mapping the points where you can save up the cost while offering service. This helps you calculate the amount you would save with a better customer experience.

Cross-Sell and Upsell

Cross-selling refers to the phenomenon where you encourage your customers to buy a second product which is in relation to the first product. This is similar to what you see in the “Customers also bought” section on the e-commerce platform. Whereas, Upselling refers to making your consumer buy an expensive product than the one in question right now.

By analyzing your data, you can easily calculate the revenue you have generated by cross-selling and upselling your products.

All these numbers combine to make the benefits. Now, all we need to do is calculate the investment of your CX program.

Calculating Investment

Calculating investment is the next step towards calculating the ROI for your customer experience program. The easy way is to calculate the entire investment made in improving your customer experience. This would include the tools required to implement a CX program, training staff for the same, and the cost of operating it.

The easiest way to get a numeric value for the same is by asking a partner for a CX solution and you will receive a quote for the same.

Once you have these numbers at your disposal, you can easily calculate the return on investment for your customer experience. In conclusion, this process helps you determine your ROI, however, numerous variables can alter the process, leading to a different result. This should be considered an origin point but not the exact scientific procedure.

Just like every CX program is different, the process of calculation of ROI would also differ. But in the meantime, this process should give you a start. If you wish to have a more detailed version of the process of calculating the  ROI of CX, you can download our eBook, here.

Survey2Connect offers an intuitive CX platform that helps you collect feedback, track and analyze the results in real-time using our Omnichannel collection suite and intuitive dashboard. With our platform, you can cater to all your CX needs including raising and solving customer complaints using our advanced ticketing system. To learn more about Survey2Connect can take your CX game to the top level, visit www.survey2connect.com