How to Calculate the ROI of CX for Your Business
Getting Buy-In with Generic Stats Doesn’t Work
For over a decade, much has been said about customer experience and its ability to create revenue and ROI for businesses, but most of these conversations have focused on the philosophical and cultural benefits of CX and CEM programmes, and not on the tangible dollar amounts that business can make from them.
For example, a famous quote by Walker Information’s Customers 2020 Report states: “By the year 2020, customer experience will be the number one competitive differentiator for brands.” This is a widely used statistic, and it makes a compelling argument, but it’s difficult for the average business person to use it to make a case for large investments in CX. What executives want for buy-in are concrete numbers they can wrap their head around.
Even when CX experts are able to come up with ROI statistics, the numbers and percentages are often generic. For example, a study featured in the Harvard Business Review found that, “After controlling for other factors that drive repeat purchases in [a] transaction-based business (for example, how often the customer needs the type of goods and services that the company sells), customers who had the best past experiences spend 140% more compared to those who had the poorest past experience.” This is fascinating number that could mean potential ‘millions’ and ‘billions’ to a business—but, again, it is a hard equation for executives to take interest in because it’s not specific enough, and is so incredible that it don’t sound real.
Case studies have generally been the remedy to this situation, but even then, it’s hard to calculate how one business’s large CX returns translates into money for another business with different needs in a different industry.
The Best Revenue and ROI Estimations Break Down CX by Industry
It is essential to segment CX gains by industry when attempting to find out the ROI for your business. That’s because every industry is at a different CX maturity stage, and their averages, whether they are the average revenue per consumer, or the average number of customers per company, vary greatly as well. For instance, Forrester assessed the revenue impact of CX on different industries and found that, with a one point increase on the Forrester CX index score, nine different industries stood to make the following monetary gains:
 Recreated from Figure 2 The Revenue Impact of Customer Experience 2015, August 2015, by Forrester Research Inc., Copyright © Forrester Research Inc. See footnote.
Similarly, Bruce Temkin, in his Customer Experience Matters report: “ROI of Customer Experience, 2016” found that a moderate increase in CX for a $1 billion company generated the following increases for various industries:
*Source: Temkin Group Q1 2016 Consumer Benchmark Study
In the graph, the numbers vary greatly from industry to industry, but even the lowest ranked industries stand to gain over half a billion in returns—which is no small amount.
This raises the question: If you want to get deeper ROI insights specific to your business, are you willing to put the time and effort into calculating your businesses averages against these kinds of industry benchmarks. If the answer is yes, questions to address in your calculations should include:
- What is the average revenue per customer for your business individually?
- What is the average revenue per customer for your industry in general?
- What is your customer base?
- What is the average customer base for the industry?
- How are your measuring your customer experience? Is it NPS, CSAT or other?
- What are the industry benchmarks for this chosen measurement method?
There are many more variables that need to be factored into your calculation too, and how deep you want to go depends on how important accuracy is to your brand. Hopefully, it is very important, in which case, seeking the help of experts is your best bet.
To learn more about the ROI your brand stands to gain from CX, including what a five-point increase in NPS heralds, contact us at firstname.lastname@example.org—we’ll get you the deep insights you need to get buy-in.