How CX programs avoid getting defunded by translating their ROI

Posted on February 23, 2023
5 min read

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During a Forrester event, we heard anecdotally how customer experience (CX) programs are getting defunded or disbanded. We were shocked. CX has become a significant priority for organizations and leaders in recent years. What happened, and how quickly did we forget what got us through the pandemic?

Let’s start with the pandemic. It hit businesses hard across the globe. Organizations that adapted quickly to meet their customer's needs survived, while those that didn't—didn't. Today, we find ourselves in a cost-of-living crisis where our survival requires a similar focus on meeting our customer’s and employees’ needs. Once again, every penny counts. Organizations are looking to trim the fat, relying on leaner operating models. With Microsoft, Amazon, Meta, Google, and Spotify laying off workers, cutting questionable programs seems the right thing to do. 

The key question is: why are CX programs at risk when customer experience is a high priority?

Why are CX programs at risk?

CX programs are at risk because they struggle to show the ROI of customer experience. According to the Forrester trends report, 54% of CX teams can’t prove their projects' ROI. Yet 80% of organizations where CX is not part of the brand’s identity demand ROI proof that CX programs are making an impact. Unfortunately, CX professionals are not in the habit of presenting their impact on business objectives:

  • They aren’t fluent in the language of executives
  • Their outputs don’t easily translate to numbers
  • Gathering customer insight is perceived to slow down product delivery

While this is unfortunate for these teams, the good news is that organizations still care about being customer-centric. CX teams who can pivot quickly and show ROI will prosper. They can even become leaders within their organization, according to Forrester.

Save your team from budget cuts and shifting priorities

As researchers with over twenty years of combined experience, here’s what we recommend to help your CX team prosper. Every organization wants and needs to be more customer-centric. However, executives and individual contributors aren’t speaking the same language.

Speak the language of executives

Executives understand that connecting with and getting customer feedback is nice. Still, they want to see metrics or key performance indicators (KPIs) because that’s how they measure success and make critical business decisions. Right now, much of a CX’s team impact is represented by anecdotal comments, which become difficult to justify when organizational cuts are happening. 

While your CX work aligns with the high-level customer-centric strategy, you must prove it in numbers or memorable stories—quantitative or qualitative data. Here are examples of metrics that executives care about:

Healthcare: Retention, task completion times, average no. of page views per session

Related resource: HIPAA and human insight

Financial Services: Customer lifetime value (LTV), customer acquisition cost (CAC), average no. of complaints

Retail and ecommerce: Conversion rate, click-through rate, average order value, cart abandonment rate

Related resource: Understanding evolving ecommerce expectations

Travel and hospitality: Loyalty program engagement, retention, online review ratings

Consumer technology: Trust rating, churn rate, interest sign-ups

What steps can you take now to address this challenge?

  • Understand what’s important to your organization: What are the goals for this year? How is impact measured? What KPIs are used?
  • Use data optimization and analytics teams to prove your ROI: Teams focused on analytics can be your best friend. If you don’t already, create an alliance with them and regularly share knowledge, which will benefit you both.
  • Correlate the metrics you gather with what you know to guide what you learn about customer needs: Use this in language when communicating with business leaders, e.g. ‘X’ is what customers say, ‘I’ is the business impact, and the KPIs influenced are ‘K.’
  • Consider how metrics impact revenue: When using NPS, SUS, or similar metrics, consider how changes to these impact actual revenue and use this to drive discussions and decisions, e.g. an increase of ‘1’ in NPS would result in ‘R’ revenue. 

Understanding business value metrics will improve your team's ability to communicate with the wider organization and make it easier to show the measurable impact your team has had or your ROI. 

Create value efficiently, not just fast

Speed is critical to business. Everyone wants a solution delivered fast, but speed comes at a risk. In 2022, U.S. organizations spent an estimated $260B on unsuccessful development projects. Too often, we see delivery cycles driven by product owners and executives pushing a particular solution in a rush to optimize KPIs. 

A solution-focused approach usually comes from a subjective perspective. For example, a product manager will embark on a journey to deliver a solution based on what they’ve seen competitors doing. Without properly understanding the problem that needs to be solved, how do they know if they’re going in the right direction? 

This is a perfect opportunity for CX teams to illustrate their value. Understanding KPIs gives the CX team the platform to ask the most critical question a product team can be asked—why? For example: 

  • Why is the conversion rate poor? 
  • Why is this the specific area we consider the problem—could it begin elsewhere?
  • Why is the competitor's solution seen as better? 

This creates an opportunity for CX teams to do what they do best—add context to the customer problem with customer insight. The problem is better understood, as are the possible solution paths and their business impact. In turn, backlog prioritization becomes more efficient, and delivery teams can do what they do best—build things that customers love. 

Understanding a problem better uncovers:

  • Whether there’s a simpler solution that’s easy to implement with a greater business impact for the effort
  • A/B testing opportunities to quickly understand the impact of possible solutions
  • A clearer scope for use cases and user stories
  • More accurate estimates for design, development, and User Acceptance Testing

In addition, this drives innovation. For example, rather than just replicating a competitor’s solution, understanding the problem space helps us know if it does work better and, if it does, how we can improve upon that solution.

And as the product team begins to design and build the solution, a problem-driven approach with associated KPIs, coupled with continuous experimentation, keeps things pointing the right way. As a result, gathering customer insights is no longer seen as slowing down the process but rather giving much-needed direction to the product delivery process, delivering greater business value, and improving the efficiency and consistency of what is created. 

As a product team with a problem-driven approach, you’re more likely to ‘get it right the first time,’ thus reducing waste, rework, and time to value.

Get started today

Leaders are warned to double down on improving customer experience instead of chasing short-term revenue growth. As a CX team, proving ROI is more important than ever. Using KPIs to speak business leaders' language is a step in the right direction. Using these KPIs as a problem-driven process puts your CX team at the delivery hub, showing the actual business impact and value added to their role. 

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