Calculate ROI of CX: a simple example

It is true (and recent research shows) that Customer Experience has finally gathered the attention of the executive boards, convincing the C-level that it’s crucial to invest in order to ensure customer-driven growth.

However, CX practitioners are wrong if they think that CEOs will back their initiatives, and CFOs will release resources, because studies say happier customers spend more. They need to know how much they can expect from the investment.

Return on Investment (ROI) of CX programs and initiatives is still something that makes some CX practitioners scratch their heads. But the truth is that calculating the ROI of CX isn’t much different from calculating it for any other investment.

I will share with you, one example that I have learnt, and should be straightforward to apply and use. You will need:

  • Experience Data (X-data) – which you are already gathering from surveys.
  • Operational Data (O-data) – which you have in your CRM or ERP systems.

Let’s use CSAT as a metric of reference (you could use any other, like NPS, CES)

  • From X-data, find Top 20% customers. Get Customer IDs and CSAT score
  • From X-data find Bottom 20% customers. Get Customer IDs and CSAT score
  • From O-data find the Yearly Spend for all those customers. Use Customer IDs

With that data, calculate the average CSAT and and the average yearly spend for the Top and Bottom 20%. Below is an example of the results you could get:

  • Top 20% customers – average CSAT 80 points – average spend $250/year
  • Bottom 20% customers – average CSAT 40 points – average spend $20/year

Next steps are:

  • Calculate CSAT difference in both groups (example above 40 points)
  • Calculate average spend difference in both groups (example above $135/year)
  • Divide one for the other to get result (example above $135 / 40 = $3.375)

Now you can tell the board of executives that: “for each additional CSAT point, we expect to drive an increased value of $3.375 per customer

How to lose a customer without even knowing

Not too long ago I wrote about how non-sense policies – built by banks who do not treat experience management as a discipline – can kill not only customer but also employee experiences. Here it is: Bank Policies – Killers for CX and EX.

Companies can also kill experiences way before the customer bumps into one of those non-sense policies. They can lose customers before even acquiring them, and without even knowing it. Some times in the most basic of interactions.

That is exactly what happened last week. I was looking around for mortgages and, after some online browsing, I decided to visit three banks – those that not only have a good brand, but are also known for having the best offerings.

The interaction with the first bank was formal and process-oriented. It focused on the information they needed for the “mortgage calculator” and risk assessment – How much is your annual income? How much is the house? How much do you want to borrow?

The interaction with the second bank was very friendly and customer-focused. They wanted to know the purpose of the buy and understand my needs – Is it a house for the family to live in? Are you investing to sell or rent? How urgent is it for you to buy it?

The third bank lost my business without even knowing. Without me having the opportunity to talk to anyone about a mortgage. Funnily enough, it was the bank that (according to reviews) has the best financial offers, with the lowest interest rates.

The story is simple. I went to the branch and rang the door (Covid-19 procedure requires doors closed and one person at a time). There was a man inside, who pretended he didn’t see me. I waited a few seconds, knocked on the door and waved.

Reluctantly he came to the door and shouted from the inside that it was lunch time, and I should come back one hour later. I smiled, walked back to the car, and drove away. Needless to say that I didn’t come back.

Despite the prospect of good financial conditions, I didn’t come back because…

  1. A person that doesn’t ask what my enquiry is about isn’t interested in helping me;
  2. A person that doesn’t open the door to talk to me doesn’t deserve my attention;
  3. A bank that is only open 9AM to 3PM isn’t necessarily thinking about my needs;
  4. A bank that closes at lunchtime is definitely not making it convenient to me.

This bank lost a customer that was looking for a product that would be very lucrative. And they have no idea they lost me, let alone why they lost me. Hence, even if they wanted, they could not do anything about it.

There is a strong chance they will continue losing customers due to this sort of interaction, consequently struggling to acquire new customers, despite efforts in customer acquisition activities (e.g. marketing campaigns, great financial offerings).

They are basically blind. Probably wondering why better products are not attracting new customers. Questioning themselves what can they do or change to grow. Scratching their heads to understand how they are going to deliver results.

To avoid this situation, all they had to do was simply…

  1. Acknowledge my presence, open the door and greet me;
  2. Ask me what I needed, and tell me they would be delighted to help;
  3. Inform that it was lunch time, and apologise for the inconvenience;
  4. Offer to schedule a time that would suit me best (on that or another day).

Post Script – I closed a deal with the second bank. A mortgage is a very important step in one’s life. And on those kinds of situations you want to deal with people that empathise with you, and that you feel will have your best interest at heart and mind.

Not coincidentally, the person in this bank had a card holder in his desk (see picture). For those who don’t know Portuguese, the side that faces the customer has the person’s name and says “You have got all my attention“, while the side that faces the person has two smiley faces meaning: “smile” and “listen“.

Best of CX day (live feed)

Today, 6 October 2020, is CX day and to celebrate it the CX community will be doing lots of online and virtual events.

It’s difficult to follow and attend everything, as many of them overlap, but the good news is that some are recorded or on-demand.

This blog post will be a sort of a live feed, with the talks, webinars, videos and other articles I found interesting and worth watching / reading.

(YouTube video, 1m 47s) VR Vaccine, from Hermes Pardini

(CXPA talk, 9m 36s) Behavioral Science/Behavioral Finance, from Graeme Newell

(YouTube video, 5m 24s) Customer Obsession, from Jeff Bezos

(Article, 10 min read) What is Customer Experience, from GetApp

(Article, 10 min read) 5 Academic Articles For Your CX Professional Development Reading List, from Stephanie Thum

CXPA’s official definition of a CX professional: A CX professional is a catalyst who enhances an organization’s results by understanding, designing, and improving experiences across the entire customer relationship. (from Greg Melia, CXPA’s CEO)

ACXS – Accredited CX Specialist

The ACXS certification was long overdue for me. I finally found time to do it, thanks to it’s creator and CX guru, James Dodkins, who made a big effort to make it available online.

This is one of the best courses I have ever done, even taking into account those that have little to do with Customer Experience. Because it is concise and practical.

The size of the course is ideal, and its structure is easy to follow. The (video) lessons are short and to the point. And the content (the SCO method) is simply outstanding.

This is not your typical course (e.g. there is no exam at the end). It is a practical course, where you are asked to use the method and its tools on a real-life business scenario.

This means there is very few (if any) theory and lots of practice. And you are evaluated, at the end by James himself, based on your knowledge of the SCO method, and the work you have done.

ACXS is empowering because it allows you to make an immediate impact in your company – using the tools, techniques, frameworks (shared with attendees in PPT format).

Enable your Employee 360 initiative

For a company to be successful it is no longer enough to have great products at attractive prices. There is a need to have a strong workforce of engaged employees, and high-performing teams.

To achieve that, companies must design, implement and run an Employee Experience Program. Establishing it as part of the HR function and initiatives, as well as daily routine.

Any EX Program should have an Employee Feedback Project, which in turn must have a Employee 360 component, where feedback is gathered from an employee’s manager, peers and direct reports.

(Note: Some companies, depending on the circumstances, may also include feedback from external third parties who may work closely with the employee in question – e.g. partners, suppliers).

The Employee 360 feedback provides a holistic view of the employee, and makes everyone comfortable (confidentiality) sharing important feedback, that otherwise may have not been shared.

Running such program, projects and initiatives can be daunting for HR / Talent Management teams. Actually, it may be impossible without technology enabling it, and allowing automation.

The technology should allow companies to:

  1. Create user-friendly and easy-to-use portals for users to provide feedback
  2. Automate process for multi-raters to review and provide employee feedback
  3. Deliver personalised, confidential and detailed reports to employees and managers
  4. Define action plans to manage and track progress, as well as drive improvements
  5. Integrate with HRIS (e.g. Workday, Oracle PeopleSoft, SAP SuccessFactors, Greenhouse)

Qualtrics is one of the leaders when it comes to Employee Engagement software (see G2 Crowd grid) as well as the undisputed leader of Experience Management (see G2 Crowd grid). Below is an example of an automated report, generated on the back of an Employee 360 initiative.

Qualtrics EX 360 Report (Example)

The report shows that when it comes to Communication (top chart) the employee rates himself much higher than peers, direct reports and manager – meaning there is a weakness not being recognised by the employee.

Qualtrics EX 360 Report (Example)

The report then drills-down on the Communication topic, looking at the individual questions of the 360 assessment. It is easy to understand, from the above 3 charts, that the employee’s weakness comes from Active Listening and Understanding, as well as lack of Clear and To-the-point communication.

Qualtrics EX 360 Report (Example)

More than only pointing out the weaknesses and strengths, the automated and personalised report also displays a description and interpretation of the results, providing a list of (pre-defined) actions and steps to follow, in order to improve that particular skill (in this case, taking an “Effective Communications” course on the the company’s LMS platform).

Fix your 4 customer-service-when-things-go-wrong issues

Pic from

It doesn’t matter how good your product or service is. At some point, things will go wrong. But that is not a problem. We all know nothing is infallible.

The problem lies in the way you respond to that situation, the effort you put into it, how you resolve it, as well as the way you treat customers in that process.

The typical and most frustrating response customers get has four main issues:

  1. reactive – problems come as a surprise
  2. insincere – apologies are not heartfelt
  3. disclaim – it’s never anyone’s fault
  4. giveaway – freebies to shut customer up

The above shows that your company lacks professionalism, empathy, accountability and customer-centricity. This hurts customer’s trust and loyalty, impacting your bottom line.

To fix issue number 1, you need to become Proactive. This doesn’t mean that you must know every single issue that could crop-up. But you must be Vigilant and Action as soon as you notice something could go wrong. I would encourage you to think about James Dodkins PXR (Proactive Experience Recovery) framework.

PXR is the practice of fixing a problem during the crisis or before it happens (…) four-step framework is: identify, monitor, communicate, compensate (…) Identify the problem, monitor the problem during the experience, communicate to the customers that you know something is wrong even if they aren’t aware, and compensate for errors

James Dodkins on Kustomer Podcast 9 Jul 2020 (link here)

To fix issue number 2, you should make sure that your staff shows Empathy towards the customer, and offers Earnest apologies. Following up by fixing the issue, ensuring that it was an one-time-only apology! In a recent chat on Twitter (ICMI chat) Stephanie Thum put it very well.

Apologies mean little, really, when they’re consistently the “go-to” for fixing the systemic problems customers face. Fix the systemic problems! That is the best compensation.

Stephanie Thum on Twitter 25 Aug 2020 (link here)

To fix issue number 3, you need to ensure your organisation has a customer-focused culture that puts emphasis on Accountability, where employees feel Empowered to resolve customer issues, and are rewarded for fixing or actioning, rather than deflecting. Supported by Technology that is easy-to-use and flexible enough to make staff efficient, and problem-solving effective.

To fix number 4, focus on Resolution rather than hesitation, idleness, lethargy. As Stephanie Thum said, fixing the problem “is the best compensation”. Customers are not looking for freebies, but for an easy and effortless experience. And if you feel you want to make up for your mistake, make sure it is seen as a gesture of Goodwill.

Foster success by focusing on the “Why”

From “The Apple Experience”

Now, more than ever, companies need to (re)define their purpose – a clearly defined non-financial purpose. And then, ensure that leadership, culture, processes, policies, communications always take that purpose into account.

As Jeanne Bliss says: “Clarity of purpose gives people’s work meaning. It is the glue that unites a team and enables everyone to look beyond their individual tasks, so they can deliver a one-company experience that customers want to have again

Companies need to make an effort to clarify why they exist (and it’s not just to make money!). Then, link that purpose to who they hire, how they conduct themselves, and what they will do (as well as not do) to grow.

This enables the delivery of great employee and customer experiences, and will make successes mean much more and, as consequence generate much more satisfaction. It will also be the perfect environment for collaboration, a key ingredient for innovation, which in turn brings differentiation.

Customers will want everyone to know they are associated with those companies, and shout to the world about joint successes. And employees will be proud to be part of such companies, share with others and attract more talent.

6 instrumental factors for technology projects success

Technology is crucial for the delivery of a good Customer Experience. No doubt all Customer Experience Programs today include a technology enablement, implementation or integration project.

But despite trends around methods like Agile or Scrum (that try and make things more efficient and effective) the success in technology projects is limited – at best people get it done with loads of hassle; often they fail to achieve what they set out to do.

I believe the problem lies on the mix between wrong cultures and the use of legacy approaches to IT projects – where people make big plans from the outset, and then take things in a linear or sequential way (similar to what you would see in Waterfall).

These approaches rely on people making estimations (for timelines and costs) that reach horizons that they cannot see, and are usually far-fetched (as people simply cannot envision the next 3, 4, 5 or 6 months).

The business decides what they want (which is not necessarily what they need or is feasible). To avoid being seen as the party-wreckers IT teams (solution architects, developers, project managers) tend to give the customary nod and optimistic estimates.

What they cannot see (despite falling into that trap hundreds of times!) is that those promises (around timelines and costs for the technology enablement project) become set in stone, and set certain expectations.

It usually doesn’t take long until the project is delayed or stalled, the scope is creeping, and things are going over-budget. But rather than flagging things earlier, there is a tendency to sweep it under the rug.

It’s not until things get to a point of no-return that the project team sees themselves on the cliff-edge, and finally breaks the news – there is no way they will be able to deliver the project on time and budget.

The Business Sponsor needs to make a decision:

  • bury more time and money;
  • deploy incomplete (and potentially buggy) technology platform;
  • bring the whole project to a halt.

None of these options is positive. Actually all of them will have a significant negative impact on:

  • Employee Experience – will feel frustrated and incompetent; will see their time and hard work wasted; will put morale down.
  • Customer Experience – if external customer, will suffer with a broken (or less than optimal) experience; if internal customer, will lose trust in business/IT capabilities.

In a technology-enablement project, there are at least 6 instrumental factors for success:

  1. Pragmatism, when it comes to discuss feasibility and investment appraisals;
  2. Realism, when it comes to set and manage people’s expectations;
  3. Focus, when it comes to design and plan the approach;
  4. Collaboration, when it comes to get things done, and push it forward;
  5. Transparency, when it comes to managing the project, risks and issues;
  6. Courage, when it comes to decision-making.