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