I see customer experience management (CEM) as a glass of finely aged wine. The topic has been in the marketplace for a long time, but it has only become more enriched with age. This is for a good reason; clearly, every business looking to make profits must sell something (a product, service or maybe even a vision). Yet success is often in subtleties such as marketing to and servicing both potential and existing customers well in order to retain their business, grow their spend and create a loyal client base that helps the company survive and thrive financially.
While the importance of CEM from the above analysis is rather obvious, companies have numerous priorities. This means that they must understand the best uses of their limited resources to fund initiatives that achieve the company’s objectives. As a result, the benefits of CEM programs should be quantified and assessed against the benefits of other programs in order to determine how companies will allocate resources accordingly.
As part of my research, I regularly interact with marketing, sales, service and customer experience executives discussing their priorities and challenges, while also sharing best practices that worked for their peers. One of the questions that I receive regularly as part of these interactions is, “What is the ROI of CEM programs?” The most recent inquiry was received just yesterday from a service quality manager within an electronics manufacturer based in the U.S.
I wanted to share a part of my response (see below) in hopes that it will alleviate the challenges companies face when trying to build a business case for a CEM program:
Given that you mentioned you’re looking for concrete return on investment (ROI) data on the value of CEM results, I should share that in addition to the quantifiable performance findings, CEM programs also create indirect business benefits that, in the long run, help companies improve performance. For example, the cost of not delivering better customer service comes with unsatisfied clients potentially sharing their experiences across different social media platforms. This results in damage to the company brand equity and loss of potential customers who might have done business with the organization. These opportunity costs are often hard to quantify, yet have a significant impact on businesses.
Therefore, one can say that the ROI of CEM is also reflected by the cost of what happens when companies don’t satisfy their customers. These consequences range from losing clients, to worsening of brand equity to potential litigations due to not meeting promised service levels.
I’d also like to state that while the opportunity costs of not satisfying customers are sometimes hard to quantify, we were able to quantify the net revenue impact top performing CEM programs have on businesses. Please read my The ROI of Best-in-Class CEM Programs study to see these findings.
Were you challenged with building a business case for CEM programs? Did you overcome it? If so, I’d love to hear your experiences in the comments below.