How to Monetize Your Customer Experience Improvements
The journey to effective customer experience (CX) includes many steps. We’ve already talked about three of those steps listening to customers, understanding who they are and the context of their experiences, and taking action to improve those experiences in great detail. This journey should be as rewarding for your company as it is for your customers when you successfully monetize improvements to create a positive impact on the bottom line.
The Strongest Link
The best way for companies to effectively monetize the changes they make to customer experience(s) is to link both actions and outcomes to business metrics. CX practitioners can point to any changes that have occurred in those metrics since implementing any experience fixes and easily connect the two. Practitioners can also use these links to prove ROI to decision makers, which helps determine both which projects to prioritize and how to build a case for (more) funding.
To make the most of these initiatives and to measure just how effective brands’ experience improvement efforts truly are, companies should always view improvement monetization through the paradigm of four economic pillars: customer acquisition, customer retention, cross-sell/upsell opportunities, and lowering cost to serve.
Experience improvement initiatives can enhance customer acquisition. Customer feedback is obviously important for fixing existing experiences, but the ideas captured by analyzing this information can also lead to new products and services, and thus to new customers.
Remember that customers are a company’s best source of marketing. Using a CX program to create promoters and then have them advocate for your brand will grow your customer base considerably.
CX practitioners can prove experience improvement’s impact on new customer acquisition by keeping a few key metrics in mind, including net new customers, new customers acquired over a certain time period, and growth of market share.
Customer retention is typically one of CX programs’ primary purposes, driven mostly by closing the loop and resolving individual complaints from customers.Typically, it’s also one of the easier elements to measure from a financial standpoint.
There are several key ways to think about and measure customer retention. Brands can draw a link between experience improvement and customer retention by paying attention not only to traditional retention or churn metrics, but also increases in average customer tenure or lifetime value (LTV or CLV).
Voice of the Customer (VOC) and improvement programs are useful for uncovering customer acquisition opportunities, but they also reveal new opportunities to cross-sell or upsell customers. Experience improvement initiatives can help brands uncover new needs and thus market products or services of which existing customers were previously unaware.
Brands need to keep a few metrics in mind as they consider experience improvement’s impact on cross-selling to or upselling customers. Companies should pay attention to how many customers upgrade within a given time period, the amount of customers buying additional products and/or services, and any increases in average customer value. New product and service purchases will also lead to increases in customer lifetime value.
Lowering Cost to Serve
Lowering the cost to serve customers is another primary focus of CX efforts, whether it’s fixing broken processes or reducing service calls. Brands can wield experience improvement in a number of cost-lowering ways. For example, channel shift is a common means of both improving an experience and lowering cost to serve. This can be achieved by, say, moving customers to more digital or self-service options. These changes can fit well within the paradigm of experience improvement and can be measured (and proven) via lowered process costs, labor costs, and cost per call or transaction.
Another way to think about lowering cost to serve is viewing it as lowering the cost to sell. Selling to a current customer, for instance, is much cheaper than trying to acquire a new customer. Activating promoters or brand advocates can also be used in lieu of marketing expenditures. So too is making certain sales processes automated or digitized.
This concludes our four-part conversation on how companies can listen, understand, improve, and monetize their way toward transformational success, a stronger bottom line, and a better experience for their customers. As we have hopefully demonstrated, the journey to effective customer experience and the corresponding benefits for a company’s success and growth is continuous one, requiring constant attention, care, adaptation, and innovation. However, if you deal effectively with the bumps and obstacles you encounter and even pave new paths when necessary, you and your customers will enjoy the journey.