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Five Metrics to Measure Customer Experience ROI

BY -

Phil Strazzulla

December 14, 2020

Calculating the return on investment (ROI) of customer experience (CX) initiatives is extremely important; it’s a way for businesses to find out if their current strategies are working, as well as for customer experience leaders to be able to justify the budget and resources they’ve used on those initiatives.

Measuring customer experience ROI can be tricky as there isn’t a one-size-fits-all metric that covers all stages of the customer journey. This is why businesses have to pay attention to different key performance indicators (KPIs) to find out if their investments are paying off. 

The following are some of the most relevant metrics to measure the ROI of customer experience initiatives:

1. Revenue Growth 

A company’s top-line revenue growth is one of the clearest CX efficacy indicators that can be reviewed. A Forrester study found that CX leaders achieved five times more revenue growth than their CX-laggard competitors.

CX leaders grow revenue faster than CX laggards
(Source)


The results of the study are not surprising knowing that great customer experience has a tremendous ripple effect. When customers are happy, they not only stay on with a company but also act as its advocates, spreading the word about their positive experience and effectively bringing new customers on board. Unhappy customers, on the other hand, can wreak havoc on a company financially. Not only do unhappy customers leave, but they also act as detractors by flooding review sites and social media pages with negative ratings and reviews.

2. Customer Experience Survey Scores


Customer experience survey
(Source)


Customer experience surveys help companies convert customer feedback into quantitative data to measure the efficacy of their CX strategies and by extension, their ROI. The following are some of the most popular surveys for measuring customer experience: 

3. Cross-selling and Upselling Rates


Compare upselling verses cross-selling rates
(Source)


Happy and loyal customers buy additional products or services from a company, accounting for a remarkable increase in its revenue. Several studies have confirmed this, including the following: 

  • According to the book Marketing Metrics, businesses have a 60–70% chance of selling to existing customers, as opposed to selling to a new prospect, which has a likelihood of only 5–20%.
  • A study by Bain & Company, along with Earl Sasser of Harvard Business School, has shown that even a mere 5% increase in customer retention can increase a company’s profit between 25-95%.
  • A 2019 Gartner study estimated that customer experience has a 66% chance of inciting customer loyalty, while other factors, such as price, account for only 13%.

4. Customer Retention and Churn Rates

 Another important metric for businesses to find out if their CX investments are paying off is by monitoring customer churn rates. Businesses can measure their churn rate by calculating the number of customers who have stopped buying their products and/or unsubscribed from their services over a given period of time.

According to a Forrester study, customers who have a great experience are 2.7 times more likely to continue doing business with a brand than customers who have a low-quality experience.

5. Cost of Customer Support 

Good customer experience plays a significant part in reducing customer support costs. The more happy customers you have, the fewer complaints and tickets your team is going to receive and deal with. 

Other CX improving measures such as providing customers with self-service options, also contribute to the reduction of customer service costs. A Harvard Business Review study shows that 81% of customers prefer self-serving due to the convenience of finding the answers they need online at any time, without needing to contact your customer support representatives during business hours. When over 80% of your customers can self-serve, you’ll see a dramatic decrease in your ticket volume and by extension, cost of service.

Final Thoughts

You can’t manage what you can’t measure. In order for you to continue running customer experience programs, it’s important that you understand whether they’re working in the first place and how much they’re contributing to your organization’s bottom line. While each CX program is different, the above metrics can help put a dollar value to most of your initiatives.

Moreover, there are several customer experience management solutions that can help you deploy customer experience initiatives and measure their effectiveness. If you are in the market for one, check out our detailed review of the best customer experience management solutions to make the right decision.

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