A question that is asked a lot in customer experience is ‘What’s the return on investment (ROI) for a Voice of the Customer (VoC) program?
Anyone in the industry knows that collecting customer feedback and taking corrective actions will result in increased customer satisfaction. So, the question then is how can you prove that this increase in satisfaction leads to increased profits?
Why do you need to calculate the ROI of your VoC program?
In order to make a business case for a VoC program, there often needs to be a financial case presented and historically this has been a difficult area to measure. Companies are more aware than ever of the importance of a voice of the customer program with over 50% of CX teams identifying it as an area they plan to spend money or effort on improving. (Forrester’s US & European State of Customer Experience Programs Online Survey).
The reason they are high such a high priority is they underpin all CX efforts from improving the customer’s experiences, changing the company culture and delivering business results. We know that, but is it enough just to know it? Companies often struggle to fund VoC programs with 38% stating the lack of a model tying CX to financial results as a significant obstacle.
Identifying the benefits of a VoC program
Before we look at the benefits of a VoC program, lets remind ourselves what makes a successful program. There are 3 main elements that need to be covered.
1. Listen – ensure you listen to your customers through every channel
2. Analyze – don’t just collect the data but analyze it and it integrate with any other customer data you have via your crm, website or anywhere else
3. Act – Use the feedback to improve the customer experience.
So how does doing that all lead to increased profits for the business? Well, evidence exists at a macro level already to show a correlation between annual revenue and Net Promoter Score. Companies with superior customer experience had a growth rate of 17% (CAGR) vs 3% for the CX laggards – Forrester. There is also evidence to show an increased lifetime customer value correlation to a higher customer satisfaction score. So, to break this down into a simple equation: happier customers = increased profits.
However, for some organizations evidence of success elsewhere is not a guarantee of internal success. For this reason, you need to look at a more micro level at several different ways that benefits can be created. Think about the benefits this could bring your company from all aspects of the program. This could be increased revenue, increased average spend, reduction in operating costs or increased employee engagement. Then you can prioritize these as part of your business case considering the value and complexity of each aspect and the availability of the data.
If you are going to make an argument based on these assumptions, then you need to have some logic behind it so try and create a logic chain around each point. For example, if one of your benefits is an increased average spend then you need the logic chain to show how you came to that conclusion.
So how can you then turn this into a real-world calculation? In order to do this, you will need to have data available or make some assumptions if you have not already been collecting this information. You can vary your assumptions to give best and worst case scenarios and refine it as you start to collect data.
An example calculation would be:
VoC Benefits = Total no. of customers x % increase in highly satisfied customers x difference in revenue between highly satisfied and average consumers (per customer)
Making a business case for VoC
So, we have now discussed a range of potential benefits that a VoC program could bring your organization so how can you put this all together into a compelling business case?
To create an effective business case, you need to appeal on 3 main areas.
1. Logic – Show the rational justification for investing. To do this you can calculate how acting on customer feedback has already demonstrated a type of financial benefit. If this cannot be done, then use the calculation above to show a potential financial return.
2. Authority – why executives should believe you? Try to assemble a portfolio of past successes – this could be personal results in another business or results from a competitor that you have researched.
3. Emotion – Your business case needs an emotional component. Try to use previous customer feedback to demonstrate current pain points within the business. Look for common themes and highlight the most compelling. You can also back this up with employee feedback to further highlight any problems.
No-one ever said it would be easy to generate the budget for your VoC program but hopefully you are now in a better position to make a solid business case. The key areas to remember are:
· Set out clear objectives for the program – what are you trying to achieve?
· Link the VoC objectives to the overall company goals where possible
· Put the customer at the heart of your program – what company doesn’t want to improve the customer experience?
· Make the case logical
· Back up your argument with evidence