Customers are very important for any organization. They are the single most valuable resource that you have in your hand. It is therefore important to work with them and encourage them to provide feedback on the products or services that they purchase.
If you consider your customers as a key resource, then it becomes very easy to measure the return on investment (ROI) of your product or service. Once you have worked with customers and got positive feedback, you can use this data to guide future decisions and improve customer experience in general as well as the ROI of any product/service that you sell.
Customer engagement is the process of reaching out to customers and persuading them to make a purchase from you. A customer engagement strategy is a set of techniques and guidelines that you can use to get the customers you want to interact with engaged with your product or service.
The goal of a customer engagement strategy is to develop a relationship with the current or potential customers so that they feel like they are important enough to engage in conversation and become buyers of your product. Customer Engagement means the process by which you nurture an existing interaction or build one up so that it can create an ongoing relationship between two parties (those who are already engaged) and also those who are not yet interested in your products but might be interested in future content produced by this new user base.
Why is it vital to calculate the customer experience’s return on investment (ROI)?
When you combine customer experience measures with financial data, you may find yourself with more questions than answers. Is it true, for example, that responding to emails faster helps you retain clients for longer? And, if you streamlined your checkout procedure, how much more would a consumer spend?
To resolve issues like these, machine learning and voice of the customer analytics are the best options. Consumer feedback software enables businesses to hear customer voice at scale, revealing the fundamental causes behind various customer experience indicators. You may also tie customer spending data to a range of KPIs to measure the return on investment of your company’s customer service approach.
Let’s look at the metrics you’ll need to track if you want to quantify customer experience ROI now that we’ve covered some of the advantages.
Customer Value Over Time
Client Lifetime Value estimates how much money a single customer will spend on your items over the course of their lifetime. It’s computed by multiplying the average customer longevity by the customer value.
Rate of churn
Your churn rate is the percentage of consumers who cancel or quit your service within a certain time frame. This metric is calculated by dividing the number of churning customers by the number of new customers. You can, however, save time by using this helpful churn rate calculator instead.
Support expenditures are out-of-pocket charges that have nothing to do with production or manufacturing. This covers programs such as quality assurance and customer service. These expenses should be weighed against your customer satisfaction scores.
Size of the Average Transaction
In order to calculate the average transaction size, divide the total income earned over a period of time by the total number of sales made over that same period. This will provide you with a better understanding of how your customer’s shop and which products they prefer.
Contract Value on Average
If your business is dependent on subscriptions, average contract value may take the place of average transaction size. Fortunately, it’s determined in the same way: divide the total value of contacts signed over a period by the total number of new consumers obtained. Combining your data so that each client’s profile incorporates contextual information is how you connect customer experience with the metrics above. This is normally accomplished through the use of a CRM or a data analytics application.
How to Improve Your ROI on Customer Experience?
1. Segment your clientele.
It helps to categorize clients into categories based on their personal features and habits in order to better understand them. Different buyer personas might help you uncover income opportunities because not every consumer behaves the same way.
Here are a few ideas for segmenting your consumer base.
- Purchased Product/Plan
- Average Transaction Size/Contract Value
- Number of Visits Per Day/Month
- Occupational Title
2. Analyze qualitative data via text analytics.
Text analytics software can analyze qualitative data from survey replies, customer discussions, online reviews, social media conversations, and more, rather than manually combing through support cases and listening to phone recordings. This technology allows you to process a large amount of data without having to analyze each item of consumer feedback individually.
3. Look for patterns in the past.
Look for patterns that describe what has worked — or hasn’t worked — in the past once you’ve acquired a considerable amount of data. Do all clients in a certain segment discuss the same feature? Do you have a greater turnover rate with a specific demographic? What did their qualitative data say about your brand’s perception?
Using this lens to look at data can help you compare your customer experience program to the KPIs you’re tracking. You’ll have a better notion of which projects are yielding results and where improvements can be made to improve results.
4. Determine which possibilities will have the greatest impact.
Look for a specific consumer profile or group where you may have a substantial impact on their customer experience once you have a sense of how your program is functioning. For example, you may begin targeting a high-value niche with a high turnover rate but still plenty of opportunities to please customers.
Here’s when your customer satisfaction measurements come in handy. Examine previous initiatives that have shown to be successful with similar audiences. Quantitative data can be used to determine financial performance, while qualitative data can be used to tailor your next project to your new target persona.
Customer satisfaction ROI isn’t only a fun metric to track for your company. It aids in the prioritization of upcoming initiatives, the creation of buy-in for customer-centricity, and the overall morale of the team.
Connecting measures you already monitor to the financial metrics given in this piece is the key to determining customer experience ROI. You can better assess whether or not your customer experience program is successful by comparing that contextual information with customer feedback.