Building a successful business case for customer experience (CX)
Too many customer experience initiatives don’t even get their business case approved. Why is that? Usually because the business case is just weak. It lacks a clear focus on measurable deliverables that will have a positive financial impact on the business. To make the board invest in your CX business case you must show how the initiative will do one, two, or all of the following:
- Grow the business
- Reduce costs
- Reduce risk
Preparing your case
The starting point of a successful business case (and its presentation) is to identify the business problems you are trying to solve and then demonstrate how your CX strategy will deliver the solution and provide improvements.
It all boils down to how the CX initiatives will help the business flourish by acquiring new customers, preventing unnecessary customer support, improving customer retention and ensuring you remain competitive.
1. Demonstrate how an excellent customer experience will benefit the business
There are a variety of clearly defined goals where customer experience can help your business grow. It can help you remove roadblocks by reducing customer effort – you can simplify the buying and onboarding process, the selection process to choose a product or service, or your communications. These all make it easier to recruit new customers.
If your customers believe that your brand provides a superior customer experience, then they are much more likely to buy from you again. This means that your opportunities for cross and up-selling are multiplied, thereby enhancing lifetime customer value.
An excellent customer experience can help a business justify a price premium. Research from PWC shows that 86% of buyers are willing to pay more for a great customer experience, and the more expensive the item the more they are willing to pay. A great customer experience generates a virtuous awareness cycle of positive word of mouth, recommendations, and social media reviews.
2. Show how the investment into customer experience will help reduce costs
Becoming more efficient and reducing your overall cost base must be part of the objective of any customer experience initiative. This can be achieved by reducing complaints, returns and your cost-to-serve (for example by migrating customers to self-serve or into a lower cost to serve channel). You can also reduce costly failure demand by improving your systems and processes. By providing a good experience you will reduce customer churn, which will help you to further grow your base of customers.
3. Reduce Risk
It is also important to remember that there will always be a need to have some level of continual investment in CX to mitigate against, and protect yourself from external risks such as changing market conditions, new regulations or challenger companies who disrupt your market. Businesses don’t operate in a vacuum and in today’s fast moving landscape businesses have to run twice as fast just to stay still. Competitive businesses are constantly innovating to keep pace with customers’ rising expectations.
Building your business case
Once you’ve decided on your specific goals, you can now begin to build a business case for your CX investment. You need to consider from the outset how you will quantify your deliverables – what baseline are you going to use and what key milestones are you aiming to hit, and when? As well as outlining the CX governance operating model you will use to monitor its ongoing success. Finally, what it will cost to fix the issues you are trying to address so you are able to make a cost-benefit calculation and determine the return on investment.
Forrester has a helpful magic formula that you can use to build your business case presentation – We propose to do A to improve B, with an economic benefit of C, at a cost of D, delivering an ROI of E.
Final tip for building a successful business case
Last but not least: don’t over-promise or set unrealistic expectations, as this can quickly derail even the best customer experience business cases.
Sources:
- https://www.pwc.com/us/en/advisory-services/publications/consumer-intelligence-series/pwc-consumer-intelligence-series-customer-experience.pdf
- Failure demand is contact that results from a problem with a product or service and is caused by a failure to do something, or do something right for the customer – e.g., people recontacting you because they did not get their problem solved the first time.
