Digital Customer Experience ROI: (How To) Show Me The Money
Forrester’s clients frequently ask us how to build the business case for customer journey mapping, particularly for digital experiences and digital products. We have proven that better customer experiences drive revenue in industries with low switching costs. But what about investments in customer journey mapping?
Now that I’ve taken on Forrester’s digital business and transformation playbook, I’ve been thinking a lot about the benefits of journey mapping, which I believe is the front end to any transformation initiative. I don’t have a wealth of evidence yet to justify your investments in journey mapping (though my CX colleagues have a lot more to share for Forrester clients). But I have been developing a framework to measure the impact of better customer experiences. These metrics range from hard to squishy:
- Higher satisfaction drives repeat business, hence higher customer lifetime value. This is a hard metric, particularly if you are using journey mapping to improve an existing touchpoint. A major online retailer told us that they prioritize digital investments (in, for example, a better mobile web experience) based on two metrics: revenue and satisfaction. Their business model succeeds or fails based on repeat business, so they build, measure, and continuously optimize the best digital engagement possible. Repeat business is something you can measure. Next, bracket the business improvement through better customer understanding with a best-case and worst-case analysis. Start by correlating customer satisfaction studies with touchpoint use and experience quality.
- Higher adoption of a digital interaction drives higher revenue or lower cost. This is a hard metric. A digital touchpoint is something customers can use or avoid, so it succeeds or fails based on whether they adopt it. Use this to bracket your return. Build the business case by starting with the total addressable market. Then imagine the impact of a best case and worst case experience on the adoption of the touchpoint. These benchmarks are hard to come by, but we can help with adoption levels of digital touchpoints in B2C and B2B industries. (For example, as Forrester clients can see, 38% of US Gen Yers using banking apps while only 17% of older boomers, do.)
- Higher satisfaction drives referrals, hence lower customer acquisition costs. This is a squishy metric. The social engagement strategy that firms bet on for years to create “likes” never drove provable revenue. “Likes” don’t generate $$$. Yes, if you go viral you might lower your cost of customer acquisition. But most referrals don’t go viral, so let’s discount this for building your business case. Referrals are a side benefit, not an investment driver.
That leaves us with two hard metrics: higher adoption and higher satisfaction resulting in more repeat business. You can calculate both. Png me if you want to talk.