How to Measure Customer Experience Initiatives and Build Real Evidence

How many times has this happened to you?

You and your team developed a new CX initiative that you’re excited to bring to your customers. But once you take it up the ranks for financial buy-in, you hit a dead end. You know your vision will make a difference—you just can’t convert its projected value into guaranteed dollars and cents. You go back to the drawing board feeling frustrated, and maybe underappreciated.

Sound familiar? You’re not alone. CX teams tend to struggle with measuring customer experience initiatives to justify their investment. More than half of CX professionals say their teams are unable to prove the ROI of CX projects, according to a Forrester study. A lot of good programs that would produce good outcomes for customers stay grounded because CX teams find themselves unable to make the business case. That disconnect not only hinders the organization’s ability to retain customers, but also the CX team’s ability to grow.

CX Teams Need an ‘ROI Rethink’

At the same time, brands are facing increasing pressure to improve their customer experiences. Forrester just announced that CX quality in the U.S. dropped again to an all-time low in their Customer Experience Index rankings. Executive leadership knows something needs to be done, but that doesn’t mean they’ll write CX teams a blank check to fix whatever those teams see fit. They need to hear the right story with qualitative evidence, not just the soft, non-financial metrics that many CX teams tend to bias toward: CSAT, Net Promoter Score (NPS), customer effort score (CES) and the like.

So how do you go beyond positive feedback and qualitative opinions to build the business case for your CX program? With real evidence to prove its direct financial benefits. Here are some tips to help you and your team get started on making that happen (drawn from Guide to Showing ROI: 6 Better Ways to Justify Your CX Spend, which you can download for free).

4 Best Practices to Build Real Evidence for CX ROI

To ensure your project convincingly conveys quantitative value, make sure you set it up the right way. You need to be able to vet the data with A/B or multivariate testing to calculate CX ROI.

The gold standard to confirm that your CX project is truly performing as well as it appears to be is to use a randomized controlled trial. Unless you test how people are doing with and without the solution, there’s no proving one strategy is better than the other. Use these CX testing best practices:

1. Use control groups to create proof. Before-and-after studies aren’t good enough to correlate directly to your initiative, or connect your ROI to the dollar level. Your CX testing needs to account for external factors and variables that influenced your business throughout the year. These might include changing market conditions, competitor promotions or price changes. You need to show that your study controlled for these factors, or else your results will get picked apart and leave the leadership skeptical.
2. Select your test group of customers. When you set up your test groups, do it with a purpose. Test on a small, representative group of random customers before you ramp up. This way, you can exercise a degree of caution that helps gain internal buy-in.
3. Customize treatment plans. You don’t treat every customer the same way. Why should your testing be any different? Instead of taking a “one-size-fits-all” approach, implement a treatment exclusively on your most—or least—profitable customers without disturbing the rest. Adapt your strategy to the customer segment you want to influence.
4. Work with real data. “Fake” data won’t cut it. When you show a soft or unrealistic business case to a CFO or an EVP, you lose your chance to get funding. Industry averages might give you a frame of reference to guide your investment, but they’re no substitute for using your own organization’s data. You need to know what’s really happening in your house. Pulling real numbers is the only way to ensure that the test results can be applied to the bottom line.

CX Testing: Putting It In Practice

For each new use case you want to test, start with a representative control group to show the true value of your solution. This step is a must, and it’s as simple as holding out a statistically significant, representative sample group of customers from your testing. The additional data from the untreated group allows you to calculate the difference in results to find your business benefit.

With that information in hand, you can apply it to your target financial metrics. Work with your business partners to identify what those metrics should be for your initiative. Examples might be churn, net present value (NPV), contact avoidance savings or cart completion, to name a few. With that, you’ve quantified the incremental benefit that can point to ROI. Now you’re speaking the CFO’s language, and you’re doing it persuasively.

There’s More to Building A CX Business Case 

Even if you know how to measure CX ROI, how do you know what projects to pursue? How to get wins? Or whom to partner with in your organization to get those wins?  

I’ve built my 16+ year career embedded in customer strategy and operations leadership roles, including head of CX. My team and I started rethinking how we used CX data, and we began overcoming those objections and obstacles. What I learned from our successes, I put into an eBook.