One could say that I’ve been a bit schizophrenic about the idea of a Return On Investment for Customer Experience.  I may be a bit more charitable to myself and say that I continue to evolve on “the ROI question.”

One of the first things I ever did as a CX “thought leader” was a video for the CXPA imploring CX leaders to tie their endeavors and CX-based metrics directly to those of the overall enterprise.  Specifically, I emphasized how making that correlation between, say, NPS or C-SAT, and overall revenues would help with buy-in:  People outside of the “CX bubble” are more inclined to care about where their CX KPIs are headed if they know that they’re a harbinger of good-or-bad sales.  After all, as I like to say, we’re all in the business of business to make money.

That said, as I ventured out more into the wilderness as a CX consultant and fractional CX leader, I found that a lot of people were simply hand-waving CX…treating it as a newest flavor-of-the-month and making Customer-centric-sounding speeches, but not really putting anything into it.  Surely there were some out there who truly saw the value of getting CX right, but many were just paying it lip-service.  It was that exposure that led me to kind of drift the other direction:  If your heart’s not really in CX, you’re likely not going to be very successful with those CX endeavors, because you’re not doing it for the right reason.

For that matter, I also noticed a bit of a paradox when business leaders would have to be convinced to engage in better Brand Promise alignment simply because of the ROI.  That’s fine as it is, but I saw hypocrisy when the same CEO would stand up in front of an all-hands meeting and aver that by golly, nothing’s more important than The Customer!  (Really?  Why did we have to battle it out, then, to decide to focus on CX, and only after I convinced you there was this fantastic pot of gold at the other end?)  That zeal led me on more of a mission on behalf of Customers.  I even went so far as to write in several places (including in my own book!) that, if you’re “doing” it simply for the money, you’re “Doing CX Wrong.”

Well.  Then again…

What I realized, the more people I spoke with was, that both things can be right.  In fact, I almost got it right in the book when I wrote something to the effect of:  Hey, if you think that good Brand Promise Alignment will lead to good business/financial results, congrats!  You’ve convinced yourself of the ROI!

Now, part of my reticence about trying to tie direct business performance with CX efforts (a direct ROI, as though for each dollar you spend on CX, you’ll get $1.48 in return) is based on my background as a statistician…You don’t want to promise anything you can’t surely back-up.  And that certainly still stands.

But there are definitely ways you can estimate how many Customers (and the following revenue) you lose at the hands of this or that CX problem.  You can estimate the costs of fixing those problems, and then calculate a (rough, mind you) return horizon on that investment.  Likewise, one can say something similar more broadly:  We should invest in a CX function because we’re losing this much revenue through lost Customers, and someone’s got to arrest that leak!  Looking at a more notional ROI (as opposed to directly attributing numbers and projections) will speak the language of business and make CX seem what it is:  A great investment for your bottom-line.

I often will relate CX with other functions within an organization when it comes to defending its existence.  HR doesn’t have to sell (from a strictly numerical perspective) the cash-value of recruiting, onboarding, developing, compensating and celebrating good talent.  Now, HR has been around a lot longer than CX (so they’re more established, and have a longer track-record), and it’s also not as though they have a bottomless budget anyway (a long tradition of existence doesn’t guarantee nobody will question their moves).  But we oughtn’t shy away from the dollars-and-cents of our discipline.  Yes, it’s fair to say that, when we get CX right, we should see improved retention and spend and therefore revenue.  While I still wouldn’t try to deliberately and directly create a formula that could stand up to mathematical and statistical scrutiny, I can feel comfortable pointing out Customer loss numbers, potential value of preserved Customers, and even team up with Marketing to estimate what could be if we just did more of our things in a more Customer-centric fashion.

Bounce that up against a budget for some real good Customer Insights work (to include the analytics), some top-notch Process Engineering, and yes some CX culture investment, and now we can get closer to speaking of a true ROI for CX.