Let’s start with a quick equation:
🤑 Customer Feedback ROI = 100 x (Benefits – Investments) / Investments
In a recent study (which matches our experience), many CX leaders find it hard to quantify the impact 💥, or the ROI of customer feedback and customer experience (CX) on business outcomes and metrics.
But in a successful business, it’s imperative that the benefits of initiatives are not only defined in a qualitative way, but also in quantitative, measurable numbers.
And that’s exactly why you should calculate the ROI of customer feedback & CX. It’ll give you the ability to guide your investments to produce the greatest revenue return and ensure the sustainability of your business.
So, now that we’ve covered the theory let’s get to practice:
🧮 What steps can you take to calculate an ROI on customer feedback and customer experience?
Step 1: What business metrics will be most impacted through customer feedback and customer and improved experience?
Business metrics 💯 depend on the industry, but here are some common ones:
A study by Forrester found out that companies focusing on CX are outperforming their competitors 5:1. Forrester is also providing a CX index, and with every added index point, companies in different industries can add millions of dollars in revenue.
The Forrester Customer Experience Index (CX Index™) tries to close the loop between CX measures and business growth.
Improving the customer experience through customer feedback has a direct positive impact on customer retention and fights every software company’s enemy: churn.
It’s easier than ever to switch a software product for other competitors, so you better get it right.
It’s very simple, happy customers tend to spend more money with your company. If you can link upsells / cross-sells to improved CX or to actions led by customer feedback, you can calculate the additional revenue on improved CX in this area. Never forget: acquiring a new customer is 9 times more effort than keeping an existing one.
It’s not easy to calculate additional revenue gains initiated by improved experiences of customers based on CSAT (or NPS) scores, but you can evaluate what an increase (i.e., 1 point) in your score could financially mean for your customer retention or your sales.
Improved customer experience and listening to your customers has a direct impact on improved processes and streamlined workflows. This leads to a reduction in costs that can be calculated.
Reduced volumes in customer support tickets mean less effort for your development team.
Reduced effort to identify issues and bugs
Another often underestimated area of investment is the identification and reproduction of issues in digital services and software. The ROI on issue tracking, reproduction, and solving can be calculated by the size of development teams & product teams, the effort invested in developing the product, and the rate (%) of how much time teams spend on identifying and validating issues.
📩 Download examples for calculating business metrics and ROI on customer feedback and CX
Step 2: Choose the right tools to give you insights to calculate your metrics for the ROI of Customer Feedback
Picking the right business metrics is difficult enough, but you also have to measure the business metrics that were impacted by the changed experience of customers with your product and by the feedback you collected from customers that you used to improve your processes.
There are three pillars when it comes to choosing solutions to have the foundation for calculating the ROI, connecting it to business behavior, and making it actionable.
- A) Analyze your customers’ behavior quantitatively by using analytics software that gives you key information on what changes are driving what CX metrics.
- B) Gather customer feedback along the journey through your product, measure your users’ experience, and offer ways to collect feedback, issue reports, and customer service requests. For this pillar, you can use customer feedback software like Usersnap.
- C) Finally, aside from analyzing & calculating, there’s also a final pillar that puts what you learned into action: add a digital adoption platform to help your users to get onboarded successfully. With that, you can improve the customer experience massively and your ROI.
How to calculate investments in improving the experience of your customers:
With the previous method, you decided on your tools to get the necessary insights to build the foundation of your ROI calculation. And as soon as you are measuring and identifying the areas of improvement, you should also calculate the necessary investments to improve your customers’ experience.
- Which investments are needed?
Investments in infrastructure/solutions
Better CX is often bound to a modern tool stack, including analytical software, customer feedback, CRM, and digital adoption platforms.
Investments in training
All your customer-facing employees must get the opportunity to get the proper training to understand the customers’ needs and pains and how to support them properly.
Investment in operation costs
CX-Ops costs include the creation of new digital assets (website, web applications, mobile apps), running VOC programs, user research, customer feedback programs, and the investment in transforming your organization into a customer-led organization with the customer at the heart of the operations.
- When to do which investment (planning)?
The timeline for these investments will go over several periods in the future.
- Estimate the costs of the investments. After you have chosen your investment-”arsenal”, you have to give them a price tag. That depends massively on the type of investment and the company’s size.
We’ve provided an example of a Customer Feedback / Customer Experience ROI calculation for you to download.
Building a successful CX program with customer experience ROI:
Once you’ve identified how to calculate the ROI on customer experience and customer feedback for your company, you can start implementing a CX program to begin your enhancements. Keep these four points in mind:
- Follow your company goals when picking investments for improving CX.
- Never underestimate the impact and costs of inactivity.
- Quick wins will help you kick off things.
- Measure the ROI on customer feedback and customer experience over time.
To improve your business outcomes like revenue, retention, etc., through becoming a customer-led organization and improving customer experience, it’s crucial to measure the customer experience ROI in hard numbers.
In this case, it’s much easier to get the approval of the necessary budgets to make the necessary investments in becoming customer-centric. Never forget that companies focusing on improved customer experience by listening to their customers outperform their laggard competitors 1:5!
Resolve issues faster with visual bug reporting.
Simplify and reduce issue & bug reporting efforts with screen recordings, screenshots, and annotations.
And if you’re ready to try out a visual bug tracking and feedback solution, Usersnap offers a free trial. Sign up today or book a demo with our feedback specialists.