There is a lot of discussion lately about "return on customer experience," an idea we think should be almost directly aligned with our Return on Customer concept. Buzz-Talk's blog has an excellent summary of many of the more recent findings in this field. Unfortunately, the "proof points" that get the most attention in Buzz-Talk's and other discussions of customer experience management have to do with comparisons of the overall economic and financial performances of CXP leaders and CXP laggards.
Now it's certainly welcome news that financial success at a company does seem to be at least roughly correlated with a better customer experience delivered by the company. However, it hardly helps a marketing executive during a debate with other executives at the firm about how much investment his or her own company should make, in which kinds of experience-improving services. Even though it's become fairly easy to "prove" that good customer experience management has some kind of positive impact on a company's results, the simple fact is that all these indicators are inherently non-financial metrics. Using these kinds of indicators, you still can't actually quantify the financial benefit of, say, investing an extra $25 million in contact center training at a firm, or spending $50 million to install software and re-engineer a company's system, in order to do a better job of treating different customers differently.
And, if your marketing exec says, well if we want a good customer experience then we should just do these kinds of things, then our question is: What if the cost is $100 million? Or $500 million? See the problem? At some point a balance must be struck, but where? Simply saying that CXP leaders tend to have better financial results than CXP laggards doesn't solve the hard problem of resource allocation. To solve this problem you need a metric for the benefits of customer-experience-management that can be converted to dollars and cents.
That's the benefit of the "Return on Customer" metric, a precisely quantifiable measure of the efficiency with which a company's customers are creating value. Our previous post on Strategy Speaks has a concise and useful description of how this metric works.