A Customer Experience Blog to Grow Your Profits and People

Why is it that some organizations have yet to invest in customer experience?

Why do some departments receive a bigger share of the yearly operating budget?

Have you ever been asked, “What’s the ROI of customer experience?” by your CEO?

Every year department heads make their case for a part of an organizations yearly operational budget. You have your VP, Marketing making their case. The head of your IT team will need their piece as well. What about customer experience? I believe the #1 reason some CEO’s won’t invest in customer strategies to support their experience is because the ROI of amazing customer service can take time to come to surface.

Jeff Bezos (Founder, CEO – Amazon) says it best, “We are willing to be misunderstood for long periods of time” (read his top 10 leadership tips here). In other words, Amazon is willing to invest in an initiative that they believe will enhance the customer experience but may not pay dividends for some time. When he says “misunderstood” he’s referring to Wall Street and their blood thirsty desire to see an immediate ROI for every dollar spent (read Why Wall Street Hates Customer Experience here).

Here’s something to consider, most CEO’s are bonused on a quarterly basis and if the ROI is 6-12 months away they may face challenges in receiving their incentive.

Let’s compare a real life situation.

Your VP, Marketing needs a greater share of the budget because she wants to invest more in Pay Per Click (PPC). The next month the organization experiences an increase in revenue because of the marketing spend. This is a great example of short term success which pleases the CEO.

The VP, Customer Experience asks for a portion of the budget to develop a Net Promoter Score program. When asked, “When will we see the ROI?” The VP responds with, “The ROI may not be revealed until the following year since we need time to gather, analyze and take action on the feedback we receive to understand our customers behaviours, desires and aversions.”

PPC wins in the short term but what if the organization has inferior customer service? The same customers who the organization received from the PPC program has no but soon shopped with your competitor because of your poor service. The short term “win” is now a long term loss. I know some organizations that invest heavily in PPC and rightfully so because it does have its place in business but it doesn’t produce the long term growth that a customer experience initiative or strategy will. We need to stop immediately investing in strategies that are only going to help us in the short term and start thinking long term.

How can you convince any CEO to invest in customer experience

I’m often asked, “Why should I invest in customer experience?” The rationale is quite simple, here are a few points you can use if you’re ever asked the same question:

• Customer experience builds businesses that grow organically which is the most profitable growth engine.
• The only way to encourage repeat business and word of mouth marketing is by having memorable customer service.
• Superior customer service builds customer loyalty. When selling to a loyal customer the opportunity to up and cross sell is more likely to convert.
• An organization completely devoted to customer experience have happier employees.
• When a consumer is confident they are going to receive amazing service they are less likely to object to price.
• An organization that is customer centric are more admired than ones who are not (see Zappos).

Some of the world’s most profitable and admired brands all believe that they became billion dollar businesses because they invest in their customers experience. I don’t think we should argue with them.

See also

There Are Two Type Of Organizations That Use Net Promoter Score