Providing a great customer experience is crucial when customers can switch to another vendor or provider with just a few clicks and some due diligence. And the concern around CX is even greater if you’re a services company relying on recurring revenue. According to Brainyard’s winter survey of business leaders, CX remains a top priority this year as sales and finance seek to mitigate the cost of customer churn and maintain brand loyalty.
Of course, the main experience is with your service — but “customer experience” includes prospective customers, too. In this case, CX means how easy and pleasant it is for prospects to do business with you. So here, we’ll focus on measuring and managing your teams’ ability to delight both prospective and current customers.
Since it pertains to the entire customer lifecycle, CX is a shared mandate among production/operations, marketing, sales and customer support teams. And because CX directly impacts customers’ tendencies to buy and to churn, it’s the CFO’s job to track changes in retention and spend and to hold teams accountable to good CX behaviors.
Doing so can have a substantial financial impact. A study by Forrester and Qualtrics showed that CX leaders outperform those lagging in CX on the S&P 500 index by nearly 80%. What’s more, their customers are seven times more likely to repeat buy, eight times more likely to be upsold or cross-sold and 15 times more likely to speak positively about the brand.
Your potential customers have more choices than ever when assessing vendors, but “if you offer a better customer experience than your competitors, that’s a point of differentiation,” says Ben Labay, managing director and head of CX experimentation at Speero. “Customers will choose to stay with your business, reducing churn.”
Let’s talk about how to offer that “better experience” during the marketing and sales cycles:
Ben Labay, managing director and head of CX experimentation at Speero
Dave Palmer, president of Everise
As CFOs create financial forecasts, they must factor in not only the cost of CX operations but also the revenue-generating potential that a solid CX strategy provides. They need to work with sales, operations and marketing teams to take more of a RevOps approach and carefully craft CX and customer retention strategies — while keeping retention costs below those of acquiring new customers.
Typically, says Labay, CFOs have revenue metrics front-and-center and approach CX metrics in terms of identifying leading indicators in financial growth models. But, he cautions, today’s CFOs shouldn’t miss the customer metrics forest for the revenue metrics trees.
“Every company should have a vision and wild goals. Those goals are expressed in financial terms, but in the end, they’re rooted in customer happiness and its associated metrics,” he said. “Customer metrics now trump a pure focus on revenue metrics because they capture and affect tendencies for repeat purchases, referrals and loyalty. They’re a better leading indicator than revenue of the long-term health and value of the business.”
“Customer metrics now trump a pure focus on revenue metrics because they capture and affect tendencies for repeat purchases, referrals and loyalty.”
We’ve written plenty on customer retention metrics, so we won’t go into those weeds. But we do want to stress that a thorough customer churn analysis is a critical prerequisite to rethinking CX strategies.
Keep in mind that the success rate of selling to an existing customer is 60-70%, while that of selling to a new prospect is only 5-20%. Every time you lose a customer, you’re losing a prime sales opportunity. So, even though they don’t directly manage sales, CFOs who want accurate forecasts need to monitor and track customer satisfaction, as well as the sales and marketing teams’ outreach efforts. Dave Palmer, president of CX agency Everise, says CFOs need to measure metrics that impact customer lifetime value, such as:
How much does it cost, in terms of operating expenses and labor, for each call or email sent to a current customer?
In customer outreach campaigns, you’ll need to know the percentage of customers you’re actually connecting with in order to determine ROI and fine-tune strategies if needed.
The obvious goal is to deliver your product or service so seamlessly that no customers contact customer support, but that’s no company’s reality. This metric captures your customer support team’s response time and percentage of first-call resolutions and how those metrics impact your Net Promoter Score (NPS).
CFOs may think these metrics are only in the purview of sales, but they should keep a close eye on them. NPS and CSAT scores reflect current customers’ happiness with the improvements and problem-solves they receive — and that directly impacts repeat sales and customer retention, which directly impact your bottom line. You can tie tickets to customers that churn or leave detractor NPS scores to land on the efficacy of your help desk, helping to pinpoint whether customer support is a factor in churn.
It’s now the CFO’s job to maximize operational efficiencies and identify where money is being well-spent or wasted. You can’t do that if you aren’t familiar with the processes, tools, systems and metrics that other functions are using to validate their spend. In order to hold each department accountable for its P&L, you have to be able to speak to the efficacy of its operations.
CFOs can relate the cost of CX-related systems and tools to the return of the associated processes, which is important when justifying the cost of sales, marketing or customer support activities.
No two companies are alike, but here are some common CX processes and supporting tools that matter to the bottom line:
A customer journey map is just a visual representation, often in the form of a Visio or PowerPoint chart, that, as far as CFOs are concerned, helps identify every time you have to spend money to interact with a customer from a marketing, sales or customer support perspective. This might include outbound calls, inbound customer support calls, email marketing, social media activity or livechat interactions in the pre-sale, sale and services/support stages. Each of these touchpoints carries a cost, and each of those costs needs to be justified.
A high-quality, robust CRM is the cornerstone of managing CX expenses. We aren’t saying you have to invest in machine learning capabilities (what many providers like to call “AI” but is often just smart analytics), but you do need customer interactions to tie to a single platform. This can only be efficiently accomplished through a CRM, which should be your first source of investment and tie into other systems, such as:
Marketing automation platforms.
Tying each outbound marketing campaign — an email or social media campaign, for instance — to your CRM lets you connect these activities with upsell and cross-sell leads. That way, you can determine not only how much each campaign costs but also its ROI per customer and overall effectiveness.
Business intelligence software.
Sure, it’s possible to manually crunch the numbers associated with the customer activity your CRM captures. But it’s rarely the most cost-effective method. Business intelligence software takes all of the activity that your CRM documents and turns it into metrics that mean something to CFOs, finding patterns in customer behavior and buying trends.
An enterprise resource planning (ERP) system.
To track customers’ buying habits and the touchpoints that cost you money, make sure your ERP and CRM can talk to each other. This will not only minimize the need to enter customer activity twice but also combine your front-end (CRM) with your back-end (ERP) for a holistic view of your customers’ activities, where they’re spending money and where you’re wasting money in retention efforts.
Customer feedback loops.
Pay attention to CSAT or NPS scores, even though they might not immediately seem within your purview. After all, how can you forecast revenue if you don’t know how likely a current customer is to renew or be upsold? Capturing customer engagement or voice-of-customer data is critical to determining the future health of your company.
From a systems perspective, consider capturing users’ experience and perception at the point of conversion or churn, says Labay. Consider asking customers these questions:
Tools like Usabilla, UserLeap and Hotjar can facilitate the asking of these questions on your website.
“The quality of a customer’s experience with a product or service is directly tied to their willingness to maintain the relationship or — often just as important — recommend [your offering] to others,” says Palmer. “These things are reliably measured as customer satisfaction and Net Promoter scores, and those metrics are reliably tied to the quality of the customer experience.”
It’s worth investing in CX systems that directly tie to your customers’ business imperatives — think livechats, natural language processing (NLP)-enabled help sessions or phone interactions. When calculating the cost of such technologies against the return of continued customer loyalty and buying prowess, having such systems tied to your CRM is valuable.
Everise, for example, works with mostly healthcare companies, which entail “some extremely complex and high-consequence interactions which can only be completed on the phone,” said Palmer.
“We can use technologies like interactive voice response and natural language processing to make those interactions more efficient and take care of the subset that can be automated,” he continued. “This means that while total transactions continue to grow, those that make it to a support agent may be fewer but will be more complex, which brings with it the need for efficient and intuitive knowledge capture and management tools.”
More Customer Experience Resources From NetSuite:
Walk through six ways to improve your customer experience, including a breakdown of customer journey mapping and a free template.
Open a seamless flow of information across the entire customer lifecycle — from lead to renewal, upsell and beyond — with our CRM tool.
Brush up on the elements of a strong customer retention campaign in this free webinar.
If you’re at around 100 employees, then you likely don’t need an outsourced CX team, says Labay; CX-related techniques and skills are becoming part of the technical sales and marketing toolkits. Marketing teams should be responsible for establishing and maintaining a clear line of value proposition communication, and sales should be responsible for following up. But that doesn’t mean CFOs should relinquish all control: It’s their job to ensure resources are spent wisely. Without a clear understanding of the cost-benefits to CX, CFOs are handicapped when trying to allocate budgets or forecast profits.
Outsourcing CX is always an option. Like an outsourced CTO or CMO, a consultant to manage CX operations might be a viable avenue for CFOs looking to decrease the cost of churn without spending to maintain a CX team.
Palmer is biased, of course, but said business leaders should focus on core competencies, which rarely include categories like customer support. He suggested CFOs leverage the specialization and variable costs that outsourcing offers.
“In addition, outsourcers operate where real estate and labor costs are much lower than where most innovative and growing SMBs are founded,” he said. “And having multiple clients, we can spread the cost of the most secure and resilient technologies across them in a way that saves everybody substantial amounts. When CFOs of growing SMBs learn they can lop 65% off their CX line item while boosting customer satisfaction by 15%, they suddenly get very interested, and with good reason.”
We’d also note that contractors can more easily transcend groupthink, offering fresh opinions and spotting more opportunities for improvement.
Here are executives’ common missteps when it comes to customer experience and retention strategies, according to Labay and Palmer.
Put each customer feedback signal into perspective with regard to the business’s growth model and market competition, says Labay. Instead of listening to customers and reacting one-off, create a strategy for strategically addressing problem themes or opportunities.
This is related to the point above. The tendency is for functional employees to execute CX tactics (e.g., run a customer survey) without considering the actual strategic goal (e.g., failing to include survey questions about a recent theme among customer feedback). So, mandates about CX initiatives must come from the highest voice.
Due to what Labay calls “data fascination,” CFOs risk getting sucked into KPIs and metrics, deep-diving into data that doesn’t really provide an understanding of the overall CX picture at their firms. Track data, yes – but don’t get so into the weeds that your CX initiatives grind to a halt as you analyze every single number.
Many organizations overlook or discount the importance of internal training, especially when it comes to disciplines that seem as nebulous as customer experience. But educating employees on best practices and metrics to watch is vital, said Labay. He recommends using a learning management system (LMS) that administers, documents and tracks employee education and automates reporting and delivery. If an LMS isn’t feasible, then at least build a process for smoothly delivering and tracking training.
The bottom line: Avoid these pitfalls when leveling-up your CX involvement as a CFO; invest in the necessary tools to measure success; mind your metrics; and you could very well watch your customers’ experience improve along with your bottom line.