The ROI of customer experience

Is there a direct correlation between your customer experience and your revenue? Can we talk about the ROI of customer experience with any hard evidence that will back up our perceptions and justify business expenditure on customer experience work?

Rather than treating your customer research investment in isolation, identifying where your business has to pay for research, analysis and testing, it’s possible to view your investment from the opposite angle – if your business chooses not to work on customer experience, what problems will you experience, what dropouts will you see on your website, and what value is being lost as a result of you not conducting any research?

Today’s customers expect excellent user experience as a matter of course from modern websites – a competitor’s web site is only a click away. Businesses pay a lot of money for their websites to be developed by design agencies, and sometimes whether the site is deemed a success or not can hinge on the highest-paid-person’s-opinion (HiPPO). Such flawed thinking often prevents the suggestion of objective changes that are grounded in data. But to be of any benefit to customers, this is where the thinking has to occur.

You must obsess about your own customers. What points are causing them problems? Why are some people finding it hard to navigate from these landing pages through to these particular items? It is often hard to see all the way down to granular issues from a very high viewpoint, but it is vital if you want to ensure a loyal following.

Of course the majority of companies are aware of the desirability of good customer experience; they just need to have a greater understanding of the impact of each change. They’re happy to invest some money in making their websites more usable by conducting customer surveys or audits and implementing design changes, and they know there’s a cost for this expertise but often have no way of grasping the potential ROI. This is why it is important that you understand more fully what is involved in quantitative analysis, and perhaps most importantly, what changes can be made that will directly improve your own conversion rates and at what cost.

One useful measurement might come from the concept of ‘engagement scoring’. You can identify the key actions that you would like customers to perform on your website. Making a purchase is right up there, of course. But how about watching your product demos, reading customer reviews, or signing up for more information? Are these tipping points that generally lead to future sales? And if so could they be assigned a score or value? Might your timely human intervention or a conversation with your customers at high-value points convert engagements into sales? These are ways in which the quality of your traffic can be valued, not simply the quantity. These are the first steps towards establishing a ROI for your customer experience research.

It’s important that you are able to focus on optimising traffic acquisition and retention. Why do people come in to your site on certain pages but not move forward? Expert analysis of your customer experience will enable you to more fully understand the quality of your visitors over time and to differentiate their experiences. If, for example, a supermarket can improve the journey towards transactions for a small percentage of customers, and increase order value again by just a few percent, the resultant revenue change can prove massive.

Through engagement scoring ground in data, your business can begin to assign commercial values to actions occurring on its websites, even if they do not directly result in purchases. Instead of recording that 3% of journeys end in conversion, it is just as true to state that 97% went through a certain process and did not complete, thus providing a commercial value for those people lost during the transaction or booking process. Not only are the vast majority of visitors not converting, but they may be causing performance problems which will impact the experience for those that do: Think of a 3% conversion rate in a high street supermarket!

A commercial value like this provides a tangible starting point from which to have a conversation about the corresponding value of conducting customer experience work and potentially reducing this lost revenue. The premise becomes: “If we make an investment to improve our customer experience and reduce dropouts, how valuable is that to our company?”

This process can be taken further still by conducting user group research or surveys to understand the ‘Why’ factor. If 97% of site visitors dropped out between stages, what was the average order value from those lost opportunities? Would most visitors have only bought small value items, and just a few bought high value ones? Did the percentage that did complete put up with poor user experience because they were getting good value they couldn’t achieve elsewhere? Were a large proportion unwilling to put up with their experience and so simply jumped to another website?

Multivariate testing and simple A/B or split testing, can help greatly in establishing the commercial value of your online processes and user interactions. There are also a wide range of tools available that can help, from Omniture’s Test & Target, Webtrend’s Optimize, Maximiser, Google’s Website Optimizer and other developers. These generally enable businesses to create pages and sites with far more modular structures and to then work out how best to display products and services. Along with the influx of greater customisation in web design, this modularity is reducing the time and overheads associated with customer experience testing. In a couple of years, more sites will become dynamically tailored to each user. But in the meantime even subtle improvements implemented as a result of solid testing can reward you with significant improvements in your conversion rates, and a potentially huge impact on your bottom line that easily exceeds your investment in testing. It’s not unheard of to read accounts of 1400% improvements in revenue following customer experience testing.

By ignoring the potential of an investment in customer experience strategy development, your business could be missing out on large volumes of untapped revenues. It’s vital that we reach a point where businesses like yours can justify a modest investment in testing far more readily. Customer experience agencies can empower you to please your customers, but if you don’t let this happen, you risk losing those customers forever.

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