Better customer experiences help businesses cut costs. Source: Shutterstock

Better customer experiences help businesses cut costs. Source: Shutterstock

Here’s how to prove that customer experience improvements help cut costs

CUSTOMER experience is a tangible metric and improvements to it can be measured in dollar terms.

However, in a world where margins are increasingly getting thinner, companies are keen to reduce costs — and Forrester Research Director and VP Harley Manning believes improving customer experience is one way to do that.

“Often your costlier customers are costlier because they have more problems. When customers have problems, they reach out to your contact center with more calls, emails, texts, social media outreach — you name it.

“Every one of those contacts costs you money to handle and resolve. What’s more, your costs can skyrocket if you also ‘make good’ with refunds, credits, or some other form of compensation.”

In his recent blogpost, Manning argues that companies can directly tackle these costs head-on when they track the root cause of customer problems and eliminate them.

According to the Forrester Research Director, the way to identify where customer experience can be improved is simple — business leaders need to ask the head of their contact centers.

Every contact center maintains detailed logs of customer interactions, classifying them by problem areas and concerns.

To decipher what troubles customers the most, Manning recommends diving into the classification system and identifying the problem areas that get the most number of complaints.

“What’s more, your contact center knows the average cost per call. That means you can prove how much each type of problem costs your firm by multiplying the number of calls for that problem by the cost per call.

“With a little additional homework, you can create a business case that’s about as straightforward and compelling as a business case ever gets.”

Customer experience improvement projects must be simple

While gaining a detailed understanding of a problem before diving in to fix it is important, business leaders must remember to keep customer experience projects and their ROI calculations simple.

A simple ROI model for CX projects could look like:

  • Identifying a problem
  • Calculating the costs associated with fixing the problem
  • Assuming how many customers that improvement will positively impact
  • Multiplying the number of customers with the average cost per call (from the call center)
  • Determining returns by deducting the positive impact as calculated by multiplication from total costs

According to Forrester’s Manning, business leaders need to learn to collaborate with their call center executives to improve customer experience and maximize cost-saving opportunities.

“Your call center is a gift that keeps on giving, because new problems surface from time to time even as you’re working on your backlog of old problems.”

Keeping customer experience projects simple and being able to calculate costs and returns helps secure budgets for future projects.

Ultimately, there’s no denying that a focus on customer experience is critical in today’s day and age. Measuring costs and quantifying returns, however, is a definite way to keep the momentum going when it comes to constant improvements.