Over the last decade Net Promoter Score (NPS) and Customer Experience (CX) tracking metrics have become vital to measure impact. Most companies, whether product or services ones, have their internal CX teams responsible for tracking, analysing and improving CX scores.
Though increasing the focus on CX and reducing attention on short-term financial results is a case, built by industry leaders, like NPS inventor Fred Reichheld, investors are hard to convince that CX is worth it. Building the business case and showing the financial value is often the first step in getting large CX initiatives approved.
80% of companies think that they are providing a good customer experience, however only 8% of customers agree with this. This disconnect needs addressing in order to build long-term brand value and customer loyalty, hence bringing better returns. Discussions on CX impact on financials often focus on churn and increasing retention, although building upon positive experiences for upsell, cross-sell and referral campaigns is also a great way to leverage customer satisfaction for a significant impact on the bottom line.
Successful campaigns include a strategic focus on overall CX improvements and a tactical customer-level actions, unlocking the potential of existing customers at the right point in time.
The Strategic Look
CX investments are often pricey. Costs pile up when hiring more people in the customer care centres, refurbishing the retail stores, or adding an additional packaging layer. Often, the link to financial results is not direct. This is why it is crucial for any CX team to provide statistical analyses be able to prioritise initiatives accordingly.
- Which factors impact CX?
- What topics move NPS the most?
Linking NPS to financial results is crucial and demands a thorough analysis. Often factors like competitors’ actions are overlooked. Many CX Managers have heard complaints that investing in CX initiatives never brought ack increase in revenue, hence CX investments were a bad decision.
Having a firm grasp on the competitive CX landscape will however show not making investment in CX when all competitors do will result in lost revenue. This is why a comprehensive CX programme, a CX and text analytics capabilities and a good view on competitive benchmarking is a bare minimum in terms of strategic CX planning. Keeping customers satisfied and NPS up has shown to make sense financially over and over again, for example satisfied customers spend 140% more than dissatisfied ones. Having statistical models, numbers and figures to back CX investments is simply necessary in order to make them happen in today’s market.
Satisfied customers, regardless of industry are more likely to refer your brand, but often they need a little extra push. Even though high level CX improvements will bring in additional revenue through happy customers leading to higher upsell, cross-sell and referral numbers, a tactical approach is also important when looking to tip the scales in your favour. Monitoring customer experience and reaching out at the moment of truth, when a satisfactory experience happens, greatly increases the chance for a successful referral.
For one of our financial services clients, we observed 24% increase when the timed communication approach was adopted. One way of doing it is to use actual NPS responses and customer feedback to know when your customers are happy. In such situations, response rates on these are relatively low (about 18% across B2C industries and just below 40% for B2B, based on our engagements), which makes it impossible to target the full customer base.
Machine Learning & AI
Machine-learning driven models like our Predictive NPS, overcome this obstacle and allow you to contact a happy customer with a referral request at the actual moment of truth, even if they did not leave feedback. Similarly, companies know a lot more about their existing customers than about their new ones. So it is often easier to upsell, but still, you need to target the right customer at the right time in to maximise chances for success.
Improved & Positive Customer Experience
A positive experience greatly increases the chance for a successful upsell offer, however you need to have a streamlined, automated way of tackling this and communicating with the right customer at the moment of truth. Disregarding the timing and sending regular communications via email, text, call, etc. has proven over and over again to be expensive and to lead to low success rates. Next best action models, which include CX scores, both actual and predicted as one of their data inputs, have been proven to be increase likelihood of success and also provide an opportunity for cost reduction, automating some of the decision making and the communications.
Track & Measure CX Improvement
CX managers have been under a lot of pressure in the last couple of years to show concrete results that go beyond an increase in relational NPS. To do this, companies implement more comprehensive CX tracking and improvement initiatives . What is fundamental now, is to have the technical capabilities to build state-of-the-art analytical models using customer data and the business acumen to pitch them to management and implement them properly.
Focus on the Right Topics
Upsell, cross-sell and referral revenue unlocked through improved CX is often overlooked, even though it can be significant. A strategic step in addressing the issue is to build a strong CX programme focusing on the topics that make customers happy. Subsequently deep diving into a tactical approach towards specific customers more likely to buy or refer at the moment of truth provides significant results and proves the importance of advanced analytics in CX management.
Customer Experience is a vital component in an overall revenue increase through upsell, cross-sell, referral campaigns. It allows for cross-team results-driven partnerships and builds the long-term case for the crucial position of the CX team within an organisation.