Why Investing in CX Makes Economic Sense
Is customer experience (CX) a question of economics? According to Mike Havard, the founding director of Ember Group, every business that has made the transition from being good to becoming a champion brand in the eyes of its customers has successfully reflected upon this question on its route to the top.
What are the reasons to invest in Customer Experience (CX)? Is CX a question of economics? According to Mike Havard, the founding director of Ember Group, every business that has made the transition from being good to becoming a champion brand in the eyes of its customers has successfully reflected upon this question on its route to the top.
And, during his keynote at this year’s Sitel Group European Customer Day (ECD) in Paris, these were also the questions he posed to the audience.
What makes a champion brand?
Whether it’s Lego or McDonald’s or IKEA, each brand understands: “What it really means to give better service – and put numbers against it versus cost,” says Havard.
In other words, they have been able to demonstrate to all stakeholders that by investing in boosting CX they will also boost the bottom line.
Countless companies are staffed with extraordinary CX talent across marketing, strategy and operations functions. But the reason why there are relatively few consumer-facing brands operating in any vertical that can be described as true “champions” is usually because these customer care experts don’t have a big enough budget to make the investments necessary to take the company’s CX to the next level.
Havard, who bases his perspective on 30 years of experience helping organizations build their brands in the eyes of their customers, says that this is often because the boardroom doesn’t always perceive CX as an investment, but rather as a cost.
Build an economic argument for CX investment
That’s why the first step to becoming a champion brand is to get the board to buy in.
“You need to speak the boardroom language of the balance sheet, P&L and risk,” he says.
Therefore CX professionals should be able to show how champion brands have a lower cost to serve and more tolerant customers who are also more likely to be strong advocates of what you do. Therefore, your cost to sell and your churn rates are also lower. But there’s a host of macro data that should help bring the argument to life.
“When the American customer service index tracked organizations over 16 years, company valuations were directly affected by service,” Havard says.
Brands that were top for customer service had valuations four-to-five times above the S&P baseline across that period.
European studies also highlight the massive difference a small boost in CX can make.
“A British study showed that companies that achieved average customer service satisfaction saw a turnover increase of 4 percent year over year,” Havard begins. “But, companies that managed a 1 percent increase on this average benchmark managed a 9 percent increase in turnover.”
How do your customers perceive your brand?
So, with all stakeholders on board, the next step is to look at your brand and ask: How do you perceive it? How do customers perceive it? What is the distance between those two viewpoints?
If there’s a gap that needs closing, start by looking at your operations and improving them. Then it’s time to improve service and that, according to Havard requires considering two different factors, simultaneously: “It’s about the brand promise – your brand is trusted and it has a reputation for service. The other is the service proposition. What do you want to be famous for, how do you want to differentiate in the way that you deliver service?”
According to Havard, bringing those three together improves how an organization talks to the market, to the customer and to prospects about its proposition as a champion brand.
“That is going to make more difference than how you deliver on it,” he says.
To gain further insights on the route to becoming a champion brand and why it’s worth it, watch Mike Havard’s ECD keynote in full in the video below:
Are you interested in how Sitel is accelerating the transition to new forms of CX? Read the highlights from our annual European Customer Day, which was dedicated to the latest developments in CX.