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Proving the Value of Customer Experience

Release Date: February 16, 2021 • Episode #153

How do you gain the support for customer experience from stakeholders? By proving the value of customer experience. Host Steve Walker welcomes Bob Thompson, CEO of CustomerThink, a global online community of business leaders. They discuss the findings in their recent report on “Best Practices to Prove the Business Value of Customer Experience” which highlights how CX professionals can, “show that improving experience will deliver value to the customer and the business.”

Highlights

What do you mean by “ROI”?

“…ROI is not showing a report for Forrester that proves that CX leaders outperform CX laggards. That’s really great to know; it is inspirational; it may motivate business executives to pay attention and to want to look deeper, but that by itself is not what I mean by ROI. What I mean is making a business case internally that will motivate people to spend money… You need to think, really, about the internal business case.”

Take time to understand people’s needs

“One key takeaway here is simply to stop pitching CX as you go talk to sponsors you want support from; spend time learning about their problems. What is it that they’re trying to get done there – their hot buttons. Especially learn about their real KPI’s, how they’re measured, rewarded and so on. Because if you don’t know that, you really can’t build a good ROI strategy.”

Show that CX can deliver

“I think the risk, which I don’t think is getting enough, or at least until the pandemic wasn’t getting enough attention, is that, you know, with executive turnover and the budget fights that are always part of companies, that if you don’t show in the first, say, a couple of years, maybe three at the outside, that you can deliver real business benefits that the stakeholders are signing off on, then you could go from developing to not going anywhere. So that that’s the part that keeps me awake at night.”

Transcript

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Steve:
If you lead a customer experience program, then you should understand the value of stakeholder support.

Bob:
To make a long story short, the ROI question has been kind of a nagging problem for a long time. You know, everybody sort of knows it's a problem that not enough CX professionals can make the business case.

Steve:
Proving the business value of customer experience on this episode of The CX Leader Podcast.

Announcer:
The CX Leader Podcast with Steve Walker is produced by Walker, an experience management firm that helps our clients accelerate their XM success. You can find out more at Walkerinfo.com.

Steve:
Hello, everyone. I'm Steve Walker, host of The CX Leader Podcast and thanks for listening. On The CX Leader Podcast we explore topics and themes to help leaders like you leverage all the benefits of your customer experience and help your customers and prospects want to do more business with you. A common take-home piece of advice provided by our guests is gaining stakeholder support. If you have the backing of your C-suite, then your job gets a whole lot easier. And how do you gain the support from stakeholders? By providing the value of customer experience. Back in July of 2020, CustomerThink, a global online community of business leaders produced a report on "Best Practices to Prove the Business Value of Customer Experience," which highlights how CX professionals can, quote, "show that improving experience will deliver value to the customer and the business." Well, I'm very lucky to have the CEO of CustomerThink, Bob Thompson, a frequent guest on the The CX Leader Podcast, who is the author of that report, and also the one of the real soothsayers and visionaries of our industry. So he's going to take us on a little journey down through this report. Bob, welcome back to The CX Leader Podcast. Thank you, Steve. It's a pleasure to be with you. Well, I know who you are, and I think probably most of our listeners know who you are because you've been on the show before. But just in case we got some new listeners, could you just give us a little bit of your background and also a little quick overview of CustomerThink?

Bob:
Well, sure. Well, customerthink.com is an online community. We've been around since, well over 20 years now. We started, believe it or not, as an email discussion list in 1998. And it's grown and evolved tremendously over the years. I'll spare you the the story about all of that. But right now we are we're reaching about this year should be at least three million unique visitors through the course of the year. We've got about forty thousand registered members worldwide and we have over four thousand registered authors. So we're a big online community. And customer experience is the really the driving topic for our community has been for the last 10 years or so.

Steve:
Yeah. And you've really done the the whole profession a good deal by just kind of creating and fostering, I think what we have today is in terms of CX pros, in terms of content. So if any of our listeners are not familiar with CustomerThink, we're going to make sure that they know about that after this podcast. But I was really excited to see your new report. And I guess it's not all that new, but it's it's new on The CX Leader Podcast. But we were talking a little bit off the air. But this idea that we have to convert what we do in CX and relate that to how it's impacting the business. Talk just a little bit about the report, how you did it, and maybe some of the key findings that that come out of it.

Bob:
Sure. This report really or this study was just another step in the research I've been doing over the last more than 10 years. I started doing formal research and customer experience in 2005. And to make a long story short, the ROI question has been kind of a nagging problem for for a long time. In fact, I remember we talked about it in the last podcast, which was a year and a half, two years ago, I think. You know, everybody sort of knows it's a problem. I've talked to a lot of people this CXPA and vendors and consultants and I get a lot of head nods. Yeah, it's a problem that not enough CX professionals can make the business case or they're struggling in one aspect of it or another. So I decided to do a formal study. This one is mainly based on qualitative research to try to dig deeper into what some of the challenges were. And so that's really the basis for this study, is nearly 50 people that are interviewed. Plus, we did do some quantitative analysis as well to try to get a sharper focus on what should be done to get the stakeholder support that that you mentioned is so, so critical.

Steve:
So what are the key takeaways, are the key findings from the work?

Bob:
I want to start with just something very simple is like why is ah, well, what is ROI and why is it important? And I've said this many times online and in different webinars, but I want to repeat it here, that ROI is not showing a report for Forrester that proves that CX leaders outperform CX laggards. That's really great to know it is it's inspirational, it may motivate business executives to pay attention and to want to look deeper, but that by itself is not what I mean by ROI. What I mean is making a business case internally that will motivate people to spend money. So that's a quickie on what is ROI. You need to think really about the internal business case. That's that's ROI's a shorthand for that. Why is it important? There's three reasons that I found. One is that there's lots of things you can spend money on and customer experience land. Right. You you know, every part of the business, including products, customer service, marketing, you could you could put a CX lens on really anything in your company and say, well, let's do a project there or let's fix a problem there. And so one thing that that having a clear ROI does is it helps prioritize different investments. So it may be obvious that customers are complaining about some problem, how to fix that problem, but it's less obvious if you say, well, look, we've got we could improve the early stage of the customer journey, whether dealing with marketing and sales, or we could maybe we should upgrade the product or we should improve customer service. Each has a different profile in terms of ROI. Which one are you going to do first? Which one has the highest impact? So ROI can help you make better decisions about where to spend your money. The second thing is that executives and their priorities do change. And this is kind of the foot on the banana peel that I've heard about directly and through some some of my contacts in the industry is that it's great that you get support and you're sponsoring executive says, "hey, no problem, don't worry about ROI it's the right thing to do. It's all part of our strategy. Just get on with it." And then that executive leaves. And then one that comes in, doesn't see it quite that same way. And they may have more of a hard nosed attitude of a show me the numbers. If you don't have the numbers, you're really in a bad position and can lose funding or certainly lose time as you're trying to put them together. And the third reason I'll give is that as we did quantitative research on this, we found that cost benefit analysis is actually the number one factor in general in spending decisions. So regardless of how strategically important CX is, that when spending decisions are made, there are a number of things that go into it. But the cost benefit analysis was in our in our study, the most important factor.

Steve:
Yeah, I think you said a lot of things. I just want to reinforce, you know, that, you know, the ROI, what you're really saying is you need to build your own customized case for what the ROI means in your organization, not just quote the nice to know stuff that's out there in the industry and that that requires you to go out and talk to some of the business leaders in the company. And then, you know, this this idea of, you know, having this sort of ROI formula, drive resource allocation, drive the focus of the business and that the fact that that changes over time. So there there really is this element of CX pros needing to stay very, very contemporary in what's going on in the business. Is that is that a fair statement?

Bob:
That's absolutely true. And and really the thing that that stood out to me. As I interviewed people in customer service, marketing, sales, top management, CX. Is that everyone's got a little different view of what does it mean to be successful. What are they trying to accomplish? And I think it's easy to sort of fall in the trap of as a CX professional to say, look, our top management's it's in the annual report. They're talking about it all the time. And so we're all good. And then you if you spend some time in the in the functional organizations and let's assume you need support from somebody at customer service or marketing or sales, I was frankly shocked at how little impact CX had and their sort of their formal success factors, the so-called KPIs. So, yeah, they measure customer satisfaction. They know customer experience is important strategically. All that's fine. But when I asked them, open question, open-end questions about, well, how do you go about deciding how to spend money, what is it that determines whether you, in fact, you personally are successful? The idea of increasing customer satisfaction was was not mentioned once – zero. One key takeaway here is simply to stop pitching CX as you go talk to sponsors you want support from; spend time learning about their problems. What is it that they're trying to get done there – their hot buttons, especially learn about their real KPI's, how they're measured, rewarded and so on. Because if you don't know that, you really can't build a good ROI strategy.

Steve:
You know, I told you that I did get a copy of your report and I studied it very, very well done. But there's a couple of things in here that that I'd like to explore with you just a little bit more. But you actually have quite a bit of how-to in terms of coming up with ROI formulas. And I thought it was very well done. But, you know, a lot of times we get pushback like, well, we don't have that data or we can't access that data. What do you say to the CX Pro that tries to offer that as a reason not to try to go down this ROI road?

Bob:
Well, it's not a very good excuse. [laughing] I have to say. It's hard to get some of this information. That is for sure. It's easier to get information that's related to KPIs they already care about. So this is, again, this dual role that I think CX professionals have to take. They've got to assess the environment. Remember, this is internal selling. And part of selling is you you have to assess your environment. Who are the decision makers, who has power to make things happen? What do they care about all of that sort of thing? It's selling, pure and simple. So you need to kind of know how things get approved around the company and tune your approach to that. And if you're doing a CX program and you're trying to get support from customer service and they say, well, you know, we don't have anything on lifetime value and we don't think anybody's going to care that much, if we can show we improve it. But I'll tell you what we do have we have a mandate to be as efficient as possible and to at least maintain our customer satisfaction scores. Can you show us how we can do that? And the CX professional can engage on that with data that they already have. And maybe there's a follow on piece of work that has to be done to say, well, let's go see if we can find some data that shows that better customer service improves loyalty, which can, in fact lead to long term revenue growth.

Steve:
Yet another twist on there, I think you referenced that in the report is, you know, sometimes you can engage that manager in sort of a brainstorming dialog of creating some hypotheses about what those metrics might be and then go actually go do some, you know, data collection. And, you know, for example, you know, what's the what is the match up to first call resolution by the internal stats versus, you know, looking at the survey question to see if the customer felt like their problem was taken care of. So there are a lot of really simple ways that we can start to draw those lines and engage the users who are not full time in CX, but who could be the the best beneficiaries of this, I think.

Bob:
Absolutely.

Steve:
Any surprises? Any anything that popped out on you that just said, wow, I didn't I didn't see that one coming.

Bob:
It's really the one I already mentioned. I was frankly shocked that the I would call them line management interviews I did, so people in marketing, sales, customer service. And the approach I took, which I recommend to CX professionals, is instead of going in and saying and asking sort of leading questions like, hey, do you think customer experience is important? I mean, it's like motherhood and apple pie. Almost everybody agrees. Sure. It's important. We're all for that. Do you think it's important to have improved customer satisfaction? Oh, yeah, absolutely. Those kind of questions don't lead to a good insight, in my opinion. You start with what's your job? How are you measured? What is your boss asking you to do? These are very fundamental questions that may or may not have anything to do with CX, but it gives you an understanding of where they're coming from. And the shock I had was that when I took that sort of neutral, open ended approach, nobody mentioned customer satisfaction as a top what I call success driver – zero. Now, it doesn't mean it's not, in fact a success driver. But but then they said what? You know, I'm in marketing, sales, service. They didn't say, you know, if I increase customer satisfaction, I'm a hero. I make more money, I get promoted. They listed a bunch of other things that are more directly related to their jobs. Now, I'm not saying there's no nobody cares about customer satisfaction or they don't measure track it. I know some organizations do hold people accountable, but it really surprised me how little weight it had compared to the vernacular that you keep hearing in the industry, that, oh yeah, we're all in on customer experience and we all we want to improve those scores. Well, I say to that, well, show me show me the KPI's show me how it's going to drive success in your company. And if it's not, then it's just lip service.

Steve:
I want to take a moment to tell you about Walker's new report, "Next Level CX for B2B Companies," which focuses on helping B2B companies rise to the next level of their CX excellence. Walker collaborated with the Qualtrics XM Institute and discovered some insightful conclusions about CX maturity and how B2B is performing compared to B2C. Download the report for free today at cxleaderpodcast.com/nextlevelcx.

Steve:
Hey, my guest on the podcast this week is Bob Thompson, who's the CEO of CustomerThink, a global online community for business leaders striving to create profitable customer centric enterprises. You have a section in there on just winning. What's "winning" at the company experience? I thought that was a great section.

Bob:
Yeah, well, I started this a few years ago. I was trying to segment CX projects. I think the prior study I had studied a couple of hundred formal CX programs. So these are these are programs that had funding. They had staffing. Wasn't somebody that said, hey, I think it's a good idea. And so the segmentation that came up with was to call "winning" being able to quantify benefits or to have at least believe you've gotten some kind of competitive edge. And I picked that because that's what top management tends to say. That they want to see – CX or really any strategic investment. Then the next category, your next segment was developing, were you seeing some signs of improvement that you can't quantify it? And then then a third segment, those are just starting out as too early to really say one way or the other. We found about one in four are in this winning category and about 60 percent are developing and 17 percent were starting. So the… to me, the the problem the industry has, it needs to be really focused on why I did this ROI study is how do we take those that are in a developing stage where they see they're seeing some signs of improvement. They say, yeah, we think we are getting some benefits here and getting them to the point where they can quantify it, because that puts him in a much stronger position to keep it or increase their funding.

Steve:
I think I could take this, you know, both ways. And I tend to be a little more of an optimist. But I think it's really encouraging that, you know, maybe as many as 60 percent are moving towards that winning segment. And I think it's even more reason why it's a great time to be a CX pro in an organization. I mean, you just have a lot of heightened awareness about the importance of it and really great tools out there. So I took that as kind of a I think, an optimistic statement for our industry, so…

Bob:
Yeah, there's a great opportunity there. There's the opportunity to turn that into a winning status. I think the risk, which I don't think is getting enough, or at least until the pandemic wasn't getting enough attention, is that, you know, with with executive turnover and the budget fights that are always part of companies, that if you don't show in the first, say, a couple of years, maybe three at the outside, that you can deliver real business benefits that the stakeholders are signing off on, then you could go from developing to not going anywhere. So that that's the part that keeps me awake at night.

Steve:
You've shared a couple already that I can think of. A couple of the insights and we on the The CX Leader Podcast are all about taking action and making sure that we're improving our CX programs. But are there any other kind of opportunities for business leaders that that come to mind that you'd want to make sure that they know about from this report?

Bob:
Well, I think part of the challenge of CX is that, again, it can be applied very narrowly or very broadly. And that's part of the strategy that the CX, the CX leader needs to develop pretty early on. If you're… If you're stuck in a silo. And I say that if some companies believe it or not, still say we'll see what happens after the sale, it's end mainly customer service. And, you know, as a CX pro, you might… You should try to change that perception. But if that's the perception, then, and you want to get funding, you may be kind of pointed over to the VP of customer service and have to basically create a business case that makes sense to customer service. The same could be said for sales or marketing, that these when you're kind of stuck in a silo, it's it's harder to make this customer sat or loyalty argument based on this study I did. That's why I think it's really important to get higher up in the organization as soon as you can. Because some of the more interesting problems and some of the bigger payoffs come when you start to streamline the either a part of or the entire journey, you're not just thinking about how do I make marketing better? These are very interesting problems. And you can get you know, you can make the case. But if you're saying, well, wait a minute, I can take a journey that has a certain level of satisfaction and it's taking a lot of resources and taking a lot of time and we're not competitive. How about fixing that? That's the kind of thing that will get the attention of senior management and they'll put a lot of money behind solving these bigger problems if you can get their attention.

Steve:
Any other tips or ideas for how they could maybe take advantage of this report?

Bob:
I would just say one other thing about there's I think a little bit of confusion about even the term ROI. And, you know, there is a an actual definition for and anybody can look this up online that ROI is taking the difference between benefits and investments, dividing it by the investments and multiplying it times one hundred. So you can basically the net gain expressed as a percentage. That's you know, that's what most everybody thinks that ROI means. But I'm using the term a little bit more generically in our discussion today. And the one thing I strongly advise is to not get too hung up on a specific methodology because there are payback periods, there's net present value. Some companies use internal rate of return and there is no one that's best. Those that take it take some account of the time value of money, I think are better if you have bigger programs. But the key bit of advice I'd give is that to really do research about what method is used within your company, look at some other key investments that were made, get a copy of the internal proposals and just, copy that. [laughing] I mean, don't don't try to I mean, you already have a problem, I think, in the CX world of trying to convince people that customer satisfaction drives other things that are important. That's a problem that can be solved. Better companies understand that relationship. But but don't take that challenge and then add to it, hey, you really ought to be looking at a completely different view of ROI. You pick something initially that is already being used.

Steve:
Bob, we've reached that point in our The CX Leader Podcast where we ask all our guests to provide their best take home value. This is something that the CX pro can take from your podcast today and take it back to the office and improve their program right away. So you've given us a lot of insight today, Bob, but what is your best tip for CX pros today?

Bob:
I would just highlight something I said at the very beginning is that you start the best way to be successful with CX is to make sure that there are internal stakeholders that are winning too. So spent time really understanding their challenges, basically treat them like customers. Like if I was if I could help you, director of Marketing or the VP of Customer Service, if I could help you achieve the goals that you have. Call it CX. Call it whatever you like, you know, would you work with me and let's see how we can do this together. And so this is sort of getting yourself out of the sort of evangelist mode of promoting the value of customer relationships in general and getting very specific and say, look, how can I help you? And the more you spent time on that early, the better off you'll be long term, because you'll you'll develop better strategies going forward that they'll actually care about.

Steve:
I think that's a great thought for our CX leaders, especially those that, you know, which you identify, the great majority are still in that developing stage. You know, let's shift some of the energy from evangelizing into actually applying it and making sure we're getting to that winning level. So, thanks again, Bob, for coming on the podcast and being the guest this week and for sharing your report with our listeners.

Bob:
Totally my pleasure, Steve. Thanks for having me again and thanks for doing this podcast. This is a really great resource to the industry.

Steve:
Yeah, we've had a lot of fun doing it. And it's only because we get great guests like you. Bob, in case anybody would want to continue the dialog with you, could you just give us a quick website and contact info so people, if they want to reach out, learn more about what you're doing, they can do that?

Bob:
Sure. I mean, you can find me on CustomerThink.com. You can email me at bob@customerthink.com. I'm on LinkedIn. I'm on Twitter. I'm easy to find.

Steve:
Thanks again, Bob, and look forward to having you on again soon.

Bob:
Thank you.

Steve:
And if you want to talk about anything else you heard on this podcast or about how Walker can help your business' customer experience, feel free to email me at podcast@walkerinfo.com. Be sure to check out our website, cxleaderpodcast.com, to subscribe to the show and find all our previous episodes. We organize them by series and by subject matter. We also have our contact information. You can drop us an idea for a future podcast or let us know what you think. The CX Leader Podcast is a production of Walker. We're an experience management firm that helps companies accelerate their XM success. You can read more about us at Walkerinfo.com. Thanks for listening and we will see you again next time.

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