How do I make the business case for CX?

At J.D. Power we get asked this question many times. Usually, it’s in the context of making some sort of investment to improve the customer experience. In my world of agent-assisted service, clients are looking specifically at improving the customer experience resulting from human interactions between the brand and their customers. This is primarily a function of the call center operation. Call center executives are continually instructed to “do more with less, and oh, by the way, let’s provide a great customer experience and have that done by the end of the year. Good luck!” In this context, how do you build the business case for CX? The answer is fairly simple and straightforward, but executing a strategy that can maximize the benefits of CX can be very complex. 

Setting the Goal

To build the case for investing in CX, you need to be able to clearly identify the end goal: providing a great customer experience. To do this, you first need to be able to define “great”. At J.D. Power, we define “great” as experiences that are rated at or above the top 20% on our annual cross-industry benchmark which is derived from hundreds of thousands of responses from consumers and small businesses as they rate their experience with a brand’s customer service. This benchmark combines the results of our syndicated studies conducted across industries because a great service experience anywhere influences expectations everywhere.

Defining “great” and understanding how you’re performing against the right benchmark will help you identify your goal and build the case to get there.

Proving the Benefits

With your target in mind, you now need to articulate the benefits of providing a great customer experience. A customer’s perception of the service they receive from a brand, which is shaped by the service they’re receiving from any brand they interact with, serves as a basis for some very important outcome measures:

• Product/service loyalty, and
• Likelihood to recommend.  

Great service also has a natural alignment to lower operational costs, but we’ll come back to this in just a moment.  

But first, let’s explore these customer outcomes. 

Benchmarking data from top performers shows that customer that rate their experience above a 900 on our 1,000-point index scale are 3 times more likely to say they will definitely remain a customer/renew than even those that score between 800-900. This loyalty metric takes a nosedive for those that rate their experience below 800. When we look at likelihood to recommend a product/service to a friend, relative, or a colleague, we see a similar trend. Customers that rate their experience at 900+ are about 2 times more likely to be in the definitely will recommend camp vs. even those that are in the 850 range. There is a huge payoff from improving performance from poor/average to good/great, and even if you are a very good performer, there is a benefit to becoming a great performer. In competitive B2B or B2B2C markets, providing a great experience can be the key differentiator helping you retain your current clients or gain market share. 

Now let’s dive into the topic that will surely grab leadership attention: lower operational costs. 

As I mentioned at the beginning of this post, call center executives are typically tasked with doing more with less. The good news is that a great customer experience aligns with this mantra. Customers generally don’t want to call you, but when they do, the stakes are high. That interaction could become more important than the price of the product/service, or even the product itself. As we’ve previously discussed, the most important attribute in the call center, and the number one improvement area for many clients, is resolution. Resolution accomplishes two things: it positively impacts the customer outcomes mentioned above, and it also saves you money as a call that you resolve is one that you don’t take another day. Even a small increase in call resolution can yield a huge ROI at $15-$30+/call. Increases in resolution, especially First Call Resolution can lead to significant improvement in overall CX and reduced cost/increased ability to handle more calls. 

Identifying and Overcoming Barriers

In addition to outlining your goal and articulating the benefits of CX, you’ll also want to ensure that you’ve identified and mapped a plan to address barriers to improvement. For example, one of the major differences we’ve seen over the years between leaders in CX and those providing an average or below average experience is agent attrition. It is extremely difficult if not impossible to provide a great or even a good experience with high agent attrition, and the cost impact of agent attrition is extensive. From the hard cost of recruiting/hiring/training, to reduced productivity during the period to develop call handling proficiency, and the sometimes-hidden cost of the impacts to employee morale and overall productivity; the results can be staggering. Define barriers like this in our business case to help leadership understand both the impact of not addressing these and the benefits of investing in improvements. Make it clear that taking shortcuts could be detrimental to your business. For example, we’ve seen companies try to cut corners by focusing on a shorter training period, increased performance management and metrics adherence, and tasking the frontline supervisors to take responsibility for more agents. All of these short-term actions typically degrade the CX and may actually accelerate the attrition rate and fuel the customer service spiral of death. 

Putting it All Together

To make the business case for focusing on investments in CX:

1. Start with your end goal. What does your current performance look like? How do you know? What is a best-in-class experience? What gap exists between where you are now and where you want to be?
2.  Articulate the benefits of CX improvement. How will the end customer be impacted? How will that impact the bottom line?
3. Identify potential barriers and prioritize the ones that will move the needle the most. It’s difficult to focus and execute when you have too many initiatives in play. Focus on a select few that will have the biggest influence on CX and define your road map for addressing them. Be clear about the impact on customer experience and financials if these barriers aren’t addressed.

Need help getting started? If you need support understanding how your current performance is measuring up, identifying your gaps-to-great, or prioritizing barriers to address, don’t hesitate to contact our team of customer service experts. We’re here to help you on your path to CX improvement. 

About the Author: Scott Killingsworth is Director of the Customer Service Advisory Practice at J.D. Power. He manages the Customer Service Certification programs and is responsible for developing and maintaining the standards and operational benchmarks for the program. 

The Data Behind the Insight: Each December, J.D. Power analyzes hundreds of thousands of customer service interactions across industries to develop benchmarks and to understand what is driving customer service interactions. This enables customer service leaders to understand the level of service they are providing based on customers’ expectations, and what can be done to increase not only satisfaction with a discrete customer interaction, but outcomes that impact the bottom line: repeat calls, likelihood to purchase/repurchase or to recommend to friend or family member.

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