Customer Experience Success® Valuation and Business Success

Despite demonstrating a means of putting a valuation on your customer experience, one must still ask, “Does this ability to valuate something that heretofore has been intangible matter in real life for a company?”

The short answer is yes.  The level and amount of impact will vary depending on several factors.  These factors include industry, the channel being used to reach the end-customer, and whether the valuation is increasing or decreasing for the company in question.

As stated in earlier posts, there are some industries which are extremely sensitive to customer experience measures and others where the impact of any customer experience program is negligible UNLESS it is in conjunction with a major push to change the status quo culture of business operations.  I have already indicated example customer experience success^® valuation differences between three industries: convenience stores (0.04), public utilities (overall=0.06) and online originated ecommerce (1.00). 

As stated before, one can quickly see that for convenience stores and public utilities there appears little immediate benefit to pouring significant levels of time, energy and money into real customer experience success^® efforts.  However, this can change.  If specific goals and objectives call for increase in business areas which allow significantly more customer interactive options to occur, then customer experience valuation becomes mission critical, even for a public utility.  One example is a public utility moving customer interaction online versus traditional methods of communication.

The Impact on Real Business Success

There are many objectives which companies desire to accomplish.  The following examples focus on specifics only to highlight the fact that real change does occur:

1) ROI increase of 14%; corresponding increase in customer experience valuation of 8.5%.

2) Customer acquisition growth rate increase of 21%; corresponding increase in customer experience valuation of 6%.

3) Revenue growth rate increase of 16%; corresponding increase in customer experience valuation of 7%.

4) Use of specific interactive tools leading directly to return on investment drop of 50%; corresponding drop in customer experience valuation of 12%.

5) Online and offline inquiries drop of 31%; corresponding drop in customer experience valuation of 7%.

6) Business closed due to continuing drop in revenue; corresponding drop in customer experience valuation of 25% in total (final levels well below competitive alternatives for similar products and services – our process was used as post mortem analysis to determine where/what went wrong).

We could go on with other examples, but here is one thing you will notice for all of them, revealed and not revealed.  ANY increase or decrease in customer experience success^® valuation is either followed by or reflected in an increase or decrease in real business objective metrics!  Interestingly, usually a decreasing customer experience success^® valuation will be followed by or reflective of larger drops in the business objective metrics than will be experienced by increases.  In no case, have we captured customer experience success^® valuation movement and not seen corresponding movement among key business objectives!

To put it another way, usually an increase in the customer experience success^® valuation will correspond to an increase of between 7 to 25% in the business metric used as the objective.  A decrease in customer experience success^® valuation will correspond to a decrease of between 35 and 75% in the business metric.  We understand a valuation of customer experience is only one of several metrics a company has to consider.  But, our experience suggests it is the type of metric that shows:

1) it’s far easier to slide backward, and quickly, than progress forward,

2) when things do increase, the percentage gain is closer to the percentage change in the customer experience success^® valuation itself, and

3) when things go wrong (as shown in the valuation), things go or have gone really wrong with the business itself.

To a point in the previous post, many times our mission as customer experience experts and providing customer experience valuation is; help a business NOT “lose their way” because of lack of cognitive learning, understanding and unguided experiential adaptation.

Does being able to valuate your customer experience matter?  Yes.  

Is it a leading indicator or a following indicator?  Depends on how you want to use it is our answer. 

If you are serious about moving your company forward, you will want to set it up to be a leading indicator.  There may be variability in how much increase or decrease in your key business metrics actually takes place, however, it will definitively show which direction they will move.  How much they move will ultimately be driven by your industry, your channel of reaching the end-customer, competitive reaction, and whether the valuation is increasing or decreasing.