In this article, CX thought leader Adrian Swinscoe addresses the dual challenge facing customer experience (CX): firstly, the declining trend in customer satisfaction, and secondly, the difficulty brands encounter in demonstrating the ROI of CX initiatives. Studies indicate a downturn in CX quality, with only 46% of CX teams capable of showcasing ROI. Swinscoe encourages brands to prioritize customer needs and align their CX strategies with measurable business benefits. He illustrates this approach with the example of a UK Life Insurance company that effectively leverages Voice of the Customer (VoC) data to enhance their CX efforts.

The first problem is on the customer side, where, on average, customers are not happy and think that customer experience standards are slipping and that brands are failing to deliver on their promises.

This is evidenced by research from both Forrester and the UK’s Institute of Customer Service, where, last year, Forrester’s US 2023 Customer Experience Index, reported that brands’ CX Quality had fallen for the second consecutive year. A week later, they released the Canadian version of their CX index, and it too had fallen, but this time, it had fallen to its lowest point since 2016. Meanwhile, in July of last year, the UK’s Institute of Customer Service released its latest UK Customer Service Index (UKCSI), and it showed that its index had fallen to 76.6 (out of 100), its lowest score since 2015.

Now, Forrester has yet to release its updated indices for 2024, but the UKCSI released some updated figures in January of this year, which showed that their index had declined further to 76.0, a decline of 1.7 points compared to January 2021 levels and 2.4 points below its January 2022 level.

I should point out that it’s not all doom and gloom. You can find pockets of excellence across all industries. However, the research speaks for itself. Customers are not pleased with the experiences that are currently being delivered.

This has to change.

The second problem is on the brand side. Now, while the largest majority of brands buy into the importance of delivering a great customer experience, many dedicated CX programs are increasingly coming under pressure as CX professionals and leaders struggle to demonstrate the ROI of their experience initiatives. In fact, according to Forrester, while 80% of organizations demand ROI proof that CX programs are making an impact, only 46% of CX teams can prove their projects’ RoI.

This is a big problem.

I believe both of these things are happening because many CX initiatives fall foul of one or two things. The first is the ’shiny object’ syndrome, where initiatives tend to focus on the newest, sexiest, most technological, or most exciting thing to do. The second is that many of these initiatives are often not connected to what matters most to either customers or the business and, at best, only offer a correlative impact on metrics like NPS or CSAT as a demonstration of their value to the business.

That’s not good enough.

Instead, CX leaders and professionals should focus on solving what matters to customers, like the delivery of easy, quick, efficient, convenient, knowledgeable and friendly experiences. And build business cases for initiatives that are aligned with these customer priorities but also can deliver demonstrable commercial benefits to the organisation like cost savings, new revenue generation or revenue protection/loyalty measures. This is not easy, and it might not be that sexy either, but doing this will demonstrate their relevance to their organisations as a whole and help develop their and their team’s organisational social capital, which will come in useful further down the line when they may be seeking support for a project whose ROI is harder to establish.

Here’s how that works in practice. A few years ago, a colleague and I were asked by a leading UK life insurance company to assess their current CX initiatives and make some suggestions as to where they should focus next. When we arrived, we found out that they had a digital team, an agile team, a lean team, and a CX team. Then, when we asked them to describe what they had done, they listed all sorts of research undertakings, journey maps, and the development of new product and service concepts. But, in truth, their work to date has only had a negligible impact on the business as a whole.

What was clear from our conversations was that these teams were fixated on tools and methods, not outcomes or relevance. As one interviewee noted, they had only created lots of Office Art!

However, we then asked about the core business, the challenges it faced and what were some of the main pain points that customers experienced when dealing with the business. They told us that the core business was growing at 2-3% per year, and by gathering and analysing Voice of the Customer (VoC) data, they were able to establish that one of the biggest problems customers face is when someone dies, and their families or beneficiaries need to make a claim against the policy.

Now, most people will say that they have their affairs in order before they die and, in this case, have sorted out power of attorney. However, often, they haven’t, and this ends up being a real pain point for both the family of the deceased and the employees managing their claim, as it involves lots of questions and identity verification paperwork.

We suggested to them that the CX and digital tools and methods they have been using could help alleviate this problem. In doing so, they could improve the lives of both customers and employees, save the business a lot of money, and prove their relevance to the core business in the process.

They took our advice and went on to build a very fruitful and productive relationship with the whole business.

One key to their success was the availability of VoC data, which provided the insights needed to identify the most important points for both customers and employees.

Now, you don’t have to be a big business to generate those sorts of insights. Businesses of all sizes are awash with data.

But, VoC data is not just about direct customer feedback from surveys, social media or online reviews. These sources are important, but they are only a small part of the picture.

The bigger picture is that customers are always talking to you via customer interviews, surveys, focus groups, online reviews, social media posts, feedback forms, customer journey mapping tools, their behaviour on your app or website, their interactions with your chatbot and their conversations and interactions with your customer-facing employees whether face-to-face or via chat, messaging, email or the phone.

These conversations are going on all of the time. You just have to listen, tune in, analyse, and leverage these conversations to drive insight and create revenue opportunities across the business.  For example, you can use VoC data to….

1. Evaluate and improve the effectiveness of your marketing and messaging, thus creating more revenue opportunities.
2. Analyze the difference between interactions that lead to a new customer and those that don’t help identify changes that could be made that could help improve your conversion rate.
3. Identify pain points that your existing customers are experiencing and that are negatively impacting satisfaction rates and churn. Eliminating these will go a long way toward protecting existing revenues.
4. Investigate customer behaviour to help identify opportunities to cross-sell or up-sell additional products or services to existing customers.
5. Better understand customer needs and preferences and use these insights to inform product or service improvements that will, in turn, help drive future revenues.
6. Reveal patterns and trends in customer behaviour, such as purchase frequency, basket size, and product preferences, which can be used to drive new revenue.
7. Personalize customer interactions and conversations to foster more productive customer relationships and boost revenue.

Overall, the key is to use VoC data to help you better understand your customers, identify opportunities that matter to them, and take actions that improve their experience and drive revenue for you.

And, the prize?

Well, according to research from the Aberdeen Group, companies that truly leverage the plethora of VoC data available to them experience:

• 10x faster revenue growth,
• 55% higher customer retention rates, and
• A 23% reduction in customer service costs.

When you truly listen to your customers, identify what matters to them and then act on what they tell you, they reward you with their money and their loyalty.

What’s not to like?

This article was written for Sprinklr and was originally published on their blog.

Image credit: Photo by Will Francis on Unsplash