How to Calculate Customer Experience ROI

There’s no question that providing an exceptional customer experience can yield a great return. Yet, it can be challenging to quantify the value of your investment. Every company is different, so although there are some universal components that make up an exceptional experience, there isn’t one set way to achieve it. Before approving the budget for a customer experience program, company stakeholders will typically want to see the return on their investment. Follow these five steps to calculate the ROI of your customer experience.

1. Set Goals and Metrics

Before launching a customer experience program, you’ll need to first identify your goals. What do you hope investing in a customer experience program will achieve? Your business’s goals will be unique to your organization. For example, if long hold times are hurting your customer experience, then your goal might be to decrease your average resolution time.

To keep your business on track toward meeting those goals, you’ll need to identify key performance indicators (KPIs) to measure the success of your program. Meeting or exceeding your KPIs means that your program was successful. So, for example, your KPI might be to shave one minute from your average resolution time after one year.

Here are some common customer experience KPIs to consider:

  • Customer retention rate
  • Customer churn rate
  • Customer lifetime value
  • Customer acquisition cost
  • Customer satisfaction

2. Create an Actionable Plan

In order to reach your goals, you’ll need to put an actionable plan in place. Essentially, in this step you will determine the solutions needed to meet your goals to improve customer experience.
For example, using the goal to decrease average resolution time, you might hire more associates to respond to incoming customer queries. Or, you might leverage automation, like AI chatbots, to resolve customer issues more efficiently.

3. Determine the Investment

Now that you have a plan in place to achieve your goals, how much will it cost to implement? Going along with the same example, if your plan requires hiring 10 more associates, how much will it cost to hire and train those people for the job? In determining the cost of investment, you’ll need to factor in the cost to hire, salary, benefits, and training for each associate. Add up those costs to determine your total investment:

Cost to hire: $4,129 (Society for Human Resource Management)

Salary: $33,750 (Bureau of Labor Statistics)

Benefits: $7,425 (CNN)

Training: $1,886 (ADP)

Investment/associate: $47,190

Total investment: $471,900

4. Quantify the Benefits

Quantifying your benefits is often the trickiest part of determining your ROI. Essentially, the benefits are business metrics that will be impacted the most by achieving your goals, such as topline revenue, customer satisfaction, customer retention, cost-to-serve, etc. This will be your “return.”

Consider these statistics:

  • One of the main reasons why customers leave is unbearably slow service (Oracle).
  • A 5 percent increase in customer retention can result in at least a 25 percent increase in revenue (Bain & Company).

Going back to our example, speeding up your average resolution time would result in an increase in customer retention rate and revenue. So, if your annual revenue is $100 million, then you can expect a 25 percent increase in revenue, or a $25 million return.

5. Calculate the ROI

Now that you have an understanding of both the investment and the benefits, you’re ready to calculate your ROI. Here’s the formula for calculating your customer experience ROI:

Customer experience ROI % = (Benefits – Investments) / Investments x 100

Customer experience ROI % = (25,000,000 – 471,900) / 471,900 x 100

Customer experience ROI % = 5,197.73

In our example, this company invested $471,900 to decrease its average resolution time. In doing so, the company was able to increase revenue by 25 percent. This resulted in an investment gain of $24,528,100, for a 5,197.73 percent ROI.

Customer Experience Solutions for a Positive ROI

IntelliShop has the customer experience solutions needed to provide a positive ROI for your business. When you partner with us, we’ll take the time to understand your core values, needs, and goals to design feedback and improvement solutions accordingly. Contact IntelliShop today to request a consultation.

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