ROI of Customer Experience in B2B
Gut feeling tells that investments in customer experience might result in a strategic differentiator, as it does in B2C markets. Quantifying the potential impact of the CX differentiator is another story. What is the impact of an improved customer experience to revenue, cost and ultimately market share gained by the competitive differentiation.
Let’s start by making a difference between good and exceptional customer experience:
- Good customer experience means that your customers or potential buyers believe your company is meeting the expectations that were set when dealing with your sales or service organisation. A good customer experience will make sure that your customers don’t run away, however it doesn’t make them loyal.
- Exceptional customer experience means that your customers are delighted by the way your company is dealing with them. Exceptional customer experience is what people remember and what can turn them into ambassadors of your brand, product or company. These ambassadors can ultimately be leveraged as an extra marketing and/or sales channel.
When translating this distinction into a business case you can conclude that: investments in good customer experience will translate into less churn, whereas investments in exceptional customer experience will translate into growth (new business and up/cross sell).
However, there is a time lag between investments in customer experience and the actual results. Anderson, et al found a positive link between customer satisfaction and profitability: a 1% improvement of customer satisfaction per year, over 5 years time resulted in an improved profitability of 11% over 5 years. On top they found that the likelihood of positive correlation between customer satisfaction and market share is higher in niche markets.
How can you measure customer experience and the respective impact on your company’s results:
- Net Promotor Score (developed by Bain & Company) can be seen as a summary of how your customers perceive working together with your sales & service organisation. Bain & Company state that it’s an indicator of growth. A high NPS score indicates exceptional CX.
- Customer satisfaction score for the company or for more detailled aspects of products and services delivered. B2B companies typically track the customer satisfaction on complaint resolutions, however it makes sense to measure customer satisfaction on all areas of your customer/buyer journey. These scores can reveals what the areas of improvements are and where your investments will result in good or exceptional CX, especially when combined with internal improvement metrics like complaints, churn, product returns etc.
- Customer effort score indicates how effortless doing business with your organisation is. Hence, it’s a good indicator of up-sell or cross-sell.
- Net value score shows how your organisation is perceived against other suppliers, allowing your to benchmark yourself as organisation against your competitors or equivalents.
- Internal metrics like employee satisfaction are proven to be highly correlated with customer experience. This makes sense: a happy employee will deliver better CX than a grumpy one.
When building out your business case to justify ROI on investments in CX I recommend starting with a baseline of the above mentioned metrics. Indicate which improvements in these metrics would result in good or exceptional CX. And ultimately link back to either churn or growth.
I’m looking forward to hear your ideas on how to quantify ROI on CX investments in B2B.
Author, Ineke de Boer is Sales Enablement Manager at Showpad
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