Failure to show Return on Investment (ROI) undermines the growth of customer experience (CX) programs. CX professionals struggle to provide quantitative proof that the resources and time necessary to launch and manage a customer experience program is worthwhile. In fact, CustomerThink’s research finds just 19% of CX initiatives can show tangible benefits.
Your executives don’t just allot resources because you came up with a great idea. You’ve got to sell the idea to get those resources. Before approving any investment, organizations want to see a clear forecast, articulated in numbers, of the return on investment (ROI) for a solid CX program. It’s not enough to provide soft benefits. To make the case for investment, customer experience leaders need to show the numbers.
Calculating the Return on Investment (ROI) of feedback requires tying customer experience metrics like Net Promoter Score (NPS®) and Customer Effort Score (CES) to financial goals (such as conversion and shopping cart abandonment rates). For example, if you make a change to your checkout process based on CES feedback, how will that impact your conversion rate?
In this article, we look at three ways collecting digital feedback benefits your ecommerce business, along with how to prove the return on investment of our program.
Reduce shopping cart abandonment
Asking for and analyzing feedback can show you exactly why customers are abandoning their purchases. Acting on these issues has a dramatic positive impact on your conversion rates and online sales. When you eliminate customers’ barriers to purchasing, you improve the likelihood of them successfully converting.
How big of an impact can the digital experience have on your bottom line?
Turns out, it’s substantial. The average global Cart Abandonment Rate (CAR) is around 77%, according to Barilliance. Even a small reduction in that number can have a big trickle-down impact on your revenue. Not only do more customers purchase, but those customers may also become repeat customers or even brand advocates that refer more customers in the future.
It’s estimated that ecommerce sites can improve conversion rates by 35.26% by focusing on better checkout design. To calculate your own impact on conversion rates (and the ROI of digital feedback), you’ll need to set your baseline. What is your current conversion rate or Cart Abandonment Rate? To learn how to calculate your CAR, read our free guide.
Then, choose the improvements you want to make based on the feedback you gathered and analyzed. Implement the changes, and measure the conversion rate again. This will tie the improvements, made based on customer feedback to a dollar value and show you the ROI of feedback. “To see the real impact of cart abandonment you also need to consider the lifetime value of your customers. A certain number of those additional new customers won’t only buy from you once, but again and again. How much are those extra sales worth? For most online businesses, that’s where the most profit is created.
Having a high-converting payment process doesn’t just lead to a higher number of new customers entering your world, but also makes it more likely they will buy from you the next time. And remember – improving shopping cart conversion also means making more sales from your existing customer base.” Kristian Borglund, Klarna, on “The True Cost of Cart Abandonment”
Cutting down on your CAR can have a huge impact on your business’s bottom line. But it’s not the only way to prove the value of collecting customer feedback. Let’s dive into another avenue of proving ROI by improving processes to cut down on customer complaints and calls.
Reduce call-center volume & cost
Whether you’re fixing bugs and technical issues via in-the-moment feedback surveys or improving the overall checkout process, your customer service team will benefit from your customer feedback program initiatives.
The more efficient your purchasing funnel, the fewer calls your call-center will receive.
To calculate the ROI from reducing customer service volume, first, calculate your cost per contact. This is the total cost it takes for your team to respond to one customer call. It’s usually calculated by adding together all customer service costs (salaries, tools, and other costs) and then dividing by the number of contacts your team receives.
Each issue that’s resolved will eliminate the need for a certain amount of contacts. Your ROI is then calculated by multiplying the number of contacts by the cost per contact.
For more on the formulas behind proving ROI, check out our Simplifying CX episode on Proving the ROI (WITH ACTUAL MATH!).
By making simple improvements to the checkout funnel, FAQ page, and other key steps on the customer’s journey–you can effectively reduce costs for the customer service team. In turn, you’ve proven the ROI of customer feedback and can continue to make improvements across the customer’s journey.
Ultimately, the goal of a CX program is to create seamless and enjoyable experiences for your customers. But how can you prove that making customers happier has a long term impact on the organization’s success? By recovering unhappy customers, you could potentially save the business a lifetime customer, you just have to have the right processes in place to do so.
Surveying customers through the purchasing funnel also creates a real-time feedback loop. When customers abandon their carts, indicate that they are unsatisfied with the process, or say that they did not complete their goal, you can instantly follow up with them.
How you recover potential customers depends on the maturity of your workflow. To start, simply trigger a new case to open whenever a customer responds negatively to a checkout survey and assign it to your customer service team to manually follow up. As your knowledge improves, you can build automated recovery steps such as emailing the customer with a free shipping coupon.
Either way, the potential ROI of real-time feedback is measurable and manageable. Calculate the number and value of customers who return to checkout based on your recovery campaign to connect your efforts to your business’ revenue.
The effects of checkout funnel optimization are cumulative. At each step of the journey, a small improvement widens your funnel and positively impacts your online sales. To maximize online sales, it’s important to follow the best practices which we’ve outlined in our guide, How to improve online sales using digital feedback.
For the ecommerce space, conversion is one of the most important metrics to track success. With the influx of online shoppers, any improvements you make to your checkout process and purchasing funnel will pay off exponentially. Implementing a digital feedback framework is the first step to knowing how to improve your online sales.
Capturing feedback, analyzing it and acting on it is critical to proving ROI. Once you can do that, you can begin to build on your existing CX program to capture more feedback and create even more incredible online experiences for your customers. In turn, you increase customer satisfaction and key success drivers, including revenue.
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