ROI for CEM? NWJ (No Way Jose)!

First things first: I don’t have a set formula for calculating a ROI on CEM.  Are you still with me?  Good… because what I do have is better than a formula – I have a method.  A method we used several times before, and it has proven to be successful.  So, if you are interested in knowing what you can get out of adopting CEM, read on.

First, want to make sure you did your homework.  In my previous post on experience management I told you to read the three notes I wrote on Customer Acquisition and Maintenance costs (just in case, #1, #2, and #3 here for your enjoyment).  I am going to assume that you did read them going forward.

The reason I am referring to those posts is that the formula you created for your customer acquisition and customer maintenance are going to be critical for your ROI calculation for CEM.  Two caveats: first, it is not possible to quantify quality – which means if you improve your experience you cannot put a number to it (as in saying “I am going to improve my experience by 10%”, or “I will improve my interactions with customers by 20%”).  Second, your mileage will vary – what works for one of you may not work for someone else.  That is why I have a method, not a formula for this.

Now, let’s focus on the ROI of from adopting a CEM strategy for your organization (you do remember this is an enterprise-wide implementation of a strategy – right?).  By creating better experiences you stand to get three benefits: reduced number of interactions (happy customers that have what they need don’t use customer service), shorter interactions (if they put off calling because they don’t like the experience, they may have 3-4 complex problems instead of a simple one), and reduced costs for training (the same systems that have better information for your customers will be used by your agents – greatly enhancing their powers with less training).

How do you decide which ones of these benefits apply to you?  Well, this is part where it depends.  If you are going to improve your customers’ experiences by offering more channels and more automation, you will have a reduced number of interactions (you may have some in other channels, but they would probably be cheaper).  If you are shortening the processing time, you are more likely to get easier and shorter interactions as well as fewer of them (customers won’t call just to “check” status).  If you are implementing more automation, better knowledge management or better access to back-office systems, then your training costs and interaction times should be greatly reduced.  You have to determine what makes sense for the actions you’d be taking.

Then, there is also the issue of increased revenues.  Depending on how you improve you experience, part of it may be offer management for specific situations, or the ability to increase revenue recognition, or even the ability to create new services and revenue sources.  All those should also be considered – and you are probably tired of me saying this – but they cannot be identified until you design your new experiences.

One final point on return on investment: if you make customer experience management part of your branding, as it should be, you will see that your customer acquisition costs (again, your calculation as detailed in my previous post) are going to be lower.  No, I am serious.  If your brand of excellent experiences becomes part of your overall brand, then customers will need less convincing to sign up, which will aid converting customers, thus reducing the cots of acquiring them.  And, if you think that I am saying that you cannot calculate your ROI until after you implement your experiences — no, I am not.  I am saying, your ROI will be based on assumptions and expectations of what that CEM implementation will be.

So, what do you think?  Does this method makes sense?  Let me know what you think..

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