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What Is The Real ROI Of Customer Experience And Where Does Marketing Come In?

Featuring Insights From Biltmore's Director Of Guest Intelligence

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Matt Wujciak

Every organization claims to be customer-centric, focusing on bringing consumers value. However, the vast majority are near-sighted, prioritizing quarterly earnings over long-term customer value. This is especially common during times of distress (i.e. the begining of the pandemic), as we prioritize completing a job over completing a job with the end-user in mind. If you dig into the research, you’ll see customer value and quarterly earnings are two sides of the same coin.  

One of the biggest obstacles change-makers face in pushing their organizations towards customer centricity (or customer experience investments) is convincing executives that the investment will yield a return – that those quarterly earnings will be met if we could just rethink the exchange between the value brought to customers and consumer loyalty received in return. 

Marketing campaigns are linked to the number of leads, click through rates, impressions, conversions, and of course, sales. Sales are directly tied to revenue growth. However, when it comes to tracking customer experience, the ball is dropped - something is missing

According to our consumer preference survey, one out of two customers now care more about the customer experience, as a result of the pandmeic. And it has quantifiable results.

According to the Harvard Business Review, loyalty leaders—companies at the top of their industries in Net Promoter Scores or satisfaction rankings for three or more years—grow revenues roughly 2.5 times as fast as their industry peers and deliver two to five times the shareholder returns over the next 10 years.

Customer-centric companies are 60% more profitable than companies that don’t focus on customers.

Brands with superior customer experience bring in 5.7 times more revenue than competitors that lag in customer experience.

84% of companies that work to improve their customer experience report an increase in their revenue. 

So why is it that public-company financial disclosure rules and corporate accounting practices require little to no reporting on customer value? This is primarily because customer experience isn’t as concrete as traditional sales or marketing, but it can be if you know where to look. Here’s a start. 

A new approach to CLV

By the end of 2020, more than 40% of all data analytics projects will relate to an aspect of customer experience. To showcase the ROI of customer experience, change-makers need to connect money and data to key aspects of the customer journey.  

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Of course, many experts, as you’ll see shortly, suggest focusing on a small group of your most valuable customers and surrounding them with the most relevant services you offer. The general rule of thumb is similar to the 80/20 principle. 80% of a company’s profits come from 20% of their customers, meaning focusing on customer lifetime value and loyalty in your most profitable customers can be exponentially more beneficial than marketing, selling, and acquiring to an ambiguous target market, or ocean of uninterested customers. After all, it costs five times more to create a new customer than it does to retain an established one. It makes more sense to focus on one area, get to know that customer base and continue to sell them relevant products and services before trying to attract everyone in the general market. CLV leads to a better understanding of each customer and fuels personalization. In fact, according to Salesforce, 92% of marketers say personalization majorly or moderately improves brand building. 86% of marketers credit personalization with a major or moderate boost in lead generation.

Yet, fascinatingly, 43.2% of contact center, marketing, and customer experience leaders site “not using data to personalize the experience” as their greatest weakness, according to CCW Digital research. 

Metrics such as CLV (and every component that goes into increasing and measuring them) helps companies be better listeners, provide more relevant experiences and be where their customers are at the right time.  

To engage employees in the work ahead and to sell investors on the necessary investments, leadership first needs a clear understanding of the size of the prize: the current total lifetime value of the customer base and the potential financial value that lies in increasing customer loyalty. 

For example, to improve the loyalty and profitability of new customers, managers need periodic reports on the performance of each new-customer cohort. How much did it cost to acquire new customers in each cohort? What percent of customers in each remains active? How frequent are their purchases? How much does it cost to serve them? What is the revenue per customer? By comparing the performance of different cohorts, managers can monitor real-time improvements or declines in lifetime value.

Understand customers’ concerns and how to alleviate them

With over 1.5 million visitors a year, Biltmore had to close its doors due to the COVID-19 pandemic, cutting off most of the establishment’s revenue.

When I talked to Peggy Dalman, Director of Guest Intelligence at The Biltmore Group, they did a few things worth noting. 


“We wanted to think about the different segments in our customer (data)base. One segment that we felt would be really key for us was our annual pass holder…” or they’re 100,000 “most loyal and valuable customers,” out of their 1.5 million annual ones.  

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Peggy and her team knew that their favorite thing to do at Biltmore was walk the grounds and gardens - so they opened them back up, exclusively for their annual pass holders, or most profitable customers. While many have focused on increasing marketing reach, Biltmore shrunk their geographical marketing and focused on bringing value to the customers that brought them the most value, focusing on the CLV of those who mattered most. 

“We measure clicks and opens just like everybody else... we also track where our guests are coming from so we measure the number of guests that are coming from a particular market vs what our spend is in that market.”   

After they focused on how to keep their most valuable customers engaged and the cost-benefit analysis of each cohort, they moved on to their larger target market, and identified the greatest problem, or opportunity, that those customers were facing. 

“For a broader view of travelers, there’s a number of research firms who are active in travel and tourism who were tracking all kinds of data and we have payed close attention to that,” utilizing surveys for customer preferences and comfortability with travel and tourism. 

How do you keep a tourist attraction open when travel options are limited? 

They ran their own sample and questionnaires with one of their vendors in the travel and tourism industry, which gave the Biltmore team a measurement of how their customers were responding versus the national average of travelers.

Despite having an airport on the Biltmore campus, they found that their customers were more willing to take road trips, which makes sense during a viral pandemic. Interestingly, they found that their larger target market of customers were actually more willing to take road trips than the national average of tourists. 

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They adjusted their advertising strategy to focus on road trip travel, doubling down on their two biggest marketing channels - their e-mail database and social media, as opposed to TV/streaming commercials, website ads, billboards, or any other campaign they could have allocated their budget in. Then the team changed their tone, language, and imagery on their marketing copy, website, and flyers to promote their most valuable asset that their most valuable customers were demanding - the outdoors. They prioritized all of this in addition to promoting the number one consumer preference customers demand from brands at the time – health and safety (i.e. social distancing, employees wearing proper masks, etc.)

“Pre-COVID it would have been very typical to have some interior shots of the house, maybe at the library or banquet hall… Now we were shifting to more outdoor pictures,” and the activities that customers could still enjoy.   

Look beyond your product

Mapping customer interests and journeys has become a norm in the larger customer experience industry. However, almost every company starts and ends its consideration of the journey with its core product — whether it be a tourist attraction, car, or a mortgage. This can miss what’s driving customers in the first place, which can be highly useful in understanding consumer motivation and potential opportunities to add value.

As HBR described, imagine a bank designing a mobile app for mortgage. It might market steps in the customer experience in the application process to make it easier for consumers to search and apply for a mortgage, build algorithms to quickly respond to their applications, and enable live chat with an agent to help answer questions. This is a typical product-focused process. But it overlooks why the customer is seeking a mortgage. 

Market the value of the experience, then measure it. 

Piyush Gupta, the CEO of Singapore-based DBS bank, encouraged his team to think beyond the bank’s products. The team realized that no one gets up in the morning excited about buying a mortgage. The true excitement is in buying their house. 

This part of the journey begins long before consumers think about applying for a mortgage. So, the team investigated what might help consumers in finding their dream house in the first place. The result was DBS’s Home Connect mobile app which integrates publicly available information to aid them in their search. Consumers download the app and when they visit a neighborhood to see houses, they can simply hold up their phone to scan the surroundings and view the latest transaction prices nearby. If their decision depends on schools or distance to public transportation or shopping, the app can provide that information. When consumers find their dream house, a mortgage calculator helps them determine if they can afford it. This process has enabled DBS to generate leads, gain market share, and in many ways, determine the ROI of the customer experience. 

Executives from every company want to engage consumers, but have they paused to think why a consumer should engage with a stick of deodorant or brand of cereal? Every company in the world claims to be customer-centric, but are they really thinking from customers’ point of view?  To become truly customer-centric, decision makers need to look beyond their products and services to the problem the customer is trying to solve - the competitive value the end-to-end customer experience brings them, the most efficient way to measure it, and the most profitable way to replicate it.