Why Focus on ROI Can Hurt the Customer Experience

Pressured to deliver on the ever-cliched "more with less" promise, many customer management professionals find themselves consumed with return on investment.

That could be a fatal mistake.

In reaching that conclusion, Beyond Philosophy’s Colin Shaw is certainly not advising professionals to ignore the importance of deriving value from customer engagements. Rather, the Customer Experience Management in Telecoms keynote speaker believes an improper application of ROI is causing companies to miss the mark in delivering a quality customer experience that garners loyal brand advocates.

"You don’t take [on] a customer experience strategy without the ultimate goal of improving the numbers," explains Shaw in an interview with Telecoms IQ, a sister-organization to Call Center IQ. "[But] all too often, people use ROI as a reason not to do things so they can effectively stay in their comfortable world and just deal with product."

Amid all the buzz regarding the importance a quality experience plays in acquiring and retaining customers, confusion may exist as to why an organization would use ROI in a way that justifies inaction. What prompts this complacency?

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Shaw believes it comes down to an insufficient understanding of what it takes to truly make customers happy.

"What we know is that over 50 percent of a customer experience is about how a customer feels…it is about emotion," clarifies Shaw. "Getting that over to people in the organization can be a challenge; particularly, when their mindset is one of looking at things from that transactional efficiency perspective and not looking at things from a true customer perspective."

For professionals, a transactional approach to business strategy provides a clear understanding of value. Breaking a decision down into ‘If we do X, Y will happen and we will benefit or suffer by Z amount’ enables all relevant executives to weigh the pros and cons of the strategy. Decision-makers bank on that clarity.

Even customer-facing executives, in fact, can have a proclivity to view experience initiatives as transactions. Incentive-based loyalty programs provide the perfect example.

From a transactional perspective, customer management professionals want to believe that if ‘X’ is provided to customers, they will react favorably to the company (Y) and become ‘Z’ more loyal and likely to continue their purchasing.

In reality, customer loyalty is driven by an emotional alignment between the customer and the company that thinkers like Shaw doubt can wholly be measured in commercial terms, at least at first. Incentives might fit into that alignment, but only insofar as they represent the company’s accurate, emotional appreciation for the needs and wants of its audience.

An incentive program built from a transactional perspective risks falling short of its loyalty objectives, delivering only near-term rewards.

"[Incentives are] part of the mix [but it] depends on how they are used. Let’s be clear—[they] don’t drive loyalty," says Shaw. "True customer loyalty and true net promotion 9 and 10 scores are driven by emotionally engaging with your customers."

With customer satisfaction hinging so heavily on difficult-to-measure emotions, it is no surprise that strict ROI approaches can miss the mark. A challenge that has only been amplified as organizations pursue opportunities in the very-unproven realms of social and mobile media, customer experience improvement often requires a transformation rather than an action, all with uncertainty about how rapidly and immensely said transformation will pay off.

When selling C-level and other department executives on customer experience initiatives, customer management executives therefore must frame the conversation as one of long-term philosophy. Decision-makers need to understand and support the idea that transforming the organization to better, more-emotionally connect with the audience will provide sustainable, day-in, day-out improvements that cannot be achieved with reactionary customer support or even new product launches (and yet cannot always be measured like those initiatives).

Once that is achieved, the value will only increase, as the customers who have become increasingly loyal to the brand will become louder advocates.

Shaw explains, "We know emotions drive experience. What are the emotions you are trying to invoke in customers?...For a customer to become an advocate, that has to be thought through.

"Customer advocacy absolutely is an important part [of building the customer experience]. You want to get to the point where customers are recommending you. If your customers are doing your marketing for you, that’s obviously the best way of [building the brand]."

Colin Shaw will be presenting at the Customer Experience in Telecoms Virtual Summit and the CEM in Telecoms live conference.