When doing customer journey mapping, it’s critical to start by identifying a business problem – one that you can solve through learning more about customer needs. This is the first question of our Five-Question Framework. Carefully choosing which problem to attack helps you avoid one of the leading reasons most journey mapping initiatives fail to drive action: they try to address every problem, and end up solving none.
Showing the ROI of Journey Mapping
To help prioritize your initiatives, I’ve laid out six ways below through which you can more than recoup the cost of best-practices customer journey mapping, which can run $100,000 to $200,000, or even more. These categories are inspired by the XM Institute’s “ROI of Customer Experience, 2018.”
That annual report has been a go-to resource for me for showing the benefits of CX. I’ve expanded on it here to include more details and specific examples based on our experience working with various organizations, from global manufacturers to non-profits and national retailers. Of course, each of these requires access to financial data to show customers’ true purchases.
1. Prompt Customers to Buy More
A superior customer experience leads customers to order more. It really is that simple. And we all know it’s easier to sell to existing customers than it is to acquire new ones. The Economics of E-Loyalty showed a 5% increase in customer loyalty can lead to profitability gains of 25-90%.
This can play out in several ways. Not only can you increase what retailers call “basket size,” but in situations where customers work with multiple distributors, you can capture more of their spending, increasing your share of wallet. Do note, though, that it’s notoriously difficult to measure this directly, as few industries can track a customer’s total spend. But survey questions can get you directional data, and for many, “number of categories purchased” (see below) can serve as a proxy for this category.
2. Prompt Customers to Buy More Often
Making it easier and more enjoyable to work with you will lead customers to purchase from you more often. This is absolutely critical for retailers, or any other industry where customers have discretion over where they purchase, such as insurance companies or distributors. The even holds true for health care organizations, though they are likely to use different language. (You probably won’t hear them refer to patients who visit more often as “ordering more per customer.”)
The language will also vary by industry for number of categories purchased, but customers who expand their order into multiple areas are probably going to be placing more orders.
For health care, this might mean patients who are delighted by the experience you provided when they came for a checkup will stay with you when they have a baby or need radiology services. For manufacturers, customers who buy from you for products where you’re the sole provider might also order more competitive products from you. For banks, this translates to consumers going beyond just a checking account, to acquire credit cards and a mortgage, too.
3. Inspire Referrals & Recommendations
When the experience improves, customers are more likely to recommend your company to friends, family, colleagues, and social media connections. This is the motivation behind the Net Promoter Score (NPS), which asks customers how likely they are to recommend your organization. However, too many CX pros think a high score automatically equals success. It most certainly does not! NPS measures intent, not actual behavior, and the two seldom correlate.
To get a true measure of impact, it’s critical to track the referrals themselves. B2C companies are typically more equipped to do this. For example, banks often have programs offering cash bonuses for referrals. When they exist, these programs (or the equivalent in other sectors) are an oft-overlooked way to prove the impact of your work. If you’ve improved the experience, referrals should increase.
4. Build Tolerance
Customers who enjoy working with your company are more likely to forgive your company if (or realistically, when) it makes a mistake. This is often tracked through customer churn, a key metric for many executives, though a difficult one to track for some industries. If a Home Depot customer hasn’t purchased in six months, it doesn’t necessarily mean she’s gone for good. It’s much clearer when it’s a customer who doesn’t renew a subscription or when a business doesn’t renew their service. In that situation, churn rate is often the most important metric.
Losing a customer is the ultimate failure for a CX program, so take a long look at this measurement. The data often lies in financial systems, but can also be found in Operations. In addition, a customer may have given up on you, yet continue to purchase at a trickle, especially if you are the sole supplier of a product. So combine this data with the inverse of customers who buy more, to track those customers who are buying less.
5. Encourage Trust in Your Innovations
Loyal customers already trust your company and are therefore more likely to be first in line when you launch a new product or service. Since innovation is the lifeblood of business growth, and new initiatives often have higher profit margins, this is a valuable outcome of an improved customer experience.
Many organizations track “innovation purchases” for products created in the last one to three years. Gain access to the financial data to track this down.
6. Save on Operational Costs
Making it easier on customers often makes it easier on your company. This typically comes from a reduction in call volume, but it can go well beyond that. One Heart of the Customer client discovered that by better forecasting upcoming customer product needs, they could save significant shipping costs by providing the right delivery at the right time. That’s a win-win solution.
However, unnecessary support calls are still a significant driver of both customer and organizational pain. One company we worked with had nearly 20,000 calls per year from customers simply asking where their orders were! At an average cost of $30 per call, that translates to $600,000 in direct costs, not to mention the risk of churn and reduced order size.
Monetize Your Mapping Efforts
After you’ve decided which problem to attack, worked through the rest of our Five Question Framework, completed your journey mapping (following the best practices laid in out in our book, of course!), and move to the Action phase, you now have several ways to track your impact.
Creating an effective measurement plan can be tricky, as unrelated fluctuations in ordering – seasonal, circumstantial, random, or otherwise – can make it difficult to isolate your changes. The most common method is to use a pre/post measurement, which shows the results from before and after the change. But imagine, if you had implemented the change on March 1? The coronavirus would have caused so much noise that it would be nearly impossible to isolate the impact of that change.
That’s why I like to roll out changes to a subset of markets. That way, you can do a pre/post evaluation by market and see what the true changes were. (Thoroughly reviewing how to create an effective measurement plan is too much to tackle in this post, so look for more on that soon.)
Journey mapping has a huge potential to show off the business value of your customer experience program. (That’s why it’s one of the three ways to show ROI highlighted in our CX for Skeptics white paper and webinar.)
Coming out of this global pandemic, your organization will be stretched for resources. It’s up to us in CX to show how an improved customer experience is the most efficient way to improve the company’s financial results.