In 1997, the credit card giant, Mastercard, was faced with a critical dilemma. Consumers were buying more of its competitors' products and the company was losing value in its marketplace.

The solution? Mastercard decided to rebrand, starting with the launch of this — now famous — marketing campaign.

The Mastercard "Priceless" campaign transformed the brand's image and has been a core component of the company's reputation for the last 23 years.

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But, why was this message so successful?

It captured the idea of customer experience. While products cost a fixed amount, great customer experiences are priceless — for both customers and businesses. In fact, studies show that companies providing an excellent customer experience enjoy five times more revenue growth compared to companies delivering a poor customer experience.


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The irony, though, is that while customers should feel like their interaction was "priceless," businesses are trying to calculate exactly what that experience is worth. Calculating the return on investment (ROI) of customer experience initiatives is important because it helps marketing and customer service teams strategize and make key business decisions.

In this post, we'll highlight some additional reasons to monitor ROI for customer experience, then we'll provide some tips you can use to improve it.

Why calculate ROI for customer experience?

Connecting your customer experience metrics with financial data can sometimes create more questions than answers. For instance, does answering email faster really help you keep customers longer? And, how much more would a customer spend if you streamlined your checkout process?

The best way to find answers to questions like these is to leverage both machine learning and voice of the customer analytics. Customer feedback software helps businesses understand voice of the customer at scale, which reveals the key drivers behind different customer experience metrics. You can also link customer spend data with a variety of metrics to clearly determine the ROI of your organization's customer service strategy.

Now that we've highlighted some benefits of calculating customer experience ROI, let's look at the metrics you'll need to monitor if you want to measure it.

Customer Experience ROI Metrics

You might already track a number of customer experience metrics, like NPS®, CSAT, CES, and First Reply Time. While these metrics highlight the state of your customer experience program, they don't necessarily tell you the impact that each one has on your business. For example, does a higher NPS result in a lower churn rate? And, if so, by how much?

Financial metrics, like the ones listed below, are valuable to your leadership team because they provide actionable insights into your customer experience program. Tracking these metrics helps management understand whether the business is growing and making money.

Customer Lifetime Value

Customer Lifetime Value projects how much money a single customer will spend on your company's products. It's calculated by multiplying customer value by average customer lifespan.

Churn Rate

Your churn rate represents the percentage of customers that will cancel or leave your business within a given period. It's calculated by dividing the number of customers who churned by the number of customers acquired. But, if you want to save some time, you can use this handy churn rate calculator, instead.

Cost of Support

Support costs are expenses that don't relate to production or manufacturing. This includes things like quality assurance and customer service programs. These costs should be compared closely to your customer satisfaction metrics.

Average Transaction Size

Average transaction size is calculated by dividing the total revenue acquired during a given time by the total number of sales made during that same period. This gives you an idea of how your customers shop and which products they prefer most.

Average Contract Value

If you're a subscription-based company, average contract value might replace average transaction size. Fortunately, it's calculated the same way by dividing the total value of contacts you've signed during a period by the total number of new customers you've acquired.

Connecting customer experience with the metrics above involves combining your data so each customer's profile contains contextual information. This can usually be done in a CRM or with a data analytics tool.

Here's an example of what that might look like.


From here, we can find trends within the data, so we know what makes one customer spend thousands, while another customer walks out the door.

How to Improve Your ROI on Customer Experience

Companies just starting with customer experience analysis may begin with looking at NPS or CSAT scores. Measuring these metrics over time will certainly uncover trends, but without digging deeper, it's impossible to know what actions to take to improve overall performance.

Here are some steps you can take to better understand your customers and generate a stronger return from your customer experience program.

1. Segment your customer base.

To better understand the customers you work with, it helps to categorize them into groups based on their personal characteristics and behaviors. Not every customer acts the same and identifying different buyer personas can help you uncover opportunities to increase revenue.

Here are some ways you can segment your customer base.

  • Product/Plan Purchased
  • Contract Value/Average Transaction Size
  • Number of Daily/Monthly Visits
  • Job Title
  • Age
  • Location

2. Use text analytics to review qualitative data.

Rather than manually sorting through support tickets and listening to phone recordings, text analytics software can analyze qualitative data from survey responses, customer conversations, online reviews, social media conversations, and more. This technology helps you process tons of valuable information without having to personally review each piece of customer feedback.

3. Look for historical trends.

Once you've gathered a significant amount of data, look for patterns that outline what has worked — or hasn't worked — in the past. Do all customers in a specific segment talk about a particular feature? Do you have higher churn rates with a certain target audience? What did their qualitative data reveal about their perception of your brand?

Looking at data through this lens can help you compare your customer experience program against the metrics that you're measuring. You'll have a better idea of what initiatives are working and where you can make changes for a greater return.

4. Identify opportunities that will yield the most impact.

Once you have a feel for how your program is performing, look for a specific buyer persona or group where you can make a significant impact on their customer experience. For example, you could start targeting a high-value segment where churn rate is high, but there's still plenty of areas to generate customer delight.

This is where your customer experience metrics come into play. Look at the initiatives you've launched in the past that have been successful with similar audiences. Use quantitative data to measure financial success and qualitative data to personalize your next initiative for your new target persona.

Growing a Business with Customer Experience

Customer experience ROI isn't just a fun stat for your business to measure. It helps you prioritize upcoming projects, generate buy-in for customer-centricity, and boost overall team morale.

The key to calculating customer experience ROI is to connect metrics that you already measure to the financial metrics listed in this post. By comparing that contextual information with customer feedback, you can better understand whether or not your customer experience program is successful.

Read on to learn about the latest customer experience trends.

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Originally published Jun 8, 2020 8:00:00 AM, updated June 15 2021


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