This CX Investment Boosts Revenue By 70%

It's all about the money!

Greetings, true believers! Let’s tackle another common objection to investing in customer engagement: It’s difficult to measure ROI!

When measuring the ROI of really any business expenditure, we need to first fully grasp the outcomes that are affected by the initiative that we are investing in.

For instance, if we spend $100 on customer engagement, we need to measure what impact that $100 investment had on our business. Ideally, we want that $100 investment to generate more than $100 in revenue for us (a positive return on investment). To get there, we need to understand the ways in which customer engagement impacts our business, then we can accurately evaluate if the investment was worth the cost. This gets into the concept of attribution modeling, a concept I won’t cover in this issue, but I’ll point you to this short video by HubSpot that helps explain the concept so you can research it more:

It’s worth remembering that when you engage customers, that has a ripple effect. Engaged customers are more likely to behave differently. And those changes in behavior can be tracked and measured to help show the ROI of customer engagement.

Here’s some areas of your business that are positively impacted by investing in customer engagement:

Retention rates: Your ability to retain customers is a huge driver of increased revenue, higher lifetime customer value, and lower customer acquisition costs. When you engage with customers, it increases their attachment to your brand, which means they will be more loyal, and will be more likely to acquire customers for you.

Regardless of how seriously your boss takes customer engagement, they will understand and appreciate the value of customer acquisition. Years ago I was working with a SaaS company to design a comprehensive brand ambassador and loyalty program for them. I worked closely with the marketing department in its design the team absolutely loved the idea and became more excited as we built out the entire system.

The CEO was not as sold on it. In fact he was fairly lukewarm about the idea UNTIL we showed him how the program would empower existing customers to refer new ones. THAT got his attention, and as soon as he understood how current customers could be leveraged to acquire new ones, he was all in!

Oh and one juicy stat for you SaaS companies: SaaS Capital reports that a 1% change in churn rate can lead to a 12% shift in company valuation in 5 years. More engaged customers stay longer and they recruit new customers for you.

Repeat purchases: More engaged customers are more loyal customers. And more loyal customers spend more. So another benefit of engaging customers is generating more sales from loyal customers.

Think about how you shop for groceries. Most people shop multiple stores and often buy items that are on sale at different stores. The reality is most grocery stores, and even smaller stores like Aldis or Dollar General offer most of the grocery items we will need. So we have plenty of options to choose from when its time to buy groceries.

So if we really don’t feel any loyalty toward any of our local grocers, then we will likely shop multiple stores, getting the best deals on the products we need each week.

But if we were loyal toward one of these grocers, that one grocery chain could conceivably earn all our grocery business. That’s a big deal, especially when you’re dealing with multiple retailers selling effectively the same products.

Repeat purchases are a massive driver of revenue. According to Adobe, 40% of your revenue comes from repeat customers, yet they represent only 8% of your customer base.

Think of the impact on your revenue if you could take just 10% of your customers who have only purchased once, and convert them into repeat purchasers. Investing in customer engagement can get you there.

Customer satisfaction: Another impact of customer engagement is increased customer satisfaction. Higher customer satisfaction levels lead to higher levels of loyalty, which in turn leads to more repeat purchases and higher sales volume per purchase.

It’s worth noting that customer engagement can also have the ancillary benefit of positively impacting your customer support efforts. Through engagement, you will have a better understanding of your customers, and this will aid in delivering customer support.

And better customer support leads to higher levels of customer satisfaction. Which leads to more sales. According to PWC, companies that provide a superior customer experience can charge up to 16% more for their products.

Perhaps the best thing about all these core benefits from customer engagement; Increasing retention rates, repeat purchases, improved customer satisfaction, is that you realize these benefits at the same time!

By engaging your customers, you are increasing their satisfaction, as well as their loyalty, and their chances of having repeat purchases, and spending more on those purchases.

The question isn’t “Do we have a positive ROI from customer engagement?’, the question is ‘How MUCH are we gaining from investing in customer engagement?’

The answer? Companies that invest in engaging with customers online see a 70% boost in revenue. Yeah.

I hope you have a wonderful weekend, thanks so much for your continued support!

Mack