CX leaders across all sectors are facing a raft of current challenges. Economic uncertainty, changing organizational structures, the rapid shift from office-based to remote or hybrid working patterns, and an increasing drive from the top to focus on profitability rather than pursuing growth at all costs — all of these issues have a direct impact on CX teams.
However, it’s precisely because of the extent of organizational change that is taking place that effective CX operations are more important than ever, and more closely linked to business success. Why? Because the party impacted the most by these types of changes is the customer — and yet it’s the party that in most organizations is the least understood, and least frequently consulted.
So it’s vital that organizations adopt a greater focus on the customer voice — and are able to predict how the changes they make at an organizational level impact customer sentiment, behavior, and intent. That means having an effective CX function in place with the people, technology, and cross-departmental support to interpret, analyze and proactively respond to what customers are saying, and how they are reacting to new initiatives.
To achieve this level of true customer centricity, CX needs to have a seat at the top table — delivering key insights, collaborating with senior leadership, and influencing strategy, to ensure optimal synergy between organizational objectives and customer expectations and requirements.
In this article, we’ll look at what CX leaders can do to prove the business value — and bottom-line impact — of their team’s contribution to the organization and evolve their position to become a senior strategic partner.
Shifting Focus from Growth to Profitability and the Role of CX
Business leaders are increasingly recognizing that focusing their effort and resources solely on growth may deliver measurable gains in the short term — but this may come at the expense of long-term organizational sustainability, brand perception, reputation, and increased exposure to risk.
The increasing cost of customer acquisition means that many organizations have taken the strategic decision to shift their focus away from continuing to spend big on growing their customer base, and instead turn their attention to extracting greater value from their existing customers.
Instead of focusing on the number of new territories expanded into, new customers onboarded and new business development wins, companies are looking much more closely at metrics such as retention, churn, customer lifetime value, and customer satisfaction scores.
What does this mean for CX teams?
In theory, this shift in focus to optimizing and improving the customer experience should be good news for CX teams — that’s exactly their area of expertise. But what businesses are looking for isn’t just a simple uplift in those key metrics we mentioned above — churn, CSAT, etc.
The purpose of focusing on CX is ultimately to generate revenue — rather than to enhance the customer experience as an end in itself. CX teams need to be able to demonstrate to senior leadership that moving the needle on, for example, retention has a demonstrable effect on the bottom line. Customer experience metrics need to be linked to outcomes, rather than viewed as end goals.
The evolving role of CX
That means that CX needs to evolve as a function, moving from a reactive service center constantly “playing defense”, to a streamlined, data-driven, and proactive operation — able to accurately predict customer needs, and plan initiatives that impact wider organizational goals — generating revenue, driving profitability, and mitigating risk.
CX leaders, therefore, need to focus on optimizing their resources, tools, and people to maximize effectiveness, while also developing a deeper and more granular understanding of their data to extract valuable insights and more accurately demonstrate impact across the business — allowing them to make evidence-based cases for further investments with clearly defined ROI calculations.
We’ll explore how you can maximize the efficacy of your existing teams — and push for continued investment in CX — later in the article. First, let’s look at the risks CX faces if it is unable to adapt.
The Potential Consequences for CX Teams
The challenge that many CX teams face is one of perception. Senior leadership often views CX as a cost center, rather than a revenue driver, and as a result, customer service teams are often top of mind when businesses look to make savings in the face of economic uncertainty or rebalance budgets to prioritize sales, marketing, and other revenue-linked departments.
The risk of cost optimization measures to CX teams
The result is often budget constraints, reducing the resources available to CX teams in terms of training, technology, or tools. This further restricts their ability to perform — and therefore their perception within the organization — which can quickly lead to a negative cycle of further cuts.
There is also a risk to CX personnel, with reductions in the compensation packages CX managers can offer, departmental hiring freezes, or in the worst-case scenario, layoffs and downsizing. This results in a higher workload and more pressure on the team members that remain, increasing the risk of burnout. Even when freezes are lifted it may be extremely challenging to rebuild teams with equivalent talent and experience, especially if the reputation of the business has taken a hit.
How changes in organizational priorities impact CX
With a greater organizational focus on cost optimization, CX teams — already operating under significant resource and staffing pressure — may also be required to pivot their focus from prioritizing customer satisfaction to introducing cost-cutting and efficiency measures. This can negatively impact the customer experience, risking increased churn and lower repeat spending.
So in order to keep delivering value, you need to quantify and prove that value, demonstrating the real ROI of CX investment to ensure key personnel and mission-critical operations are protected from short-term cost-cutting measures. And that has to start with analyzing and optimizing the existing resources they have available.
IV. Maximizing the Efficacy of Existing Teams
Before you can improve the efficacy of your CX team, you need to understand the position you’re starting from. To do so, you’ll need to carry out a comprehensive evaluation of the tasks your team is handling day-to-day, the efficiency with which they are doing so, and the results they are achieving.
Key metrics will include average tickets handled per agent or time period, average response and resolution times, customer satisfaction expressed as CSAT or NPS, customer churn, and customer lifetime value, or CLTV. You’ll also need to look at what the team is working on, drilling down into conversations and tickets to categorize and tag them so that you can separate different types of customer interaction and analyze where the most impactful issues are.
Solving for growth without increasing headcount
Once you have an accurate picture of how your resources are being deployed, and the current results you’re achieving, it’s time to look for areas where you can make improvements without throwing more agents at the problem.
This might involve restructuring your team to allow agents to specialize in certain tasks, improving efficiency; optimizing existing processes and workflows to reduce repetition or duplication of work; or automating certain simple tasks to free up agents to focus on more complex issues elsewhere.
What’s most important here is that you can associate areas where you plan to make improvements with concrete outcomes for the business. If you’re proposing automating all responses to WISMO tickets, for example, you need to know exactly how many agent hours that will save — and the dollar benefit.
Let’s look at how that works, and how you can develop more complete ROI models.
Demonstrating the ROI of CX investment
Showing the cost savings associated with optimizations such as automation is fairly straightforward. As in our example above, if you can automate 1,000 ticket resolutions it’s pretty easy to calculate the agent time saved — and the associated cost reduction. But to make a truly convincing ROI argument to justify CX investment to senior leadership, you need to offer a more complete picture of the value-add.
For example, a simple automation gives you the following provable benefit:
- The investment will result in a 5% reduction in agent hours billed
But that doesn’t represent the total value that this single initiative adds. You need to be able to document and report on the effects of the intervention across the wider organization — answering questions like:
- How does automating WISMO responses affect CLTV, CSAT, or retention?
- What impact does this have on revenue or profitability?
- Where are those agent hours redirected and what’s the impact?
If you can do that, you can present a more detailed argument for investing in the tools or technology you need to make such an automation possible — something more like:
- The investment will result in a 5% reduction in agent hours spent on WISMO and a 30-minute reduction in response time.
- That will increase CSAT among those customers by 0.5, which increases the average CLTV by $500.
- This will also allow us to redeploy agents to proactively reach out to at-risk customers, reducing churn by 2% and saving $25,000 in lost lifetime sales.
The more that you’re able to use CX data to pinpoint the benefits of a particular initiative or investment to the whole business — the easier it will be to get buy-in from senior leaders. And once you can do that, you can start to position CX as a strategic point of contact for all departments within the business.
Adapting to New Contexts and Becoming a Strategic Point of Contact
To transform CX from an internal service provider to a key strategic partner, you need to show how the insights into customer thinking that your team can deliver to other areas of the business translate into successfully achieving key objectives.
Monitoring customer sentiment during organizational change
As we touched on in the introduction, being able to maintain a clear picture of the shifts in customer perception of your company, and their positive and negative responses to the changes you introduce is absolutely critical.
Customer voice is essentially the compass businesses need to use as they navigate change — because any major deviation can be disastrous. The insights into customer thinking delivered by CX are therefore vital to wider business success.
Ensuring the voice of the customer informs key decisions
As the primary representative of the customer within your organization, you need to be able to extract meaningful insights from the mass of customer conversations and interactions that take place on a daily basis and deliver these insights to other areas of the business to inform their decision making. It’s also important to be able to predict customer behavior in response to specific organizational changes, in order to mitigate the risk of negative impact.
Quantifying the impact of CX on the wider organization
You also need to quantify how the insights that CX delivers, and the initiatives that it carries out have a direct impact on company-wide objectives, such as revenue or growth targets in order to be able to demonstrate the value of CX as a function and ensure that senior leadership understands the value of continued investment in CX.
That means accurately calculating the ROI associated with CX initiatives, and clearly linking CX activity and outputs to key strategic objectives within other areas of the business.
Aligning CX goals with overall business objectives
Once you are able to accurately measure how CX activities impact the success of other teams, you can develop a closer working relationship with those departmental leaders, offering predictive analytics and insights that will assist them in meeting their goals.
From there, you can begin to collaborate with teams such as sales, product, or marketing on designing and implementing CX initiatives that are aligned with their specific objectives — delivering continuous value in terms of revenue, growth, and profitability uplifts.
Promoting customer centricity within the organization
To become a truly customer-centric organization, CX needs to be represented in the C-suite, and CX leaders need to be involved in key strategic decisions to ensure that the voice of the customer is represented and considered.
Once you’re able to clearly demonstrate the impact that CX operations have on the organization as a whole, the strategic value of the insights into customer thinking that CX teams can provide, and the accuracy of predictive analytics you can achieve by unlocking the value in customer conversations, you’re in a much stronger position to make a case for representation at the highest levels of management.
Of course, navigating organizational change is an ongoing process. The challenges that CX teams face are always evolving, and so too must the role of the CX leader in order to keep pace. It’s important to recognize that with the right approach, organizational change presents an invaluable opportunity for CX teams to reposition themselves within the business.
The ultimate goal of CX leadership should be to become a key strategic partner within the business, taking advantage of your proximity to the customer and the valuable data contained in their interactions with CX to predict customer thinking and behavior — and drive revenue and profitability by delivering actionable insights to other areas of the organization.
To visualize this evolution as a process, take a look at our 5-stage CX maturity model — it’s a useful starting point to evaluate where your team is now, and what improvements or changes you should focus on next.