As businesses heavily scrutinise expenditure it’s all too easy to forget to invest in your number one asset – your customer.
Our experience from hundreds of client organisations is that few people can answer how much it really costs to meet their customers’ needs.
Some organisations, though by no means all, understand the cost of acquisition during the sales process,
By understanding all of the costs associated with meeting a customer need, the investment and improvements required will become much clearer, allowing you to focus your efforts for maximum return.
When assessing the cost of your customer journeys, there are three key areas to understand:
The entire customer journey must be considered, from very early interactions, qualification and disqualification and the costs to serve through their lifecycle
For many businesses, the total cost of acquiring or servicing customers is challenging to reveal. However, every element of the customer journey will leave a trail of clues which, when grouped, will reveal the real cost of doing business with your customers.
This can be hard to extract; MI systems are often not set up to provide these holistic end-to-end views. Only by joining up the dots across the silos, from beginning to end, can you begin to understand the true cost of the customer
From the internal costs of labour and technology, through to your supply chain, the bigger picture is revealed. You’ll also need to include the losses in your sales funnel here to ensure you don’t just assess the cost of the ‘good’ path but look at the total cost of acquisition.
By zooming out, you can start to see the trends and what is, or isn't, delivering value. Your goal here is to create journey dashboards, clearly showing the total cost to serve as part of a balanced set of KPI’s.
What happens when something goes wrong? Whether it be a tweet, phone call or email of complaint, having the right team responding promptly to avoid reputational damage carries a cost.
When you delve a little deeper, consider whether members of your product team frequently get dragged into firefighting mode to make problems disappear? Is your finance team's productivity affected by making payments to compensate disgruntled customers or dealing with fraudulent activities?
A study by
Can you identify every person that plays a part in resolving an issue when something doesn’t work as expected? Documenting precisely who deals with the fallout, who is accountable, and how much their time is worth, will reveal a far higher cost than you may have accounted for.
As consumers, we have all endured a poor customer experience that not only prevented us from completing a purchase, but was also responsible for us saying the words “I’ll never buy from them again, and I’m telling all my friends.” Esteban Kolsky, the founder of ThinkJar, reported that 66% of consumers abandon companies because of poor service. You should never undervalue the cost that may be attributed to unsatisfactory customer experiences.
When examining customer attrition, there are three angles to consider.
Firstly, the cost to acquire a replacement customer and the direct revenue
Secondly, the impact of any negative PR or detractors on your conversion rates, and the cost of this. For
Finally, bear in mind the
And what is the impact on your brand and reputation? Public perception is magnified through the lens of social media, reviews, forums and the press. You seldom get a second chance to make a first impression. Reductions in referrals and website traffic views may be symptomatic of larger customer experience issues and, while more challenging to quantify, could ultimately carry a higher value.
It’s all about profitability
Once armed with a deep understanding of these costs, don't rush into reducing them immediately. Consider the bigger picture and your long-term strategy. For each element of the customer journey, decisions need to be made around whether it delivers genuine value to the experience or simply exists to rectify issues happening elsewhere.
To create a cost-effective customer journey you need to identify the areas where profitability can be increased, whether
Whether B2B or B2C, your focus should be the same
Customer experience is an area increasingly familiar to those operating in a B2C environment. However, customer journey thinking is just as valuable for B2B.
Fundamentally, we all carry the same customer expectations both
Can you honestly say that your highly trained sales force is spending all their time selling rather than problem-solving? You’ll need to consider the impact of unsatisfactory journeys on their capacity and ability to sell.
Negative customer experiences can be catastrophic to a business of any size. In the last few months, IBM and Adobe have gone to great lengths to demonstrate how their customers are buying experiences, rather than products.
Jeff Bezos highlighted the difference between our analogue past and digital future when he said: “in the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts.”