What are the best tools and methods for measuring CX outcomes and ROI?

In my view, you should distinguish between leading indicators - the measures that you evaluate on a weekly and monthly basis - and lagging indicators - the ultimate financial measures that are the output of your customer experience program. Lagging Indicators include Gross Retained Revenue (GRR) and Net Retained Revenue (NRR), as well as Customer Churn Rate. Your ability to influence these, once measured, is virtually non-existent. Leading Indicators include Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), Customer Effort Score (CES), Opportunities generated, and Referrals made. CX goals that stem from these measures can be calibrated weekly, measured monthly, and adjusted as opportunities and challenges arise.

The first step is knowing what your company's strategy, goals and objectives are. Only then can you create a strategy for your CX team, and identify how you plan to point your resources toward helping the business achieve it's goals. While you may have a goal to increase a CX metric (NPS, CSAT, CES, etc.), your true metrics are actual business outcomes you help drive, including revenue, cost reduction, and company culture enhancement. If you start off with defining CX metrics for CX goals, you will not get to a point where you can measure the impact of your team or return on investment.

While you may be starting out and simply have a few survey programs in place, ensure that the platform you choose allows you to go beyond surveys, or single-use platforms (e.g., just used for digital experiences). Specifically, look at platforms, and I would add Medallia into this mix, that allow you to capture multiple signals through the customer - and employee - journey, analyze them in one platform, then distribute personalized insights at scale to close the inner and outer loops. By multiple signals, I mean survey responses, social media, contact center speech-to-text transcriptions, CRM data, operation & financial data, etc. Also, ensure that the platform you choose can also easily connect with your company's core platforms.

Be cautious about stand-alone tools or experience platforms that act as little more than silos. A mature CX measurement tool has easily exportable data in universal formats, well-established marketplace integrations with your key enterprise and business intelligence systems, and workflows and CX measures that directly map to corporate best practices. A tool that simply conducts a survey, or that ingests transactional data and emails a questionnaire, is usually inferior to products already available in the Microsoft 365 or comparable productivity suites, and should not be considered a credible measurement tool.

An effective analysis of your CX data and insights should be anchored upon your ability to correlate measures with business outcomes. If you cannot draw a direct line between your CX data and revenues, you should ask yourself whether that CX data is really significant and objective or if it is simply incidental and subjective. For example: Net Promoter Score is an effective CX measure only if coupled with an effective NPS follow-through program, ensuring that your "Promoters" (9s and 10s) are activated to pursue new clients through referrals. If such a follow-on call to action does not exist, NPS will largely serve as a non-correlative and non-performant (i.e., vanity) measure that has no relationship with revenue or retention.

Ensure that your CX measures are consolidated and actionable, with a clear understanding of the thresholds needed for improvement. For example: - Customer Satisfaction Scores (CSAT) of 1, 2, or 3 will require an intervention or escalation in order to remediate the dissatisfaction and ensure the issue has been resolved satisfactorily. - Net Promoter Scores (NPS) of 1-6 are actively damaging your brand by detracting new clients in the marketplace, whereas 7s and 8s are experiencing brand misalignment issues. Both require delicate and specialized improvement actions appropriate to your go-to-market. Each measure's thresholds requires a corresponding success playbook.

Estimating the benefits of your CX efforts should be clearly understood and measured using generally-accepted accounting principles (GAAP). The ultimate measure of CX ROI is: - Net Retained Revenue, or NRR, defined as - the percent of recurring revenue retained from the prior year, including the impact of upsell and cross-sell. An alternative measure of an early-stage CX program would be: - Gross Retained Revenue, or GRR, defined as - the percentage of recurring revenue retained from the prior year, excluding the impact of upsell and cross-sell. Both measures should be applied to the same client population over a 12 month period to measure the percentage retained (gross or net) in calculating the ROI of the CX program.