How to build a business case for a CX technology project

Published on: August 09, 2017
Author: Neil Titcomb

Getting the technology right is an important aspect of delivering on your customer experience (CX) goals. But any investment in new technology will be competing against multiple other disciplines for budget and management time. Building a strong business case is therefore essential.

To help achieve this Olive Huang of Gartner gave an informative tutorial at this year’s Gartner Customer Experience & Technologies Summit, where she discussed how to build a business case for technology investments in CX.

First, the good news – CX does deliver ROI. Huang presented data from a recent Gartner study that suggests 58% of CX projects in 2016 saw a measurable ROI. On top of this while 27% of projects hadn’t delivered ROI in that year, they were expected to in the future.

Despite this, working out the ROI for CX technology investments is a tricky business and there are probably four important reasons why:

  • Often there are multiple different managers and departments across the organization who have primary or secondary responsibility for CX, complicating the job of tracking ROI.
  • At any one time organizations are typically rolling out a number of ongoing, interlocking CX projects. Unravelling the ROI of individual initiatives is not easy.
  • Many different technologies have to work together to deliver CX improvements. Again this make it difficult to put your finger on exactly what ROI is delivered by each one.  
  • CX investments often take a number of years to deliver ROI and other benefits which makes it difficult to measure within short term timescales. Equally, some benefits are indirect i.e. they directly benefit the customer which in turn produces an indirect benefit to the organization – such as increased loyalty or customer advocacy.

Addressing the last point. Huang highlighted that CEOs are typically more open to investments that deliver long term, indirect ROI while CFOs tend to favor projects that promise short term, direct ROI.  

So how do you build a successful business case? Start by following this eight stage process:

1.  Identify the Primary Stakeholders and their interests
Think
about the different stakeholders and the types of benefits that will appeal to them. These include:

  • ‘IT enablers’ who are most interested in improvements in IT capability
  • ‘Business process owners’ who are looking for evidence of improvements in customer experience using measurements of business performance
  • ‘Financial drivers’ who want to generate improvements in financial controls and performance.

2. Select the measurement metrics
Choose the appropriate performance metrics for your project based on your CX strategy, and identify real business benefits they are measuring. For example, if you are tracking increases in repeat orders, frequency of orders or order values then the business benefit is lower cost of sales acquisition.

3. Set a benchmark
To measure improvements you need to start with a baseline or benchmark. Take an average measure of performance for each metric over the last 12 months and then track how your new CX project drives improvements.

4. Document the capabilities of your new CX solution
Describe the capabilities of the solution and the benefits to help the IT team understand its impact on business processes while demonstrating to managers how it will improve performance.

5. Agree the targeted improvements
Work with the primary stakeholders to agree best and worst case targets for the performance improvements you are seeking. For example an X% reduction in customer complaints or an X% increase in average customer satisfaction scores.

6. Translate improvements into monetary returns
It is usually possible to convert the CX performance improvements you are targeting into the potential value they will deliver in terms of cost savings or increased revenue for the business.

7. Work out the Total Cost of Ownership
Make sure you include all costs when working out the Total Cost of Ownership, including direct costs (hardware, software, support costs etc.), indirect costs such as staff and training, and process costs such as marketing.   

8. Calculate the ROI
Obviously working out the ROI of an investment amounts to the monetary value of the potential benefits minus all the costs. But be realistic - plan for several scenarios that take into account how the numbers will vary if you don’t reach your best case targets, including a realistic worst case projection.

By the time you have get to this point you’ll have done a lot of the hard graft in researching and thinking through your business case. But your job is not quite done. Make sure you understand how senior management works, and what makes decision makers tick. Talk to them in their language and address any objections early to get the project over the line.

With customer experience currently enjoying plenty of positive attention on the business agenda, it is easy to think that funding for CX projects will come relatively painlessly. But you always need to work hard to demonstrate the power of any CX initiative and to ensure that all stakeholders understand and buy-in to the benefits.

Tags: CEO, CX, Customer experience, Customer Service, Gartner, Olive Huang, ROI, Business case, metrics, Measurement
Categories: Best Practice, Trends & Markets

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