Marketing and customer experience (CX) pros intrinsically believe that their initiatives create value for both customers and the business. But many only assume downstream impact based on the butterfly effect of disconnected activities and metrics.

If you’re not familiar with the butterfly effect, Edward Norton Lorenz defined it in “The Essence of Chaos as:

[The] phenomenon that a small alteration in the state of a dynamical system will cause subsequent states to differ greatly from the states that would have followed without the alteration.

A more commonly cited example is the idea that the flapping of a butterfly’s wings may lead to a tornado.

But the butterfly effect applies in a business context when firms “know” — but cannot prove — that their marketing and CX investments result in positive customer outcomes and drive business value. Inadequate measurement frameworks mean that they fail to produce the requisite financial figures to prove return on investment.

In fact, Forrester’s research shows that less than half of organizations can prove the value of their CX programs. That’s a big problem. And Forrester predicts that one in five CX programs will disappear in 2023 if they can’t show numbers.

Another prediction for 2023: Half of new CMO hires will come from pure-play performance marketing roles. Their firms will prioritize short-term revenue growth over long-term CX and brand-building initiatives. That’s another big problem. Firms should double down on improving CX — especially in an economic downturn.

Align Marketing And CX Metrics With Customer Lifetime Value

So how do you prove the business value of marketing and CX? How do you ensure ongoing customer-obsessed investments in difficult times? In short, it is critical for marketers and CX pros to align their respective metrics with shared business metrics. They need to plug their customer insights into a P&L system that measures their contribution to the bottom line.

To accomplish this, Forrester recommends customer lifetime value (CLV) alignment. CLV is a robust financial methodology. It enables marketing and CX teams to demonstrate how their work directly contributes to long-term value. Once established, CLV can serve as a unifying strategic framework to predict the future profitability of customer engagement.

Unfortunately, CLV calculations are complex and vary across different business operating models:

It is critical for marketing and CX to align their metrics with CLV. Furthermore, forward-thinking marketers and CX pros can help guide their firm’s CLV efforts. But they will need to collaborate with their customer insights cohorts to map marketing and CX metrics to relevant CLV parameters. Stay tuned for upcoming Forrester reports that will help you navigate CLV complexity and alignment.

Register Now For Forrester’s CX EMEA Forum

Those attending Forrester’s CX EMEA Forum in London on May 10–11 will have a chance to see and hear this research in person. I’ll personally deliver a keynote presentation on this topic. I’ll also be available for one-to-one meetings throughout the event to answer your questions.

Register here. I look forward to seeing you in London in May!