How Much Is CX Actually Worth In Profit For Telecoms?
We all instinctively believe that great customer experience (CX) can bring financial success, but proving this with numbers can be a real challenge. If you are a CX professional working in the telecom sector, you know that your firm measures its success with metrics such as ARPU (average revenue per user) and net profit and shareholder values such as ROE (return on equity) or ROIC (return on invested capital). But how much of it comes from delivering great customer experience, and how much is left on the table by not doing so?
The Main Challenge: Inability To Link CX To Hard Numbers With A Dollar Sign
With the arrival of 5G, telecoms around the world are substantially increasing their capex spend on new infrastructure and network development. Burdened with heavy investments, oftentimes at the cost of taking on additional debt, telecom execs are laser-focused on managing operating costs, driving up revenue, and accelerating returns on what they’ve invested. The good news is that CX can actually help on all three. The bad news: Not many companies have figured out how.
The Solution: Hardwire Your Customer Experience Data To Financial Outcomes
Every industry has its own unique DNA because it makes and spends money largely in the same way. But every company within the sector writes its own code by essentially deciding how to run its business, i.e., where to invest, how many people to employ, what products to promote, which customer segments to pursue, and so on. We studied the accounting model used by the telcos and decomposed the financials of several global and regional (full-service) carriers down to the foundation. In the process of doing that, we discovered a collection of financial and operational metrics (e.g., invoice revenue/user, pocket margin, average latency, uptime, incident rate, etc.) that basically tell the money story. The other side of the equation is the customer story, told by measures such as customer satisfaction, complaint rates, customer advocacy, and so on. The trick is to link the two stories by understanding the patterns that exist between soft metrics like complaints to hard metrics like call center costs. Companies such as Telstra and Vodafone, for instance, have been able to link some such data points to tell interesting stories about how delivering a better CX actually helps them drive revenue and save costs.
This is the art of hardwiring CX to financial performance, and every CX pro should become prolific in this art. For more details, please refer to my recently published research here and here.
- Age of the Customer
- customer centricity
- Customer Engagement
- customer experience
- customer experience index (CX Index)
- customer experience maturity
- Customer Experience Measurement
- Customer Experience Strategy
- Customer Insights
- customer loyalty
- customer relationship management (CRM)
- customer-centric design
- Data Analysis
- Data Insights
- digital business
- Digital Transformation
- experience design (XD)