ROI of Customer Experience: Measure To Improve The Value of Personalized Experiences

People are already getting personalized and bespoke experiences everywhere and from anything. So, there is no point in thinking about if you should create a strategy for personalized customer experience. If you don't do it, you will never get an edge in the market since all your peers must have already provided more personalized customer experiences. All these theories are very familiar to marketing and customer service leaders, but are they clear about the real meaning of this personalization?

If you are sending a marketing email or message with the name of customers, for example, "Hey, John….", and thinking that you are creating personalized customer experiences for your customers, you need to recheck what really a personalized customer experience should be and how your competitors give it. These are just substitutions, not personalizations. Then what is the real personalized customer experience?

It should begin with understanding customer personas, journeys, channels, ways of communication, buying behavior and history, and other demographic information and curate an experience that exactly fits the customer's requirements. But, one size fits all solutions are also not ideal. Large companies may find it hard to execute since the overall operations are stuck in multiple silos, and there are many customers to give individual experiences. When it comes to smaller companies, the issue is cost and budget. To provide personalized experiences, you need resources accordingly to satisfy each customer.

The way companies can do this is to understand customer information and capture their journey and behavioral insights with customer insights and analytics platforms and provide bespoke experiences to different groups of customers.

If there are budget concerns, the best way is to do A/B testing. You can segregate your customers into 2 groups and provide the one size fit all experience to the A group and personalized experience to the B group. If you can see any improvement in the ROI with the personalization you provided to the B group compared to A, you can ensure that the personalization strategy works. Then the strategies can then be extended to other customer groups. If it does not work, you can rethink and redesign the personalization strategy and work until you get the desired results. There are specific ways you can measure the ROI of customer experience programs effectively.

They are:

Based on the audience's response
The content you provide, and
Business processes
Based on the audience's response
The content you provide, and
Business processes

Let us go through how you can measure the ROI of customer experience programs:

1. Measuring the ROI of Customer Experience with Audience Response

As we already discussed, the substitution of names and other details of customers cannot be considered as personalization. To give extreme personalization to your customers, you need to collect their data from authentic sources.

Usually, companies can collect this data from first-party sources like CRM and CDPs. Another way is to collect from third-party sources like cookies and mobile ID tracking. But Apple’s security factors on these hinder the companies from collecting data at some level.

So the best way to collect data to create a customer persona is through first-party data sources.

There are 3 steps involved in this.

Collect data from CRM and CDPs.
Acquire the trust of customers who provide their data to you.
Enrich the customer experience with curated offerings as the return to the data customers shared.

But, initially, personalizing every customer’s experience can be an experiment. You may win or lose. You can test it in 3 ways. Customize the email or website view of a specific customer by showing the product or service they recently purchased, the recently customized product they bought, and a customized version of a product based on the demographics and geographical aspects of the customers.

Check the results, and then show your default, one size fits all product or service to the same customers on your website and emails. Compare those results, and check if the bespoke experience could yield some results in the conversion. You can extend the processes according to the results you get from the testing processes. Here, you won’t lose a huge amount of cost and time.

Another best way of measuring personalized customer experiences initiative is using key metrics like CLV (Customer Lifetime Value). CLV basically measures based on 2 factors, 1) customer information and 2) time. Here, the customer lifetime value lets you understand the cost of acquiring a customer to your brand that you need to invest in personalization efforts and how the customers can provide value over time to your company. This should also be checked with the period a customer engages with your brand. For example, if the average lifespan of your customers is 3 years, you can check how you will get a customer lifetime value in this short period.

You can also use other relative metrics to give more detailed results around the ROI of personalized experiences. Since personalization requires a lot of costs, including customer acquisition costs, resources, and technological support, you need to be very clear about every step you take.

When we talk about one-to-one personalization, we need to get it backed by top-notch and advanced technology like Artificial Intelligence, Machine Learning, and Predictive Analytics. These are way too costly to implement and require time in training to deliver accurate results.

To encounter these barriers, you need to measure 2 things: how much personalization is required currently and how the current personalization will be effective in the future. When you consider these multiple aspects of personalization and measure the activities from different perceptions, you won’t waste resources, money, and time, and you will deliver a personalized experience constantly.

2. Measuring the ROI of Personalized Content You Provide

Providing personalized content is essential, especially in marketing campaigns through different marketing channels. Brands must decide what content should be seen and accessed by the customers based on their needs and preferences. Showcasing the content for a customer throughout the channels they connect with a brand will help curate more content and marketing campaigns for them to get more conversions and boost revenue.

To measure how well the content personalization activities perform, you need to check the overall performance and test them in multiple ways.

Check how an individual piece of content performs and how the same content performs in the individual channels. And check how the content contributes to the customers’ buying in a specific phase of their buying journey.
Check how the conversion rate increases or decreases when there is personalization in content and there is no personalization.
Conversion when there is personalization across all channels, personalization in just one channel.
The conversion rate when providing personalization in just one channel and when there is no personalization in that single channel.

When you check the performance of personalization efforts in these multiple ways, you will get an overall idea of which channel could contribute more return on investment and which one is less contributing. So, you can remove or stop applying personalization on the less productive channels and focus more on the channels that yield more results.

To get more idea on this, you can check through which channels your customers mostly reach you by asking them like ‘How did you reach us’ or ‘how did you find us.’

Sometimes, people won’t have a clear idea of how they reached you since they might have seen your marketing ad campaigns on multiple channels, at least 6 or 7. But they don’t convert with the 5 channels if they have converted on the 6th.

That doesn’t mean that all the content you have shown up on the other 5 channels is not relevant. They have seen your content multiple times, and then they got this establishment of your name in their minds and started to consider it. So, multiple channels contributed to the final conversion.

To measure which channel plays a huge role in the conversions, you can check,

How the personalized content on a single channel contributes to the conversion.
What type of content and which way of interactions could convert more?
The channels that easily and quickly convert to sales.
Channels that did not contribute at all, or at least contributed, need to be removed from marketing campaigns to save the money and time spent on them.

As you know, you can’t waste your time and efforts on channels and campaigns that don’t really work. Personalizing content means curating a lot of content to get seen by potential customers based on their preferences. Automation can save you at some level, but that also requires time and effort.

To provide better-personalized content, you need to try multiple variations of content like texts, images, videos, carousels, etc., a system to manage multiple campaigns simultaneously, and systems to dynamically update the content.

All these personalization techniques should be adequately measured channel by channel and content by content to check if they contribute to the ROI.

3. Measuring the ROI of Personalized Processes

Delivering holistic and one-to-one experiences requires all departments to achieve a single goal. But the main issues many companies face are the siloed working culture. For example, the marketing team markets with different content and themes while the product team keeps changing the products and functionalities. And the product and customer service teams seem to live in different galaxies since the customer issues on a specific product feature never get fixed and addressed. All these issues hamper a personalized customer experience. All teams must be in the same room to get synced and avoid the fragmented experience that a customer may encounter.

Holistic personalization is a must-have. But it’s not easy to do and can’t be achieved overnight. It will take time to get into all the channels and unify the communications and connectivities on the same track. So, it is better to start from the front level. For example, if the content on the mobile app and marketing email doesn’t match, you need to start from there instead of waiting till everything gets synced and fixed.

There will be multiple opinions when there are more people and leaders in the decision-making of overall customer experience processes. In such situations, understand what processes yield more ROI, brainstorm, find which initiatives can be avoided and which should be continued, and invest in them. An effective measurement system is necessary here.

To initiate the process measurements, you can use feedback loops to ensure the people and systems related to a specific process are connected and yield better ROI results. And getting the errors and mistakes fixed and closing the gaps caused by silos will help to improve the overall bottom line.

Furthermore, practicing customer experience governance is important to foster coordination between departments and provide a holistic experience that can contribute to higher conversion.

So, practice transparency and consistency in data and information flow between departments, keep improving the processes based on the feedback loops, and avoid frequent changes in processes, which will again open more inconsistencies and confusion to other teams.

To conclude,

Personalized customer experience practices are essential and inevitable. But there is no point in investing a lot in personalized practices that do not contribute any value to your business's bottom line.

Hence, measure the personalized experiences in different dimensions to understand if they contribute to a great result in ROI and check if the company blindly invests in practices that are wasting cost, time, and effort. Always implement and extend that really works for your company with the help of adequate measurements.

ROI of Customer Experience: Measure To Improve The Value of Personalized Experiences

Do you know what your customers really want?

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