As a business leader, you are constantly seeking opportunities to optimize costs and maximize the value of your investments. When it comes to customer experience (CX), one of the significant advantages is the ability to capture cost savings that can be used to fund strategic CX investments. By adopting a data-driven approach, focusing on efficiency, and leveraging technology, you can unlock substantial cost savings in various areas of your business and utilize those savings to strengthen your business case for strategic CX investments.
Let’s dive deeper into three specific opportunities to make your investments in CX self-funding. Any one of these cost levers can generate savings that more than cover the investments in headcount, technology license fees, and consulting services, typically within an 18-24 month payback period, after which you will continue to be able to fund ongoing investments or drive margin expansion. Moreover, the capabilities you are building to drive a growth flywheel will also drive upside that can be 10-20x the investments you are making.
1. Savings on research and testing
One area where CX investments can lead to cost savings is in research and testing, which can be as much as 30-50% of your addressable spend for things like user testing for websites and mobile apps, ad hoc surveys, ethnography, mystery shopping, or other more bespoke research. Traditional research methods can be time-consuming and costly, requiring extensive resources and manual data collection. However, with the integration of AI and advanced analytics, you can streamline your research and testing processes, automate data collection and analysis, and derive valuable insights more efficiently. Generating a steady stream of insights from mining your unstructured data (e.g., call center verbatims, ratings and reviews, social media conversations, open ended survey questions) using platforms like Qualtrics, in combination with new services to play back and analyze customer interactions on your website and mobile apps using platforms like Quantum, enables you to get “more for less” from your investments in research and testing, while increasing the quality and quantity of insights available to your teams to make decisions as part of their continuous improvement cycle. By reducing the time and resources spent on research and testing, you can capture significant cost savings that can be redirected towards strategic CX initiatives.
2. Rationalizing vendor spend
Another area that can often yield significant savings is rationalizing vendor spend, especially if you are like many larger companies that have fragmented and duplicative investments in CX listening, social media analytics, and closed loop actioning platforms across their business. By optimizing your vendor relationships and leveraging technology solutions, you can streamline operations, reduce manual processes, and negotiate more favorable contracts. For instance, implementing a centralized customer data platform (CDP) can eliminate the need for multiple vendor solutions, reduce licensing and maintenance costs, and enhance data integration and accessibility. Similarly, as you invest in modernizing your CX listening approach to take advantage of AI and analytics of unstructured data sources, you may find that you can streamline the number of vendors you are working with and reduce the step up in spending by giving more of the incremental business to one of your vendors. You can also take a broader view across the vendor landscape across customer, brand, product, and employee experience, building an enterprise relationship with a strategic vendor such as Qualtrics that is well positioned across all of these experience management disciplines. By consolidating your vendor landscape and leveraging technology efficiently, you can capture substantial cost savings that can be allocated towards driving superior customer experiences and funding your growth flywheel.
3. Reducing customer service costs
Another area where strategic CX investments can generate substantial cost savings is in customer service costs. By improving self-service capabilities, implementing AI-powered chatbots or virtual assistants, and offering intuitive knowledge bases, you can empower customers to find answers to their queries and resolve issues on their own. This reduces the volume of incoming customer service inquiries and decreases the need for extensive agent support. As a result, you can typically achieve cost savings of 10-20% of your addressable costs for customer service operations. You can then reallocate resources to fund your enabling capabilities for your growth-oriented investments as well as drop some of the benefits to the bottom line.
It's important to note that capturing cost savings is not just about reducing expenses and reallocating those savings towards strategic CX investments. By demonstrating the tangible financial benefits of CX initiatives, you can strengthen your business case and gain support from stakeholders. Present the cost savings achieved through research and testing optimization, vendor spend reduction, and customer service efficiency improvements. Showcase how these savings can be reinvested into strategic CX initiatives that drive customer satisfaction, loyalty, and business growth. Drive a continuous quality management cycle, where apply a data-driven approach to pursuing these opportunities and measure the impact on business outcomes. Implement robust analytics and reporting systems to track the impact of your CX investments on cost reduction. By monitoring key performance indicators (KPIs) and conducting regular cost-benefit analyses, you can demonstrate the value and financial impact of your CX initiatives.
In conclusion, strategic CX investments offer significant opportunities to capture cost savings and reinvest those savings into driving superior customer experiences. By optimizing research and testing processes, streamlining vendor relationships, and reducing customer service costs, you can achieve tangible cost savings that strengthen your business case for future CX investments. Embrace the power of CX to deliver business value and allocate resources wisely to achieve both cost efficiencies and exceptional customer experiences.