Measuring the return on investment of any campaign, tool, or strategy is crucial, but it can be a murky endeavor. Consider customer experience initiatives. Delivering outstanding customer service is one of the few ways businesses can win loyal customers and increase their bottom line, according to customer experience professionals. However, evaluating the ROI of good customer experience by total stock market returns is misleading, finds Forrester Research in a new report. The research firm analyzed five industries and found no correlation between customer service leaders and strong corporate performance based on market returns.
For instance, Borders and JCPenney both received high marks in customer experience, but performed poorly when it came to stock returns. In contrast, customer experience laggards like Cigna, Charter Communications, and Comcast performed well in the market.
Part of the discrepancy lies in the fact that companies are often part of larger organizations, which along with other factors complicates the results, notes the report's author, vice president and research director Harley Manning. To solve this problem, Manning isolated the revenue streams for specific lines of business within large corporations and calculated the compound annual growth rate of revenue from 2010 to 2014.
"This allowed us to compare direct competitors and determine whether or not customer experience actually correlates with growth," Manning maintains. By doing so, companies' revenue growth now correlated with customer experience in four out of the five categories. Health insurance providers were the exception largely because it's difficult for consumers to change health plans, and few people are willing to make the switch even for a better customer experience.
One of the key takeaways from the report is that companies should take a multi-method approach to measuring an initiative's true ROI. The same holds true for social media sentiment. Social media is an important consumer engagement channel, but marketers still struggle when it comes to measuring its value, admitted vendors and analysts yesterday at the Sentiment Analysis Symposium in New York City.
"Social data has not been taken seriously because marketers haven't been able to bridge the gap between social insights and actionability,"notes Rob Key, CEO of social analytics firm Converseon. "We need to find ways to integrate [social sentiment] with other data points and create forward-looking strategies."
Indeed, social sentiment data is often regarded "as noise" says Forrester Research analyst Anjali Lai. However, if it's leveraged correctly, social sentiment data can give companies a better understanding of their customers' needs and expectations. A possible solution, is to combine social insights with other data types to solve specific business problems.
For instance, social listening combined with behavioral survey data yields identifiable information about customers. The bottom line is that integrating various data types such as social sentiment and survey data brings companies closer to a 360-degree view of the customer. "Multi-method analysis," Lai points out, "rounds out our understanding of the customer and minimizes biases."